The Republic of Moldova reached the 22nd year of independence. The IPN Agency decided to present the accomplishments and failures in the country’s development in a number of articles. Representatives of the current government, experts, former and current politicians stated their views on the steps taken by Moldova after August 27, 1991.
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Article No. 8 of the IPN series “Moldova-22. Steps forward and steps backward”, on the occasion of the Independence Day
Twenty-two years ago, Moldova didn’t have a business community. The business sector developed in parallel with the new state. At the start of the 1990s, the business community was at the incipient stage of development, but now it is a community with prospects. But it could have been even more developed. As any other sector, the business sector has many shortcomings, including the lack of professionalism, transparency and, often, of common sense.
Leonid Cerescu, chairman of the National Employers Confederation of Moldova, said the period of 22 years since the proclamation of Moldova’s independence was a tumultuous one for the development of the business environment. However, a positive trend is seen as regards its quality, which is mainly due to the better legal framework and the examples of good practices given by investors. But there is internal business potential that will be realized when the mentality of the national businessmen starts to change. Leonid Cerescu believes that privatization, with all its drawbacks, gave an impetus for the appearance of a new class that didn’t exist until then – the business owners.
Events that influenced business environment
Businessman Ion Sturza, ex-Premier of Moldova, said the most important events that marked the development of the Moldovan business sector were the introduction of the national currency and the adoption of the Civil Code. The privatization, including of land, led to the appearance of market economy based principally on private property.
Economic analyst Viorel Chivriga mentioned also the working out of the institutional framework and the signing by Moldova of different international agreements. This enabled the businessmen to feel comfortable in the country and abroad. The privatization eliminated the inefficient ballast inherited from the Soviet period. As to the liberalization of prices, when it was decided that the state would no longer set the prices, way was given for launching ordinary reforms in the national economy. The creation of the banking system was also an important event as it allowed the companies to easier get financing.
Among the events that had an impact on the business environment, Leonid Cerescu mentioned the loss of the traditional markets where the Moldovan goods were sold, the crime situation at the beginning of the 1990s – the so-called racket activity – and the facilitation of the development of the business sector by paying a zero income tax rate, which resulted in additional revenues collected into the budget and the legalization of many companies. The global economic crisis and the austerity measures of the Government as well as the political crisis had a negative impact on the business community.
Moldovan businessmen made progress in certain areas
Ion Sturza said the business sector in 1991 was not at all developed. The enthusiasm at the start of the 1990s, combined with the total chaos, diminished. According to the businessman, they started to do business in Moldova after 2000, even if that business was insignificant.
Ion Sturza considers the Moldovans are not excellent businessmen. They can do with a small, but secure quantity – of apples, pears and wine for example. “We must admit that the large businesses in Moldova are run by foreigners, not by natives,” said the former Prime Minister.
Leonid Cerescu considers that the service sector was the sector that grew continuously, mainly due to the legal framework, which favored the appearance of services, and the process of rationalizing the national companies by separation of activities and by externalization. A powerful decline in the period was sustained by the industry, which lost the traditional markets where Moldovan industrial products were sold after the dismemberment of the USSR. As a result, a large part of the giant companies stopped existing.
The period saw a number of events that marked some of the sectors, primarily the winemaking and winegrowing sector, which developed significantly, but also experienced a decline following the Russian ban imposed on the import of Moldovan wine products. According to Leonid Cerescu, two sectors now have a greater share in the GDP – the ICT sector and the furniture industry. Owing to investments, the car making sector is also developing, but the industrial development lags behind owing to the regional competition with which Moldova cannot cope because there is no skilled labor force, appropriate infrastructure, etc.
Viorel Chivriga said the Moldovan businessmen seem to have got lost. There are fewer businessmen in industry than possible. They made slight progress in the foreign trade and excelled in the service sector. There are now fewer foreign investors than in other states of the region.
According to him, the legal framework was improved. There are laws that are considered good and there are laws that had a negative impact on the business community. The relations between the state and the businesses are not the best. The 22 years witnessed constraints, lack of dialogue and cooperation. The business community wasn’t consulted when certain strategies and laws were formulated. Such discussions started to be held only recently.
Relations with EU foster Moldovan business
Viorel Chivriga said the prospect of initialing the Association Agreement with the EU already stimulates the development of businesses. During the negotiations, the economic entities and the authorities made effort to encourage the reformation of the business sector. The initiated reforms are to produce results soon.
Despite the reformation efforts, Moldova didn’t make progress in removing the constraints on companies. There are a series of problems faced by them, including corruption, which affects the economic entities more seriously than all the crises taken together, the lack of authentic competition, foreign trade-related problems and difficulties in obtaining authorizations and documents, the reduced protection of investors, the limited access to loans, etc.
“I would mention four important problems: the relation with the state institutions, which are sometimes compared with branches of hell on earth; the political interference in economy; disloyal competition, even if there are laws and a Competition Council; distrust in the customs, fiscal and other policies because there is no dialogue between the businessmen and the authorities,” said Viorel Chivriga.
Leonid Cerescu said the private property is a very important aspect that makes a difference between the business sector of the start of the 1990s and the current one. The owners became more daring, as they have to protect their property, as well as freer and surer in choosing the areas for investments and in running the business.
How are the Moldovan businessmen
Ion Sturza said the Moldovan businessmen lack vision and courage and this state of affairs can be changed by other generations already. He called on the businessmen to make effort to show that they are competitive, even if they risk lagging behind.
Leonid Cerescu said he can characterize the Moldovan businessmen as ‘different’. There are businessmen with vision who endeavor to implement good practices and to be correct in the relations with the state, form employers organizations in order to promote a favorable business environment. But there are also businessmen with short-term interests who are parasitic.
Viorel Chivriga believes the businessmen are a group of young people with a bright future, but this future will not come if nothing is changed. Other states that withdrew from the USSR as Moldova made enormous changes in the economic situation as the business community often fostered changes. However, for the situation to change the businessmen must feel comfortable and enjoy optimal work conditions
Society can contribute to business development
The creation of a favorable business environment is the imperative of time that can be achieved by appropriate concessions and stimuli alongside increased and rational responsibility for the violation of the law, stated Leonid Cerescu. The mentality of society and the authorities should also change as the business sector should not be blamed for all the evils.
Viorel Chivriga considers the state and society must have a friendly attitude towards the business sectors, which is the greatest tax payer of the state. Also, the state should support all the initiatives aimed at removing corruption, nepotism and bureaucracy as they prevent the foreign investors from coming.
Society can also press the politicians to separate economy from politics so that they work like in a market economy. They can be penalized in elections and in the periods between elections.
Mariana Galben, IPN
August 2013
