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Economy

East vs. West// The exports of the Republic of Moldova to the CIS and the EU countries – a comparative analysis

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The Republic of Moldova is a former soviet country, having tight commercial relationships established with all countries forming the Commonwealth of Independent States (CIS) –  a regional intergovernmental organisation of ten post-Soviet republics in Europe and Asia, that formed after the dissolution of the Soviet Union in 1991.

On the other hand, Moldova signed the Association Agreement with the European Union in June 2014 and has benefited from a preferential trade within the Deep and Comprehensive Free Trade Area (DCFTA) with the EU, that meaning reduced or eliminated tariffs for goods, increased services market and better investment conditions, as the official website of the European Commission states.

Statistical data and newly signed trade agreements are often publicly mentioned when wishing to emphasise one or another relationship as the most strategic one for the Republic of Moldova. But how is it in reality?

Moldova and the EU

On December 19th, 2019, the Council of the EU has formally endorsed an agreement granting Moldovan farmers and SMEs additional preferential export opportunities to the EU, following the agreement signed between the EU and the previous government led by Maia Sandu, to broaden the degree of trade liberalisation for specific agricultural products under the DCFTA, according to a statement of the European Commission.

The agreement provided that the Republic of Moldova will be granted additional duty-free tariff rate quotas to export table grapes (of double the current amount) and plums (of a 50% increase on the current volume), as well as a new duty-free quota for cherries (of 1.500 tonnes). The EU exporters will also gain additional duty-free access to the Moldovan market.

Moreover, the thresholds triggering the anti-circumvention mechanism (a mechanism that provides for the possibility of reintroducing the customs duty when imports of certain agricultural products and processed agricultural products exceed a given threshold) for wheat, barley, maize, sugar and processed cereals have also been raised, taking into account the trade patterns over the last few years.

Generally, the Association Agreement between the EU and the Republic of Moldova provides Moldova with a framework for boosting trade and economic growth through improved access to the EU market and mechanisms for aligning its trade-related laws and regulations to EU’s standards.

According to the official statistics of the European Commission, the Moldova’s exports to the EU grew by 62% between 2014 and 2018. Between 2017 and 2018, it increased by 16%, from €1.6 billion to €1.9 billion.

source: ec.europa.eu

The European Union is Moldova’s biggest trade partner, as around 70% of its exports are sent to the EU, followed by Russia (8%) and Belarus (3%). Key EU imports from Moldova are mainly machinery and appliances, vegetable products, textiles and textile articles and base metals.

Moldova and the CIS

Russia is one of the most important eastern partners for the Republic of Moldova. Usually, the good news about the export of Moldovan products to this country come from the president of the Republic of Moldova, Igor Dodon. This December, he already made 2 announcements regarding the extension of fruit and vegetable exporters’ list who are allowed to export on the Russian market starting the next year. First, the list was extended from 130 to over 350 Moldovan companies, and then 150-200 other companies obtained such permission recently.

“It was agreed to extend the list of categories of goods that are exported to the Russian market without customs duties for another five product categories: beef, sunflower seeds, sugar, ethyl alcohol and furniture from January 1st, 2020. I mention that so far the export taxes for five categories have been excluded: vegetables; apples, pears and fresh quinces; apricots, cherries and sour cherries; canned vegetables; wines,” informed Dodon on his Facebook page.

Additionally, the Minister of Agriculture asked the Russian profile institutions to inspect 33 wineries and four canning companies from Moldova, in order to grant them access to the Russian market. All in all, the Russian Federation will issue 16,000 transport authorisations for Moldovan carriers in the next year.

A prohibition of export for Moldovan companies was set up after a decision of the Government of the Russian Federation, on December 29th, 2018, which forbid to import Ukrainian products and products transiting Ukraine, including those from Moldova.

At the begging of 2019, Russian customs authorities forbid to import large quantities of goods produced in the Republic of Moldova and the Transnistrian region.

The Russian portal Regnum.ru was writing, at that time, that the majority of Moldovan exporting companies affected by the Russian Government decision are precisely those for which, in the following half of 2019, Russia cancelled the import duties, such as producers of fresh and preserved fruits and vegetables, as well as wine products. According to the Russian publication, the measure to support Moldovan businesses was an act of political support of the Moldovan president, Igor Dodon, in the upcoming parliamentary elections, which became possible after a meeting between Dodon and the Russian president.

Nowadays, more and more companies from Moldova are granted gradually back access to the Russian market, President Dodon announcing that every time on his page or at press conferences. Let’s not forget that Moldova expects new presidential elections in 2020.

All in all, the statistics of the CIS presented a total export value of $416 million in 2018, as compared to $463 million in 2017. From January to September 2019, Moldova’s exports to CIS countries amounted $301.8 million, that decreasing by 1.6% as compared to the same period in 2018.

source: cisstat.com

National statistics

When looking at the whole picture, it can be observed that in 2006, the Moldovan exports to the EU countries exceeded for the first time the exports to the CIS countries, the difference between the exports to the two destinations starting to be bigger and bigger, as the National Bureau of Statistics of Moldova (NBS) displays.

Data source: statbank.statistica.md

Still, the most important trading partners for Moldova remained such European countries as Romania42.54% ($ 792.137 million) of the total exports to the EU countries, Italy16,62% ($ 309.606 million) of the total exports to the EU countries and Germany11.81% ($ 219.902 million) of the total exports to the EU countries, as well as such CIS countries as Russia, the exports to which represented 52.55% ($ 218.571 million) of the total volume of exports to the CIS countries in 2018.

Photo: statistica.gov.md

Economy

Global Talent Competitiveness Index: Moldova when it comes to Artificial Intelligence

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The 7th edition of the Global Talent Competitiveness Index (GTCI) addressed the topic Global Talent in the Age of Artificial Intelligence. The index is used to rank 132 national economies, across all groups of income and levels of development, that representing 97% of the world’s GDP and 94% of its population. The report referred, first of all, to the level of innovation and technology development, exploring how the development of Artificial Intelligence (AI) is not only changing the nature of work but also forcing a re-evaluation of workplace practices, corporate structures and innovation ecosystems.

This year, Moldova ranked 86th out of 132 analysed economies, being ranked behind the neighbouring countries such as Ukraine and Romania, which ranked 66th and 64th, respectively.

The countries that are best positioned to benefit from the AI revolution are also the most developed countries in the world, especially when it comes to the competitiveness and potential of attracting and training best professionals. Top ten countries in the ranking are Switzerland, the United States of America, Singapore, Sweden, Denmark, the Netherlands, Finland, Luxembourg, Norway and Australia.

New York, London, Singapore, San Francisco, Boston, Hong Kong, Paris, Tokyo, Los Angeles and Munich are among the most developed cities in this regard.

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source: insead.edu

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source: insead.edu

GTCI highlights

One of the most important observations made in the GTCI report for 2020 is that the gap between talent champions (almost all of them high-income countries) and the rest of the world is widening. Still, AI may provide significant opportunities for emerging countries to leapfrog.

The top of the GTCI rankings is still dominated by Europe, including the Nordic countries – a significant number of small high-income economies, many of them being either landlocked, island or quasi-island economies, including Switzerland (1st), Singapore (3rd), Luxembourg (8th), Iceland (14th) or Austria (17th).

According to the report, the key factor is developing relatively open socio-economic policies in which talent growth and management are central priorities in the age of AI.

Moldova

Moldova managed to get a score of 36.64, being ranked 86th out of 132 countries. It was classified as lower-middle income country and ranked 7th out of 32 countries included in this category. The country’s talent competitiveness index weakened as compared to the period between 2015-2017, when it was listed around the 61st position.

Moldova was evaluated with the highest scores for such aspects as gender development gap, ease of doing business, number of female graduates, competition intensity and political stability, while the lowest scores were given for its share of R&D expenditure, robot density, university ranking, number of registered researchers, scientific journal articles, labour productivity per employee, new business density and collaboration across organisations.

This year’s model of the GTCI index includes a total of 70 variables, up from 68 indicators used in the GTCI 2019.

source: insead.edu

Photo: cambridgealert.com

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Society

How corrupt Moldovan citizens are? Comparative figures

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When talking about corruption, most of Moldovan citizens blame the ‘system’ built by politicians and their political regimes throughout history. And that may be true, but only to some degree. When looking deeper, it can be actually observed that little corruption acts are perceived as a normality by a lot of individuals and legal entities in the country. That is what is shown in a recent study conducted by by the Center for Social Studies and Marketing “CBS – Research”. The study assessed the impact of the National Integrity and Anticorruption Strategy for the years 2017-2020.

 516 million lei – this is the total amount of bribes offered by Moldovans in 2019. On average, a Moldovan citizen has offered at least five bribes, while an enterprise has been involved in about three corruption acts. Businesses paid bribes worth 197,3 million lei, while individuals offered a total of 319,4 million lei as bribes during the last year, estimated the study. The value of the one illegal payment ranged from 50 to 20 thousand lei.

The research was carried out on the basis of a national survey where 1 120 persons, 506 companies and 606 civil servants from central, district and local public administration participated. The data were presented in comparison to the situation in 2017, when the first such survey was conducted. It was carried out within the project “Fight against corruption by strengthening integrity in the Republic of Moldova”, implemented by UNDP in collaboration with the National Anticorruption Center, and the support of the Norwegian Ministry of Foreign Affairs.

The total value of the bribes offered by Moldovans is lower, however, compared to those from two years ago, when the amounts varied between 100 and 500 thousand lei in the case of companies and between 50 lei and 8 thousand lei in the case of individuals, as the study stated.

Even though the study affirmed that corruption remains a serious problem for the Moldovan society, the level of intolerance of the population towards corruption has increased. Thus, about 62% of individuals (compared to 45% in 2017) and 83% of businesses (compared to 61% in 2017) consider any corruption situations unacceptable and declare that they do not accept to offer or receive bribes, regardless of the situation and implied personal benefit.

Moreover, both individuals (73% of respondents) and companies (80% of them) are aware that bribery entails punishment of both parties involved, and 87% of them, on average, would report the corruption acts to the anti-corruption agencies in the event of such a situation.

In the opinion of the civil servants participating in the survey, among the main causes of corruption are the low salaries in the public sector and the mentality of demanding and giving bribes in money and /or goods.

The same causes for corruption acts were emphasised by a survey conducted by Transparency International (TI) Moldova throughout the employees of 13 central public authorities. The survey results revealed that a quarter (24.6%) of civil servants who work in public institutions, and answered the survey, consider that their workplace is affected by corruption. More details about the survey can be found here.

Although the legislation obliges civil servants to report corruption cases and other abuses to the head of the public entity or to the responsible authority, a considerable part of the respondents (about 27%) are openly not willing to do it for reasons of personal security and lack of trust in empowered bodies, according to the TI-Moldova report.

Thus, the main factors that could determine the involvement of citizens in corruption abatement activities are the confidence that they will be protected if they denounce a public official for corruption acts, as well as the trust in the independence of the justice, showed the Center for Social Studies and Marketing study, as being reported by TV8.

“Committing acts of corruption must become non-profitable. But to drive forward those reforms, independent, effective, and incorruptible leaders of the judiciary and law enforcement bodies are urgently needed,” said Stanislav Pavlovschi, a Moldovan judge formerly at the European Court of Human Rights (ECHR), for the Global Voices portal.

In 2019, Moldova registered a score of 32 points for the Corruption Perception Index for 2019 released by Transparency International, being ranked 120th out of 180 countries. The score for Moldova worsened as compared to the 2018 year, when the country recorded 33 points, whereas improved when confronted to the data from 2017 – 31 points. More details here.

Photo: freepik.com

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Society

Amnesty International: the Government of Moldova needs to ensure hygiene conditions in schools. Statistics

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“A clean and safe toilet in schools is a right, not a privilege.” – this is said in the statement of Amnesty International that urged the Government of Moldova to ensure decent hygiene conditions in the schools of the Republic of Moldova.

The statement of Amnesty International said that, according to the official data provided by the National Agency for Public Health and the Children’s Platform that conducted the research, about half of the schools in the Republic of Moldova do not have toilets inside the school building, which is connected to a public sewerage system, or if they exist, the toilets are not used.

“The schools usually have only toilets, located far from the school building, which are in poor condition, without cabins or separators for privacy, no electricity or heating, no hand-washing facilities, and which are rarely cleaned. Thus, almost half of the pupils from the Republic of Moldova use old outside toilets, located in the school yard, no matter it is hot or cold outside. Children do not have facilities that meet basic standards regarding water, sanitation and hygiene practices,” claimed Amnesty International.

According to the Children’s Platform survey results, in which 175 children from different schools from all over the country participated, 57% of them said that the toilets are located outside the school building, and 75% of the respondents mentioned that there is never toilet paper in the toilets. Toilet paper was never included in the list of hygiene products in schools, and the norms have not been changed since 1986, a fact confirmed by the Ministry of Education, Culture and Research.

Even though 90% of them said there are hand-washing facilities in schools, 70% said that soap is rarely there or there is no soap at all.

70% of pupils said that their teachers use a different toilet. The conditions in the teachers’ restrooms are much better than those for pupils. There are even cases where the teachers’ restrooms are located inside the school building, and the pupils’ restrooms are outside.

The privacy of the children is not assured as well. Even though 77% of the students mentioned that there are walls in the school toilets, only 43% of the children said that these cabins have doors.

source: mamaplus.md

Some survey participants mentioned that the school’s indoor toilets, if they exist, are open only when controls in the institution take place.

These practices seriously contradict the World Health Organization (WHO) minimum standards on water, sanitation and hygiene in educational institutions, that meaning a sufficient number of separate, well-maintained restrooms for girls, boys, women and men, integrated in the school building, accessible to children with special needs, and having hand-washing facilities, as Amnesty International stated.

On this occasion, it’s worth mentioning that seven out of ten households in the Republic of Moldova do not have a toilet in the house. On average, 21 out of 30 people go to the outside toilet located in the yard, stated a report published by Moldova.org.

Taking into consideration that the majority of the Moldovan localities are remote from big cities, they also can’t be connected to their centralised sewage system. Only 126 out of 1682 localities have sewerage systems and only 73 of them have functional sewage treatment plants. Without a sewage treatment plant, wastewater reaches the soil and rivers, causing serious pollution.

Experts say that there a 2 more solutions: decentralised sewage systems with attached treatment plants for a locality or a group of localities (such projects have a cost of more than 1,5 million euros) or home treatment plants attached to the individual sewage system (that can cost about 4 thousand euros). For 60.6% of the population with low and very low income, several thousand euros represent a lot of money.

More details can be found in the Moldova.org article.

Photo: Nadea Roșcovanu| Jurnal de Chisinau

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