2023 Investment Climate Statements: Moldova

Policies Towards Foreign Direct Investment

One of the poorest countries in Europe on a per capita GDP basis, Moldova relies heavily on foreign trade and remittances to spur economic growth.  Under Moldovan law, foreign companies enjoy national treatment in most respects.  The government views FDI as vital for fueling sustainable economic growth and poverty reduction.

Moldova ratified its Association Agreement with the EU in 2016, with the intent of bringing closer political association and economic integration with the EU.  The DCFTA, a component of the Association Agreement, provides for mutual elimination of customs duties on industrial and most agricultural products and for further liberalization of the services market.  It also addresses other barriers to trade and reforms in economic governance, with the goal of strengthening transparency and competition and adopting EU product standards.  Given its small economy, Moldova has relied on a liberalized trade and investment strategy to increase the export of its goods and services to the EU.

A WTO member since 2001, Moldova has signed bilateral and multilateral free trade agreements, including:

• Commonwealth of Independent States (CIS) FTA
• Central European FTA
• EU DCFTA
• Turkiye – Moldova FTA

After Moldova signed the Association Agreement and DCFTA with the European Union in 2014, Russia retaliated through a series of trade bans on Moldova’s  fruit, canned products, and fresh and processed meat.  These embargos drove Moldova to expand and diversify its exports outside Russia and the former Soviet Union. The EU has now become the country’s largest export destination, consuming more than 60% of all Moldovan exports.

Russia’s February 2022 invasion of Ukraine further damaged Moldova’s traditional trade ties and routes. Russia’s 2022 politically-motivated ban on Moldovan apples, the destination for 98% of Moldova’s apple exports, put additional pressure on fruit farmers. In response, Europe doubled its quota and Moldova sought new markets in India and Egypt. Moldova seeks additional flexibility from the EU to eliminate import quotas on Moldovan goods to compensate for lost trade with Russia, Belarus, and Ukraine. Trade with Europe is likely to increase, particularly as Moldova moves toward EU accession. In 2022, the government adopted the national development strategy, “European Moldova 2030” that sets out a vision to strengthen resilience and lay the foundation for sustainable and inclusive development of the country. The government has among its objectives growth of investments, both foreign and domestic, in all economic areas, including manufacturing, IT, agricultural processing, and post-harvest infrastructure. It is especially interested in advancing bilateral cooperation with the United States in the energy sector.

Limits on Foreign Control and Right to Private Ownership and Establishment

There are no formal limits on foreign control of property and land, with the significant exception that foreigners are expressly prohibited from owning agricultural or forest land, even via a locally domiciled corporation or business. Foreigners may become owners of such land only through inheritance and may only transfer the land to Moldovan citizens. However, foreigners are permitted to buy all other forms of property in Moldova, including land plots under privatized enterprises and land designated for construction. In 2006, Parliament further restricted the right of sale and purchase of agricultural land to the state, Moldovan citizens, and legal entities without foreign capital. However, there are reportedly Moldova-registered companies with foreign capital known to own agricultural land through loopholes in the previous law. The only straightforward option available to foreigners who wish to use agricultural land in Moldova is to lease the land.

Under Moldovan law, foreign companies enjoy national treatment in most respects. The Law on Investment in Entrepreneurship prohibits discrimination against investments based on citizenship, domicile, residence, place of registration, place of activity, state of origin, or any other grounds. The law provides for equitable conditions for all investors and rules out discriminatory measures hindering management, operation, maintenance, utilization, acquisition, extension, or disposal of investments. The law mandates equitable treatment for local companies and foreigners regarding licensing, approval, and procurement. By statute, special forms of legal organizations and certain activities require a minimum of capital to be invested (e.g., MDL 600,000 (roughly USD 32,000) for joint stock companies, MDL 15 million (USD 794,000) for insurance companies, and MDL 100 million (USD 5.3 million) for banks). Companies registered in questionable tax havens are technically prohibited from holding shares in commercial banks.

In November 2021, Moldova passed a law establishing a formal national security screening mechanism for high-risk investments. The government adopted secondary regulations in 2022 but has yet to utilize the new mechanism. The law outlines a range of industries and assets critical to state security, including energy, transport, strategic infrastructure, electronic communications, mass media, elections, information technologies, high-end technologies, cryptography, defense, radioactive materials, cybersecurity, airspace, hydrometeorology, geophysics, and handling of personal data and state secrets. Any (yet to be defined) strategic investment requires prior approval from a governmental council chaired by the Prime Minister. The law restricts investment opportunities for investors from offshore zones, those convicted of certain crimes, involved in money laundering and financing of terrorism, or known to have links to foreign authorities that pose a risk to national security.

Other Investment Policy Reviews

The latest Investment Policy Review of Moldova was conducted by the United Nations Conference on Trade and Development (UNCTAD) as part of a broader South-East Europe Review in 2017 and can be accessed at:
https://unctad.org/en/PublicationsLibrary/diaepcb2017d6_en.pdf

Moldova underwent the second trade policy review by the World Trade Organization (WTO) in July 2022: https://www.wto.org/english/tratop_e/tpr_e/tp528_e.htm 

All major business associations usually publish position papers and policy recommendations. These documents can be found on the respective websites: American Chamber of Commerce in Moldova www.amcham.md , European Business Association www.eba.md  and Foreign Investors Association www.fia.md .

Business Facilitation

Moldova has an investment promotion agency to assist prospective investors with information about business registration or industrial sectors, facilitate contact with relevant authorities, and organize study visits. The Investment Agency has an investment guide available on its website: invest.gov.md .

The government has established a special council to promote investment projects of national importance and tackle bureaucratic impediments to larger investment. It has also taken steps over the years to simplify and streamline business registration and licensing, lower tax rates, strengthen tax administration, and increase transparency.

The Public Services Agency, created in 2017, oversees business registrations. By law, registration should take three days for a standard procedure or four hours for an expedited procedure and is done in two stages. The first stage involves submission of an application and a set of documents, the range of which may vary depending on the legal form of the business (LLC, joint-stock company, sole proprietorship, etc.). At the second stage, the Agency issues a registration certificate and a unique identification number for the business, conferring full legal capacity to the entity. In 2010, the government introduced the “one-stop-shop” principle, under which businesses are relieved of the requirement to register separately with fiscal, statistical, social security, or health insurance authorities. There are currently no procedures for online business registration. Certain types of activity listed in the law on licensing require businesses to be first licensed by public authorities.

In 2006, the Moldovan Parliament ratified the 1961 Hague Convention on Abolishing the Requirement for Legalization for Foreign Public Documents. Acceptance of U.S. apostilles applied on official documents simplifies the legalization of official documents issued in the United States that are required in the process of business registration.

Outward Investment

Moldova does not have an official policy or mechanism for promoting or incentivizing outward investment.

Transparency of the Regulatory System

Laws and regulations are published in the official gazette called Monitorul Oficial, while a database of laws and regulations is available online at http://www.legis.md . The Moldovan government generally publishes significant laws in draft form for public comment. Draft laws are also available online, on the website of the Moldovan Parliament. Consultations with business and trade associations provide other opportunities for comment. A significant exception to these public consultations is a mechanism that Parliament may employ to propose draft laws.

The Prime Minister chairs an Economic Council, which liaises with the Moldovan business community to discuss government proposals and gather ideas to improve Moldova’s economy, especially in response to the COVID-19 crisis.

A Foreign Investors Association (FIA) was established in 2004 with the support of the OECD. This alliance of 25 members from 14 countries engages in a dialogue with the government on topics related to the investment climate and produces an annual publication of concerns and recommendations to improve the investment climate. In 2006, the American Chamber of Commerce (AmCham) registered in Moldova, presenting another voice for the business community. In 2011, a group of ten large EU investors founded the European Business Association (EBA). These are the three largest foreign business associations; they regularly engage in policy discussions with the government.

All regulations and governmental decisions related to business activity have been published in a special business registry, “Register of Regulations on Business Activity,” to raise the awareness of businesspeople about their rights, increase the transparency of business regulations, and help fight corruption. The government has an approved list of business permits and authorizations. Government agencies and inspectors cannot issue any form of documents not included in the list.

The working group of the State Commission for Regulation of Entrepreneurial Activity, which was established as a filter to eliminate excessive business regulations, meets to vet draft governmental regulations dealing with entrepreneurship.

Nevertheless, bureaucratic procedures are not always transparent, and red tape often continues to make processing registrations, ownership, and other procedures unnecessarily long, costly, and burdensome. Discretionary decisions by government officials provide room for abuse and corruption. While the government adopted laws to improve the business climate and reduce excessive state controls and regulation, effective implementation isuneven.  This inconsistent application of laws and regulations undermines fair competition and adds uncertainty particularly for small- and medium-sized businesses as well as new entrants.

Moldova committed to implementing International Financial Reporting Standards (IFRS) in 2008. Use of IFRS is required by law for all public interest entities (financial entities, investment funds, insurance companies, private pension funds, and publicly listed entities) and national accounting standards (which approximate IFRS in many ways) are used by other firms, although many use IFRS as well due to foreign ownership.

Moldova has a “one stop window” which provides clear and uniform rules for the release of information and standardized documents for business registration.

In 2020 Moldova launched a Trade Information Portal for the domestic and international traders. The new portal is available at www.trade.gov.md . It is the main source of official specialized information on related procedures and documents required for the import, export, and transit of goods. The Customs Service of Moldova also operates a call center to provide online support and guide economic agents through Moldova’s import/export procedures.

A law simplifying the system of inspectorates and various inspection bodies was adopted in 2017 to increase efficiency and reduce regulatory burden. Through the reformation of inspection bodies, the government reorganized the state inspection agencies for better planning and monitoring of inspectors’ activity. By reducing the number of inspection agencies and introducing risk-based criteria for inspections, the government sought to improve the business climate by reducing the opportunity for inspections to be used for political purposes.

The government does not currently have specific policies promoting companies’ environmental, social, and governance disclosure.

International Regulatory Considerations

The EU Association Agreement (AA), including a Deep Comprehensive Free Trade Area (DCFTA), has binding regulatory provisions committing Moldova to a reform agenda and to approximating domestic legislation to EU standards in a range of areas, including corporate law, labor, consumer protection, competition and market surveillance, general product safety, tax, energy, customs duties, public procurement, intellectual property rights, and others. Under the DCFTA, Moldova will gradually abolish duties and quotas in mutual trade in goods and services. It will also eliminate non-tariff barriers by adopting EU rules on health and safety standards, intellectual property rights, and other fields. The agreement contains a timeframe for implementation, with phase-ins up to ten years.

Moldova has been a member of the World Trade Organization (WTO) since 2001 and, as such, is a signatory to the General Agreement on Trade in Services (GATS), the Agreement on Trade Related Investment Measures (TRIMs) and the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). These agreements contain major investment-related commitments, such as opening to the establishment of non-domestic service providers, prohibiting local content requirements, trade-balancing, domestic sales requirements (TRIMs), and protection of intellectual property (TRIPS). No major WTO TRIMs inconsistencies have been reported.
As a WTO member, Moldova must notify draft technical regulations to the WTO Committee on Technical Barriers to Trade. In 2016, Moldova ratified the WTO Trade Facilitation Agreement and adopted several measures to conform to WTO requirements.

The government has undertaken incremental steps since 2017 to draft a new Customs Code, which merges existing separate laws on customs procedures and goods crossing national borders and approximate national customs rules to the EU Customs Code. In 2017, the government changed customs rules to align with the EU Authorized Economic Operator requirements and Approved Exporter conditions.

Moldova’s commercial litigation rules comply with WTO requirements. 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. 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. This has increased customs revenues but disadvantaged importers.

Legal System and Judicial Independence

Moldova has a civil law legal system with codified laws that govern different aspects of life, including business, trade, and economy. The country’s legal framework consists of its constitution, organic and ordinary laws passed by the Parliament, and administrative acts issued by the government and other public authorities. Although Moldovan courts are constitutionally independent, their structures have made them vulnerable to government and political interference; the courts also suffer from inefficiency and low public trust.

The court system consists of lower courts (i.e., trial courts), four courts of appeal, the Supreme Court of Justice, and a separate Constitutional Court.

Moldova has a justice reform strategy for 2022-2025. The strategy continues the 2016 parliamentary initiative to “optimize” the country’s court system as part of broader justice sector reforms intended to reduce the number of trial courts in Moldova from 40 to 15. Specialized courts such as the Commercial Circumscription Court and Military Court have been eliminated. Five trial courts from Chisinau were conceptually merged into one – the Chisinau trial court – although in 2018 the merged Chisinau trial court was further reorganized to specialize across five districts (investigative and contravention; criminal; administrative; bankruptcy; and civil, which includes adjudication of commercial disputes). The government is slated to review court jurisdictions to ensure that the courts are structured in a way that provides access to justice for all citizens and will begin to review the jurisdiction of the prosecutor’s offices for the same reason.

In 2023, the government announced the intent to set up a new anticorruption court for major corruption cases, a move designed to restore public confidence in the judiciary and boost Moldova’s credentials for EU membership.

With justice reform as policy priority, the government started integrity checks for judges and prosecutors in three stages through the pre-vetting and vetting mechanisms. The first stage, the integrity check of the judiciary and prosecution oversight bodies, began in July 2022 and expected to be completed mid-summer 2023, followed by vetting of incumbent and aspiring judges of the Supreme Court of Justice, as well as judges and prosecutors in key institutions.

Laws and Regulations on Foreign Direct Investment

In addition to its international agreements, Moldovan laws affecting FDI include the Civil Code, the Law on Property, the Law on Investment in Entrepreneurship, the Law on Entrepreneurship and Enterprises, the Law on Joint Stock Companies, the Law on Small Business Support, the Law on Financial Institutions, the Law on Franchising, the Tax Code, the Customs Code, the Law on Licensing Certain Activities, and the Law on Insolvency.

The current Law on Investment in Entrepreneurship came into effect in 2004. It was designed to be compatible with European standards in its definitions of types of local and foreign investment. It provides guarantees of investors’ rights, prohibitions against expropriation or similar actions, and for payment of damages if investors’ rights are violated. The law permits FDI in all sectors of the economy, while certain activities require a business license. Parliament adopted a new law setting up an national security screening mechanism for investments in 2021 (see chapter 1 above).

Competition and Antitrust Laws

In 2012, Parliament passed a law on competition in line with EU practice and legislation. The National Competition Agency was subsequently renamed the Competition Council. The Competition Council oversees compliance with competition and state-aid provisions and initiates examination of alleged violation of competition laws. The Competition Council may request cessation of action, prescribe behavioral or structural remedies, and apply fines.

Expropriation and Compensation

The Law on Investment in Entrepreneurship states that investments cannot be subject to uncompensated expropriation or to measures with a similar effect.An investment may be expropriated for purposes of public utility if it is not discriminatory and just compensation is provided. If a public authority violates an investor’s rights, the investor is entitled to compensation equivalent to the actual damages at the time of occurrence, including any lost profits.

The previous governments have had a history of depriving investors, both national and foreign, of their businesses in various forms. Many of these have sued the government at the European Court for Human Rights for violations of the right to fair trial and of the respect for property, or in international arbitral tribunals. However, the current government has given no indication of any intent to expropriate the property of foreign investors.

Dispute Settlement

ICSID Convention and New York Convention

In 2011, Moldova ratified the Convention on the International Center for the Settlement of Investment Disputes (ICSID – Washington Convention). The country also ratified the New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards. Domestic courts recognize and enforce foreign arbitral awards. Moldova is also a party to the Geneva European Convention on International Commercial Arbitration of April 21, 1961, and the Paris Agreement relating to the application of the European Convention on International Commercial Arbitration of December 17, 1962.

Investor-State Dispute Settlement

Moldova is signatory to a number of bilateral investment treaties (see chapter 3 above), including the U.S.-Moldovan Treaty Concerning the Encouragement and Reciprocal Protection of Investment, which includes access to international arbitration for investment disputes.

Local courts recognize and enforce foreign arbitral awards against the government. There are no known cases when the Moldovan government failed to pay an arbitral award rendered against it.

International Commercial Arbitration and Foreign Courts

Private parties may choose alternative dispute resolution mechanisms instead of going to courts. Moldovan law provides the options of mediation and arbitration. The arbitration legislation is modeled after UNCITRAL rules. There are a number of arbitration bodies available in Moldova, including the arbitration court of the Moldovan Chamber of Commerce and Industry. AmCham Moldova has established the Chisinau Court of International Commercial Arbitration (CACIC) under its auspices.

Recognition and enforcement of foreign judgments are regulated by a complex framework of documents, including the Code for Civil Procedures, international conventions, and bilateral treaties. Therefore, depending on the nationality of the court, Moldovan courts may apply different legal norms in examining the enforcement of foreign judgments. However, as a rule, foreign judgments are enforceable in Moldova on the basis of reciprocity and subject to New York Convention obligations.

Moldova’s court system generally enjoys a low level of public trust and is perceived to be vulnerable to acts of corruption, while court processes lack transparency. The overall expectation in court hearings involving representatives of public authorities, including economic entities, is that final court rulings will be in favor of state representatives. While arbitration is often seen as a preferable option to the courts, the courts must still enforce the arbitral decision. Investors have at times been discouraged by the slow pace of court enforcement of arbitral awards and the judge’s perceived discretion over the arbitral decision.

Bankruptcy Regulations

Moldova’s insolvency law provides for expedited insolvency proceedings, including by granting priority to secured creditors, restructuring mechanisms, reduced opportunities for appeals, moratorium provisions, strict statutory periods in the proceedings, and enhanced role of insolvency administrators.

Investment Incentives

Investment incentives are applicable for all Moldovan-registered businesses, irrespective of the country of origin of the investment. Certain incentives apply only in specially designated areas such as free economic zones and industrial parks. Until 2024, Moldovan legislation allows employees of IT companies to benefit from incentives on personal income tax and social security contributions. Also, a 2017 law on information technology parks established a single tax for residents of the digital IT parks, calculated as the maximum between seven percent from sales and 30 percent from the national average forecasted salary multiplied by the number of employees. There is also a range of tax incentives applicable if businesses meet certain requirements. Among those incentives are the following: value-added tax (VAT) and customs exemptions on long-term assets included in share capital; deferment of VAT liabilities on imports of materials used in manufacturing export-bound products; lower VAT rates for the hospitality and restaurant businesses; and lower social contributions and VAT rates for agricultural businesses.

The Organization for Development of Entrepreneurship (ODA) manages several business support programs for small and medium businesses and underrepresented investors such as Women in Business, Start for the Youth, and Attraction of Remittances in the Economy PARE 1+1. ODA developed new programs to support SMEs to expand into foreign markets, adopt green technologies, move business operations online, and access loans at low interest rates. Historically, the government’s budget allocations to these programs have been limited and ODA relies on funding from international donors.

Foreign Trade Zones/Free Ports/Trade Facilitation

At present, seven free economic zones (FEZs), one international free port – Giurgiulesti – and one international free airport – Marculesti – are registered in Moldova. According to Moldovan law, these zones support job creation, attraction of foreign and domestic investments, and export-oriented production. The Law on Free Economic Zones regulates FEZ activity. Foreigners have the same investment opportunities as local entities. FEZ commercial entities enjoy the following advantages: 25 percent exemption from income tax; 50 percent exemption from tax on income from exports; for investments of more than USD 1 million, a three-year exemption from tax on income resulting from exports; and for investments of more than USD 5 million, a five-year exemption from tax on income from exports; zero value-added tax; exemption from excises; and a stand-still guarantee against any new changes in the law for ten years. In addition, residents investing at least USD 200 million in the FEZ are afforded a stand-still guarantee regarding new regulatory changes for the entire period of operation in the FEZ, but such protection cannot extend beyond 20 years.

The government also passed a 2008 law creating eight industrial parks with the aim of attracting investments in industrial projects. Businesses operating in those parks do not receive any special tax treatment, but typically have access to ready-to-use production facilities, offices and lower office rents for 25 to 30 years. Typically, these are idle premises of former industrial State-owned enterprises.

The government also recently set up 18 multifunctional industrial platforms throughout the country. These platforms represent plots of land accommodating technical and manufacturing infrastructure for economic – mostly manufacturing – activity that capitalize on regional resources.

Similar to the FEZs, the Giurgiulesti Free International Port, Moldova’s only port accessible to sea-going vessels, was established in 2005. Commercial residents of the port enjoy the following advantages: 75 percent exemption from income tax for the first ten years following the first year when taxable income is reported; 50 percent exemption from tax on income for the remaining years; exemption from value-added tax and excises on imports and exports outside Moldova’s customs territory; zero valued-added tax on imports from Moldova; and a stand-still guarantee for commercial residents regarding any regulatory changes until February 17, 2030.

The Marculesti International Free Airport, a former military air base, was established in 2008 as a free enterprise zone for a 25-year period to develop cargo air transport. Airport management is also interested in turning Marculesti into a regional hub for low-cost passenger airlines.

IT parks are another area of special tax treatment with opportunities of virtual residence status, simplified tax payments and tax incentives for IT companies registered in Moldova.

Performance and Data Localization Requirements

All incentives are applied uniformly to domestic and foreign investors. The Law on Investment in Entrepreneurship, in effect since 2004, does not protect new investors from legislative changes.

No requirements exist for investors to purchase from local sources or to export a certain percentage of their output.

The Embassy is not aware of any reports of forced data localization or special requirements targeting foreign IT providers. However, companies maintaining servers with customer databases outside Moldova must comply with cumbersome domestic procedures related to protection of personally identifiable information. Cross-border transfer of personal data requires prior authorization by the supervisory body for personal data processing. The Ministry of Economic Development and Digitalization is responsible for developing strategies and policies on electronic communication. The National Regulatory Agency for Electronic Communications and Information Technology (ANRCETI) is responsible for regulations and oversight. The National Center for Personal Data Protection (NCPDP) is the supervisory body for personal data processing.

No limitations exist on access to foreign exchange in relation to a company’s exports. There are no special requirements that Moldovan nationals own shares of a company. Both joint ventures and wholly foreign-owned companies may be set up in Moldova.

In fact, while not an official policy, in sectors of the economy that require large investments, experienced management, and technical expertise such as energy or telecommunications, the government has shown preference for experienced foreign investors over local investors. In other sectors, foreign and local investors formally receive equal treatment.

Moldovan law allows investments in any area of the country, in any sector, provided that national security interests, anti-monopoly legislation, anti-corruption, environmental protection, public health, and public order are respected.

Some performance requirements are connected to tax incentives but are enforced equitably and described in the Tax Code and related governmental decisions and instructions. Foreign investors are required to disclose the same information as local investors. Moldova has no discriminatory visa, residence, or work-permit requirements inhibiting foreign investors’ mobility in Moldova. The government has set up a one-stop shop for foreigners applying for Moldovan residence and work permits in an effort to streamline a complicated procedure. Moldova has a liberal commercial regime with more than 100 countries. According to the Tax Code, Moldovan exports are exempt from value added tax.

Real Property

Moldova’s laws protect all property rights. There is a national cadastral office, which registers all ownership titles in the real estate registry. However, the mortgage market is still underdeveloped. In addition, the judicial sector remains weak and does not always fully guarantee the property rights of citizens and foreign investors.

Intellectual Property Rights

Despite efforts to improve its intellectual property rights (IPR) regime and set up relevant executive structures in the government, Moldova does not fully enforce its IPR laws due to conflicts of interest, lack of resources, and a low level of awareness and training among law enforcement agencies. The concept of IPR is largely unrecognized by the population. The country has an agency for the protection of IPR, the State Agency on Intellectual Property (AGEPI), which continues working on improving the legal framework and adjusting it to EU norms, increasing public awareness, and building capacity in law enforcement. Under the AA/DCFTA, the government is working to bring Moldova’s practices in line with the EU.

Moldova is party to the majority of international treaties on IPR, including the World Trade Organization (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) and 26 World Intellectual Property (WIPO) treaties, including the Berne Convention, the Paris Convention, the Patent Cooperation Treaty (PCT), the WIPO Copyright Treaty, and the WIPO Performances and Phonograms Treaty.

Along with other public institutions, AGEPI works on fulfilling Moldova’s IPR obligations as provided by the 2021-2027 EU-Moldova Association Agenda and the IPR commitments under the Association Agreement. In 2021, AGEPI adopted a Strategic Development Plan for the years 2022-2024 that contains the main objective and priorities of AGEPI for IPR system development.

In 2018, AGEPI was reorganized and consolidated as the central administrative authority in the field of legal protection of intellectual property relating to industrial property rights and copyright and related rights. AGEPI created a free and publicly available online IPR database, which can be found at www.db.agepi.md . AGEPI continued to integrate its legal services and data into the international and regional platforms. In 2020, AGEPI signed a new Memorandum of Understanding on Electronic Communication of the Madrid System with the International Bureau of WIPO (BI) and integrated into the Madrid e-Filing platform. Moldova integrated its trademark and design data into European Union Intellectual Property Office’s online information and classification systems and began implementing the European common practices to harmonize trademark and design protocols with the EUIPO.

In response to the COVID-19 pandemic, AGEPI redesigned most of its processes, including IP consultancy and support services, by moving online and encouraging IP holders to use electronic communication.

In 2022, Moldova received an invitation to accede to the European Patent Convention (EPC). While not an EPC member, Moldova is a validation state under which European patent applications and validated European patents are subject to the same conditions as Moldovan national patent applications and patents.

A new law on copyright and related rights adopted in July 2022 is broadly aligned with the EU law on copyright and latest EU directives, including the EU Collective Rights Management Directive. Moldova’s collective rights management system faces several challenges, including lack of transparency and accountability in the collection and distribution of royalties, weak institutional capacities of collective management organizations (CMO), insufficiently skilled personnel, and unsuitable cooperation mechanisms with foreign collective management organizations.

In terms of industrial property rights, Moldova is largely aligned with EU Directives. Its legislation on trade secrets is partially aligned with the Directive on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use, and disclosure.

Moldova’s criminal code prohibits the unauthorized disclosure of trade secrets. A law for the protection of pharmaceutical and medicinal product data came into force on January 1, 2020, the aim of which is to guarantee the confidentiality, non-disclosure, and non-reliance of data submitted while obtaining regulatory and market approval of the products.

Moldovan authorities, including Customs, the Ministry of Interior, and the General Prosecutor’s Office, track statistics for IPR violations annually, but such reports are not readily available online. To improve IPR enforcement, in 2020 Moldovan authorities developed, with EU support, an IPR Information System to track the exchange of IPR data between agencies, including AGEPI, Customs, Prosecution, Police, the Agency for Consumer Protection and Market Surveillance, and the Agency for Court Administration.

A report containing statistical and analytical data on IPR enforcement collected from all relevant stakeholders is released annually by the IPR Enforcement Observatory established by AGEPI. The latest Report is available in English and Romanian languages on the Observatory website: http://observatorpi.md/raport-national/ .

Moldova is not listed in the U.S. Trade Representative (USTR) Special 301 Report, nor is it included on the Notorious Markets List.

For additional information about national laws and points of contact at local IP offices, please see WIPO’s country profiles at www.wipo.int/directory/en 

Capital Markets and Portfolio Investment

Moldova’s securities market is underdeveloped. Official National Bank of Moldova (NBM) statistics include data on portfolio investments, yet there is no open-source information that fully reflects the trends and relevance of these investments. NBM data shows that most portfolio investments involve banks, while the National Statistics Bureau does not differentiate between foreign direct investment and portfolio investments of less than 10 percent in a company.

Laws, governmental decisions, NBM regulations, and Stock Exchange regulations provide the framework for capital markets and portfolio investment in Moldova. The government began regulatory reform in this area in 2007 to spur development of the weak non-banking financial market. Since 2008, two bodies in particular – the NBM and the National Commission for Financial Markets – have regulated financial and capital markets. Starting July 1, 2023, the NBM will take over regulatory and oversight responsibilities for the non-banking financial sector, while the National Commission for Financial Markets will be responsible for the oversight of the securities market.

Foreign investors are not restricted from obtaining credit from local banks – the main source of business financing. However, stringent lending practices limit access to credit for Moldovan companies, especially SMEs. Local commercial banks provide mostly short-term, high-interest loans and require large amounts of collateral, reflecting the country’s perceived high economic risk. Progress in lending activity suffered a sharp reversal in 2015 after the late-2014 banking crisis, triggered by a massive bank fraud, which severely weakened the banking system. Extreme monetary tightening by the NBM following significant currency flight. The resulting bank bailouts led to prohibitively high interest rates. In 2022, inflation peaked at 34.6%, pushing interest rates – which had lowered in recent years –back up. As inflation started to subside in 2023, interest rates hovered near 14%.

Large investments can rarely be financed through a single bank, but require a bank consortium. Recent years have seen growth in leasing and micro-financing, leading to calls for clear regulation of the non-bank financial sector, which entered into effect on October 1, 2018.

Even prior to the COVID-19 pandemic and Russia’s invasion of Ukraine, which exacerbated Moldova’s inflation, the private sector’s access to credit instruments has been limited by insufficiency of long-term funding, high interest rates, and unrealistic lending forecasts by banks. Financing through local private investment funds is virtually non-existent. A few U.S. investment funds have been active on the Moldovan market. The government adopted a 2018-2022 strategy for the development of the non-banking financial sector aimed at bolstering the capital markets combined with prudential supervision. A new Central Securities Depository was established under the supervision of the National Bank of Moldova to bring greater transparency and integrity to ownership and the recordkeeping associated with it.

Acting as an independent regulatory agency, the National Commission for Financial Markets (NCFM) supervises the securities market, insurance sector and non-bank financial institutions. A capital markets law adopting EU regulations came into effect in 2013, that was designed to open capital markets to foreign investors, strengthen NCFM’s powers of independent regulator, and set higher capital requirements on capital market participants.

Money and Banking System

In 2014, a crisis at three Moldovan banks, including two among the country’s largest, resulted in their closure and the loss of USD 1.2 billion, undermining confidence in the banking system. The role of a Moldovan bank in a separate “Russian Laundromat” case, estimated to have laundered from USD 20 to 80 billion, further underscored these challenges. The crisis shook Moldova’s banking system, causing some foreign correspondent banks to terminate ties with Moldovan banks and others to significantly tighten their lending.

In March 2020, Moldova successfully completed its IMF program after implementing reforms in financial and banking sectors. As a result of these reforms, the financial sector was better prepared to withstand the economic impact of the COVID-19 crisis. There is a high degree of capital and liquidity, and an overall reduction of non-performing loans to below eight percent. Moldovan banks remain the main, albeit currently limited, source of business financing. The non-bank financial institutions however have been gaining sizable market share, especially in individual and SME lending, where banks are subject to prudential banking rules. Bank assets account for about 55 percent of GDP. Banks are also the largest loan providers, with loans amounting to approximately USD 3.2 billion. Lending activity decreased in 2019 and 2020, recovered somewhat in 2021, and decreased again in 2022 in response to high inflation and uncertainties caused by Russia’s further invasion of neighboring Ukraine.

Moldova currently has 11 commercial banks. The NBM regulates the commercial bank sector and reports to Parliament. Foreign bank subsidiaries must register in Moldova and operate under the local banking legislation. Although the integrity of true bank ownership records is questionable, foreign investors’ share in Moldovan banks’ capital is reported to be approximately 87% of total capital, and includes such major foreign investors as OTP Bank (Hungary), Erste Bank (Austria), Banca Transilvania (Romania) and Doverie Holding (Bulgaria).
As of December 31, 2022, total bank assets were MDL 131.4 billion (USD 7.0 billion), a 10.9% increase from 2021. Moldova’s three largest commercial banks account for roughly 65 percent of the total bank assets, as follows: Moldova Agroindbank – MDL 43.0 billion (USD 2.3 billion); Moldindconbank – MDL 25.8 billion (USD 1.4 billion); and OTP Bank – MDL 18.6 billion (USD 984.2 million). To prevent another crisis, the NBM instituted special monitoring of these top three banks over concerns about the transparency of bank shareholders; this monitoring was lifted in April 2020.

After 2016, the Moldovan Parliament adopted legislation that would strengthen the independence of decision making at the NCFM and NBM – to help address systemic supervisory problems that had a negative effect on Moldova’s financial sector. To strengthen the system of tracking shares and shareholders, with USAID assistance, authorities put in place a law establishing the Centralized Securities Depository. In addition, all bank shares must be sold and purchased on the Moldovan Stock Exchange. These measures have improved the transparency and reliability of the financial sector.

NBM’s Banking Law of 2018 and the Bank Recovery and Resolution Law from 2016 bring the financial sector closer to harmonization with EU standards, including through the application of stronger risk-based supervision to banks, increased enforcement powers and monetary penalties applied to banks, structures to address problem banks, and strengthening the NBM’s ability to conduct risk assessments. Also, NBM required banks to increase their credit loss provisioning and take urgent action to reinforce internal risk management as well as procedures on related-party financing. In addition, the NBM developed a methodology to better identify the related parties at banks.

Foreign Exchange and Remittances

Foreign Exchange

Moldova accepted Article VIII of the IMF Charter in 1995, which required liberalization of foreign exchange operations. There are no restrictions on the conversion or transfer of funds associated with foreign investment in Moldova. After the payment of taxes, foreign investors are permitted to repatriate residual funds. Residual fund transfers are not subject to any other duties or taxes and do not require special permissions. Moldova’s central bank uses a floating exchange rate regime and intervenes only to smooth sharp fluctuations.

Between late 2014 and early 2016, the national currency, the leu (plural lei), depreciated following challenges in the political environment, Russian bans on Moldovan food exports, and falling remittances from Russia, which impacted Moldova’s balance of payments. A massive banking fraud and a subsequent bailout program further undermined the leu, which depreciated by 36 percent. Since 2016, the National Bank has been pursuing a tight monetary policy that has contributed to a strengthening of the leu. In 2022, the lingering energy crisis compounded with the spillovers of Russia’s further invasion of Ukraine led to the depreciation of the national currency by 7.4%.

Remittance Policies

No significant delays in the remittances of investment returns have been reported. Domestic commercial banks have accounts in leading multinational banks, and foreign investors enjoy the right to repatriate their earnings. The Moldovan leu is the only accepted legal tender in the retail and service sectors in Moldova. Foreign exchange regulation of the NBM allows foreigners and residents to use foreign currencies in some current and capital transactions in the territory of Moldova. Generally, there are no difficulties associated with the exchange of foreign or local currency in Moldova.

Sovereign Wealth Funds

Moldova has no sovereign wealth funds.

Privatization Program

Moldova launched the first of several waves of privatization in 1994. In 2007, Parliament passed a new law governing management and privatization of SOEs. Two major privatizations in 2013 – of the then-largest bank, Banca de Economii, and the 49-year concession of the Chisinau Airport – subsequently proved highly controversial. Privatization efforts in 2014 and 2015 emphasized public-private partnerships as the means for companies to gain access to SOEs in infrastructure-related projects. In 2018, the government held several rounds of privatization, selling stake in 19 companies, including the airline Air Moldova and gas interconnector Vestmoldtransgaz. After a 2019 moratorium, the government resumed privatizations in 2020. In the first six months of 2021, the government sold off MDL 91.2 million (USD 5.16 million) worth of state-owned assets in open outcry auctions. Since July 2021, the government has again suspended privatization efforts, which are expected to resume with the implementation of the new Strategy on State-Owned Enterprises slated for 2023 or 2024.

To date, Moldova has conducted privatizations through open tenders organized at the stock exchange, open to interested investors. The government may also use open outcry auctions for some properties, so-called investment or commercial tenders to sell entire companies to buyers taking on investment commitments, or to the highest bidders or public-private partnerships for infrastructure related projects. The government publishes privatization announcements on the website of the Public Property Agency and in the official journal Monitorul Oficial.

Additional Resources

Department of State

• Country Reports on Human Rights Practices;
• Trafficking in Persons Report;
• Guidance on Implementing the “UN Guiding Principles” for Transactions Linked to Foreign Government End-Users for Products or Services with Surveillance Capabilities;
• U.S. National Contact Point for the OECD Guidelines for Multinational Enterprises; and;
• Xinjiang Supply Chain Business Advisory 

Department of the Treasury

• OFAC Recent Actions

Department of Labor

• Findings on the Worst Forms of Child Labor Report;
• List of Goods Produced by Child Labor or Forced Labor;
• Sweat & Toil: Child Labor, Forced Labor, and Human Trafficking Around the World and;
• Comply Chain.

Climate Issues

Moldova’s draft National Development Strategy Moldova 2030 addresses the issue of climate change. The government approved the Environment Strategy for 2014-2023 and an accompanying Action Plan. In 2017, the country approved the Low Emissions Development Strategy until 2030. The Energy Strategy outlines climate change mitigation in the Energy sector until 2030. Under the Climate Change Coordinating Mechanism, approved by the government in 2020, the National Commission on Climate Change has been established as an inter-institutional body to coordinate and promote measures and actions under the United Nations Framework Convention on Climate Change and the Paris Agreement.

Moldova has committed under its updated National Determined Contribution to reduce greenhouse gas emission to 70% unconditionally or even 88% if the country gains access to technologies and financial resources at low cost.

The law on promotion of the use of renewable energy set the target of 17% for renewables as share of final gross energy consumption, although the government has publicly committed to incorporate renewables into 30% of its grid.

Resources to Report Corruption

Iulian Rusu
Director
National Anti-Corruption Center
Bulevardul Stefan cel Mare si Sfant 168,
Chisinau MD2004, Moldova
Tel. +373 22-257 257 (secretariat)/800-55555 (hotline)/22-740 777(special line)
secretariat@cna.md 

Lilia Zaharia
Executive Director
Transparency International Moldova
Strada 31August 1989 nr. 98, of.205, Chisinau MD
2004, Moldova
Tel. +373-22 203-484(office)/800-10 000 (hotline)
office@transparency.md 

Corruption Map: https://anticoruptie.md/ro/harta-coruptiei 

The Corruption Map is a platform for free expression, open to every person who has been a victim or witness of acts of corruption, abuse, human rights violations, etc.