Moldova Commercial News
Digest July
2007
07.31.2007
Author: Iulian Bogasieru,
BISNIS Representative, U.S. Embassy Chisinau, Moldova
INTERNATIONAL COPYRIGHT, U.S. & FOREIGN
COMMERCIAL SERVICE AND U.S. DEPARTMENT OF STATE, 2007. ALL RIGHTS RESERVED FOR
USE OUTSIDE OF THE UNITED STATES.
This report summarizes
press reporting on business developments in the Republic of Moldova for the
month of July 2007.
BUSINESS CLIMATE AND ECONOMIC
TRENDS
1. Moldova’s monthly inflation
was flat at 0% in June versus 0.9% in May, according to the National Statistics
Bureau. Cumulative inflation rate for
the first six months of 2007 was unchanged at 3.9% compared with 7.4% a year
earlier. In June 2007, prices fell 1.3%
for food products and grew 0.7% for non-food products and 0.2% for services.
2. The average monthly
salary in January-June 2007 was MDL 1,926 ($153), up 23.2% year on year,
according to the National Statistics Bureau.
The average monthly salary in June alone was MDL 2,221($181). State budget-funded institutions paid one
employee in the first six months an average MDL 1,605 ($131) per month;
businesses paid MDL 2,097 ($171).
3. Moldova’s trade deficit for January-May 2007 totaled $852
million, 46.8% wider than a year ago, with exports at $481.4 million (+25.9%)
and imports at $1.3 billion (+38.4%), according to Infotag. The lion’s share of exports headed to the
European Union – $244.9 million – up 40.1%.
Shipments to the CIS suffered a decline of 46.2% to $179.5 million. Moldova’s main exports for the period were
textiles – $102.1 million (+24%); food, alcohol and tobacco –$75.4 million
(+49.7%); and machinery and equipment – $30.7 million (up 1.9-fold). Moldova imported $483.8 million (+25.9%)
from CIS and $592.9 (+46.2%) million from the European Union. Among the key imports were mineral products
– USD 297.6 million (+16.9%), and machinery and equipment – USD 166.7 million
(+46.5%).
INTERNATIONAL ASSISTANCE AND
PROJECTS
4. The Executive Board of the International Monetary Fund (IMF) completed
on July 13 the second review of Moldova's performance under the three-year Poverty
Reduction and Growth Facility (PRGF) arrangement, which enabled the release
of the third tranche with an amount equivalent to SDR 21.7 million (about $33.1
million), according to www.imf.md. This brings total disbursements to the
country under the PRGF arrangement to SDR 65.1 million (about $99.2 million)
since May 5, 2006 when Moldova signed the arrangement with the IMF after a
four-year break in financing relations.
The IMF granted Moldova a waiver for the non-observance of the
end-December 2006 performance criterion related to tariffs for district
utilities. The fourth tranche under the
arrangement will be discussed in October.
5. The Japanese Government granted Moldova
in June additional $2.07 million in technical assistance under the 2KR
project for the increase of food production. The
assistance comprises 51 MTZ-82 tractors, 7 Deutz-Fanr combine harvesters, 10
Agroplus-100F tractors, used in horticulture and viticulture, one Dorado
Classic conventional tractor and one Agrotron field tractor. The machinery is offered to Moldovan farmers
under a four-year hire purchase plan on preferential conditions. The Government of Japan has granted Moldova
$7.0 million under the project over the last three years. The funds have financed the purchase of
2,800 farming machines.
BANKING, FINANCE AND
INSURANCE
6. Italian regional bank Veneto
Banca has extended a 20 million euro ($27.2 million) credit line to its
Moldovan unit, Eximbank, in support of its corporate lending for medium-term
projects, according to SeeNews. This is
the third credit line that Veneto Banca made available to Eximbank since acquiring
it last May. In January Veneto Banca
extended a 9.2 million euro line, which was followed by a second one, of 10
million euro, in April. The Italian
bank bought Eximbank as part of its plans to set foot in eastern Europe. The
value of the deal was not disclosed.
Veneto Banca, based in northern Italy, owns 92.3% of Banca Italo Romena
in Moldova's western neighbor Romania.
ENERGY
7. After some wrangling, Ukraine and
Moldova agreed on the price of Ukrainian electricity to be supplied to
Moldova until July 2009, according to Infotag.
Starting from 1 July 2007, Moldova will pay 0.03 dollars per 1 kWh and
the price will increase by 0.001 cents per kWh monthly. Ukraine insisted on a 15% increase in the
price of electricity supplied to Moldova up to $0.031 per kWh, plus further
monthly increases so that the price reaches $0.04 dollars per kWt (the price of
electricity in Ukraine) by the end of the year. Moldova imports about 70% of electricity from Ukraine.
8. In response to demands from distribution companies after
Ukraine raised electricity prices for Moldova, the National Energy Regulatory
Agency (ANRE) decided in late July to increase electricity rates by at
least 23%. Consumers connected to
Spain’s Union Fenosa will pay MDL 0.96 ($0.079) instead of the previous MDL
0.78 ($0.064), while those connected to state-owned RED Nord and RED Nord-Vest
will pay MDL 1.01 ($0.083) instead of MDL 0.7 ($0.058). The new rates take effect on August 3.
INTERNATIONAL TREATIES
9. After a decade-long dispute, Russia and Moldova finally signed July 19 a protocol
on indirect taxation in the country of destination, according to www.mec.md.
The intergovernmental agreement signifies that the value added tax on
Russian goods and most notably gas and oil will be levied in Moldova, not
Russia.
LEGAL DEVELOPMENTS
10. Moldovan Parliament voted in July the new law on
prevention of and fight against money laundry and terrorism financing,
according to BASA. The law compels real estate
agencies, exchange offices, investment funds, capital market professionals,
insurance companies and casinos to report monthly on suspicious transactions
worth over MDL 500,000 (USD 41,000) to the Center for Combating Economic Crimes
and Corruption (CCCEC).
11. In a bid to ease the effects of the ongoing drought and
ensure the country’s food security, the Parliament voted in July that imports
of grains be exempted from the 20% value added tax and customs duties. Moldova is experiencing a severe drought
with record high temperatures in the last 120 years that compromised this
year’s crops. The country harvested
only 430,000 tons of grains, far less than the originally planned 750,000
tons. The drought is said to have affected
80% of the agricultural areas.
Estimates put losses in agriculture from the drought at about $100
million.
12. Moldovan Parliament approved in July amendments to current legislation, obliging
mobile operators to transfer 2.5% of their sales proceeds to the social
security fund. Until recently, the
government exacted a $2 fee from GSM mobile users as part of their
subscription. The government estimates
budget receipts from the new tax at $5 million.
COMPANY FOCUS AND PROJECTS
13. Moldova-registered Filatura
Ungheni and Axiom announced
combined investments of $5.2 million to launch operations in Moldova’s fastest
growing free economic zone Ungheni Business, according to BASA. Filatura Ungheni will invest $5 million in a
factory for wool and synthetic fibers with projected annual sales of MDL 160
million ($13 million). Axiom will
invest $200,000 in a stone processing factory expected to generate MDL 15
million ($1.2 million) in sales.
Ungheni Business, located in western Moldova on the border with Romania,
has been experiencing the highest growing rates, surpassing output levels in
the once leading Expo-Business-Chisinau zone located in Moldovan capital city
Chisinau. As of April 1, 2007,
investments in Ungheni Business totaled $21.2 million.
14. PGWM,
a majority Italian-owned glass maker, will invest 1.36 million euros ($1.9
million) in the next five years to launch operations in the free economic zone
Ungheni Business in October, according to www.mec.md. The company is set to produce glass for
windows, doors and insulating glass units.
It will invest 330,000 euros this year in production lines of insulating
glass units, sliding doors and iceboxes.
PGWM will employ 40 and projects annual sales of 3.2 million euros in
Moldova, Ukraine and Russia.
15. Moldova offered in July for sale the assets
of the insolvent canning factory Provit, leaving the starting price
unchanged at MDL 30.87 million ($2.5 million) after no investors turned up at
the previous auction held in June, according to SeeNews. The repeat auction will be held August 24. Provit, based in the southern town of Cahul, was declared
insolvent in 2002. Several attempts by
the government to sell its assets have failed since then.
The U.S. Embassy appreciates
feedback on this report. Please share comments and suggestions with:
BUSINESS INFORMATION SERVICE
FOR THE NEWLY INDEPENDENT STATES (BISNIS)
U.S. Embassy Chisinau
str. Mateevici 103
Chisinau MD 2009, Moldova
Tel. +373 22/40-89-05
Fax/voice mail + 373
22/40-89-62
Email: Iulian.Bogasieru@mail.doc.gov
cc: Irina_Mitchell@ita.doc.gov
For more information on Moldova, visit BISNIS
online at http://www.bisnis.doc.gov/bisnis/country/moldova.cfm
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