industrial GuidEof thE rEpublic of Moldova

2011

Industry of the Republic of Moldova 2001-2010

Within 2001 - 2010 in the economy of the Republic of Moldova there were significant structural changes, reflected in its shift from agriculture and industry to services (Pic. 1), due to the creation of favorable economic conditions for import expansion and reduction of the volume of own industrial production, associated with the loss of traditional outlets.During this period, the share of industry in GDP fell by 5.5% and in 2010 it made up 13.2%. The share of agriculture declined by 10.5% amounting to 11.9%. At the same time, the share of services sector in GDP reached 58.2%, having increased by 11.4% during this period.The structure of the industrial sector has also changed. The largest share in total industrial output in 2010 belonged to such activities as “production of current consumption goods” (56.6%) and “production of intermediate goods” (21.9%) (Table 1). 567 enterprises or 81.0% of the total number of industrial enterprises of the republic are engaged in the production of these types of products. However, the types of industrial activities that generate the largest value added in 2010 made up a rather low level, “ production of fixed assets” - 3.8%, and “production of durable goods” - 1.9%. Thus, the today’s industry of Moldova is characterized by prevailing production of current consumption goods, while investment production (production of fixed assets) has an insignificant component.In 2010 in the structure of industrial production the share of processing industry made up 82.7%, the share of production of electricity and heat, gas and water supply - 15.8%, while the share of extractive industry (quarrying) - 1.5%.45.0% of total production or 55.0% of the volume of production of the processing industry belong to food and beverages. At the same time, the share of so-called “non-food” industry made up 32.8% and 39.7%, respectively, which was due to the highest increase in sales volumes as compared to other industrial sectors, which in 2010 made up 21.6% as compared to 2009. For comparison, the sales volume in the production of food and beverages increased by 17.1%.The main sectors making up 2/3 of the volume of production of non-food industry (Pic. 2) are: textile and garment production, whose share in 2010 amounted to 17.3%; production of glass and glass articles - 25,1%; production of rubber and plastic articles - 8.4%; chemical production - 7.4%; furniture production and others - 6.1%; machinery and equipment production - 5.2%; leather and leather articles manufacture, footwear manufacture - 4.2 % and other types of production - 26.3%.Despite the decline in industrial production over the past decade the volume of export of the republic has increased 3 times, having reached 1.6 billion US Dollars (Pic. 3). The export growth rate in 2010 made up 23.0% as compared to 2009, which allowed reaching the pre-crisis level of exports. The volume of export of the Republic of Moldova to the European Union countries in 2010 made up 47.0% of total exports, while the share of exports to CIS countries made up 39.0%, respectively.The main types of Moldovan export products are food, soft drinks and liqueur, tobacco whose volume of shipments to foreign markets increased over 10 years 2.2 times, and in 2010 made up 20.0% in total exports; the volume of textile materials and textile articles made up 16.9%, respectively; electrical machinery and equipment - 11.0%; chemical industry products - 4.7%, furniture products, toys - 3.3%.In-depth analysis of structural changes, which occurred both in the economy as a whole and in the industrial sector, led to a radical revision of directions of economic development of the country, used instruments to implement economic policy and to definition of a new development paradigm - industrialization of the economy as the only intensive path of economic growth.

* The information is presented based on the data of industrial enterprises, included in the annual statistical analysis of industrial production.

Production output in 2010 (at current prices),

mln. MDL

2010/2009

%

Share in the total output, %

Number of enterprises

Industry, total 21644,5 107,0 100,0 697

Production of intermediate goods (except for energy) 4743,8 103,8 21,9 217

Production of fixed assets 811,6 107,4 3,8 81

Production of durable goods 417,1 101,7 1,9 29

Production of current consumption goods 12245,1 110,0 56,6 350

Activity and products related with the energy generation 3426,9 100,5 15,8 20

Table 1. Industrial output by main industrial groups

Рiс.1. Dynamics of the GDP structure, 2001-2010

Pic.2. Structure of the non-food industry sector,2010

Pic.3. Dynamics of export volume, 2006-2010

MAP OF GAS PIPELINES NEtwOrk IN tHE rEPUBLIC OF MOLDOVA

Active gas-main pipeline

Gas-main pipeline in perspective

Active district gas pipeline

District gas pipeline in perspective

Active gas measuring station (SMG)

Gas measuring unit in perspective (PMG)

Active gas compressor station (SСG)

Active gas distribution station (SDG)

Gas distribution station in perspective (SDG)

Active gas management unit

Gas management unit in perspective

Existing gas field

Legend

Rating of Moldova in Europeby the natural gas pricefor industrial consumers

(Euro/м3)

Romania 0,14United Kingdom 0,22Estonia 0,25Netherlands 0,25Latvia 0,27Bulgaria 0,27Czech Republic 0,28Belgium 0,29Poland 0,31Slovakia 0,31Finland 0,31Portugal 0,32Lithuania 0,33Ireland 0,33Macedonia 0,35Moldova 0,36Slovenia 0,38Croatia 0,38Germany 0,39Sweden 0,40

AustriaBelgium

from 1,7 to 0,28

GermanyDenmarkIrelandCyprusMaltaNetherlandsPortugalSlovakia

BulgariaUnited Kingdom HungaryGreeceLatvia

from 0,8 to 0,16

LithuaniaMoldovaPolandRomaniaSloveniaFinlandFranceCzech Republic

Estonia

Rating of Moldova in Europeby the electricity price for

industrial consumers (Euro/ kWh)

MAP OF ELECtrICIty NEtwOrk IN tHE rEPUBLIC OF MOLDOVA35-400 kV for 2010

Power plantsCombined heat and power plant (CHP)Hydroelectric power station (HPS)Transformer substations (TS)400 kV330 kV110/35/10-6 kV110/10-6 kV

Overhead power lines750 kV400 kV330 kV 110 kV

Construction of overhead PL 330 kVRenewal of PL 35 kVConstruction of overhead PL 110 kVRemoval of overhead PL 110 kVRecovery of TS

Legend

Industrial sector of Moldova in investment-favored treatment

In order to change the paradigm of economic development, the Government of the Republic of Mol-dova aims for the industrialization of the economy based on investment, exports and competitiveness.

Representing the basis for long-term economic development, the set goal can be achieved by ensur-ing such fundamental assumptions as the creation of a favorable investment climate, attraction of foreign direct investments in retechnologization of production processes and entry of export-oriented products to major international markets.

Investment-favored mechanisms are being continuously developed in the republic, as evidenced by the fact that 89 countries, including EU members, have already invested in the Moldovan economy.

As a result, foreign direct investment flow increased from 74 mln. US dollars in 2003 to 713 mln. US dollars in 2008. But, because of consequences of the global financial crisis this indicator fell to 199 mln. US dollars in 2010. The amount of capital, invested by the European Union countries, makes up about 75% of the total foreign direct investments.

At the same time, for the period from 2001 to 2010, the foreign investment amount increased fivefold from 549 mln. US dollars in 2001 to more than 2.8 billion US dollars in 2010.

Thus, during this period, the volume of Moldovan export increased almost 3-fold, having reached 1.6 billion US dollars, of which the export of Moldovan products in 2010 made up 47.2% in EU countries and 39,4% in the CIS countries.

Today, Moldova’s trade policy is aimed at extending markets, using its favorable location in the geo-economic space as a benefit.

Being an active member of the Commonwealth of Independent States over 20 years, the Republic of Moldova signed bilateral free trade agreements with all CIS member states, thus ensuring duty-free import of Moldovan products to markets of the Commonwealth countries.

Also, the Republic of Moldova signed bilateral agreements on industrial cooperation with the Russian Federation, Republic of Belarus and Ukraine.

Since July 2001, the Republic of Moldova is a member of the World Trade Organization, which allows extending the markets of Moldovan goods, based on WTO rules on non-discrimination.

Also, as a result of the unilateral granting by the European Union of autonomous trade preferences, the customs duties on imports to the EU of industrial and most agricultural goods of Moldovan origin were abolished.

It should be mentioned that Moldova is the only CIS country, which has reached such a level of coop-eration with the EU, representing an indisputable advantage for business.

Besides, Moldova is a member of the Central European Free Trade Agreement, ensuring free access of goods, produced in the country, to the markets of Croatia, Macedonia, Bosnia and Herzegovina, Serbia, Montenegro, Albania and Kosovo.

Thus, the opportunities offered to business in Moldova, provide access to the vast market for goods totaling over 800 million people and contribute to strengthening trade and economic relations be-tween East and West.

The Republic of Moldova has a competent and skilled workforce, which is at the same time competitive by the remuneration as compared to other countries in the region (1.1 Euro/hour, as compared to 2 Euro/hour in Ukraine, and 4 Euro/hour in Romania and Bulgaria).

The tax legislation in Moldova provides for a wide range of benefits provided to business, including a VAT refund on tangible assets and services, related to long-term investments; exemption from VAT and customs duties on assets in case of their inclusion in the company’s authorized capital; the opportunity to avoid double taxation in accordance with international agreements, signed with 39 states etc.

The Public-Private Partnership mechanism allows providing services to the society, partially or fully using tools and new technologies of private companies with transfer of the construction, opera-tion and financing risk to the private sector (Law on public-private partnership No. 179-XVI of July 10, 2008).

Free Economic Zones provide significant benefits for entrepreneurs that export the products, manu-factured by them (Law on Free Economic Zones No. 440-XV of July 27, 2001). There are 7 FEZ, cre-ated in the republic, where 159 resident enterprises were registered in 2010. The total amount of investments in the development of FEZ for the entire period of their operation made up 129 mln. US dollars, of which 12.3 mln.US dollars in 2010. Tax and customs regimes, similar to the regime of the free economic zone also provides for Giurgiulesti International Free Port and Free International Airport “Marculesti”.

The condition for the activity as a FEZ resident is the industrial production of export-oriented goods and thereto related services, for which the resident has the right to use production and technical infrastructure of FEZ and a wide range of tax benefits: exemption from VAT and excise duties, exemp-tion from customs duties, an incentive of 50 % of the income tax rate established in the Republic of Moldova, etc.

The adoption of the new Law on Industrial Parks (No. 182 of July 15, 2010) created entirely new conditions for attracting investments in the development of the industrial sector of economy. Thus, within one year after adoption of this law on the initiative and with the support of the Ministry of Economy of the Republic of Moldova 13 feasibility studies were developed on the creation and de-velopment of industrial parks, based on various types of property in different regions of the country.

When creating and developing the activity of industrial parks, investors are provided with the state support both in the process of obtaining authorizations to operate (the principle of “single window”), and in the process of park functioning: granting of special benefits for use and redemption of assets, optimization of government inspections of the residents’ activity, as well as support of investment projects of national significance.

In addition, three research and technology parks and an innovation incubator are established in the republic, where development works in the field of energy and electronics take place, as well as projects in the areas of intensive agriculture and creation of ecological products and other projects are being conducted.

The Moldovan government is open towards investors and is ready to provide assistance for the implementation of effective and mutually beneficial investment projects on the develop-ment of the Moldovan economy.

Spain Portugal

France

Italy

Germany

Ireland

Serbia

Czech Rep.

Poland Neth.

Lux.

Belgium

Switz. Austria Hungary Romania

Bulgaria

Turkey Greece

Alb.

Russia

Finland

Sweden

Norway

Faroe Islands

Denmark

Liech.

(Denmark)

Estonia

Latvia

Lithuania

Belarus

Ukraine

Monaco

San Marino

Russia

Slovakia

U.K.

Bos.& Herz.

Mace.

Mont.

Slovenia

Croatia

Moldova Moldova

industrial potEntial of thE rEpublic of Moldova (types of production, industrial parks, free economic zones,

the largest industrial enterprisesinnovation incubators, scientific-technological parks, with sales over 3 million. MDL)*

* The information is presented without the data of enterprises and organizations from the left bank of the Dniester and Bender municipality.

Free economic zones (FEZ) FEZ „Otaci-Business”, Ocnita district FEZ „Balti”, Balti municipalityFEZ „Ungheni-Business”, Ungheni district FEZ „Expo-Business Chisinau”, Chisinau municipality FEZ „Tvardita”, Taraclia district FEZ „Taraclia”, Taraclia districtFEZ „Vulcanes”, Vulcanesti district

Research and technology parks and innovation incubators (RTP and II)

RTP „Academica”, Chisinau municipalityRTP „Inagro”, Chisinau municipalityRTP „Micronanoteh”, Chisinau municipalityII „Inovatorul”, Chisinau municipality

Industrial parks (IP) (which obtained the title of Industrial Park)

IP „Bioenergagro”, Drochia district IP „Tracom”, Chisinau municipalityIP „Cimislia”, Cimislia district

Industrial park projectsIP „Dacia”, Ocnita districtIP „Edinet”, Edinet districtIP „Rаut”, Balti municipalityIP „Bаlti”, Balti municipalityIP „UMS Falesti”, Falesti districtIP „CAAN”, Straseni districtIP „Hincesti”, Hincesti districtIP „Cainari”, Causeni districtIP „Cania”, Cantemir districtIP „International Industrial Park”, Ialoveni district

Production output per 1 person (mln. MDL /person)

0 - 3,0

3,1 - 6,0

6,1 - 15,0

15,1 - 19,0

capital

municipality

city-residence

BALTI municipality (TOP 10)“DRA DRAEXLMAIER AUTOMOTIVE” Ltd.

“FLOAREA SOARELUI” (SUNFLOWER) JSC

JV “KNAUF-GIPS” Ltd.

“RĂUT” JSC

JV “BALTEANCA” JSC

“MOLDAGROTEHNICA” JSC

JV “FASHION GROUP” Ltd.

CFC “EXCEL MANUFACTURING” Ltd.

“INCOMLAC” JSC

“BASARABIA-NORD” JSC

Industrial parks

Free economic zones

Research and technology parks and innovation incubators

Light industry

Machinery and equipment industry

Electronic industry

Food industry

Beverage industry

Tobacco industry

Metallurgy

Production of building materials

Glass industry

Furniture industry

Chemical industry

Production of paper and paperboard

Extractive industry

Energy industry

Briceni

Ocnita

Edinet

Donduseni

Riscani

Drochia

Soroca

Glodeni

Floresti

Balti

Singerei

Telenesti

Falesti

Soldanesti

Rezina

UngheniCalarasi

Orhei

Nisporeni

Straseni Criuleni

Cocieri

Hincesti

Ialoveni

Leova

Cimislia

Comrat

CantemirBasarabeasca

Cahul

Causeni

Tiraspol

Anenii Noi

Chisinau

Stefan Voda

Taraclia

AUTONOMOUS TERRITORIAL

UNIT GAGAUZIA

GAGAUZIA

GAGAUZIA

JV “GLASS CONTAINER COMPANY” JSC

JV “INFINITY INC” Ltd.

“IONEL” JSC, Garment factory

“ZORILE” JSC

“CONFORT” Ltd.

SE «FABRICA DE STICLĂ DIN CHIŞINĂU»

CFC “F.A. FASHION” Ltd.

“MACON” JSC

“MOLDOVAHIDROMAŞ” JSC

CFC “EUROPLAST-CHIŞINĂU” Ltd.

“TUTUN-CTC” JSC

JV “SANIN” Ltd.

“SUPRATEN” JSC

“FARMAPRIM” Ltd.

JV “M. EFES VITANTA MOLDOVA BREWERZ” JSC

JV “MICHAILIDES TOBACCO MOLDOVA”

“FRANZELUŢA” JSC

“JLC” JSC

“BUCURIA” JSC

“PEGAS” Ltd.

“CARDBOARD MILL” JSC

CHISINAU municipality (TOP 20)

“FILATURA UNGHENI” Ltd.

“MOLDABELA” Ltd.

CFC “ECOVIT” Ltd.

CFC “PINTO-MOLD” Ltd.

“CAVIO” Ltd.

UNGHENI District center (TOP 5)

ASPA JSC

“PARSE-TUTUN” Ltd.

JV “CHATEAU VARTELY” Ltd.

“BRODETCHI” Ltd.

“ORLACT” JSC

ORHEI District center (TOP 5)

“TRICON” JSC

“CAHULPAN” JSC

JV “VINIA TRAIAN” JSC

“VIERUL-VIN” Ltd.

JV “GRAPE VALLEZ” Ltd.

CAHUL District center (TOP 5)

CFC “ASENA-TEXTIL”Ltd.

CFC “DK-INTERTRADE” Ltd.

JV “VINARIA BOSTOVAN” Ltd.

“CIOC-MAIDAN-VIN” JSC

“INVINPROM” Ltd.

ATU Gagauzia (TOP 5)

ChisinauBaltiComrat

Legend

Tvardita

Spain Portugal

France

Italy

Germany

Ireland

Serbia

Czech Re p.

Poland

Neth.

Lux.

Belgium

Switz.

Austria

Hung ary Romania

Bulgaria

Turkey

Greece

Alb.

Russia

Finland

Sweden

Norway

Faroe Islands

Denmark

Liech.

(Denmark)

Estonia

Latvia

Lithuania

Belarus

Ukraine

Monaco

San Marino

Russia

Slovakia

U.K.

Bos.& Herz.

Mace.

Mont.

Slovenia

Croatia

Moldova

Moldova

location of EntrEprisEs With forEiGn capital and of thE JoinEd vEnturEs

(with sales over 3 million U.S. dollars, 2010)*

CFC Wine and cognac plant “Zolotoy Aist” (Golden Stork) Ltd.

CFC Wine and cognac plant “Moldavskiy STANDART” Ltd.

JV “Soroca cheese-making plant” JSC

CFC - Company with Foreign CapitalJV - Joint VentureJSC - Joint-Stock Company Ltd. – Limited Liability Company

CFC “KNAUF-GIPS” Ltd.

JSC “LAFARGE CIMENT (MOLDOVA)”

JV “MAGT-VEST” Ltd.

CFC Canning factory “ECOVIT” Ltd.

JV “PURATOS-MOLD” Ltd.

JV “SUDZUCKER-MOLDOVA” JSC

JV «EFES VITANTA MOLDOVA BREWERY» JSC

JV “LION-GRI” Ltd.

JV Chisinau Factory of Sparkling and Fine Wines «VISMOS» JSC

JV “SALCUTA” Ltd.

CFC «ICATEX-PRO» Ltd

CFC “CRISTINA MOLD-ROM SIMPEX” Ltd.

CFC “STAG TEXTILE INDUSTRY”

CFC “ICATEX-PRO” Ltd.

CFC “DRAEXLMAIER AUTOMOTIVE” Ltd.

CFC “LAPMOL” Ltd.

JV «MICHAILIDES TOBACCO MOLDOVA»

JV «TOPAZ»

JV «FIRSTLINE» Ltd.

JV «SANIN» Ltd.

JV «GLASS CONTAINER COMPANY»

JV «GLASS CONTAINER PRIM» JSC

more 110 000

61 000 - 110 000

41 000 - 60 000

19 000 - 40 000

The economically active population, pers. (men from 16 to 61 years) (women from 16 to 56 years)

CFC “DK-INTERTRADE” Ltd.

CFC “ASENA-TEXTIL” Ltd.

JV “VINARIA BOSTAVAN” Ltd.

JV “BALTEANCA” JSC

CFC «F.A. FASHION» Ltd.

CFC “OILTECH” Ltd.

CFC “NEFIS” Ltd.

JV “INFINITY INC”

CFC “BETON-LUX” Ltd.

Legend

* The information is presented without the data of enterprises and organizations from the left bank of the Dniester and Bender municipality.

JV “CHATEAU VARTELY” Ltd.

JV “VINIA TRAIAN” JSC

CFC “RENAISSAANCE-PERFECT” Ltd.

CFC «EUROPLAST-CHISINAU» Ltd.

CFC “SUVOROV-VIN” Ltd.

JV “FARMACO” JSC

CFC “COCA-COLA IMBUTELIERE CHISINAU” Ltd.

CFC “WINE INTERNATIONAL PROJECT” Ltd.

MAP OF trANSPOrt rOUtES IN tHE rEPUBLIC OF MOLDOVA

Dear all,

Over the past 20 years, Moldova has travelled a long and difficult way. We managed to establish workable relationships not only with the CIS countries, but also with the countries of South-Eastern Europe and the European Union. The value of this experience is that at present, by combined efforts, we are able to ensure stability and economic development of the vast region.

Further economic growth will be accompanied by a revival of investment processes, including by increasing the flow of foreign direct investments in development of production, agriculture and export - a reality that needs to be fed by the appropriate tools of fiscal and trade policy.

The priority in this process is not only the gradual reduction of trade barriers, but also the simplification and improvement of the existing legislation in terms of investment attraction, elimination of the existing bureaucratic barriers to economic cooperation.

Currently, however, it is impossible to speak about a sustainable economic development without the appropriate attention in the field of innovations. In this regard, we aim at building an effective mechanism of interaction with the view to determining mutually beneficial innovative projects with a high degree of readiness for possible commercialization.

In 2010 a new law on industrial parks was adopted in Moldova. This law regulates the process of establishment and operation of industrial parks under preferential terms, provided by the state. Establishment of industrial parks aims at attracting local and foreign investments and creating competitive industrial sectors on the basis of modern innovative technologies. As the world practice shows, the development of industrial parks is an effective way to attract investments and the Republic of Moldova is open to investors.

Besides, it is already becoming clear now that it is impossible to implement the global infrastructure projects solely by the state or the private sector, but only a wise balanced investment policy making, using the strengths of public-private partnership will allow us to achieve optimal results.

It is important to note that the development of mutually beneficial cooperation is defined by the Republic of Moldova as one of the most important goals, which together with our European integration aspirations, is a successful formula for regional policy, providing both the Republic of Moldova and its Eastern and Western partners, with a constructive and long-term platform for substantial, dynamic and consistent foreign economic policy making, designed to serve the national interests of our country.

In this sense, having economic benefits, the Republic of Moldova is an advantageous investment platform for all stakeholders and is ready to implement ambitious economic projects.

With best wishes for a fruitful cooperation, Deputy Prime Minister, Minister of Economy

Valerii LAZAR

Contact information:Ministry of Economy of the Republic of Moldova

МD-2033, 1, Piata Marii Adunari Nationale, Chisinau Tel.: (+373 22) 25 01 07, fax: (+373 22) 23 40 64

Tel.: (+373 22) 23 77 43, fax: (+373 22) 25 06 73 www.mec.gov.md

Agency for Innovation and Technology TransferMD-2028, 5 Miorita Str., Chisinau

Tel./fax: (+373 22) 88 25 60E-mail: aitt@aitt.md www.aitt.md

Moldovan Export Promotion Organization 65 Alexei Mateevici Str., Chisinau

Tel.: (+373 22) 27 36 54, fax: (+373 22) 22 43 10 www.miepo.md