102 Investment Guide for Southeast Europe 2004 Moldova I Economic overview 1 1 General economic indicators 1998 1 69 465 6 5 1999 1 17 319 3 4 0 0 15 0 11 2 18 3 1 5 47 5 198 1 1 2 3 Indicators GDP USD bln GDP per capita USD Real GDP growth rate 4 Industrial production growth rate 6 5 5 Annual inflation rate 15 1 6 7 Annual unemployment rate Average monthly gross salary USD 1 5 40 8 8 9 Current account balance USD mln Gross external debt stock end of year USD mln 10 Foreign exchange reserves USD mln 11 Exchange rate of MDL for 1 USD end of year 1996 1 69 471 5 9 1997 1 93 528 1 6 2000 1 29 354 2 1 2001 1 48 407 6 1 2002 1 62 448 7 2 11 6 7 7 13 7 10 6 43 7 18 4 6 3 5 2 1 9 46 4 2 1 28 9 2 1 32 9 2 0 40 3 2 0 50 1 274 8 334 7 54 8 160 1 108 0 77 0 1 067 6 1 057 9 1 109 7 1 067 5 1 218 3 1 233 2 1 337 9 313 5 362 2 136 9 180 4 222 0 228 0 269 0 4 65 4 66 8 32 11 59 12 38 13 09 13 82 Source Department of Statistical and Sociological Analysis 1 2 Foreign trade 1 2 1 Foreign trade regime and major regulations Since 1994 foreign trade has been liberalised and since 1995 there are no quotas or other restrictions on exports At present businesses market freely a wide range of goods with the exception of some specific groups weapons precious metals explosives poisons as well as medicines medical items and equipment Moldova is a member of the World Trade Organisation since February 2001 1 2 2 Customs regime export and import quota and license system tariffs In trading with other countries except CIS countries the principle of the country of destination is applied i e duties are imposed on imports at the border Most Favoured Nation agreements have been signed with 14 countries There are no duties on raw materials spare parts half finished goods and chemicals Starting from 1 July 1999 the Republic of Moldova benefits from the Generalised System of Preferences granted by the European Union according to which Moldovan exports to the EU markets enjoy partial or total exemption of customs tariffs Additionally the Republic of Moldova benefits from the social incentives on export in the application of GSP offered by the European Union to the countries that respect the social norms and the ILO international agreements Also according to the GSP the exports of the Republic of Moldova enjoy tariff preferences on the markets of Switzerland Japan Slovakia and USA 1 2 3 Exports and imports Trade volume 1996 1997 1998 1999 2000 USD mln 2001 2002 Exports Imports 795 874 632 463 472 570 666 1 072 1 171 1 024 586 776 897 1 052 Source Department of Statistical and Sociological Analysis 1 2 4 Major trade partners Major export partners in 2002 Russia 37 1 Ukraine 9 3 Italy 9 1 Romania 8 6 Germany 7 8 Belarus 5 9 USA 5 4 France 1 7 Hungary 1 4 Major import partners in 2002 Ukraine 16 9 Russia 13 2 Italy 7 6 Romania 7 6 Germany 7 5 USA 4 0 Belarus 3 4 Turkey 2 7 Poland 2 1 Bulgaria 1 7 Investment Guide for Southeast Europe 2004 Moldova 1 2 5 Structure of foreign trade by regions 1 2 6 Structure of foreign trade by commodities Source Department of Statistical and Sociological Analysis Source Department of Statistical and Sociological Analysis Source Department of Statistical and Sociological Analysis Source Department of Statistical and Sociological Analysis 103 104 Investment Guide for Southeast Europe 2004 Moldova 1 2 7 Major bilateral and multilateral trade agreements Moldova has Free Trade Agreements with Romania the Russian Federation Ukraine Belarus Armenia Kazakhstan Uzbekistan Turkmenistan Kirgizstan Azerbaijan and Georgia Moldova has 24 bilateral agreements on trade and economic co operation with the Netherlands Ukraine USA Austria Turkey China Hungary India Lithuania Estonia Iran Bulgaria the Russian Federation Latvia Poland Italy Israel Greece Uzbekistan Belarus Tatarstan Czech Republic and Ukraine 1 2 8 Free zones Free economic zones zones of free entrepreneurship are parts of the customs territory of Moldova separated economically strictly bounded on the entire area where certain types of entrepreneurial activities are allowed on preferential conditions to local and foreign investors 1 Industrial production of goods for export 2 Assorting packing marking and other similar operations with goods conveyed through the customs territory of Moldova 3 Other auxiliary types of activities such as utility services warehousing construction public alimentation and others needed to fulfil activities specified above in 1 and 2 Industrial production is the priority type of activity The Free Zones are governed by The legislation of the Republic of Moldova with exemptions stipulated by the current laws and laws adopted for each concrete Free Zone Interstate and international agreements conventions to which Moldova is a party At present there are 6 FEZ in Moldova Expo BusinessChisinau established in 1995 in Chisinau Ungeni free economic zone Tvarditsa Otaci Business production park Valkanesh production park and Taraclia production park The legislation provides incentives guarantees and privileges for businesses established in the FEZ FEZ is opened to the following licensed types of activities FEZ residents enjoy exclusive customs and tax regime In particular they are exempt from customs tax for goods and items imported in the FEZ for ultimate consumption FEZ origin goods exported to the customs territory of Moldova goods produced in FEZ exported outside the customs territory of Moldova goods exported via the FEZ outside the customs territory of Moldova irrespective of their country of origin FEZ resident enterprises with foreign ownership pay 12 6 profit tax compared to the general 25 tax Goods and services manufactured and rendered in the FEZ are exempt from VAT which is otherwise 20 and FEZ residents who invest at least USD 250 000 gain a profit tax holiday for a period of 5 years Investors in the FEZ are protected from legal changes that would negatively affect the customs and tax regime by retaining the same conditions for 10 years from the enactment of the new law 1 3 Privatisation 1 3 1 Privatisation policy The privatisation process in Moldova has undergone several stages The 1993 1994 State Privatisation Programme has regulated the first stage It has been approved by the Moldovan Parliament in March 1993 its implementation starting in mid 1994 immediately after setting up the Ministry of Privatisation and the creation of adequate legislative framework The second stage March 1995 August 1997 has been developed
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