{"id":446099,"date":"2018-11-25T12:37:17","date_gmt":"2018-11-25T12:37:17","guid":{"rendered":"http:\/\/www.moldova.org\/en\/?p=446099"},"modified":"2021-06-18T09:39:19","modified_gmt":"2021-06-18T09:39:19","slug":"chisinau-becoming-global-tech-centre-synthesis-activity-moldova","status":"publish","type":"post","link":"https:\/\/www.moldova.org\/en\/chisinau-becoming-global-tech-centre-synthesis-activity-moldova\/","title":{"rendered":"Is Chi\u0219in\u0103u becoming a global tech centre? A synthesis of the IT activity in Moldova"},"content":{"rendered":"Reading Time: <\/span> 6<\/span> minutes<\/span><\/span>

From San Francisco to Hong Kong, all over the globe, the information technology is flourishing. Everyday, new software and devices are invented (just look at this beautiful Gmail app for Mac<\/a>), 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 \u2013 Chi\u0219in\u0103u, Republic of Moldova.<\/p>\n

According to the IDC CEMA research<\/a>, 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.<\/p>\n

Macroeconomic importance<\/h4>\n

The analysis<\/a> 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\u2019s GDP and is steadily in a rising trend.<\/p>\n

Within the event<\/a> \u201cPIN Awards 2018\u201d that took place in April at Ia\u0219i, 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.<\/p>\n

The entrepreneurial environment<\/h4>\n

Nowadays, it is way easier and more accessible for the Moldovan entrepreneurs to develop a tech startup<\/a> 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> \u2013 a company that offers funding of up to 25000 EUR, mentorship, legal support and free space for the startup\u2019s activity in return to 15% of the business.<\/p>\n

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 Chi\u0219in\u0103u, Chi\u0219in\u0103u Startup Week, Startup Weekend, Startup Weekend Woman, Techvillage, etc.)<\/p>\n

\"\"

Photo source: locals.md<\/p><\/div>\n

In the last years, more than 50 startup companies were founded in Moldova, among the most active startups<\/a> being Diez, Paynet, Privesc.eu, Planable, Lobster, XOR, Vintage, Retently, etc.<\/p>\n

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 \u2013 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.<\/p>\n

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.<\/a> \u201cThe 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\u201d, as the Ministry of Economy and Infrastructure press service<\/a> announced.<\/p>\n

Tacit Knowledge is one of the Moldova IT Park residents since February 2018. \u201cWe 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\u2019 number and persons that choose to follow an IT career\u201d, declares Vadim Echim, the Tacit Knowledge CEO, for diez.md<\/a>.<\/p>\n

IT legislative Benefits<\/h4>\n

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<\/a>, 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.<\/p>\n

As it is stated in the current law<\/a>, 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.<\/p>\n

\"\"

Photo Source: Facebook| Startup Academy<\/p><\/div>\n

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<\/a> that \u201cThe entrepreneurs that are members of the IT park have the possibility to pay higher salaries as compared to the standard tax rate.\u201d 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.<\/p>\n

External cooperation<\/h4>\n

Moldova is seen by foreign companies as an IT nearshoring or offshoring destination. The MAICTC catalogue<\/a> 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 Chi\u0219in\u0103u, 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.<\/p>\n

Education<\/h4>\n

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.<\/p>\n

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.<\/p>\n

\"\"

Photo source: Facebook| Startup Weekend<\/p><\/div>\n

Challenges<\/h4>\n

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<\/a>. 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.<\/p>\n

\u201cMoldova 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\u201d, 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. \u201cFor 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\u201d, points out Vadim Echim, the Tacit Knowledge CEO.<\/p>\n

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 \u201cEndava University\u201d, 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.<\/p>\n

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. \u201cNo local or foreign investor will have the opportunity to develop on a market where human resources are lacking\u201d, Eugene Galamaga says<\/a>.<\/p>\n

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.<\/p>\n

Featured image source: Facebook|Startup Academy<\/p>\n

<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Reading Time: <\/span> 6<\/span> minutes<\/span><\/span>From San Francisco to Hong Kong, all over the globe, the information technology is flourishing. Everyday, new software and devices are invented (just look at this beautiful Gmail app for Mac), and new tech centres are built. Among the IT global giants, there is a small city that is still at the beginning of its […]<\/p>\n","protected":false},"author":31,"featured_media":446104,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[13,56],"tags":[85,35,83,27,86,84],"class_list":["post-446099","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-it-en","category-reportaje","tag-development","tag-important","tag-it","tag-moldova","tag-synthesis","tag-technology"],"content_social_share":"Reading Time: <\/span> 6<\/span> minutes<\/span><\/span>

From San Francisco to Hong Kong, all over the globe, the information technology is flourishing. Everyday, new software and devices are invented (just look at this beautiful Gmail app for Mac<\/a>), 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 \u2013 Chi\u0219in\u0103u, Republic of Moldova.<\/p>\n

According to the IDC CEMA research<\/a>, 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.<\/p>\n

Macroeconomic importance<\/h4>\n

The analysis<\/a> 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\u2019s GDP and is steadily in a rising trend.<\/p>\n

Within the event<\/a> \u201cPIN Awards 2018\u201d that took place in April at Ia\u0219i, 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.<\/p>\n

The entrepreneurial environment<\/h4>\n

Nowadays, it is way easier and more accessible for the Moldovan entrepreneurs to develop a tech startup<\/a> 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> \u2013 a company that offers funding of up to 25000 EUR, mentorship, legal support and free space for the startup\u2019s activity in return to 15% of the business.<\/p>\n

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 Chi\u0219in\u0103u, Chi\u0219in\u0103u Startup Week, Startup Weekend, Startup Weekend Woman, Techvillage, etc.)<\/p>\n

\"\"

Photo source: locals.md<\/p><\/div>\n

In the last years, more than 50 startup companies were founded in Moldova, among the most active startups<\/a> being Diez, Paynet, Privesc.eu, Planable, Lobster, XOR, Vintage, Retently, etc.<\/p>\n

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 \u2013 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.<\/p>\n

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.<\/a> \u201cThe 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\u201d, as the Ministry of Economy and Infrastructure press service<\/a> announced.<\/p>\n

Tacit Knowledge is one of the Moldova IT Park residents since February 2018. \u201cWe 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\u2019 number and persons that choose to follow an IT career\u201d, declares Vadim Echim, the Tacit Knowledge CEO, for diez.md<\/a>.<\/p>\n

IT legislative Benefits<\/h4>\n

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<\/a>, 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.<\/p>\n

As it is stated in the current law<\/a>, 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.<\/p>\n

\"\"

Photo Source: Facebook| Startup Academy<\/p><\/div>\n

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<\/a> that \u201cThe entrepreneurs that are members of the IT park have the possibility to pay higher salaries as compared to the standard tax rate.\u201d 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.<\/p>\n

External cooperation<\/h4>\n

Moldova is seen by foreign companies as an IT nearshoring or offshoring destination. The MAICTC catalogue<\/a> 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 Chi\u0219in\u0103u, 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.<\/p>\n

Education<\/h4>\n

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.<\/p>\n

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.<\/p>\n

\"\"

Photo source: Facebook| Startup Weekend<\/p><\/div>\n

Challenges<\/h4>\n

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<\/a>. 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.<\/p>\n

\u201cMoldova 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\u201d, 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. \u201cFor 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\u201d, points out Vadim Echim, the Tacit Knowledge CEO.<\/p>\n

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 \u201cEndava University\u201d, 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.<\/p>\n

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. \u201cNo local or foreign investor will have the opportunity to develop on a market where human resources are lacking\u201d, Eugene Galamaga says<\/a>.<\/p>\n

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.<\/p>\n

Featured image source: Facebook|Startup Academy<\/p>\n

<\/a><\/p>\n

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