Moldova needs to expand its industrial sector and improve its business climate in order to achieve economic growth of 8-10% annually in the next decade, Economy Minister Dumitru Alaiba told SeeNews.

In an interview offered last month on the sidelines of the EBRD’s annual meeting in Yerevan, but published only now, the minister says that “we have to be bold and this is what we are doing right now. We are undertaking reforms that will unlock a much bigger growth potential... I think it is realistic to say we can accomplish it because the base is quite low, there is a lot of space where we can grow during the next decade and this is what has been the experience of other countries in the region that have embarked on the path to EU integration”.

“Last year alone, we removed barriers to doing business worth at least 0.5% of GDP, and we are pushing for even bigger reforms this year,” Alaiba added.

In 2023, Moldova waived taxation of reinvested profit in order to encourage companies to expand their businesses, and also opened the labor market to citizens of 47 countries. The digitization of public services for entrepreneurs has increased from around 38% to 60% and should reach a share of 75% this year, rising to 100% in the following years.

To achieve economic growth, attract investment and encourage exports, the government plans to launch state aid schemes in support of SMEs operating in several sectors in which it believes it has a competitive advantage - electronics, automotive, pharma, food processing, and energy, the minister said.

“The IT sector is very promising,” Alaiba said. “Over 60% of Moldovan GDP comes from IT. The sector has seen very robust growth of 7-9% per year over the last decade and will keep growing because there is still space.” In support of the sector, Moldova has imposed a 7% flat tax on IT turnover, with no other taxes levied either for the employer or the employee.

The Government also intends to promote a reform of the capital market legislation and a restructuring of the stock exchange with the aim of facilitating access for private investors. “This is a growth driver that we see contributing another 0.5% of GDP”, said Dumitru Alaiba in an interview with SeeNews.