The U.S. Department of State’s 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.  The Investment Climate Statements are also references for working with partner governments to create enabling business environments that are not only economically sound, but address issues of labor, human rights, responsible business conduct, and steps taken to combat corruption.  The reports cover topics including Openness to Investment, Legal and Regulatory Systems, Protection of Real and Intellectual Property Rights, Financial Sector, State-Owned Enterprises, Responsible Business Conduct, and Corruption. To access the ICS for Moldova, visit the U.S. Department of State Investment Climate Statement website.

Executive Summary

Under the new pro-reform government, Moldova is making progress on economic reforms and strengthening democratic institutions.  The pro-reform message voters sent when they chose Maia Sandu as Moldova’s first female President in November 2020 was solidified when the pro-Western, anti-corruption Action and Solidarity Party (PAS) won snap parliamentary elections in July 2021. The government enjoys wide support among the business community.

In December 2021, the government secured a 40-month, $560 million governance-focused program with the International Monetary Fund (IMF). The government also unlocked new EU MicroFinancial assistance and secured an Economic Recovery and Resilience plan of up to $660 million for 2021 – 2024 to help Moldova meet its development priorities.

In 2021, Moldova’s economy grew by a record 13.9%, following an almost 8% contraction in 2020. Unemployment decreased, outmigration slowed, and consumer confidence grew.

However, there are major concerns facing Moldova’s investment climate in 2022. Russia’s invasion of Ukraine has had an immediate and significant negative impact on Moldova’s economy. Almost 20% of Moldova’s goods were imported from Ukraine, Russia, and Belarus before the war; with those supply routes now frozen, Moldovans have had to substitute goods from the EU at significantly higher costs.  Moldova relied on the port in Odesa and Ukraine’s railway system for much of its trade and now must pay significantly higher transport fees for goods to be trucked in from Romania via the land border.  Experts predict GDP will grow by at most 0.3% in 2022.

The government is committed to strengthening Moldova’s investment and business climate to attract foreign investment, which will help mitigate the negative economic impacts of the COVID-19 pandemic, energy crisis, and disruptions to Moldovan economy because of Russia’s invasion of Ukraine. The government continues to deal with the fallout from the massive bank fraud in 2014, when more than a billion dollars was stolen from Moldova’s state coffers.  Efforts are being taken 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 105 out of 180 on the Transparency International Corruption Perceptions Index.

Moldova has adopted modern commercial legislation in accordance with WTO rules following negotiations linked to Moldova’s WTO accession.  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.  In March 2022, in response to Russia’s war in Ukraine, the government formally applied for EU membership. 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. Moldova now exports over 80 percent of its goods to European, North American, and other non-Russian markets. U.S. assistance, particularly in the agricultural, wine, information technology, and other key sectors, has been critical in promoting a competitive Moldova that is well-integrated into Western markets.

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.