Business CORe

123Thirty years after gaining independence, the Republic of Moldova remains to be the least economically developed country in Central and Eastern Europe (GDP per capita). The perpetuation of the current unsustainable economic pattern, mainly driven by remittances and consumption rather than investment and exports, results in underperformance in improving the quality of life, which will inevitably maintain emigration, thus forming a vicious circle.

This vicious circle can only be broken by a firm adoption of a sustainable model of economic growth, with the private sector as its core and driving force.

The government is expected to fully engage in developing stimulating and inclusive policies, securing institutional independence and transparency, and delivering good-quality and adequate public services, to ensure that the private sector can prosper, innovate and consequently generate more jobs and budget revenue. At present, the share of foreign direct investment in the national gross domestic product is among the lowest in the region – a practical reflection of the country's competitiveness as a destination for investment, in relation to the countries in the region. The accuracy of this indicator is also backed by international rankings on the quality of the business climate, Moldova being perceived less competitive as a destination of doing business than Albania, Armenia, Georgia, Bulgaria, or the Baltic States, these being just a few examples. The favorable business climate, coupled with the targeted attraction of major investments in infrastructure, has led to significant economic growth in the aforementioned countries, ensuring the well-being and the quality of life of their citizens.

To catch up with other countries, Moldova should be ambitious in setting up the economic growth objectives and act determinedly in achieving them. Double digit GDP growth in the short term, coupled with significant increase of exports and a balanced balance of trade, as well as substantial growth in both domestic and foreign direct investment in the medium term should all be targeted with an overall goal to improve the quality of life in Moldova and stem the exodus and brain drain from the country.

Moldova should enter the European Union not as a welfare case but as a growing and prospering country with much to offer to its own people and to the EU community.

AmCham Moldova wants to partner with the newly elected government to revise the National Development Strategy ”Moldova 2030”, in order to establish far more ambitious yet realistic economic targets based on the appropriate set of reforms. In the meantime, we are convinced that the implementation of the compendium of recommendations within this iteration of Business CORe will generate economic impulses that will provide room for the implementation of strategic development objectives.

Ensuring real and effective judicial reform to guarantee fair justice
Notwithstanding all of the financial assistance and expertise provided by the EU and the USA, the justice sector remains to be weak, bribery being perceived as almost an ordinary practice. Judges frequently make decisions in contradiction to Moldovan law, a situation that is substantiated by Moldova’s poor history in the European Court of Human Rights. The level of business trust in the Moldovan court system is also low, as foreign investors feel more harassed than protected by the local judiciary.

Alternative dispute resolution (ADR) and online dispute resolution (ODR) mechanisms are still underdeveloped, due to both the ineffective laws and defective law enforcement. Best recent international and regional practices, especially developed in response to Covid-19 pandemic threats, have proved that robust and efficient ADR/ODR mechanisms help dissolving court backlogs, increase access to justice and distributive justice. The redesign of the judiciary system requires a new configuration of people, processes, technologies, and physical spaces that are user-centered, technology-enabled, sustainable and accessible. 76% of businesses are unsatisfied with the quality of justice (Confidence in the Justice System of the Republic of MoldovaLRCM)

Reducing the outflow of human capital through economic and social policies that encourage citizens to live, work and invest in Moldova
A continuous effort should be deployed to improve the working and living environment, and the entrepreneurial sphere, which requires support.

Such improvements would create incentives for skilled and well-qualified Moldovan citizens to stay in the country, and for the diaspora living and working abroad to return home.

Combating corruption at all levels to create a fair competition environment for all participants
There is a strong consensus among the private sector that corruption remains to be a widespread phenomenon, infiltrated in all public authorities that deliver services to businesses.

101st place in the ranking showing the incidence of corruption (2019 Global Competitiveness Index, WEF).

Corruption shatters the rule of law, thus hampering the effective application of the Moldovan legislation, and fails to protect the legitimate rights of entrepreneurs. It also destroys the competitive environment both within and across industries by an inequitable application of the law to all companies.

8% of businesses feel treated equally by the law (2019 Cost of Doing Business, World Bank)

Counteracting the informal economy
The level of the shadow economy is estimated to be ~40% of GDP. The large, cash-based informal economy serves to slow the velocity of the economy, fuels corruption and creates a significantly unfair competition for transparent, tax-paying businesses. Therefore, strong actions should be taken in combating and preventing unfair competition between formal and informal businesses, which will in turn result in an immediate increase in government income.

Developing a reliable infrastructure
All the above listed deficiencies are amplified by inadequate physical infrastructure. Poor roads, subpar alternative transportation methods, and difficult access to public utilities are issues identified across a range of industries, especially those involved in manufacturing and cross-border trade. Although the density of roads is considered acceptable, their quality is still poor, resulting in significant transport repair costs and delays in deliveries. Furthermore, a deficient customs posts infrastructure is also considered to be an obstacle for streamlining external trade.

The poor state of roads implies additional costs for users, amounting to approximately $213 million annually (UNCTAD “Investment Policy Review”)

Achieving energy security by transition to clean, safe and affordable energy
Under the ongoing geopolitical situation and the country’s dependence on the import of energy resources, coupled with increased demand for electricity, energy security issues remain to be acute. In this regard, ensuring access to electricity and fuel at affordable and competitive prices remains a priority for Moldova.

At the same time, Moldova needs to align its priorities with those of the EU, namely, to accelerate the transition from fossil fuels to clean energy from renewable sources, gradually increasing the share of the latter in the global energy mix. Diversification of supply sources by ensuring an active energy market can stimulate foreign and local investments in industry, thus reducing the risks for the Republic of Moldova related to the delivery of electricity and natural gas resources.

Initiatives and projects related to interconnection with the European Electricity Network (ENTSO-E), creating a transparent and competitive electricity market, and promoting energy production from renewable resources must be a priority and their implementation must be ensured in the short and medium term.

Dialoguing with the private sector to align public and private priorities for development
It is essential that any decision affecting the entrepreneurial activity is communicated to and consulted in advance with the business community representatives. The elaboration of the regulatory impact assessment document accompanying the draft decisions must be one of the mandatory steps to be followed in promoting policies with an impact on the business community, both at the level of executive authorities and at the level of Parliament.

The exercise of drafting and consulting draft decisions and regulatory impact assessment documents is to be effective, participatory and geared towards achieving both public and private priorities.

• To actively and regularly request the opinion of the private sector both for solving problems affecting the business climate and for determining the sectors of the Moldovan economy that should be considered as future vectors of economic growth and employment
• To comply with the obligation to elaborate regulatory impact assessment documents to accompany draft regulatory acts regulating entrepreneurial activity, including for draft laws initiated by Members of Parliament
• To ensure the quality of the legislative process, by improving the expertise and capacities of civil servants in drafting normative acts (including with expertise accumulated in the private sector);
• To not admit the operation of non-transparent changes in the draft normative acts after completing the consultative process
• To improve communication with the private sector by clearly stating the reasons why private sector proposals and recommendations, developed and submitted in regard to the consulted normative acts, are not accepted
• To develop a balanced law on the business ombudsman that would satisfy and meet the real needs of entrepreneurs
• To maintain and further develop the existing platforms that proved to be efficient in hosting important public-private dialogue, such as:
  Economic Council to the Prime Minister;
  Working Group on Regulation of Entrepreneurial Activity
  Advisory Committees under various Government agencies
  Councils of Dispute Resolution

Guaranteeing the predictability of the long-term and short-term business regulatory regimes
Doing business in the Republic of Moldova continues to present enormous challenges for investors hoping for a business model with a certain level of predictability of the regulatory framework. This is because the entrepreneur, whilst building a business model that includes product approval, cost formation elements, distribution channels and the tax regime, must be sure that he/she can base his model on a relatively stable and attractive business climate.

For example, recent attempts to legislate the screening of foreign investments, despite their noble intent to ring-fence the Moldovan economy from unsound capital in-flows, prompted reasoned concerns from existing investors on the security of the investments made and the stability of the Moldovan business protection environment as a whole.

• To ensure predictability of the regulatory environment so businesses can focus on streamlining operational activity and business development;
• To provide a reasonable transition period for compliance with the new regulations

Permissive acts

The existence of cumbersome, and, at times, unpredictable and nontransparent procedures of getting permits, authorizations, licenses, and other documents required by authorities impose additional pressure on businesses. The practical effect of several ‘guillotine’ laws has been spoilt in practice by the poor coordination of the business permission process among public authorities and the tendency of the latter to impose restrictive or burdensome rules in circumvention of the law.

• To eliminate barriers of doing business and daily bureaucratic hassles so that businesses can operate freely and remain focused on activities that create value for Moldova;
• To review and strengthen the implementation of the single window of permissive acts;
• To further eliminate redundant or duplicative permissive acts;
• To minimize interaction between businesses and the Government by ensuring proper exchange of data between public agencies.

Competition legislation

The risks engendered by non-compliance to competition requirements may be very high. A company found non-compliant by the Competition Council may be subject to unexpected and disproportionately severe fines, the payment of damages incurred by their competitors or customers due to the anti-competitive behavior, or may be exposed to contractual risk, as most anti-competitive agreements are illegal and therefore inapplicable. Also, not to be ignored is the reputational risk which usually surrounds any major competition case. Intervention of politics and the tendency to extend the political agenda to the market supervision body bring about market uncertainty and make it unreasonably difficult for new participants to assess the competition framework and associated risks. Not the least, exogenous pressure over the Competition Council generates the risk of premature leakage of confidential information on the ongoing investigations and breaches the principle of presumption of innocence.

• To focus on building ex-ante compliance mechanisms preventing anti-competitive practices rather than fighting such practices post-factum
• To continue the capacity building of the Competition Council in terms of human and financial resources, so that the institution may perform its duties independently and efficiently.
• To secure the real independence of the Competition Council (which is a commitment made by the Republic of Moldova under the RM-EU Association Agreement), thus creating guarantees for the Council, for companies facing competition investigations, and for society in general. The Competition Council shall have the capacity to exercise its legal powers objectively, without being subject to outside influences.

Personal data protection regulations

The Republic of Moldova has begun the process of implementing the new EU General Data Protection Regulation (GDPR) into the national legislation, making efforts to ensure the extraterritorial application of the GDPR.

• To ensure the reasonable transposition of EU rules into the draft national legislation with due account to the legal interests of the affected stakeholders; the transposed regulations being in some respects stricter, without the argumentation of the proposed solutions;
• To ensure the correlation between data protection regulations and other competing provisions that impose on the data controllers the obligation to collect data that may be personal (i.e. AML regulations), thus avoiding any impediments and tensions for entrepreneurs to fulfill their legal obligations;
• To review the attributions of the National Center for Personal Data Protection in order to ensure reasonable and proportionate intervention, as well as prevention and curbing of abuses;
• To ensure the correlation of the fines with the damage caused and to optimize related control procedures, taking into account the economic and legal realities of the Republic of Moldova.

The regulatory framework regarding public procurement

Public procurement is an important chapter of public spending, with public authorities being important consumers of goods and services produced by the business community. Increasingly, public procurement is being used as a lever to stimulate economic growth and achieve related policy objectives, such as encouraging innovation and achieving sustainable results at the central and local levels.

That is why public procurement processes must be carried out in a righteous, efficient, fair, and equidistant manner, based on high standards and the national legal framework adjusted to the best international practices. They must also be conducted in clear and transparent procedures, ensuring fair competition among all participants.

The fiscal system is an important part of the activity of any business entity. It is very important to ensure that it is fair, predictable, easy to understand and follow, corresponding to the best regional and international practices, and with a clear and transparent system of implementation of associated procedures, focusing on the taxpayer and digitalization. Tax authorities must continue to consolidate their competencies in ensuring voluntary compliance focusing on their advisory role, and on increasing the degree of satisfaction resulted from interactions between tax payers and public authorities.

• To ensure predictability of the tax system by timely consulting the proposed tax policies with relevant stakeholders and correlating it with the Medium-Term Budget Framework. It is crucial to ensure that there is enough time allocated to the consultation of the tax and customs policies and all the procedures that are connected to the process are followed. Also, a six-month implementation period, as stipulated by the Tax Code, should be followed more strictly
• To actively involve the business community in the process of rewriting the Tax Code with a focus on income (profit) tax, VAT, and local taxes. The 2018 Ministry of Finance document named “Concept of Rewriting the Tax Code and Customs Code” stipulates that some actions should be undertaken for rewriting the Tax Code, based on a specific calendar. It is imperative to update the calendar to proceed with the process. Still, it is critical to involve the business community from the early stages, in order to benefit from the best business community expertise from the beginning.
• To extend by 2030 the deadline for aligning the minimum excise duty with that of the EU and gradually increase the country's long-term excise duty on tobacco to ensure stable and sustainable budget revenues and reduce the risk of the development of the illegal tobacco market.
• To boost investment flows by keeping the current efficient tax incentives (IT Parks, Free Economic Zones) and by implementing the new incentive mechanisms (e. g. zero tax rate on reinvested profits, etc.) Some tax regimes or tax incentives have proven their efficiency in raising investors’ interest in Moldova as an attractive location. It is essential to maintain those incentives as long as possible to continue exploring the benefits of such tax regimes for the business community and the state budget (through the rise of incomes, mainly “whitened” revenues). Also, for the stimulation of internal investments, it is vital to give businesses a chance to reinvest profits back into their activity and not pay any taxes on profits if this decision is taken.
• To guarantee a transparent, risk-based approach on tax inspections. Tax audits should be based on risk analysis without admitting the involvement of exogenous factors in their planning and implementation. Access to information related to the planning of audits is to be obtained according to the legislation, including publishing relevant information on dedicated platforms (state audits). Also, the right to challenge the act of audit and/or the decision of audit and the right to challenge the decision within law enforcement bodies must be strictly respected.
• To ensure that all tax procedures are explained exhaustedly and adequately, avoiding generalizations, and that the best practices in the application of tax regulations are transparent and clear for all involved parties.It is crucial for both the tax legislation, and the secondary normative acts that come to explain some legal norms from an applicative point of view, to be clear and applicable. Respectively, the Generalized Base of the Tax Practice must be constantly updated and completed to create a unique and comprehensive understanding of the subjects of fiscal administration. Also, the normative acts approving the fiscal procedures must respect the established transparency and general consultation procedures and be done with the active involvement of the business community to capture the best experiences and anticipate the potential problems that could occur when applied.
• To relaunch the discussions on the Double Taxation Avoidance Agreement between the United States of America and Moldova
  The Republic of Moldova has not currently ratified a Convention for the avoidance of double taxation with the United States of America, nor does it apply by succession the Convention on tax matters between the Union of Soviet Socialist Republics and the United States of America, signed in Washington DC on June 20, 1973, which is applied unilaterally by the United States of America. However, there are precedents for the application by succession by the Republic of Moldova of bilateral tax conventions with the Federal Republic of Germany, the Government of Japan, or the Government of the Kingdom of Belgium, their texts being more detailed and explicit. In the case of Belgium, the Republic of Moldova, by Law no. 17-VIII of 17.09.2009, ratified the new Convention concluded between the parties. We consider it imperative to relaunch the line of communication on this subject with the Ministry of Finance and the Ministry of Foreign Affairs to either negotiate a new convention or to adjust it through existing protocols and ratify it accordingly.
• To prioritize the digitalization of the tax procedures in B2G, B2B, and in internal processes
  The digitization of fiscal processes is imperative in the context of the digitization of all processes in society. Although the tax authority in this regard is making many efforts, it is essential for updating electronic business processes or implementing new electronic procedures to take into account the capacity of the private sector to assimilate and update its own information systems, connected to these procedures, in order not to admit high costs and processes that will not be able to be appropriately interconnected.
• To approve a single and compulsory methodology for all public local authorities to be used for the calculation of taxes on commercial and service-providing units, which will protect both local public authorities and affected businesses.

Insufficient qualified human resources on the national labor market, generated by mass emigration and the slow adaptation of existing educational programs in educational institutions, continue to be some of the main problems encountered by employers in the recruitment process.

These issues can be partially eradicated by reforming the education system, taking into account the current and future requirements of the economic sector, to prepare graduates to meet the real needs of the private and public sectors in the Republic of Moldova.

Another problem perpetuated over time is the rigidity of the labor market as a factor in discouraging dynamic economic growth.

While acknowledging the beneficial effects of recent efforts to modernize the labor legislation, entrepreneurs emphasize the need to reform the regulatory framework of the labor field, reduce bureaucratic burdens on employers and transpose the best international practices.

Activities aimed at modernizing the Labor Code and related regulations must strive to create conditions that maximize labor productivity while protecting the fundamental rights of employees and ensuring the growth of sectors with a high level of employment.

• To further improve the legal regime of remote-working;
• To promote amendments for the regulation of work through temporary agency;
• To further simplify immigration rules to more easily permit qualified workers and their families to live and work in Moldova when they fill jobs for which there is a demand on the local labor market;
• To stimulate the provision of benefits to employees by offering tax incentives to companies that offer such benefits (examples: meal tickets, facultative medical insurance, etc.);

International trade policy

• To advance negotiations with EFTA countries on free trade agreements
• To amend the Free Trade Agreement between Moldova and Ukraine so that PanEuroMed rules of origin are applied
• To pursue new opportunities to sign free trade agreements with other countries
• To ensure a level playing field between US-made products and goods of preferential origin
• To eliminate tariff trade barriers for goods originating from countries Moldova signed free trade agreements with (ex. tax on packaging)
• To abandon the policies that present non-tariff trade barriers, such as regulating commercial relations between suppliers and retailers (discounts, marketing activities)

Customs procedures

Although export customs procedures are considered to be more openly facilitated, companies experience delays and over-bureaucratization in the process of issuing certificates of origin. The AEO status is not fully operational due to the lack of designated traffic lines, and the proper management of the queues for trucks. The regulatory requirements and therefore accessory costs on export in postal consignments discourage local manufacturers from actively promoting their products on foreign markets.

One of the main issues that importers complain about is the practice of applying an unjustified increase in customs value to imported goods by using reference values. This particularly concerns the invoice prices of imported goods and transportation costs. The lack of proper regulations for customs terminals has a significant impact on costs related to the customs clearance procedure.

• To continue and intensify the implementation of the WTO Trade Facilitation Agreement;
• To consider the ratification of the International Convention on the Simplification and Harmonization of Customs Procedures;
• To ensure the security of information systems;
• To eliminate the duties for customs procedures;
• To upgrade the infrastructure of internal borders;
• To upgrade the infrastructure of border customs posts;
• To continue establishing common customs border control posts;
• To continue the digitalization of customs procedures, thus ensuring a streamlined clearance of goods and reduced interaction between customs representatives and businesses;
• To remove standardized forms of customs declarations;
• To conceptually review the customs infringements regime and the related sanctions system;
• To eliminate discretion measures and increase transparency within the assessment of the customs value of goods;
• To enhance the information flow between the Customs Service and other relevant authorities that monitor the quality and safety of goods to be imported and placed on the market;
• To optimize the procedures of clearance of postal consignments, both for export and import;
• To enable the delaying of import charges mechanism

Food safety and public health

The signing of the Association Agreement between the Republic of Moldova and the European Union boosted the trade between the two parties, largely due to the elimination of tariff and non-tariff barriers, but also due to efforts that brought Moldova's regulatory system closer to the EU. However, the legal framework in Moldova still requires numerous pre-market approvals with health authorities, e.g. coordination of packaging, health warnings, notifying about new products and products with changed composition, submitting ingredients’ lists, annual reporting etc., in addition to the requirements regarding the health certificates and/or the certificates of conformity. These certifications are often redundant, generating bureaucratic, burdensome, and time-consuming processes, and Ukraine already abandoned many of them.

• To effectively deliver on the action plan aimed at offering access to domestic products of animal origin into the EU market
• To eliminate redundant permissive acts that hinder the optimization of the trade process (such as the conformity certificates/declarations, Sanitary-Veterinary Certificate (form 2), sanitary certificates, etc.)
• To improve the food safety control system in Moldova by developing the capacities of public and private laboratories
• To digitalize the process of disclosing different certificates for food products in-store, by creating a single digital platform where all certificates can be reviewed online

Access to finance

According to the World Bank, the domestic credit to private sector (% of GDP) index is 24.8, which is quite a low performance in comparison with the region (Serbia – 54.7). Therefore, more effort is needed to encourage businesses to use credits in order to grow on one hand, and institutional creditors to lend, on the other hand. The relevant SMEs Law No.179/2016 labelled only the potential funding mechanisms for small and medium companies, including innovative start-ups, but the national law failed to further elaborate upon such instruments, disincentivizing the potential market participants to engage in such financing and cover the financing gap of the small business.

• To develop the legal framework for alternative financing options for SMEs and start-ups, and have it address regulations regarding venture capital fundsand angel investors.
• To abolish the requirement of obtaining the authorization from individuals in order to access their credit history, and facilitate the information flow between credit bureaus;
• To amend the secondary legislation (replace or materially amend the Regulations on Real Charges No.210/2016), to bring it in line with the reformed secured lending laws, and ensure protection of security rights and the order of priority among competing creditors;
• To eliminate the ban on the voluntary restructuring of the debt of individuals of loans of up to 50,000 MDL;
• To consolidate the judicial decisions database and simplify its user platform within the credit risk analysis process of debtors;
• To encourage commercial banks to finance SMEs transitioning to IFRS as principles of provisioning for supervision purposes;
• To modify the framework regarding prudential regulations so that it reflects current international best practices, starting with the evaluation of debtors’ solvency by using application scoring-based statistical methods, as well as behavioral and transactional-based ones. Such methods give the evaluations a significantly higher security degree than that of traditional evaluation methods that are based solely on profit records and nothing more;
• To relax the requirements for accessing the state managed financing facilities (DLC) by non-bank credit organizations;
• To ensure effective access of non-bank credit organizations to the Credit Guarantee Fund;
• To extend the foreign exchange risk hedging instruments to the non-bank credit sector;
• To allow LLCs, in particular LLC NCOs, to issue corporate bonds in local currency;
• To ensure effective implementation of the credit cost cap provisions;
• To carry out a cross-institutional educational campaign on the financial literacy of the population, which would help avoid the over-indebtedness of private entities.

Payment services

Banks and non-bank payment service providers ensure the proper circulation of money in the economy, focusing on electronic (cashless) payments and implementing the best FinTech technologies to become as digital in this as possible.

• Develop and implement a strategy for reducing cash circulation in the national economy, which would identify a balanced value of cash and cashless transactions (to achieve that, a study of the value of cash and a study of the impact of cashless transactions on the shadow economy should be conducted, containing practical recommendations on how to deal with it, including recommendations that cater to the unique features of rural areas and the agricultural industry);
• Conduct a national interdepartmental educational campaign on the population`s financial literacy;
• Ensure the fair competition in the payment services market (from the perspective of regulations and combating non-licensed providers` activity);
• To identify a balanced ceiling for cash based transactions (it is necessary to conduct a research on appropriate cash values, but also a study on the impact of the digital payments on black economy, with practical recommendations, including an adequate approach to the peculiarities of rural areas and the agricultural sector as a whole);
• Introduce tax benefits for cashless transactions/for merchants accepting cashless transactions;
• Implement the possibility to receive cash through POS-terminals.

Insurance

The insurance sector is underdeveloped and continues to fight against unfair competition. A series of insurance companies are suspected to experience difficulties in complying with prudential regulations, which creates an uneven playing field for the entire sector, with everyone playing according to their own rules.

• To ensure that insurance companies are audited by professional and well recognized companies, for both financial and anti-money laundering purposes;
• To guarantee transparency in the disclosure of indicators regarding the financial stability of insurance companies. Strict control of stability indicators of insurance companies is needed, particularly concerning the long-term solvability and liquidity ratio, and the quality of assets covering the insurance reserves, in order to avoid any issues in claims payment in advance;
• To accelerate and finalize the fraud investigation related to the embezzlement of assets from BNAA via local banks and adopt measures to recover these assets;
• To ensure proper and unbiased compliance with the price policy regulations for compulsory insurance products (MTPL and Green Card);
• To consider streamlining the contractual arrangements between insurers and insureds (by removing the mandatory insurance agreements and limiting to issuance of the insurance policies), boosting the digitalization of compulsory insurance products (MTPL, Green Card and Travel & Health) and following international best practices
• To ensure the implementation of prudential norms and corporate governance principles within the insurance companies
• To encourage the implementation of international insurance instruments, such as export insurance policies, risk insurance in the agriculture sector, financial risk insurance, etc.

Facultative pension funds

• To develop a secondary legislation in order to enforce the recently approved Law on facultative pension funds;
• To develop an attractive tax regime to boost the development of the facultative pension funds.

Sustainable development and the promotion of a green economy are development priorities for the Republic of Moldova. These are reflected in the main policy documents of the Government but are also part of the Republic of Moldova's commitments to external development partners. The Association Agreement with the European Union expressly aims to ensure sustainable development and promote a green economy in our country. The Republic of Moldova is committed to harmonizing its national legislation with the European legislation, and to ensure the integration of environmental protection provisions, rational use of resources and energy efficiency in all sectors of the national economy and social life.

The European Union announced the European Green Deal and committed to turn Europe into the first carbon-neutral continent by 2050, as a response to the effects of climate changes and global warming. Thus, the demand for sustainable and resilient development has become a priority concern for governments and the business community alike.

Renewable energy
The Republic of Moldova must elaborate its vision and develop a strategy in the short, medium and long term, taking into account the reduction of CO2 emissions by decarbonizing the energy , transport and industrial sectors.

The development and approval of the National Energy and Climate Plan is necessary for setting targets on reducing emissions, the share of clean energy in the energy mix, as well as other measures to reduce pollution and combat the effects of climate change.

Promoting the production of renewable energy will contribute not only to the decarbonization of the sector, but also to the strengthening of energy security.

Although the primary and secondary regulatory framework for promoting the production of energy from renewable sources based on tender was adopted and entered into force in 2018, so far no tender has been launched.

• To adjust the legislative framework in order to ensure the bankability of the support scheme;
• To publish the tender calendar, to elaborate the tender documentation/launch the tender/adjudicate the capacities;
• To carry out the interconnection with Romania and to approve a calendar for the execution and commissioning of the first line, as well as the calendars for the realization of the other two interconnection lines;
• To create more attractive mechanisms for prosumers;
• To prioritize the dispatching, delivery, and distribution of renewable electricity outside the support schemes;
• To establish preferential fiscal measures for equipment producing electricity from renewable sources;
• To facilitate the access in correct and transparent conditions to lands with agricultural destination for the objects of energetic infrastructure.

Environmental regulations on waste management
Although historically environmental legislation has not been considered a concern for business, in the light of the state’s commitments to implement the EU environmental law, new obligations are imposed on the private sector.

• To implement the Extended Producer Responsibility approach by taking into consideration the best EU practices and eliminating the Government as a financial intermediary;
• To ensure proper integration of the new requirements related to environmental legislation in the current regulatory framework.

Regulations on purifying waste water
To create financial mechanisms that encourage local producers to implement the best technologies for managing residual waters that result from production processes

Organic agriculture
Moldova’s organic sector has considerable potential for growth. Proximity to the EU market offers Moldova’s farmers a competitive advantage, especially thanks to the Deep and Comprehensive Free Trade Area.

• To ensure access of domestic organic products on international markets by simplifying the rules of entrance for EU certification bodies in Moldova;
• To subsidize the organic farming focused on exports

Healthcare

There is a persistent need for the development in Moldova of a transparent, efficient and nondiscriminatory market for pharmaceuticals, medical equipment and healthcare services.

A continuous cooperation among all stakeholders - public and private - should center on a common vision of reform in healthcare aimed at granting access to affordable and qualitative health services for Moldovan citizens, thus enforcing the perception that Moldova is a safe place to live and work.

The market for pharmaceutical products and medical services is a specific one, that indeed needs closed supervision and regulation from state authorities. However, excessive and unjustified regulations of the market, related, among others, to price control regulations, authorization, etc., without a proper background analysis and lack of functional control mechanisms, lead to market distortions, reduction of investments, and scarcity of products.

• To align the core national legislation related to pharmaceuticals and medical devices with relevant EU Directives and Regulations, such as: the Community Code relating to medicinal products for human use that is to be transposed into national Law on medicines, turning it into the key regulatory document governing the health sector; Community pharmacovigilance rules for both drugs and devices that is to be transposed and enforced via national Regulations; Community drugs' quality assurance and safety systems;
• To enact a clear and transparent mechanism for drugs compensation as an essential premise for granting the population access to pharmaceutical products;
• To liberalize the prices of over-the-counter (OTC) medicines in order to increase their level of presence and market access. By comparison, the prices of food supplements and other products for human use sold in pharmacies are free of regulation. Their evolution shows that there are no unjustified price increases for these product categories, which would allow the authorities to apply the same approach to OTC medicines, liberalizing prices accordingly.
• In order to increase the accessibility of prescription medicines (Rx), a change in the public budget and the list of reimbursed drugs is required. It would be useful to include in this list the essential medicines recommended by the WHO and the innovative products necessary for the contemporary treatment of diseases that have a majority share in medical statistics in Moldova;
• To further improve the national healthcare procurement system that will allow the country to constantly provide patients with the necessary qualitative medicines in a timely manner;
• To consider implementing the concept of the Managed Entry Agreement in national legislation.
  Managed Entry Agreements (MEA) are agreements between companies and payers in the field of healthcare, which allow access to medicines, while providing an answer to the problem of uncertainty about their financial impact or the results of their use.
  The international practice of states that have implemented the MEA, including the states of Eastern Europe, has made it possible to ensure the stability of the medical system, without denying patients the medicines they need for treatment; solving the problem of uncertainty about the effectiveness of medicines; better control over the general budget; faster access to innovative technologies and new medicines; new options when impossible to get a better price for certain medicines; establish a means to encourage the proper use of medicines, to reimburse only economically viable medicines and to be able to collect data on application in real conditions.
• To monitor closely the proper implementation of rules on ethical drug promotion to people qualified to prescribe or dispense drugs and thus enforce the ethical and transparent behavior of pharmaceutical market players in accordance with international good practices;
• To implement further GxP standards (GMP, GDP, GPP);
• To accelerate the digitalization of the medical system and the introduction of telemedicine services;
• To develop and implement regulated online trade of medicines and pharmaceutical products;
• To expand pharmaceutical services and introduce primary health assessment services for patients (e.g., blood sugar, blood pressure, etc.) in pharmacies;
• To expand vaccination sites in the context of the cold/flu season and simultaneous vaccination of COVID-19/influenza, by introducing vaccination in pharmacies (especially in disadvantaged/rural areas).

Telecommunications

The telecom industry is of an utmost importance to Moldova's economy: it significantly contributes to the gross domestic product, promotes economic growth and digital inclusion, and supports the development of the IT industry

Nevertheless, the industry encounters significant barriers which could compromise its commitment to further invest in Moldova.

• To abolish or reduce excessive industry-specific taxes, such as:
  • 3 million EUR annual fee to the portability database administrator (equivalent to 1% of total telecommunications market value);
  • License fees for the use of spectrum and recurring spectrum management fees that are disproportionate, given GDP per capita and the size of the population, and could be a major obstacle to the implementation of 5G technology;
  • The fee for financing the system of normative documents in constructions, in the amount of 0.5% on networks investments value;
• To improve the networks roll out authorization procedures, which are currently cumbersome, lengthy and costly, while the provisions of legal regulations are interpreted in an abusive and non-uniform manner by local public authorities;
• To revise the rules on electromagnetic fields (EMF), which are currently non-transparent and excessively strict, compared to those from other countries;
• To ensure the effective implementation of the new Law no. 28/2016 on access to properties and shared use of the infrastructure associated with public electronic communications networks. The law imposes obligations on owners to grant access to properties for network deployment on fair terms and is largely sabotaged by both public and private entities. Here we also mention the need to develop regulations on reducing the costs of developing broadband networks.
• To ensure the protection of public electronic communications networks that are already deployed by preventing the dismantling of sites, abusive power cuts, authorization of public renovation and real estate development projects that do not analyze the potential impact on the networks
• To communicate the terms of the 5G spectrum license in a transparent manner, including coverage obligations;
• To solve the problem of the lack of independence of the regulatory authority, due to the conflict of interest with the operator controlled by the state;
• To transpose the community acquis into the national regulatory framework in an equidistant manner.
  In the process of transposing EU regulations in the Republic of Moldova in the electronic communications sector, there is a tendency to enforce only those regulations that tighten working conditions for providers, without introducing regulations that would reduce their financial-administrative burden and improve the investment climate in this field. In order to encourage positive changes and diversify consumer services, the following regulations shall be transposed in Moldova:
  • Combining the functions of NARECITR with NRFMS in order to reduce the administrative costs related to the regulatory payments in the field of electronic communications and the costs for the use of the frequency spectrum
  • Extending the validity term of licenses for the use of radio frequencies from 15 years to 25 years.

Digital transformation returns to the frontlines of the Government agenda in the COVID-19 period. That was a mind-changing period that started a new era in B2G relations, as digital transformation became a “must” for public services. Nonetheless, some challenges need to be addressed to increase the prospects of B2C and B2G digitalization.

• • To elaborate the framework document for digitization, setting immediate objectives (quick-wins) and medium and long-term actions, focusing on all dimensions of digitization (public sector digitization, private sector digitization, and digital literacy of the population);
• • To tackle e-commerce issues, including payment services, logistics, customs duties and procedures, set-up and marketing, and other connected matters (tax and accounting, for example);
• • To simplify the procedures behind the electronic signature
• • To expand the possibility of conducting judicial proceedings by videoconference.
• • To further ensure the digitalization of public services rendered to businesses;
• • To ensure full interoperability between public registries and institutions;
• • To provide access for business to state owned registries at reasonable fees;
• • To support the establishment of an interoperability platform between the State Tax Service, bailiffs and banks;
• • To exclude confirmatory documents from physical circulation (abstracts from Public Services Agency) at the stage of notary authentication during real estate transactions, given that notaries have online access to cadastral documents;