From San Francisco to Hong Kong, all over the globe, the information technology is flourishing. Everyday, new software and devices are invented, and new tech centres are built. Among the IT global giants, there is a small city that is still at the beginning of its way – Chișinău, Republic of Moldova.
According to the IDC CEMA research, Republic of Moldova has all the competitive advantages for placing its IT products and services on the international market. Moldova has geographical proximity and cultural compatibility with the western and eastern Europe, visa liberalisation, highly qualified human resources, tax benefits, a developed infrastructure in the Information and Communication Sector, low costs for business launching and developing, as well as relatively low human resources costs, and the government support in attracting new investments in the IT sector.
The analysis made by the Directorate of Economic Policy and Business of the Ministry of Economy and Infrastructure indicates that the Information and Communication Technology sector (ICT) registers the highest growth in the last 8 years and becomes more and more attractive for the investors. In 2018, it reached a share of 6.6% of the country’s GDP and is steadily in a rising trend.
Within the event “PIN Awards 2018” that took place in April at Iași, Romania, 500 IT companies registered in Republic of Moldova were reported. These companies hire more than 12500 employees and have a turnover of around 152 million dollars in total.
The entrepreneurial environment
Nowadays, it is way easier and more accessible for the Moldovan entrepreneurs to develop a tech startup business. In comparison to 2010, when startups were established merely on the own expense and risk of the founders, today more and more possibilities of applying for financing and assistance from outside the company appeared. For instance, there is Business Angels Moldova – a company that offers funding of up to 25000 EUR, mentorship, legal support and free space for the startup’s activity in return to 15% of the business.
In the Republic of Moldova, several startup accelerator programs (Founder institute, Startup Academy, Dreamups), training programs (Tekwill Academy), hubs and coworking spaces for freelancers, startups, IT companies, NGOs and investors (Generator Hub, IHub, Dreamups, Digital Park, Tekwill) are being developed. Therefore, the number of the IT projects and events has raised as well (Ignite Chișinău, Chișinău Startup Week, Startup Weekend, Startup Weekend Woman, Techvillage, etc.)
In the last years, more than 50 startup companies were founded in Moldova, among the most active startups being Diez, Paynet, Privesc.eu, Planable, Lobster, XOR, Vintage, Retently, etc.
At the initiative of the Moldovan Association of Information and Communications Technology Companies (MAICTC) and with the support of the Competitiveness Project, the first IT park – Moldova IT Park was launched at the beginning of this year. The Moldova IT Park comes in an innovative form – the park is only a virtual entity, the resident companies working directly from their offices. It is considered one of the most important IT initiatives in the country, as the activity of the IT park is enforced by a promulgated law (the law nr. 77/2016 and the Government decision 1144/2017). One of the stipulated legal conditions says that the employees of the IT park have to be engaged in at least one of the following activities: software development, software editing, computer games development, computing technologies, servers and IT solutions, data processing, web site management or IT consultancy.
Until September 2018, 250 companies that perform their activities in IT have already obtained the resident status of the IT park, as reported by a national news portal. “The main scope of the IT park is designing an organisational platform that enables and facilitates the information technology industry development, creating new jobs and attracting local and foreign investments”, as the Ministry of Economy and Infrastructure press service announced.
Tacit Knowledge is one of the Moldova IT Park residents since February 2018. “We were very happy to discover that the concept of IT park was implemented in Moldova. We would like to retain our human talents and we consider that the provided mechanisms of facilitating the business management through the IT parks would represent an important incentive to the growth of the IT engineers’ number and persons that choose to follow an IT career”, declares Vadim Echim, the Tacit Knowledge CEO, for diez.md.
IT legislative Benefits
The Republic of Moldova has created through its legislation several important benefits for the entrepreneurs and workers in the Information Technologies sector. In order to promote the foreign investments, the process of obtaining work permits and visas for foreign citizens wishing to undertake IT activity in the Republic of Moldova was facilitated. Therefore, according to the law amendments, the specialists that work in an IT park can obtain a long-term visa for a period of maximum 12 months with one or multiple entries. Afterwards, they can apply for a permanent residence permit without meeting any special requirements like owning property, speaking the Romanian language or having previously a temporary residence permit of 3 to 5 years with proof of income.
As it is stated in the current law, the tax benefits for the residents of the Moldova IT Park include a 7% single tax on corporate income that is not lower than 30% of the average monthly wage, calculated per employee. The same ratio applies for the income tax on salary, social security and medical contributions payable by employees and employers, local taxes, real estate tax, and tax for the use of roads by motor vehicles registered in the Republic of Moldova. Moreover, an improved and simplified tax administration mechanism and access to a direct and effective dialogue with state authorities were provided.
Through a single 7% tax, it is intended to reduce the phenomenon of paying salaries under the table. Sergiu Voitovschii, the Moldova IT Park administrator, mentions in an interview for Bizlaw that “The entrepreneurs that are members of the IT park have the possibility to pay higher salaries as compared to the standard tax rate.” There are already several registered companies with foreign capital and joint ventures. Therefore, the Moldova IT Park is viewed as an opportunity for foreign investors as well.
Moldova is seen by foreign companies as an IT nearshoring or offshoring destination. The MAICTC catalogue includes more than 30 foreign companies that carry out their activity in the hardware and software development, as well as telecommunications. Among them are some global leaders like Allied Testing, Endava, HP, Intel corporation, Pentalog and PWC. Some of the foreign companies have settled their offices in Chișinău, some of them established partnerships and joint ventures with the local companies, and others contracted companies from Moldova for outsourcing a part of their activity.
At the national level, more than 20 educational institutions offer courses related to IT and STEM (Science, Technology, Engineering, Mathematics), out of which 11 universities, 4 training centres and 3 vocational schools.
Beside the public institutions, there are some nonconventional educational forms such as trainings organised by the IT companies, online trainings, IT Academies, Summer Schools for pupils and mentorship provided within the accelerator programs.
Even though the IT sector in Republic of Moldova is in a continuous advancement, there are still some problems. The most stringent one is the insufficient number of qualified IT engineers. Companies on the local market are ready to hire at least 1000 new specialists every year, whereas only a half of the labour demand is covered. The main reason for such a low labour supply is the small number of students that graduate the Moldovan universities. Last year, the number of registered students at the IT specialisations of the Technical University of Moldova reached 3800 candidates, out of which only 15% are still studying. Others chose another specialisation or left the country.
“Moldova became an attractive tech centre. If the local companies had enough IT specialists, they would be able to engage in 50% more projects than they do at the moment”, mentions Eugene Galamaga, the director of the Allied Testing company. Because of the limited choice of experienced professionals, companies have become more flexible when hiring new employees. They turn towards students and try to inform them about the skills and abilities one should have in order to be hired. “For 4 years already, we organise an internship program for students. In such a way, we prepare the future employees and we make them a job offer afterwards”, points out Vadim Echim, the Tacit Knowledge CEO.
Some foreign employers went further and founded training programs for their future and current employees. It is the case of Endava that launched the program “Endava University”, offering trainings in the universities lead by the Endava mentors, trainings inside the company for developing the technical and soft skills. They also organise teambuilding, career coaching and offer extra-wage benefits for their employees.
As a solution for the stated problems, IT employers asked the government to create incentives for increasing the number of students that graduate in technical specialisations and to invest more in the IT education. “No local or foreign investor will have the opportunity to develop on a market where human resources are lacking”, Eugene Galamaga says.
Thus, the Republic of Moldova is still far from being named a global tech centre, but with the proper measures and common effort of the companies, IT community and the government, it has the potential of becoming a developed IT arena, at least at the regional level.
Featured image source: Facebook|Startup Academy
GirlsGoIT Spring Bootcamp – 2019 Edition
The Spring Bootcamp are organised by GirlsGoIT ambassadors and the program will take place in their local clubs: GGIT in Calarasi, GGIT in Balti, GGIT in Soroca, GGIT in Ungheni, GGIT in Orhei, GGIT in Causeni, GGIT in Salcuta and GGIT in Straseni
The aim of the spring bootcamp is to encourage girls with no knowledge or background in choose tech or STEM (science, technology, engineering, and mathematics) path, by empowering them to have better education and employment opportunities.
The participants of the spring bootcamp will have the opportunity to continue their software development experience at GirlsGoIT 5th Summer STEM camp edition in July. Some of the participants will have the opportunity to be selected for internships with tech companies.
GirlsGoIT is implemented by TEKEDU and it is supported and in strategic partnership with The Austrian Federal Ministry of Labour, Social Affairs, Health and Consumer Protection and Ellation. The spring bootcamp is also supported by our contributors on Indiegogo and attendees of CodeWăy Conference organised by Ellation.
Moldova IT Park after one year of activity: 346 residents and revenues of almost 2 billion lei
The first IT Park in the Republic of Moldova encompasses 346 IT companies that joined the IT park in 2018, out of which 96 are companies with foreign capital. According to a press release of the Government of the Republic of Moldova, the IT Park registered a sales revenue of almost 2 billion lei (102.96 million EUR) and a number of employees of 6600 people in the previous year. The average salary for the park’s employees amounts to almost 26 thousand lei (1338 EUR).
As the same source reports, Moldova IT Park remains an open platform to attract new residents. Among the facilities granted to them are the single tax of 7% of sales revenue and the elimination of some bureaucratic barriers. The park’s residents can operate and benefit from the provided facilities directly from their offices, as the Moldova IT Park functions in a virtual regime.
The first IT park in the Republic of Moldova started its activity on January 1st, 2018, planning to operate for the next 10 years. During this period, the number of residents of the park is planned to reach about 500 IT companies. The main objectives are attracting local and foreign investments, creating new jobs, pioneering new services and boosting the growth of the information technology industry. “For the Republic of Moldova, the IT sector has a great potential. Being a small country, we must not only produce new work force, but also prepare specialists for high value-added industries, “said Pavel Filip, the Prime Minister of Moldova.
More information about the IT sector in the Republic of Moldova here.
Photo source: t1-solution.com
A Chinese company is interested to invest in the 5G technology implementation in Moldova
The Chinese company ZTE is interested in investing in the implementation of the 5G technology in the Republic of Moldova. This is what the representatives of the company announced today, during the meeting with the Moldovan Prime Minister Pavel Filip.
The 5G technology is the fifth generation of mobile communication that will provide higher upload and download speeds, broader coverage, a more stable connection, as well as, higher energy savings and lower costs.
ZTE Corporation is one of China’s leading telecom equipment manufacturers, conducting its business in over 160 countries and having about 75,000 employees.
It is important to mention that several countries such as New Zealand, USA or Australia refused to implement the 5G technology through the services and the telecommunication equipment provided by the ZTE and Huawei companies, as they consider it could significantly raise the national security risks. The Chinese companies consider these decisions unfounded.
A press release by the Government of Moldova mentioned that the ZTE representatives presented their investment plans, noting that the Government actions encourage new investments. “Our interest in coming to Moldova derives from the stability and attractiveness that you have created for your business environment,” they mentioned.
The prime minister welcomed the investors’ intention, highlighting that the development of new technologies and the implementation of large-scale projects in the Information and Communication Technology sector represent a priority for the Government, as they boost entrepreneurial activity and create new jobs for people. “You will have all the necessary support and the openness from the Government team. If we work in the same direction, we will see the expansion and development of the ZTE company in our country,” the prime minister said. At the same time, Pavel Filip spoke about the actions of the Government aimed at improving the business climate and attracting foreign investments in the strategic economical sectors.
Photo source: gov.md
Parliament asks prosecutors to indict Moldova’s ex-PM, central bank governor, and 2 ex-ministers for negligence over 2014 frauds
The Parliamentary committee on the investigation of the circumstances around the devaluation of the baking system requested the Moldovan prosecutors...
Interview with Heritage director, Robert Ford: ”A society investing in education lays the foundation for prosperity, peace and ability to face the challenges of the future”
What made you take up educational work? Give us your essential bio. Like all good teachers, it was the influence...
Maia Sandu urges Tiraspol to lift the travel ban for officials of the Republic of Moldova
Prime Minister Maia Sandu had a meeting with representatives of the mediators and observers in the “3+2” negotiation format. The...
President Igor Dodon’s Past Support for Irredentism Against Romania and Moldova’s New Government
This opinion piece was written by Dr. Ionas Aurelian Rus, Associate Professor of Political Science at the University of Cincinnati Blue...
Dumitru Alaiba: Vlad Plahotniuc has a Czech nationality as well?
Deputy of the ‘ACUM’ bloc Dumitru Alaiba wonders whether the former DPM leader and oligarch Vlad Plahotniuc is Czech citizen....
Want to increase birth rates? Try gender equality
By Alanna Armitage and Tomas Sobotka Many countries in Eastern Europe face what is often perceived as a population crisis....
The 2020 U.S. Presidential Election Is a Toss-Up
This opinion piece was written by Dr. Ionas Aurelian Rus, Associate Professor of Political Science at the University of Cincinnati Blue...
Romanian historian A. Gosu about the Moldovan crisis: “Russia has found itself on the same side of the table as Americans and Europeans”
On Friday, the Interim Government of Chisinau, formed by oligarch Vladimir Plahotniuc's Democratic Party, gave up the government invested by...
The case for a Moldovan MEP
“Where is Moldova?”- a commonly asked question everywhere East of Bucharest, and also a British board game. Few know about...
East or West? Celebrating Victory Day and Europe Day at the same time
For 3 years, people in the Republic of Moldova have been debating what is more important: celebrating Victory Day or...