Investment and Business Investment and Business Opportunities in the Republic of Opportunities in the Republic of

MoldovaMoldova

Ministry of Economy of the Republic of Moldova

Republic of Moldova: geo economically advantageous position

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Republic of Moldova: overview (preliminary data, approx.)

GovernmentRepublic,Declaration of Independence -

August 27, 1991

Population 3,56 million people (1 Jan. 2011)

Literate Population 96%

Working-age Population 1,1 million people (4th quarter 2010)

Unemployment rate 7,4 % (2010)

Inflation Rate (medium annual) 7,4% (2010)

GDP $ 5,8 billion (2010)

GDP per capita $ 1631 (2010)3

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Total recovering of the national economy from the economic crisis

Indicators 2009 to 2008, %

2010 to 2009, %

2011 to 2010,

%

2011 to 2008,

%

GDP 92,2 105,6 107,5 104,7

Agricultural production 102,6 111,4 103,9 118,8

Industrial production 75,1 106,6 109,1 87,3

Export 79,3 104,5 164,9 136,7

Import 64,2 111,9 141,7 101,8

Investment in fixed capital 61,6 96,4 131,8 78,3

including construction and assembling works

66,3 92 112,9 68,9

Transported goods 40,7 104,6 113,7 48,4

New economic development paradigm based on New economic development paradigm based on investments and exportinvestments and export

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PovertyPovertyreductionreduction

Job Job creationcreation

Risk Risk reductionreduction

Sustainable growth and developmentSustainable growth and developmentof Moldova economyof Moldova economy

Trade partners(Source: NBS, 2011)

Belarus4% Austria

2%

Others27%

Russia14%

Ucraine13%

Romania11%

Germany8%

China8%

Italy7%

Turkey7%

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January - September 2011, mil.$January - September 2011, mil.$ExporExport: 1549,7 mil. $ ImportImport: 3693,8 mil. $ CIS: 626,5 (40,4%) CIS: 1191,7 (32,3%) EU: 774,8 (50,0%) EU: 1642,8 (44,5%)

Belarus3%

Austria0%

Others20%

Russia28%Romania

18%

Italy 10%

Ucraine7%

Germany6%

UK5%

Turkey3%

EXPORT IMPORT

Foreign trade by type of product

7Source: NBS, 2011

January – September 2011, mil. $

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636,7713,9 843,8 1020,2 1258,3 1843,7

2566,62649,6

2837,5

3062,1

2002 2003 2004 2005 2006 2007 2008 2009 2010 sem I 2011

FDI - BNM data

Foreign Direct Investment in Moldova

Yearly FDI net inflow (mil. $)

84,1 73,8 146,2 190,7 239,7

533,6712,8

127,8 198,9 152

2002 2003 2004 2005 2006 2007 2008 2009 2010 sem I2011

Cumulative FDI stock (mil. $)

FDI Origin

FI ,1994 – FI ,1994 – 01.10.01.10.2011, NBS2011, NBS9

Netherlands 17,6%

Cyprus 11,2%

Italy 7,7%

Germany 8,7%

Russia 19,7%

Romania 6,4%

UK 3,4%France 2,9%

USA 3,2%

Others 19,2%

FDI Structure

Financial Services; 20,4%

Wholesale and retail trade; 17,1%

Manufacturing Industry; 14,0%

Real-estate transactions; 16,8%

Transport and Communications

7,4%

Electricity, Water and Gas; 19,3%

Hotel and Reastaurants; 1,1%

Construction; 1,1%

Agriculture; 0,9%Others; 1,9%

FDI by sector in cumulative FDI stock at 01.10.2011, NBS10

Benefits of Benefits of Investing in the Investing in the

Republic of MoldovaRepublic of Moldova

Openness to foreign investment

The Government provides equal rights for all investors;

89 states have invested in Moldova, including all member-states;

The amount of capital investment of the EU states is 64% of total FDI

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Rankings on the ease of Doing Business (2012 )

• Change in the Rank, Moldova: 18 points higher.

• Economies that improved the most across 3 or more areas measured by Doing Business:

1. Morocco2. Moldova3. Macedonia, FYR4. Sao Tome and Principe5. Latvia, etc.

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Fiscal incentives

A. Incentives when starting a business VAT refund for capital expenses on long-term investments, except for housing and vehicles (not applicable in Chisinau and Balti)

VAT and customs tax exemption for assets to be included in the share capital of the company

B.Benefits when operating

12% Corporate Income Tax – since 2012, with incentives for investors

Double Taxation Avoidance Agreements (DTAA ) with 39 countries

Corporate Income Tax in the Region

Romania 16% flat rate

Ukraine 30% for non-residents

Bulgaria 10%

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International trade benefits of the RM

VAT reimbursement on export activities;VAT reimbursement on export activities;0% corporate income tax – up to 2012; http://www.fisc.md/en/lege/0% corporate income tax – up to 2012; http://www.fisc.md/en/lege/Double Treaty Avoidance Agreements with around 44 countries.Double Treaty Avoidance Agreements with around 44 countries. 15

Competitive Labor & Operational Costs

Moldova1,1 €/hourMoldova

1,1 €/hour

Romania4.0 €/hourRomania

4.0 €/hour

Workforce costs in the region

Bulgaria4.0 €/hour

Bulgaria4.0 €/hour

Ukraine 2.0 €/hour

Ukraine 2.0 €/hour

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Free Economic Zones

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Industrial Parks

The Law on Industrial Parks (№ 182 from 15 July 2010): 30-year term for the industrial park; Free change of land use; Free transfer of state land to the company administrator; Opportunity to lease state land with a 30% discount; State contribution to the infrastructural and technological

development; Limited by and controlled Government inspections; Assistance from local authorities and the Council to promote

investment projects of national significance;

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12 projects for establishment and operation of industrial parks :

• 3 – based on the joint stock companies with the majority state capital

• 5 – based on the public property assets

• 3 - based on the private property assets

• 1 – within subzone no.3 of the FEZ „Balti”

from which:

3 – are obtained the Title of Industrial Park, including 1 park is in construction phase, registered according to the Law 182/2010

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Promising location of the industrial parks in the

regions of Moldova

OcnitaOcnita

Feasibility studies: http://mec.gov.md/sector/121/2604

Successful Investors of the RM

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THE WORLD FAMOUSTHE WORLD FAMOUSMilestii Mici Milestii Mici

Largest wine cellar by number of Largest wine cellar by number of bottlesbottles

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The cellars of the Milestii Mici wine-making plant in Moldova contain over 1.5 million 1.5 million bottles of winebottles of wine. The bottles are stored in 55 km (34 miles) of underground galleries excavated in lime mining operations. The first bottle was stored in 1968, and new vintages are added each year.

Cricova – Moldova’s underground treasure

In just 15 km North of Chisinau, lays a of subterran city, a labyrinth of avenues and streets, named after wine types. Cricova’s museum stores the country’s national

collectional of 1.3 millions of bottles, the oldest one beeing from 1902.

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