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The export potential of the food industry of the Republic of Moldova: the wine cluster; the cluster of the vegetable and fruit preparations.
Business cluster – geographic concentration of international business, suppliers, associated institutions in particular filed. Is also characterized resources reach critical fresh rod (prag) with decesive competitive advantage: - Porter cluster affect competition in 3 ways: - Increasing of productivity of component in cluster - Driving innovations - Stimulating new business in filed Classifications of cluster (technical point) - Horizontal - Vertical – supply chain cluster Origin point: - Techno cluster (ex. Silly way India) - Historical know-how = based clusters (ex. London financial Center) The concept of export potential . The components of export potential of a branch of a country consists in: - Overproduction – the amount exceeding the absorbtion capacity of domestic market - The competitiveness of overproduction through the price and trademark - The corresponding demand of the external markets Factors that influence the export potential are the following: - Direction of exports since the prices of the same products vary through different regions - The composition of the exports (the degree of processing of raw materials )bulk wine, bottled wine The category “food staffs, tobacco, beverages” represent the 1st place comparative advantage of RM. It share in total exports involved : 1998 – 55,4%; 2008 – 19,6%; 2009 – 21,7%. Wine cluster- the competitive groups: The related and supporting branches of wine cluster 1) groups cultivation – total surface of vineyards, in 2006 150 th. Ha which 26% offers to wine varieties , 14% mass varities. 2) Sugar industry 3) Bottles industry 4) Label’s industry 5) Wine tourism (tertiary sector) 6) Elaboration and maintains of trademarks 7) Wine industry : 15 wine enterprises, 126 primary winemakers, 6 secondary production wineries, 18 mixed wineries that do both, 7 brandy factories - Dry table wines 10% - Semidry and semisweet wines – 75% - Fortified wines – 5% Moldavian wine exports on the Russian market: Moldavian producers lost the Russian market due to the political events but also due to some real economic problems: The reinforced competition from the part of the Central European countries (Ukraine #2, Armenia #7, 2009), West European countries (France #1, Italy #3, United Kingdom #4, Spain #5, Germany #6), but also American countries (USA #9, Chile #13, Argentina #17), which managed to promote the trademark of the “New World” wines. Evolved market architecture – the consumers increase their preferences for dry wines with 12 percent alcohol, while Moldovan producers used to export mostly semisweet and semidry wines, with an alcohol percentage of 9 percent (low-price (US$1.80–2.20/bottle) and medium-price (US$3.00/bottle) markets. Capacity constraints in Moldova’s wine sector. For example, the rising level of wine imports of Moldova from Romania. The ignorance of the need to protect and maintain our wine trademarks. Political problems. Moldavian wine exports on the E.U. market
Ukraine – fresh grapes (80.5 %) → Germany. • Elaboration and maintenance of the trademarks of the vegetable & fruit preparations. “emerging products”: beer made from malt. • Labels industry.On the West-European markets. The Europeans consider the wines to be sensitive products → their production is often subsidized. Belarus to E. Many tariff and non-tariff barriers for the Moldovan wine exports in the E. Poland (5. Romania. exp. the European wine market (total imports of the E. milk). Moldova’s exports in the group “22.Vegetable. The cluster of the vegetable & fruit preparations Fruits & vegetables growing. juices. Spain. Georgia. • Plastic and paperboard packages industry.).5 % in gr.1 %) → Russia.U. ← abundant irrigation. Belarus (27. registers positive rates of output growth but diminishes its share in the total exports of our country.gems. (75. fermented beverages. Kazahstan.S. “stars”: nonalcoholic beverages (excl.: 77.3 % prepared or preserved vegetables. providing quotas for them. Ukraine (8.8 %).U. 11 % cucumbers preserved by vinegar Juices Direction 2009 year: E. because of: Exporting the ordinary low. Poland. 16. unable to gain competition with similar wines from Italy. 2009 year: Russia (32 %) “snail”: vermouth and the like. 13'985'000 USD 2009 year: E. → Autonomous Trade Preferences applied from March 2008. spirits and vinegar Evolution 2005 year: 314'548'000 USD (29 % in total export) 2007 year: 135'503'000 USD (10 % in total export) 2009 year: 159'462'000 USD (12.4 % in total export) Composition Direction 2009 year: 2005 year: Russia – 75 %.: 2007 y. Moldova is continuously increasing – from 0.I. “traditional products”: wine of Belarus – 12 %. mineral and Kazahstan (9.S. Kazahstan.52 billions USD (2001) till 16. marmalades to C.136 % in 2008 (I place among the C. cognacs (16.S. exclude the wines with < 15 % of alcohol. . 2008 y.7 % in gr. 14 % juices. Still. fruit.I. vinegar and substitutes for vinegar. 12'726'000 USD.9 % juices.S.Beverages. exporters to this market) till 0.and medium-price wines (9 % alcohol). nut preparations” Evolution 2009 year: 50'117'000 USD Composition 2009 year: to E. R.: 66. water. Poland R. Portugal and France. Moldova’s exports in the group “20.9 %) aerated waters (apă plată).5 % .U.-27) expanded from 7.045 % in 2001 (II place among the C.U.I. (35.U.U. employing 3000 persons. nes. use of fertilizers etc. ). 2009 y. Vegetable & fruit preparations industry → 25 medium and small enterprises (2008).5 %).8 %) C. the Moldovan wines are not competitive so far. exp.5 %).I. 41'670'000 USD.19 billions USD (2008) and the share of the R. exporters to this market. • Bottles industry. (63. Austria. 6 %. • Sugar industry.
Solution: • • • • to elaborate local unique wine variety which will be associated with the country to reorient production toward dry wines to involve modern production facilities to invest in new developments (screw caps. crisis of overproduction. the average white grape yield was 4. Moldova still needs to improve a lot and is suffering from underutilisation of it’s capacity. Increased competition. which compares poorly to that in key competitor countries such as Georgia where yields in 2001 were about 5 MT/ha. labelling can be old-style Insufficient winery management Underutilisation of factory capacity Old age of vineyards Large stocks of wines The yield productivity of Moldovan vineyards is low. The wine processing industry in Moldova comprises 197 of wine producers that specialise in producing still wine. etc LACK OF ADAPTABILITY TO CHANGES Modern world winemaking industry has suffered sufficient changes in the last 10-15 years.Seminar The yield productivity of Moldovan vineyards is low.2 MT/ha) and Romania (3. sparkling wines. shifts in consumption. modern design. 2. .4 MT/ha). limited use of irrigation.8 MT/ha. little export activity in EU as yet EU – rather new (in comparison to Russia) and unknown market for Moldova − No previous recognition of Moldova in the EU market − Late penetration into the EU market in comparison to Australia. as well as farmers’ limited technical skills who inherited small areas of vineyards after the privatization process. world economic crisis – all these factors make difficulties for Moldovan producers to penetrate and be competitive in the EU market. 3.Solution: stimulate Moldovan government and attract financial resources from foreign investors through NGOs. wine storage and bottling. COMPETITION High competition in the EU market together with Moldova’s lack of recognition abroad. modern technologies imposed producers all over the world to be extremely reactive in order to remain competitive. wine experts. mainly from Western Europe. Resources: − − − Microsphere Lack of financial resources for country and companies promotion Insufficient marketing and institutional capacity High cost of credits − − − − − − − − − Some “vitis labrusca” varietals unmarketable in EU 70 cl bottle size problem Overly 'sweet' wine style for much of EU countries Some wineries need complete re-equipping Little innovation in new developments such as screw-caps.5 t/ha. in order to promote Moldova’s image in EU. penetration is more difficult and competition is higher − Insufficient government support. banks. The primary reason for the low yields is due to the limited application of inputs (particularly fertilizer and crop-protection chemicals). In this sense. etc.3 WEAKNESSES Macroeconomic factors: − Excessive reliance on Russian export market (now suspended). for instance in 2008. such as Bulgaria (3. and those of Australia where average yields are over 13 MT/ha. Core problems: 1. Chile. innovative marketing approaches) − 2. etc. insufficient collaboration between and within government and private sector − Absence of a national well-planned wine-making strategy for product penetration and promotion onto the EU market. although they were not significantly higher than other major rivals in the CEE. trade fairs. projects. LACK OF FINANCE FOR PROMOTION Difficult economic situation of Moldova. Despite investment to purchase modern equipment for grape processing. capacity remained low with most enterprises using only 20-30 percent of their production capacity. Solution: country promotion campaign by means of mass media. and spirits. Despite these yields remain extremely poor in comparison to international standards such the EU-15 average of 7. recent political vulnerability impeded the allocation of funds for country promotion abroad.
ecological and social order. Simultaneously. Since agriculture in RM is mostly based on manual labor. In the agricultural sector. At the beginning of transition. Bioinspecta (Switzerland).9 % (II place). Produces of the vegetal field”. it takes part in the respective clusters of the food and beverages industry. the textile industry of the R. Allocation of governmental subsidies to producers and attracting local and international investors. which led to the failure of cultivation technologies and to the drastic reduction of investments into this sector. Currently. Agricultural cluster doesn’t form independent cluster like industrial cluster. Intensification of education activities and personnel consulting to prepare them for obtaining and processing such products. By supplying raw materials. 1. that leads to education of consumers. Livestock and produces of the animal field”. the crisis of the textile enterprises was due to: . According to Veaceslav Ioniţă. The agriculture of RM confronts a series of problems on the economic.5 % in 2009 year (in conditions of world economic post crisis period) • the category „Livestock and produces of the animal field” had registered an increase of its share till 1997 year but subsequently it diminished to just 0. Only large firms can afford passing to modern production technologies and consequently. it doesn’t form clusters independently. The situation aggravated as a consequence of the application of the privatization program in the 90’s. Strengthening of the technological and research capacities in order to ensure all the technological processes for obtaining ecological products. Main niche in market produce influence consumers. have kept an important share in the total export – 13.to be adaptive to market trends and innovation 17. The category „XI.5 % in 2009 year).2 % (2008 y. 6.7 % (2009 y. These inspections are made by controlling institutions from European Union. Peasant households are rather small and they need to be consolidated. The competitiveness and the export potential of the Moldavian light industry: textiles. Textiles and articles thereof” in 2007 for the first time situated on the I place (20. Such inspections are rather expensive and they require significant investments. 5. • It directly provides two categories of exports: “II. Producers from RM are used to work without respecting the norms imposed by the European Union. Ecocert (France) etc. because of immigration of population in rural areas. 4. Moldova manufactures from imported raw materials → the category XI has got a high share in the total imports of our country (7. there is a deficit of labor force. During transition. garments. 2009 year – 19. 7th place in Romanian. The productivity of this sector is 2 or 3 times lower than in Europe. “I. However. Textiales are relatively competitive. if this tendency persists. carpets. to interest the participants in this type of activity and to support farmers in their transition to ecologic agriculture. Moldova. Clusters have the capacity to find investments. A good opportunity for the development of the agriculture sector in RM could be ecologic agriculture. The power of the cluster comes in it capacity to interact with different sectors of the economy. the consolidation. The main restrictions of EU are the administrative barriers: certification and quality of goods. despite fluctuations due to their sensitivity to the climate conditions. their evolution differed substantially: • the produces of the vegetal field. The export potential of the agricultural sector of the Republic of Moldova.) of the total country’s export. 3.6 %) in the total exports of R. such as BioKontrol (Hungary). Currently RM does not have a national system of inspection and certification of households which obtain and process agricultural products. than the consequences will be critical. 18. 2. currently the producers from RM cannot face efficiently the restrictions imposed by the EC. • The pure ecological agricultural products could offer the possibility of developing a promising and independent cluster. Past crisis increases the demands for agriculture. Features of the Moldovan agricultural sector: • So far. the situation in the industrial sector in RM can be compared to the situation in Europe in 1970’s.) & 21. for this we need to solve a wide range of problems: Creation of a system of coordination of activities in the field of ecologic production. to advanced methods of conducting business. We still have to work on it. Nuts are relatively competitive 15th place among countries supplying this product in EU. leaders of carpets in Russian market.
distributors of accessories. skirts 61. But low wages in Moldova hinder the further expansion of this industry due to the lack of labor force. continues to remain of critical importance because it is based on one of the most important resources available in Moldova.8 % in exp. a strong and competent labor force. trousers. It is a sector with long-standing traditions in exporting a wide range of products. Over the last five to seven years. crochet: Romania 1) Women's blouses & shirts. The breaking of the traditional links with suppliers of raw materials and external sales markets. not tufted/flocked 2009 year: 7. They rarely have own brand-names or even own design products. The geographical location between the east and the west (relatively low costs of transporting). Germany.8 percent in 2007 and was mainly textiles (Own Label products) while the EU market for C&M services represented 90. Romania. exp. and Belgium. knitted or crocheted 57. These occupy leading positions in light industry. Their production has utilized low wages. which requires four to six weeks.3 %) 5702.9 % in tot. The recent currency appreciation reduced the competitiveness of the clothing sector and caused exports to decline in the first nine months of 2008. It. Out of the total value of textile and apparel products. . Poland. as compared to China.7 %). The free access on the domestic market of the import garments. Moldova has recently attracted some investors and contracts which had left Romania due to rapidly rising wages there. even these wages may be too high compared to Asian producers. Ukraine (13. Romania (13. and spare parts. such as embroidery service providers.U. Over 95% of the production is exported. Composition Direction 62. the creation of the Joint Ventures. jackets. Quick responses to incoming orders ← lack of alternative employment opportunities. Only few Moldovan firms are able to move up the value chain as a quick-turnaround supplier to the European fashion industry.2 percent and the main clients are Italy. The decrease of the purchasing power of the population as result of the general economic crisis. knitted or crocheted. Ukraine floor coverings woven. jackets. 2) Women’s suits. equipment and gadgets. 2) T-shirts. dresses. the recovery by the exports redirecting to the E. The FDI. It is the country’s top export and one of the most profitable and viable industries in the economy. Evolution 2009 year: 9. 57 Seminar: The successful brands made in the textiles cluster of the Republic of Moldova as a reflection of the competitiveness stage of our economy. the CIS market represented only 9. Carpets and other textile Russia (62. due to: The cheap & qualified domestic labor force → the Lohn operations.U. Germany. crochet: Romania 1) Men’s suits.8 floor coverings: %). Textile articles not knit or Italy (48 %). . Carpets & other textile Russia. Later on.7 % in tot. Companies are mainly engaged in contract manufacturing for Italian and German firms. The canceling by the E. Textile articles knit or United Kingdom. There are 13 enterprises of textile and 7 enterprises of sewing industry. and academic facilities for labor force training. 2009 year: 99. exp. of both tariff & non-tariff barriers for the Moldovan textile exports → Outward Processing Traffic arrangement (the duty-free importation of all inputs + the taxation of the value-added portion only upon re-export to the E. Textiles and clothing as well as shoes have become important export articles. One of the key advantages for Moldova is its proximity to European markets. certain support industries were created and are slowly developing. The light industry ranks second after agriculture in its size. gr.U.6 % in tot. which allows C&M orders to be filled in four to five days.On the other hand. exp. Turkey. 2009 year: 1. vests.. Italy.
throught :. 4. underground economy is located in the Distribution sphere:. peculiarities of the R.29%. ♦Forgery of money and securities. lack of social assistance of participants to the underground economy. unauthorized by the state administration. due to Institutional factors and historical background 1989 – the size of unofficial economy: RM. railroad transporting. Institutional: low transparency in decision making process. The forms of the underground economy: classification according to the way of their influence on the competitiveness of the national economy. the annual volume of narco business can be estimated to 200-260 mln $ 4. ♦Black market. Social effect: imply the decrease of funds destined to public social services. The forms of the underground economy may be classified according to the way they influence the competitiveness of the national economy: • Quality of the state policy – showing the corruption of the state administration: ♦Bribery. Undetermining the production activity.In transition countries. circulation and consumption sphere. Political implying interest of some groups to increase the political power 5. The underground economy comprises those forms of economic activity. ♦Illegal tax exemption. software sector. Worsening of business climate (increase of transaction cost) b. as corruption penetrates also the judiciary system. but the way of state implication Causes in RM: 1. Increase of the service sector share both in GDP and labor force distribution – intangible goods requires good legislation 4. some roots of drug trafficking in RM. unlike developedproduction -The smuggling – the economic spheres with largest share of smuggling: energy distribution sector (Trannistria). Increase of state implication in economy: level of corruption is not determined by the extend of state implication. ♦Illegal migration of the labor force (undeclared incomes). Poverty causes: lower GDP/ cap -> higher tendency to develop corruption 3.19. ♦Illicit privatization.formation of political and economic oligarchy. ♦Illegal barriers to entry the sectors – the racket. leading to the failure of policies supporting small business and paralyzing the state institutions -crime expansion. Political effects: . • Demand parameters: ♦Counterfeiting of products. ♦Illicit distribution of the foreign technical assistance. ♦Dilapidation – money laundering.18%. policy generating rent seeking of public officials 3. 2. The causes of the underground economy in the world countries. Economic effect imply the decrease of economic growth through a. • Firms’ strategy & rivalry: ♦Tax dodge (evasion). Undetermining the state economic policy through distortion of the Macroeconomic indicators d. Degradation of public and private investments. increase of the social inequity gap. Russia. Environmental effect 3. . Uzbekistan – 33% 2. Moral causes: mentality of population. these forms mostly relate to the external environment: ♦Smuggling. Paper of Mauro estimated that an increase of 2 points in CPIleads to an increase of investments with 4 points and additional ec growth of 0. • Resources’ endowment & Structure of the national economy – implicitly. not reflected in the official statistics.5% c. Legal causes: controversial and out of date legislation 2. Max: Azeirbaijan. ♦Fictitious bankruptcy of the enterprises. which are harmful to the development of the country. cigarettes sector. Social and moral: public tolerance of corruption The effects of the underground economy: 1. ♦Human trafficking. ♦Public procurements’ manipulations. Moldova. Economic causes: low wages for budgetary employees. Georgia. Causes of the underground economy: 1.excessive rotation of financial means in the distribution.
2 (#4) 9.2 0.The methods of estimating the size of the underground economy. also 30 % had an informal job.0 (#1) 9.4 (#1) 9. 1999 – 108 %.3 (#1) 9.6 0.2.6 0.9 0. 11. of some world countries.5 2003 14. • Physical inputs (electricity consumption)→services sector & others.7 20.9 corresponding to the rank of 105 among the 178 countries (the last rank detained by Somalia).1 0.3 0.2 (#3) 8.6 1. 2010 year 3. • Labor force statistics.4 4. Corruption Perception Index score & world rank The country New Zealand Denmark Singapore Sweden Finland 1999 9.9 1.20.3 0.1 3.6 0.3 9.1 6.4 6.1 0. Moldova.8 6. the National Bureau of Statistics applied: The Labor force statistics method: in 2009.3 (#1) 9. •Transactions method. the Republic of Moldova scored 2.7 1.6 3.4 2008 2.3 1. • Tax audit. The international ranking of R.7 % were engaged in the informal sector.1 1.5 0.5 6.4 0.7 0.0 0.5 0.3 1.1 0.0 0.0 2008 5.6 0.1 (#7) 9. of the total labor force. Corruption Perception Index (the scale is descending of 10 to 0.4 1.1 - Economy hidden formal sector 2003 0.2 23. Center of Studying the Market Problems attached to the Ministry of Economy of the R.7 in Total 2003 Agriculture Industry Buildings W & R Trade Hotels.4 (#3) 10. estimating the underground economy in R.2 2.4 2. •Currency demand method.4 7. Moldova applied the Currency demand method.0 2008 3.2 0.3 (#2) 9.3 1.P.1 4.6 2.8 The international assessment.5 1.I.2 0.8 6.0 2. The National accounting statistics method: Contribution (%) to the formation of the GDP Economic activities Informal sector Households production for their own consumption 2003 10.5 2. Moldova according to the Corruption Perception Index.8 (#2) 2009 9.7 30.8 1.6 2008 0.0 0.0 9.2 0. with 0 representing total corruption and 10 total lack of it) → according to the CPI 2010. 2002 – 65 % For the next years. communications Other services Total Total. Indirect approaches: • National accounting statistics.3 (#1) 9.9 (#6) 2010 9. restaurants Transports.2 (#3) 9. Table 6. Moldova had registered: 1994 – 48 % to the official GDP.9 14.6 0.0 2. Evolution of the C.5 7.2 (#4) . There are several methods of estimating the size of the underground economyi: Direct approaches: • Sample survey.2 3. the structure of the unobserved economy in the R.3 0.4 (#3) 9.
Legalizing the capital. 2. Moldova: since 2005. The relevant legislation. 16 December 2004 – Guillotine I and Law No.2 (#146) 1. Creating a viable private sector: The fiscal reform that was launched in April 2007 year: A zero rate of the Corporative Profit Tax on the profit that is reinvested is introduced starting with 1 January 2008. Strengthening the capacity of the NGOs to lobby. 2000) mentioned 3 main elements of a successful campaign against corruption: The will.7 (#174) 6.8 (#68) 3.4 (#58) 2. raise public awareness - Canceling of the historical debts of the enterprises.5 (#26) 3. represented by the NGO’s 21.3 (#63) 2. and economic effects of the underground economy in the Republic of Moldova. environmental. the introduction of the ASYCUDA World (Automated SYstem for Customs DAta) developed by the UNCTAD.8 (#94) 6. Promoting an active civil society. The directions of the anti-corruption policy : Adopting and implementing the European and other international instruments expanding international cooperation (European Union-Republic of Moldova Action Plan 2005-2008 years.3 (#84) 3. 20 July 2006 – Guillotine II.3 (#89) 2. 424-XV.7 (#69) 2.5 (#127) 2.6 (#172) The ways to reduce the size of the underground sector in the Republic of Moldova.8 (#71) 3. 30-31 March. which would include: the implementation of the Guillotine approaches: Law No.6 (#75) 3. the adopting of a Law on Lobbying Promoting good governance: Increasing transparency.1 (#66) 3. Second stage – gradual cut of the governmental size. . The Regional Conference of the Central and Eastern European Countries in fighting corruption (Bucharest. The directions of the anti-corruption policy. The Customs Service of the R. of the system of rotation of customs officers. The relevant mechanism of implementing the legislation.9 (#105) 2. Some of the measures: .4 (#82) 1.Estonia Georgia Romania Rep.6 (#75) 2. 3.2 (#146) 2. of Moldova Belarus Ukraine Russia Uzbekistan 5.4 (#134) 2.Increasing access to information. optimization of the governmental structure. The state administration (government).4 (#139) 2. The business community. Supervising the competition environment of the economy – State Agency of Protecting the Competition. Increasing efficiency.1 (#154) 1.6 (#27) 4. political. 235-XVI. consisting only of 15 ministries instead of 16 ministries and 14 departments. The civil society. Republic of Moldova joined in June 2001 year the GRECO group of countries against corruption. A successful campaign against underground sector and corruption in the Republic of Moldova requires the participation of the three main sectors of the society: 1. Strengthening the legislation and promoting the state based on law. staff by 70 %. April-May 2005 – the Government became one-level structure.7 (#27) 2. In April 2005 a total administrative reform was initiated: First stage.The social.
Usmanov. which during the soviet period was representing substantial consumption power in the region due to the numerous military staff.Political effects: . the annual volume of narco business can be estimated to 200-260 mln $ 4. Thus.formation of political and economic oligarchy. Paper of Mauro estimated that an increase of 2 points in CPIleads to an increase of investments with 4 points and additional ec growth of 0. some roots of drug trafficking in RM.throught :. The Transnistria illegal entity. supplying also some jobs to the local population. However. lack of social assistance of participants to the underground economy. initially was privatized by the Ukrainian investors. 2. At present. 1. Social effect: imply the decrease of funds destined to public social services. The exports are dominated by metallurgical items produced solely by the Moldavian Metallurgical Mill from Râbniţa. it is believed that the debts of Transnistria are linked to the political interests of Russia. unlike developed. 90 % of electrical energy was produced by the electrical power stations from Dubăsari and Cuciurgan that was also exporting to Ukraine and other countriesmembers of the CMEA. Till the 1991 year. as corruption penetrates also the judiciary system.excessive rotation of financial means in the distribution. Moldova.Environmental effect 3. increase of the social inequity gap. the imports are dominated mainly by: common metals and mineral resources imported from Russia.2) Enormous debts to the Russian Gazprom. Simultaneously. as the region is not at all endowed with mineral resources. The political instability is due firstly to the presence of the Russian troops (at present. the Transnistria industry is fully relying on the import of raw materials. Thus. software sector. its impact on the competitiveness of the Republic of Moldova’s economy. the population of Transnistria is allowed to introduce from R. although the results of privatization are not recognized by Chişinău. the Moldavian Metallurgical Mill from Râbniţa founded in 1985. Ukraine and food stuffs imported largely from Ukraine and very little from Republic of Moldova. 1500 persons) – the former 14-th Russian Army. According to the official data. Moldova goods for personal use in small quantities.3) Extremely low diversification of exports and imports. circulation and consumption sphere. Economic effect imply the decrease of economic growth through Worsening of business climate (increase of transaction cost) Degradation of public and private investments. leading to the failure of policies supporting small business and paralyzing the state institutions -crime expansion.The effects of the underground economy: 1.1) Political instability implying also the fact that the world community doesn’t recognize the term “Transnistrian economic agent”. The current state of the Transnistria economy is characterized by the following: 1)External constraints: 1. the majority of the large enterprises are privatized by the local and the Russian investors. Transnistria region was characterized by positive balance of migration. railroad transporting.53 billions USD at the 1 January 2006 year. the general director of Gazprom-investholding.production -The smuggling – the economic spheres with largest share of smuggling: energy distribution sector (Trannistria). In addition. Nowadays. which is state owned and may be just rented.5% Undetermining the state economic policy through distortion of the Macroeconomic indicators Undetermining the production activity.1) Privatization and competitional environment settled by the political & economic oligarchy of Transnistria. The initial privatization took place during 2002-2003 years referring just to the industry – 144 enterprises. Taking into account that Russian Gazprom is generally known as a company succeeding in prosecution of its debtors. 2)Internal constraints: 2. More than 1/3 of the total industrial output of the SSRM was produced there.In transition countries. So far. in Transnistria doesn’t exist private property on the agricultural land. cigarettes sector. because of customs duties representing 100 % (!) of the commodities’ value. therefore all the economic agents have to be registered by the official authorities of the R. this is a high-technology mill . underground economy is located in the Distribution sphere:. 1. they constituted 1. then it was resold to the Russian billionaire A. 22. Another problem of privatization is the frequent reselling of the enterprises.
Sheriff holding.Savings Bank of Transnistria. Sheriff holding is actively participating in the political sphere of Transnistria by means of its political party “Obnovlenie” which detains the majority of mandates in the Supreme Soviet. WestEuropean countries and others). The Cuciurgan Power Station was sold at the end of 2003 year to a Russian-Belgian company for just 29 millions USD. more than 1/3 of the disposable active population of Transnistria is working abroad. The most important tax-payers of Transnistria: 1. At present. Finally. 2. there were registered 59. In 2002 was inaugurated a sports center comprising: the main football arena that was given by FIFA the maximal score. According to the official statistics.Moldavian Metallurgical Mill. In 1997 the sport club Sheriff was founded. 13810 persons were employed by the Sheriff holding. 6. . 5. 10000 inhabitants of Transnistria are alcohol addicted. 3.producing competitive products and it is also member of many international organizations of Metallurgy Producers. As of 2006 year. In 1990 the total population constituted 750000 people. even if the problems related to the privatization and investments will be solved in the future. Competitional environment. In the 2006 year the birth rate constituted 8. The company succeeded to set relations with partners from all over the world (USA. In 2005 year the power station was bought by the Russian corporation RAO EES. the Interdnestrkom company which is the largest supplier of mobile and stationary communication. The Sheriff company has got the exclusive right to represent and sell in the region the products of Mercedes-Benz Corporation. 2.Electromas.4 per 1000 inhabitants.2) Labor force migration and alcoholism.9 per 1000 inhabitants. In the 2006 year the total population represented 540000 people. Besides. the leader of the group being the speaker of the Legislative body. 4. the labor force – 130000 employees. In conclusion.Moldavian System Regional Electrical Central (CERS) of Cuciurgan. a publishing house. an advertising agency. in 2006 – the Wine & Cognac factory Kvint. the deficit of labor force will continue to affect seriously the economic development of the region.The company owns few channels television. The company is the shareholder of the Transnistrian bank Agroprombank detaining Tirotex – the largest textile mill in the region and the Moldavizolit plant.Ltd Tiraspoltransgaz-Transnistria. the labor force – 273000 employees. and the most important Internet-provider in the region. The sheriff football team is many fold champion of Moldova and the holder of many cups. Argentina. 2000 persons are stated to be narcotics addicted. the death rate – 15. Brazil. In 2005 year Sheriff company privatized the Cereal Products Plant and the Bakery Factory from Tiraspol. Starting with 1996 year Sheriff company put into operation a whole trade network comprising many supermarkets and wholesale depots.4 divorces per 100 marriages.South-East Electrical Networks. in reality the figure is at least 5 times bigger. few oil depots. 7. Sheriffland is another name of Transnistria.
Canada. Turkmenistan.RM became a full member in June 2001. 18 Free-trade agreements (of which 2 have been cancelled at 1 January 2007): – CIS countries (10) – Russia. Very liberal horizontal commitments in the service sector. Switzerland. their implications on the external trade of our country. but the enclosed protocol was signed in April 1999. leather. spirits. Moldova has assumed such commitments for 148 services subsectors from the total 165 services subsectors subjected to WTO settlement. providing also negotiation of deepen comprehensive FTA (DCFTA) The South East Europe Stability Pact. memorandum of trade promotion and liberalization • The Free Trade Agreement with CIS. freedom. Moldova adhered to the WTO in May 2001. Moldova relations with European Union Bilateral agreements concluded by the R. January 12. Montenegro. . EU granted RM few preferential schemes: GSP (Generalized System of Preferences) GSP+ Autonomous Trade Preferences. Armenia. Georgia. and security. came into force 1998 for 10 years. Croatia. due to excemptions. Unlike it is a theoretical one. The juridical framework of the R. + Preferential trade schemes granted by some world regions • Implementation of the WTO commitments – good progress: • • • A four year scheme of gradual reduction was implemented during 2001-2005 years → strong commitments of Moldova as a developed country: relatively low simple average of ad valorem final bound duties – 6 % for the industrial products.The international economic agreements concluded by R. Moldova Action Plan Key priorities: • • • Political dialogue. without custom`s duty and no single policy. concluded in April 2994. Moldova.i 23.2 % for the agricultural produces. Moldova: 43 agreements as to the mutual protection and promotion of investments. Multilateral agreement: • • • • • • The World Trade Organisation (WTO). Japan. European Union-R. and 12. Serbia. recently – CEFTA + Regional Cooperation Council. No tariff quota for imports The Partnership and Cooperation Agreement with European Communities. (Kosovo). signed in 1994. ensuring privileged access to the markets of WTO by MFN clause. .Derogation from FTA between Ukraine and RM include: sugar. Kazakhstan. Ukraine. Kyrgyzstan. GSP is also granted by USA. iron and steel. So far 131 subsectors have been fully liberalized. Azerbaijan. 38 bilateral agreements as to the economic and trade cooperation. Albania. excepting sugar. copper and articles • Agreement on creation of a Free-Trade Area between GUAM states. Economic reform and trade: . Macedonia. not enlargement. European Union-R. Moldova Action Plan within the frame of the European Neighbourhood Policy. RM adhered earlier than Ukraine and Russia. 2010 – Negotiations of an Association Agreement between RM and EU. Bosnia & Herzegovina. It is more beneficial for economic agents to pay specific tax instead of advalorem tax. – South Eastern Europe Stability Pact (8) – Romania (cancelled). No tariff quotas and no special safeguard measures. Uzbekistan. Bulgaria (cancelled). seeds. in the frame of European Neighbourhood Policy-> refers to interdependence. Justice. Belarus.
dairy products. grapes. Circumstances justifying the waiver: Moldova is the poorest country (with a GDP per capita around 1400 €1) on the European continent + the two external shocks in 2006 (the increase in prices of natural gas supplies from Russia and Russian ban on imports of Moldovan wine) + the drought in summer 2008 have had a significant negative impact on the economic situation of Moldova. 3. – Agreement with IMF on a new lending programme. (d) the abstention of Moldova from introducing new duties and new quantitative restrictions for imports originating in the EU or from increasing existing levels of duties or charges or from introducing any other . The Republic of Moldova currently benefits from the GSP+.U. (b) compliance with the methods of administrative co-operation. – Regulator for electronic communications. – Convergence with the E. peaches and nectarines. apples. courgettes. meat products. – Improvement of the business climate.– Macroeconomic stability. Since the year 2000 a similar regime of autonomous trade preferences has been extended to the countries of the Western Balkans (Albania. Montenegro. European Communities to the World Trade Organisation – Request for a Waiver for the application of Autonomous Preferential Treatment to MOLDOVA 1. – Adopt & implement a Road Safety Action plan. internal electricity & gas markets. pears and quinces. the former Yugoslav Republic of Macedonia. The European Communities' committed itself in the 2005 European Neighbourhood Action Plan for Moldova to consider granting additional autonomous trade preferences. cherries. except for certain agricultural products. Description of the measures for which a waiver is requested … all products originating in Moldova shall be admitted for imports into the European Communities without quantitative restrictions and with exemption of customs duties. Kosovo2). • Customs – Improve control of origin for Autonomous Trade Preferences applied starting with 1 March 2008 year. The entitlement to benefit from the preferences is subject to the following conditions: (a) compliance with the rules of origin of products and the procedures related thereto. In 2005 this arrangement was extended for another 5 years and the extension of a waiver for the autonomous trade preferences for the Western Balkans was adopted by the WTO General Council. which cover the following: • • Imports of meat. Import duties are still levied for around 14% of imports from Moldova. – Cooperation in protection of the Danube and Black Sea. 2. Croatia. cucumbers. plums are admitted for import with exemption of the ad valorem component of the import duty. apricots. cereals. garlic. 29 February 2008. • Sectorial issues: – Educational reform in line with Bologna process. eggs. In 2006 Moldova reformed its customs legislation and a satisfactory level of implementation of the new legislation was reached at the beginning of 2007. Imports of tomatoes. Serbia. – Reforming the system of certification of origin. Bosnia and Herzegovina. (c) the involvement of Moldova in effective administrative co-operation with the European Communities in order to prevent any risk of fraud. white sugar and wine are subject to annual duty free tariff quotas.
customs procedures fees. excises. • The customs warehouse. – The annihilation. in particular as regards effective economic reform. The Law regarding the State Settlement of the External Trade Activity (adopted on 08. • The Free-trade. • The active improvement. Custom Code came into force in 2004. VAT. • The temporary admission. (e) Moldova's continued engagement in the implementation of the ENP Action Plan for Moldova of 2005.restrictions from the day of the entry into force of the preferential regime. (f) Moldova maintaining the ratification and effective implementation of the conventions listed in Annex II and accepting regular monitoring and review of its implementation.Second Chapter specify the types of Custom Duties: ad valorem. sufficient processing of the good(criteria. specific. • The processing under the customs supervision. other taxes Taxes on exports: customs procedures fees. The Customs destinations: – The duty-free shop. – The re-exportation. exemptions (special duty. other taxes. TVA se intoarce Law regarding Custom Values regarding to the way of formation and application of Custom Tarrifs. – The renunciation in favour of the state. The non-tariff settlement. The Budget Law & Fiscal Code (III-rd Title) mention the following rates of the VAT: - . • The transit. • The exportation. The methods of state settlement of the external trade activity (Article № 8): The tariff settlement. • State protection of the rights by law of the participants to the external trade activity. compensatory duty) 5th Chapter refers to the Determination of Origin country: when commodity was entirely produced in that country. Third chapter refers to Taxation of Commodities: Taxes on imports: custom duties. • Unity of the customs territory of R. Moldova. • The passive improvement. tax for participation to the custom option.2000): The basic principles of the state settlement of the external trade activity (Article № 5): • Unique external trade policy. – The free areas. It refers to the customs activity organizations. • Centralisation of the system of the state settlement of the external trade activity. • Non-discrimination of the participants to the external trade activity.06. antidumping duty. • Priority of the economic tools. mixed custom duties.intrabranch) Budget Law and Fiscal Code Law regarding Custom Value (2007) The customs regimes (chapter 2 of the Customs Code): • The importation. tax for license issuance and prolongation.
both for those imported and for those delivered internally. The zero rate: for some commodities and services delivered according to the articles 103 and 104 of the Fiscal Code → VAT is not perceived on: t The imported goods and services constituting the result of the entrepreneurial activity in R. • According to the value of the transaction with identical commodity. The Moldovan Customs Service issues preferential origin certificates upon the export of commodities: • • • • • Certificate of commodities circulation EUR.1 confirming the origin of the commodities exported to the countries members of CEFTA. • According to the value of the transaction with similar commodity.U. t The imported goods and services in order to be sold exclusively to the diplomatic missions and their staff.1 confirming the origin of the commodities exported to the European Union in the frame of the Autonomous Trade Preferences (ATP). confirming the origin of the commodities exported to the countriesmembers of the FTA inside CIS. Transporting certificate EUR. The reduced rates: 8 % for sugar. The methods of estimating the customs value of the commodity (the Law regarding the Customs Tariff of the R. t The commodities introduced on the customs territory being placed under all the customs regimes mentioned at the Second chapter of the Customs Code excepting for the importation regime + the exported goods and services + all type of international transporting of commodities and passengers. still granting the GSP to Republic of Moldova. members. Blinds Society and Deafs Society. chapter 4): According to the value of the transaction with the respective commodity or according to the price that was / will be paid.The standard-rate: 20 % of the taxed value in the case of the domestic goods as well as in the case of the imported ones. • Reserve method. Certificate of origin Form CT-1. t The raw materials imported to be used in the production by the Invalids Society. for the bread & bakery produces. the milk & dairy produces delivered internally and 5 % for the natural and liquid gas. • According to the unitary cost of the commodity. t The imported goods and services constituting Humanitarian Aids. Moldova. • According to the calculated value of the commodity. Certificate of origin Form A confirming the origin of the commodities exported to the countries that are not E. Moldova. .
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