Government rejected proposal to allow foreigners to buy farm land

This week the Government rejected a bill authorising foreign investors to purchase farm lands In Moldova. The draft law was proposed by MP Igor Clipii. The amendment proposals were justified by the author with the necessity to improve the situation related to the consolidation of agricultural land and the improvement of the investment climate in agriculture. The bill stipulates amendments to the Land Code, the Law on the Normative Price and the Sale-Purchase of Land and the Law on Investments in Entrepreneurship. The Government considered the examination of this project as inopportune. According to the Executive the land market of Moldova is currently on a normal development pace. Thus, 47,400 transactions were registered in 2005, 51,500 – in 2006, and 85,100 – in the first half of 2007. The authorities explain the increase in the number of land transactions with the growth of the citizens purchase power in the domain of farm land. The administration considers that this fact has a positive impact on the development of the land market. As the Government puts it, the access of foreign investors to purchasing agricultural lands will lead, in a certain measure, to the growth of prices, but will also contribute to the elimination of local individuals and companies from the country’s land market and will influence negatively the evolution of transactions and the farm land consolidation process. The Government also considers that the arguments of the bill’s author concerning the dependence between the amount of foreign investments and the legal restrictions for land purchasing are unfounded. The Executive brings the example of successful enterprises like Tomas Smhidt Landau Ltd which rents and administrates about 7,000 ha in Soldanesti, Anenii Noi, Rezina and Kelley Grains Corporation Ltd who rents other 7,000 ha in Causeni, Anenii Noi and Stefan Voda. The mentioned companies continue to extend the surfaces they rent and, in the same time, reassess their investment policy in the domain, re-examine the rent relations with the owners in order to conclude long-term contracts and bring additional investments in the construction of irrigation systems and others. The activity of these companies suggests that the existing legal framework is not an impediment for foreign investment in agriculture, Government’s not attached to the bill says. In the last few years, Moldova Foreign Investors Association (FIA) has repeatedly solicited the annulment of the restrictions for foreign investment companies to buy farm land. In exchange, FIA was proposing concrete investment commitments.