Moldova - Country Commercial Guide
Investment Climate Statement (ICS) 

The Investment Climate Statement Chapter of the CCG is provided by the State Department. 

Last published date: 2021-10-06

The U.S. Department of State Investment Climate Statements provide information on the business climates of more than 170 economies and are prepared by economic officers stationed in embassies and posts around the world.  They analyze a variety of economies that are or could be markets for U.S. businesses.

Topics include Openness to Investment, Legal and Regulatory systems, Dispute Resolution, Intellectual Property Rights, Transparency, Performance Requirements, State-Owned Enterprises, Responsible Business Conduct, and Corruption.

These statements highlight persistent barriers to further U.S. investment.  Addressing these barriers would expand high-quality, private sector-led investment in infrastructure, further women’s economic empowerment, and facilitate a healthy business environment for the digital economy.  To access the ICS, visit the U.S. Department of State Investment Climate Statement website.

Executive Summary

Since gaining independence in 1991, Moldova has made some progress in adopting free-market economic reforms and strengthening democratic institutions.  While the historic election of a reform-oriented president in 2020 was a positive sign, her authority is limited, and Moldova’s investment climate still presents significant challenges.  The government resigned in December 2020, leaving a caretaker government with limited powers to address the dual impact of the COVID-19 pandemic and the most severe drought in recent history. Moldova successfully completed a $178 million International Monetary Fund (IMF) program and implemented some financial sector reform, but political turmoil precluded a second $550 million program.   In 2020 Moldova’s unemployment increased, GDP declined by over seven percent, and many small/medium enterprises (SMEs) closed as the pandemic dragged on. The interim government is not empowered to implement meaningful reforms or address local business concerns; with no visible end to the ongoing political crisis in sight, it is uncertain when a new permanent government will be in place.

The government continues to deal with the fallout from massive bank fraud in 2014, when more than a billion dollars was stolen from Moldova’s state coffers.  More efforts are needed to implement reforms, investigate, and prosecute those responsible, and tackle the pervasive corruption that continues to undermine public trust and slow economic development.  Moldova ranks 115 out of 182 on the Transparency International Corruption Perceptions Index.  Major investment climate concerns in 2021 include ongoing political uncertainty, macroeconomic and budgetary risks related to the COVID-19 crisis, external budget support, foreign malign economic and financial pressure, and a lack of domestic consensus to maintain reform momentum.

Thanks to negotiations linked to Moldova’s WTO accession, modern commercial legislation has been adopted in accordance with WTO rules.  The main challenges to the business climate remain the lack of effective and equitable implementation of laws and regulations, and arbitrary, non-transparent decisions by government officials to give domestic producers an edge over foreign competitors in certain areas.  For example, an environmental tax is applied on bottles and other packaging of imported goods, but not levied on bottles and packaging produced in Moldova. Additionally, the government may liberally cite public security or general social welfare as reasons to intervene in the economy in contravention of its declared respect for market principles.  There are reports of problems with customs valuation of goods, specifically that the Customs Service has been applying the maximum possible values to imported goods, even if their actual purchase value was far lower.

In June 2014, Moldova signed an Association Agreement (AA) with the European Union (EU), including a Deep and Comprehensive Free Trade Agreement (DCFTA), committing the government to a course of reforms to bring its governmental, regulatory, and business practices in line with EU standards.  The DCFTA has helped integrate Moldova further into the European common market and created more opportunities for investment in Moldova as a bridge between Western and Eastern European markets.  The Government approved an Action Plan for the implementation of AA/DCFTA in 2017-2019.   Although enough EU-required reforms were completed to receive two of the three tranches of the 2019 EUR 100 million in macro financial assistance, the government failed to meet requirements for the third tranche.   Moldova received the first tranche, EUR 100 million, of the emergency EU COVID-19 assistance in 2020, but have not met the requirements to receive the second tranche.

While some large foreign companies have taken advantage of tax breaks in the country’s free economic zones, foreign direct investment (FDI) remains low.  Finance, automotive, light industry, agriculture, food processing, IT, wine, and real estate have historically attracted foreign investment.  Largely through USAID programs, Embassy Chisinau has supported the development of a number of these emerging sectors, yet risks remain.  The National Strategy for Investment Attraction and Export Promotion 2016-2020 identified seven priority sectors for investment and export promotion: agriculture and food processing, automotive, business services such as business process outsourcing (BPO), clothing and footwear, electronics, information and communication technologies (ICT), and machinery.

Private investors, including several U.S. companies, have shown strong interest in the ICT sector, especially after Moldova established a preferential tax regime for the sector.  Improvements in the strength and transparency of the financial sector also helped attract interest.  Many U.S. businesses have explored opportunities in the agricultural and energy sectors.