Investment Opportunities in Moldova
IT sector
The IT sector in Moldova has a long history. Producers of hardware and companies specializing in software employed approximately 40,000 people during the 1990s. More recently, the activity has concentrated on software and systems development, with associated PCB design etc. The skills that are currently available in Moldova are concentrated in this area; manufacturing, assembly and testing skills are still present, but are dispersed through other sectors. Currently there are 7 high education institutions and 3 colleges, which enrolled in 2005 about 2057 university students and 735 college students at ICT faculties.
There are more than 90 active companies in the IT sector, which reached a total turnover in amount of US$ 279,9 million in 2005, that is with 52% more than the previous year.
Their fields of work include:
- ¡¤ Development of hardware and embedded software for the control of technological processes, telecommunications, special purposes;
- ¡¤Software applications for business;
- ¡¤Customized software;
- ¡¤Encryption and data protection software.
There is no usually strong competition among the local producers concerning ready-made software products because they usually offer quite unique products and don¡¯t compete directly between themselves. The competition can be only in IT services, for example in web development. Regarding the products as such, only two companies provide banking related software, one company-telephone billing software, three companies-content management software etc.
Programming is the sub sector of IT industry that has the biggest potential in terms of export potential. The size of the local market of programming is limited by the size of the country and its level of economic development. The yearly volume of exported programming services is estimated to minimum US$1,403 thousand.
Electrical and radio-electronics sector
Traditionally, electronics formed a key part of the Moldovan economy employing about 25,000 people, with famous research and production facilities, supplying and subcontracting to the entire Soviet Union, notably to the defense industry. In the years of decline following the break-up of the Soviet Union, its main markets were considerably reduced.
Currently, the electrical and radio-electronic sector comprises around 20 big enterprises and scientific institutions and many smaller ones. The total number of employees is about 5, 000 people.
The range of products offered by Moldovan companies is very large (Non-destructive testing equipment, connectors for transducers, recharge devices, automatic devices, power electronic devices, automatic programs,FM portable receivers, electric instant water-heaters, pumps, programming-electric modules, embedded software, custom software, program for micro-controller, measuring stations for diesels, automated system for control, systems for measuring energy resources, Smart Integrated Metering System, micro-wires, cable-systems and system-solutions, electronic industry component parts, electronic and automotive industry component parts, high-voltage dividers for radio, electronic equipment, printed circuit boards, products of microelectronics, TV sets modules, cash registers etc).
According to the data of Customs Department of the Republic of Moldova, in 2005 the value of exports of the radio-electronic and electrical sector increased by US$339.2 thousands (33.5%) and amounted US$22382 thousands.
The value of imports of the radio-electronic and electrical sector continued to increase with the growth rate of 53.2% in 2003 and constituted US$90261 thousand.
After decades of activity in the sector, Moldovan companies have obtained particular expertise in the technologies described below:
¡¤Hybrid electronics with thin layers, hybrid circuits
¡¤SMT
¡¤Semi-conducting structures, Silicon with integrated microcircuits
¡¤ Wire networks, including multi-layers networks
¡¤Assembling electronic devices
¡¤Material technologies and electronic structures
¡¤Electronic and optic-electronic devices
¡¤Micro-sensors and micro-converters
¡¤Metallic micro-fibre, semiconductors, thermo-electrics and devices based on thermo-electrics
It is strategically important for Moldovan electronic industry to attract investments in the following sectors:
¡¤Telecom networks
¡¤Fibre optics
¡¤Electronics for consumption
¡¤Industrial electronics
¡¤Semi-conducting electronics
¡¤Medical electronics
¡¤Assembly technologies
¡¤Integrated circuits
¡¤Circuits for automobiles
¡¤Power electronics
¡¤Converters etc
Constructions and real estate
The construction industry, along with other industries creates the country¡¯s investment potential accounting 9-10% of GDP. The availability of local raw materials presents a significant advantage for the development of the sector. Raw materials deposits are sufficient for satisfying Moldova¡¯s needs, certain quantities are also exported, such as: limestone, granite, natural stone, clay, raw materials for brick manufacturing, etc. There is some mineral sediment, which could be used for the manufacturing of construction materials: heat-resistant glue, chalk, ceramic glue and quartz sand for glass production.
The 2001 year has served as a turning point for Moldovan real estate market. After three years of decline caused by the Russian crisis in 1998, finally the market has changed its course and recorded a rocketing growth. Construction of both multi-store buildings and individual houses has intensified.
Housing.
During 2002 and 2003 the demand has exceeded by three times the supply, being explained by an increase of the purchasing power, caused by significant transfer of incomes of Moldovan residents working abroad, 22% of which are being spent on purchasing of real estate and automobiles. Likewise, 80£¥of all residential real estate supplied on the market is concentrated in Chisinau, this trend being demand driven. During the past 2 years the housing prices increased 2.5 times, while for certain types even 3 times. During the first quarter 2004 the prices increased by 15-20%, this concerns both ¡°cheap¡± and elite housing.
Non-residential real estate.
The situation is rather similar with regard to non-residential real estate market-demand exceeds supply several times. The demand for non-residential real estate is directed mainly towards commercial and office spaces, given a lower investment payback period (7-10 years). Also, demand has increased for large spaces, the average area of real estate objects sold averaging 524.8 square meters. Undersized supply is explained by experts by the fact that non-residential real estate owners (in particular of commercial spaces) prefer to lease out, rather than sell.
Therefore, the construction industry is a promising sector for future investment. There is no special regime for the operation of foreign construction companies in Moldova, and they enjoy national treatment.
According to the Law on Licensing of Certain Types of Activities No. 451-XV (30 July 2001), the following activities in the construction sector are subject to licensing:
¡¤ Design for all the categories of construction, urbanization and (or) engineering, reconstruction, and restoration;
¡¤ Building and (or) engineering constructions and technical maintenance networks, reconstruction, consolidation and restoration.
Tourism
The geographical Location of Moldova, its climacteric conditions and natural recreational resources are preconditions for the tourism to become one of the most profitable branches of the national economy. Notwithstanding a decrease in the number of tourists that have visited Moldova in the past few years, resulting from the decrease in transit tourists, a structural change of this industry is noticeable and namely the diversification of countries where tourists are coming from.
In 2005 about 57,231 Moldavians have traveled abroad, while close to 25,073 of foreign people have visited the country, the greatest number of tourists has come from Turkey, Ukraine, Russia, USA, Romania, Belarus, Germany, Italy, Bulgaria, Netherlands and Austria.
At present Moldova may propose foreign tourists the following main types of tourism products: rural tourism, national and ¡°wine path¡± tourism, and business tourism. All of these services are available throughout the year and offer a relatively low price.
Rural Tourism. This type of service allows tourists to ¡°roam¡± the picturesque places of Moldova, to get an insight into the historic culture and current customs, traditions and rural way of life.
National Tours.Moldova is a small country with distances from its Northernmost and Southernmost points being 350 km, and from the East to the West - 1 50 km. Tourists coming to Moldova have the possibility to see the whole country within a relatively short period of time.
Wine Path Tours.Moldova has rich traditions and a well-developed vine growing and wine producing industry. On wine routes, which spread out like a web starting from Chisinau, visitors can appreciate, along with European wines like Chardonnay, Pinot, Riesling, Cabernet and Aligote, the local, high quality wines like Rara Neagra, Feteasca, Plavai, etc. Excursions to world renowned underground wine cellars such as: Cricova, Purcari, Ciumai, Romanesti, Asconi, Cojusna, Milestii Mici, etc., are organized for tourists.
Business Tourism.This type of tourism is new for Moldova, as it involves the organization of various events (meetings, conferences, seminars, symposiums, etc.) on the territory of the Republic. The favorable geographical Location, traditional hospitality and relatively low prices are good preconditions for the development of this type of tourism.