Economy
Moldovan president s speech at government meeting
Reading Time: 6 minutesMoldovan president s speech at government meeting
Esteemed government members,
Last July, during the closing meeting of the parliament’ session, I submitted a series of proposals on the way we are to change the vector of our economic development. Today, I will resume the idea I set forth from the parliament’s rostrum at that time: if Moldova does not undertake radical, extraordinary measures, it has no chance to decisively speed up its economic development. This statement has never meant that I would have proposed to advance in breach of the economic rules. It means that, to a great extent, the way of the generally accepted rules has been simply exhausted.
What are we currently ascertaining? The economic part of our legislation has been created and, in general, the fiscal code, the customs code, the laws on accountancy, on enterprises and entrepreneurship, on financial institutions, on the National Bank, the securities market have been stabilized. This normative framework has been so far under dynamic changes, targeting the correlation of its norms and regulations, which has been accomplished already. On the whole, the large-scale privatisation process has been completed; the action of the 1997 law has had its effect already. The mechanisms and institutions tasked with regulating the economic sectors and monopolies have been created. But, one way or another, all these steps have brought us precisely to where our Moldovan economy is now.
A hasty analysis is enough to understand that our economic system needs a "doping". We have no resources so as to further extensively develop. We can no longer do in Moldova only what is used to be done everywhere, as if the concerned actions would be xeroxed. Time is ripe to adopt decisions which would take into account our peculiarities, including the political, geographical and mental ones. The time has come to adopt decisions designed to release our population’s spirit of entrepreneurship, routing it towards a dynamic creation process.
I would like to highlight the period after the proclamation of the independence, was characterised by the existence of contradictions both within the economic legislation and in the process of its enforcement. We can say that this period has passed. It would be logical to leave in the past certain deviations from this contradictory legislation, and to focus our attention and efforts on the future. "The past should not suppress the future." Being clever just because you know what happened in the past and filing claims to the citizens and entrepreneurs for the fact that, during the quite confusing 1990s, they were trying to survive as they could, would mean proving excessively false principledness. This happened because in those years, the state and the power were behaving as if there were no citizens whatsoever, no economy and no responsibility for the future. Now, when we have put in order the tax levying system properly, when we have liberalised to as much as possible the framework of economic processes, when the state "has woke up", and acquired the proper sense of responsibility, we should get rid for good of this excessively troublesome legacy of the past.
I will say that this legacy is not in the least inoffensive.
First of all, as it is known, the particularly monstrous and extremely widespread phenomenon of underground economy appeared and developed during the 1990s. Its roots entered all the sectors. Ambiguity and lack of clear-cut market rules led to the fact that the entire country and all its citizens live in conditions of double accountancy. It is enough to cite a single example – the situation of the dwellings’ fund, when, on the one hand, there is the dwelling’s market price, a price known by everybody, and on the other hand, the concerned price can by no means be confirmed in documents. This is not only about the dwelling fund. This is about all the assets and all the means owned by our society as a whole. Hence, Moldova’s material sector is underestimated; the country’s capitalisation does not meet the official statistics. Not only the normal market mechanisms – mortgage, credit, capitals’ circulation – are paralysed, but also the mechanisms characteristic of a realistic social policy. The capital of the well-off people, of the middle class, of our citizens who work abroad is dead, it produces no new values, and what the state really allocates to support those who are in need does not reach them.
Second, for many years, the state and the business have been playing "hide and seek" with each other whenever it came to "taxation" issues. But starting 2001, we embarked on the pathway of gradually diminishing the income tax, while concurrently strengthening the fiscal discipline. As a result, the income tax dropped from 32 to 15 per cent. This, certainly, has had its impact: the degree of levying taxes increased, and the enterprises’ discipline has enhanced. At the same time, new and new spirals of pursuing our entrepreneurs for their past "deals" have created an environment favourable to the appearance of a new wave of corruption, the end of which is some agreement reached between the control body and the enterprises they check. Is there any point in saying that each new "price" for such an agreement means money purloined from our economy, from our budget, from our future? Is there any point in saying that some of our state structures, through such actions, deprive our business environment of any incentives, of any wish to evolve?
I have submitted to the parliament a set of three interdependent initiatives namely because of these circumstances.
The first one deals with capital amnesty. Capital amnesty can impact all the citizens and all the enterprises from our country, with no exception at all. Amnesty regards all the capital forms – from money to real estate, from the share of participation in business to securities. Amnesty will be made on application basis. No matter the sum of the capital declared for amnesty, the state will legalise only five per cent of it. The money the state has amassed this way will be distributed as follows: half – to the state budget; half – to the social and health insurance budgets.
The second initiative sees fiscal amnesty, which means that all the types of state taxes will be reprieved. We put a strong end to the past in this way. The state says to the business: we start a new life together, a life which is not burdened by past memories and conflicts.
The third initiative is a new radical approach to the income tax got from entrepreneurship activity. According to this initiative, the income tax will be equal to zero for all the enterprises. The 15-per cent share will be applied from now on only to dividends, which means that the most important problem for us is the investments, the extension of the economic activity, increase in the degree of labour insertion, increase in salaries. Thus, the tax will be paid if the businessman decides to get dividends, i.e. to stop making his own investments, to remove his money from business, to use it for personal consumption. At the same time, the state gets the moral right to increase thrice the size of the sanctions applied against the committed fiscal frauds. I believe that it is fair to act this way!
What are the expected effects, however?
If we talk about macroeconomic effects, the main ones are: rising the Moldovan economy’s capitalisation, boosting the investment process and cutting inflation. If we talk about these measures effects on the business environment, they are as follows: the reduction of the underground economy, the shift of a good deal of the "black" circulation of liquidities to the official money circulation, the reduction of the area where corruption’s development is possible. The control bodies will allot forces and money to analyse the current situation so as to prevent contraventions and will cease dealing with "historical" investigations. Besides, state statistics’ reliability will considerably grow, and so will the truthfulness of decisions passed in the social and economic sectors. Certainly, the democratic institutions will be considerably consolidated and the process of the national middle class’ formation will be carried out more dynamically.
Esteemed government members!
I call on you to treat these initiatives with full responsibility. We will go to the parliament in ten days exactly. I rely on the fact that these ten days will be enough for our MPs and our entire society to assess the proportions and the irreversibility of changes that are being prepared. It is enough for us to live in conditions of double accountancy! Let’s no longer play "hide and seek". Double accountancy means double morals. And this, as it is known, means the lack of any morals. This extremely bad practice should be ceased once and forever, cut as the "Gordian knot".
Reliability of the power, responsibility before the society, transparency of the legislation and freedom of the entrepreneurship – these should the symbols of a modern, European Moldova!
Thank you for attention.
Economy
Moldova will receive a disbursement of 36 million euros as part of the the Economic Recovery Plan
This week, the European Commission approved the disbursement of 36 million euros in grant money for the Republic of Moldova. The announcement was made by Deputy Director-General for Neighbourhood Policy and Enlargement Negotiations at the European Commission, Katarina Mathernova, who paid an official visit to the Republic of Moldova between September 13-15, together with Managing Director for Russia, Eastern Partnership, Central Asia, Regional cooperation and OSCE, at the European External Action Service, Michael Siebert.
The EU officials had meetings with President Maia Sandu, Minister of Foreign Affairs and European Integration, Nicu Popescu, Speaker of Parliament, Igor Grosu, Prime Minister of the country, Natalia Gavrilita, as well as key representatives of Government, international financial institutions and the civil society, according to a press release issued by the Delegation of the European Union to the Republic of Moldova.
Beside such topics as the EU-Moldova relations and prospects, the priorities of the reform agenda of the new Moldovan Government, preparations for the Eastern Partnership Summit at the end of the year and the Transnistrian conflict settlement, the officials also discussed the EU assistance in support of reforms and the Economic Recovery Plan for Moldova, which was announced in June with a total EU support of 600 million euros over the next 3 years.
“The first measures under the Economic Recovery Plan will shortly materialize, with the expected disbursement of 36 million euros in grant money under budget support programmes to support the authorities’ efforts to fight against the consequences of the pandemic. Moldova can count on EU’s assistance on its path to reforms and to recovery, bringing tangible results to citizens,” Katarina Mathernova stated.
The plan is based on assistance provided by the European Union through various bilateral and regional instruments, aiming to mobilize the funds in the form of grants, loans, guarantees and macro-financial assistance.
“The Economic Recovery Plan for the Republic of Moldova involves much more, not just this financial support provided immediately. It must help digital transformation, strengthen infrastructure, energy efficiency, education and support small and medium-sized enterprises,” the EU official also said.
As Prime Minister Natalia Gavrilita informed, “The Economic Recovery Plan and the 5 flagship initiatives for Moldova in the Eastern Partnership will directly contribute to the reform and consolidation of institutions, stimulate long-term socio-economic development, bring direct benefits to citizens, and unleash new economic opportunities through promoting the green agenda and digitization. Small and medium-sized enterprises (SMEs) have been hit hard by the crisis. Promoting and diversifying access to finance and reducing collateral requirements will be essential in supporting economic operators. We are grateful to the EU partners who will launch two programs to support 50 000 independent Moldovan SMEs to adapt to the new conditions.”
President of the Republic of Moldova, Maia Sandu, welcomed the decision of the European Union to disburse about 745 million lei in grant money, as the official page of the President’s Office announced. “EU support comes after a long period of freezing of European assistance, caused by former governments. We managed to relaunch the political dialogue with the European Union and resume financial assistance. The Republic of Moldova is gradually regaining the trust of its strategic partners. This European support is also a signal of encouragement for the new Government team in its commitment to clean up the institutions, fight corruption and launch development programs in the country,” said Maia Sandu.
Photo: unknown
Economy
Romania and Moldova signed a partnership memorandum pledging to cooperate in promoting their wines
The Chamber of Commerce and Industry of Romania (CCIR) and the National Office for Vine and Wine (NOVW) of the Republic of Moldova signed, last week, a memorandum of cooperation on organizing joint promotional activities in the markets of common interest, as the CCIR announced.
China, Japan or the USA are just some of the markets targeted by the Romanian and Moldovan institutions. The memorandum also involves advertising activities for wines from common indigenous varieties, promoting the oeno-tourist region, developing a tourist route in the two states, exchange of experience, study visits, and mutual support in identifying new export opportunities. “We are very confident that this collaboration between our organizations will lead to sustainable economic growth and a higher degree of well-being among Moldovans and Romanians,” claimed Deputy Secretary-General of CCIR, Bogdan Visan.
On the other hand, Director of the NOVW, Cristina Frolov, declared that no open competition with Romania is aimed at the governmental level of the Republic of Moldova. “This request for collaboration is a consequence of the partnership principle. Romania imports 10-12% of the wine it consumes, and we want to take more from this import quota. Every year, the Romanian market grows by approximately 2.8%, as it happened in 2020, and we are interested in taking a maximum share of this percentage of imported wines without entering into direct competition with the Romanian producer,” the Moldovan official said. She also mentioned that Moldova aims at increasing the market share of wine production by at least 50% compared to 2020, and the number of producers present on the Romanian market – by at least 40%.
Source: ccir.ro
**
According to the data of the Romanian National Trade Register Office, the total value of Romania-Moldova trade was 1.7 billion euros at the end of last year and over 805 million euros at the end of May 2021. In July 2021, there were 6 522 companies from the Republic of Moldova in Romania, with a total capital value of 45.9 million euros.
The data of Moldova’s National Office of Vine and Wine showed that, in the first 7 months of 2021, the total quantity of bottled wine was about 27 million litres (registering an increase of 10% as compared to the same period last year), with a value of more than one billion lei, which is 32% more than the same period last year. Moldovan wines were awarded 956 medals at 32 international competitions in 2020.
Photo: ccir.ro
The Republic of Moldova has perfect weather conditions for growing walnut trees, that creating a great potential of walnut production and trade, especially on international markets, where the demand is way higher than the product’s supply. National and international experts believe that the country’s walnut production industry is on the verge of important transformations, which could lead to increased yields, quality and competitiveness worldwide.
According to authorities, Moldova exports 34-35 thousand tons of walnuts in shell, which is about 7% of the total export of fruit and 5% of the total export of horticultural products. The export value is assessed as being $120 million, that being 57-60% of the total fruit export value and about 50% of horticultural export value. Most of walnut crops are exported to the EU countries, such as France, Germany, the Netherlands, Romania and Austria. The country’s exports were among the world’s top 10 when it comes to the highest dollar value of the product during 2020.
Viorel Gherciu, Minister of Agriculture and Food Industry, pointed out that the production in the domestic walnut industry has increased by 55% in the last five years, which ranks Moldova among the main producers in the world.
“The biggest opportunity for this industry is that we are in the geographical proximity of the largest walnut import area in the world, which is the European Union, with almost 40% of total imports in the world. We are on the EU border, with privileged relations, with an Association Agreement. We already enjoy a good relationship in working with European importers, they trust our processors. A very close collaboration has been created and this is, in fact, the guarantee for those who invest in the area,” claimed the president of the Walnut Producers Association, Oleg Tirsina.
The data provided by the National Bureau of Statistics show that there are 34.7 thousand hectares of walnut plantations in the country. 20.90 hectares are represented by orchards. 75% of planted orchards are formed of old varieties trees. 30-35% of the exported production comes from orchards, the rest comes from individual farmers and plantations along the roads. This means that the quality of walnut production is not at its maximum potential. Developing commercial plantations through orchards modernization and extension of walnut varieties would provide double yield and better quality, experts say.
Governmental support in the form of subsidizing solutions, foreign investments and credit options are indispensable for the industry development. One of the financing options is the credit line of the European Investment Bank Project. Since 2016, 15 producers and processors of nuts, almonds and hazelnuts have benefited from these loans with the total amount of investments worth 8.7 million euros. A further extension of the project would provide another 60 million euros for the modernization of the horticultural sector in general and for harvesting organic walnuts in particular.
Photo: heymoldova.com
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