Moldova

Jizdan & Partners LLC, Moldova

Economic Overview & Business Opportunities

Wedged between Ukraine and Romania, Moldova is a landlocked country located in the continent of Europe. Spanning over 33,851 square kilometres (including 960 square kilometres of water), Moldova is the home to a population of approximately 4 million people. Despite its small size, Moldova’s strategic location has given it an edge as the key position in the lowlands of Southeastern Europe between the Carpathian Mountains and the Black Sea. Throughout history, Moldova has always been part of the invasion route from the Balkans into Russia and vice versa and many outside powers sought to conquer this place.

Moldova scored 59.1 in the economic freedom score, putting the country’s economy in the 97^th place in the 2019 Index of the freest economy. Moldovan economy showed improvements in judicial effectiveness, government spending, and fiscal health. Moldovan economy depends heavily on agriculture sector due to the moderate climate and productive farmland, where the agriculture and food processing account for around 40% of the nation’s gross domestic product (GDP). Though Moldova has a few natural energy resources, the country imports most of its energy supplies from its neighbouring countries: Russia and Ukraine.

Moldovan government strives to create a supportive and business-friendly investment environment for both local and foreign investors by upholding international law and safeguarding the market economy. Moldova inked and ratified the Partnership and Cooperation Agreement with the European Union (EU) in November 1994; and Moldova signed the Plan of Action with the European Union in 2005, improving political, economic, and cultural relations; enhancing cross-border cooperation.

Furthermore, Moldova maintains good trade relationship with many countries and it is also a member of the many international organisations listed below:

1. World Trade Organisation since 2001
2. The Commonwealth of Independent States (CIS)
3. The Council of Europe
4. The European Bank for Reconstruction and Development
5. The International Monetary Fund
6. The International Development Association
7. The International Finance Corporation
8. The International Bank for Reconstruction and Development
9. The Multilateral Investment Guarantee Agency and
10. The Stability Pact for South-Eastern Europe

Moldova maintains good investments relationships with 86 countries where the European Union (EU), the Commonwealth of Independent States (CIS), the USA, and Canada are the major FDI sources. The well-maintained macroeconomic stability and consistent economic growth in Moldova in these recent years are also the main reasons that cause significant increases in foreign direct investment (FDI). Meanwhile, the Netherlands is the largest investor in Moldova, with Russia, Spain, Cyprus, UK, Italy, the USA, Germany, France, Romania, and the British Virgin Islands being the significant investors to the nation. The reinvested earnings from FDI are always an important benchmark that reflects investors’ trust. Moldova’s reinvested earnings from FDI have been growing over the last few years and are expected to continue growing in the future. The growing trend reflects the long-term confidence of foreign investors.

On top of all the above-mentioned advantages, Moldova makes the great choice for foreign investment because of its strategic geographical position at the crossroads of commercial routes, proximity to large markets like EU and CIS, as well as the platform for manufacturing and exporting both to CIS and to EU.