HomeReportsBureau of Economic and Business Affairs2023 Investment Climate Statements…Moldova

# 					2023 Investment Climate Statements: Moldova			

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													EXECUTIVE SUMMARY											

                -  EXECUTIVE SUMMARY 
                -  1. Openness To, and Restrictions Upon, Foreign Investment                    -  Policies Towards Foreign Direct Investment 
                  -  Limits on Foreign Control and Right to Private Ownership and Establishment 
                  -  Other Investment Policy Reviews 
                  -  Business Facilitation 
                  -  Outward Investment 
                -  2. Bilateral Investment and Taxation Treaties 
                -  3. Legal Regime                    -  Transparency of the Regulatory System 
                  -  International Regulatory Considerations 
                  -  Legal System and Judicial Independence 
                  -  Laws and Regulations on Foreign Direct Investment 
                  -  Competition and Antitrust Laws 
                  -  Expropriation and Compensation 
                  -  Dispute Settlement                      -  ICSID Convention and New York Convention 
                    -  Investor-State Dispute Settlement 
                    -  International Commercial Arbitration and Foreign Courts 
                  -  Bankruptcy Regulations 
                -  4. Industrial Policies                    -  Investment Incentives 
                  -  Foreign Trade Zones/Free Ports/Trade Facilitation 
                  -  Performance and Data Localization Requirements 
                -  5. Protection of Property Rights                    -  Real Property 
                  -  Intellectual Property Rights 
                -  6. Financial Sector                    -  Capital Markets and Portfolio Investment 
                  -  Money and Banking System 
                  -  Foreign Exchange and Remittances                      -  Foreign Exchange 
                    -  Remittance Policies 
                  -  Sovereign Wealth Funds 
                -  7. State-Owned Enterprises                    -  Privatization Program 
                -  8. Responsible Business Conduct                    -  Additional Resources 
                  -  Climate Issues 
                -  9. Corruption                    -  Resources to Report Corruption 
                -  10. Political and Security Environment 
                -  11. Labor Policies and Practices 
                -  12. U.S. International Development Finance Corporation (DFC), and Other Investment Insurance or Development Finance Programs 
                -  13. Foreign Direct Investment Statistics 
                -  14. Contact for More Information 

## EXECUTIVE SUMMARY

Under the current pro-reform government, Moldova is making progress on economic reforms and strengthening democratic institutions.  The pro-reform message voters sent when they chose Maia Sandu as Moldova’s President in November 2020 was solidified when the pro-Western, anti-corruption Action and Solidarity Party (PAS) won snap parliamentary elections in July 2021. The government’s reform agenda enjoys wide support among the business community.

In December 2021, the government secured a 40-month, $560 million governance-focused program with the International Monetary Fund (IMF). Amid the economic fallout from Russia’s further invasion into Ukraine, this amount was increased to a total of $795 million.

In 2022, Moldova’s economy contracted sharply by almost 6%, following a record 13.9% growth in 2021. The downturn reflected spillovers from Russia’s war against Ukraine, which had an immediate and significant negative impact on Moldova’s economy. The country was faced with an energy crisis and unprecedented inflation which spurred a cost of living crisis. Almost 20% of Moldova’s goods were imported from Ukraine, Russia, and Belarus before the war; with those supply routes frozen, Moldovans have had to substitute goods from the EU at significantly higher costs.  Moldova previously relied on the Odesa seaport and Ukraine’s railway system for much of its trade and now must pay significantly higher transport fees for goods to be trucked in from Romania via the land border. A modest recovery is expected in 2023; the government is enacting a series of reforms to better support businesses to improve economic growth.

The government is committed to strengthening Moldova’s investment and business climate to attract foreign investment, which will help mitigate the negative economic impacts of the COVID-19 pandemic, energy crisis, and disruptions to Moldovan economy because of Russia’s invasion of Ukraine. In the wake of the massive bank fraud in 2014, when more than a billion dollars was stolen from Moldova’s state coffers, the government is taking action to reform the justice sector, investigate and prosecute those responsible, and tackle the pervasive corruption that continues to undermine public trust and slow economic development.  Moldova ranks 91 out of 180 on the Transparency International Corruption Perceptions Index.

As a WTO member since 2001, Moldova has adopted modern commercial legislation in accordance with WTO rules.  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.

In June 2014, Moldova signed an Association Agreement (AA) with the European Union (EU), including a Deep and Comprehensive Free Trade Agreement (DCFTA), committing the government to a course of reforms to bring its governmental, regulatory, and business practices in line with EU standards.  In 2022, the EU granted Moldova the formal status of candidate country. The DCFTA has helped integrate Moldova further into the European common market and created more opportunities for investment in Moldova as a bridge between Western and Eastern European markets. Moldova now exports over 80 percent of its goods to European, North American, and other non-Russian markets.

While some large foreign companies have taken advantage of tax breaks in the country’s free economic zones, foreign direct investment (FDI) remains low.  Finance, automotive, light industry, agriculture, food processing, IT, wine, and real estate have historically attracted foreign investment.  Largely through USAID programs, the United States has supported the development of a number of these emerging sectors, yet risks remain.  The government has identified seven priority sectors for investment and export promotion: agriculture and food processing, automotive, business services such as business process outsourcing (BPO), clothing and footwear, electronics, information and communication technologies (ICT), and machinery.

Private investors, including several U.S. companies, have shown strong interest in the ICT sector in response to a new preferential tax regime.  Improvements in the strength and transparency of the financial sector also helped attract interest.  Many U.S. businesses have explored opportunities in the agricultural and energy sectors.

							1. Openness To, and Restrictions Upon, Foreign Investment					

### 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.

							2. Bilateral Investment and Taxation Treaties					

Moldova has signed bilateral investment protection and promotion agreements with 44 countries. In addition to the United States, these include: Albania, Austria, Azerbaijan, Belarus, Belgium, Bosnia and Herzegovina, Bulgaria, Canada, China, Croatia, Cyprus, the Czech Republic, Estonia, Finland, France, Georgia, Germany, Greece, Hungary, Iran, Israel, Italy, Kuwait, Kyrgyzstan, Latvia, Lithuania, Luxembourg, Montenegro, the Netherlands, Poland, Qatar, Romania, Russia, Slovakia, Slovenia, Spain, Switzerland, Tajikistan, Turkiye, Ukraine, United Arab Emirates, the United Kingdom, and Uzbekistan.

Moldova has a bilateral investment treaty with the United States. To avoid double taxation, the Convention on Matters of Taxation signed between the United States and the USSR on June 20, 1973 still applies to former Soviet republics including Moldova.

Moldova has signed 50 double taxation avoidance treaties with the following countries: Albania, Armenia, Austria, Azerbaijan, Belarus, Belgium, Bosnia and Herzegovina, Bulgaria, Canada, China, Croatia Cyprus, the Czech Republic, Estonia, Finland, Georgia, Germany, Greece, Hungary, Ireland, Israel, Italy, Japan, Kazakhstan, Kuwait, Kyrgyzstan, Latvia, Lithuania, Luxembourg, Macedonia, Malta, Montenegro, the Netherlands, Oman, Poland, Portugal, Romania, Russia, Serbia, Slovakia, Slovenia, Spain, Tajikistan, Turkiye, Turkmenistan, Ukraine, United Arab Emirates, the United Kingdom, and Uzbekistan.

Moldova has signed free trade agreements with 43 countries, among them member states of the Commonwealth of Independent States (CIS), the Central European Free Trade Agreement (CEFTA), Turkiye, and the United Kingdom. Moldova has also undertaken FTAs with China and the European Free Trade Area (EFTA). In 2008, Moldova moved from the extended generalized system of preferences (GSP-plus) with the EU to autonomous trade preferences, which expanded the duty-free access of Moldovan goods to EU markets. In September 2014, the Deep and Comprehensive Free Trade Agreement (DCFTA) supplanted the Autonomous Trade Preferences regime.

							3. Legal Regime					

### 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.

							4. Industrial Policies					

### 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.

							5. Protection of Property Rights					

### 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

							6. Financial Sector					

### 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.

							7. State-Owned Enterprises					

Since gaining independence in 1992, Moldova has privatized most State-owned enterprises (SOEs), and most sectors of the economy are almost entirely in private hands. However, the government still fully or partially controls some enterprises operating in a variety of economic sectors. The major SOEs are northern electricity grids, Chisinau heating companies, fixed-line telephone operator Moldtelecom, and the state railway company. The government keeps a registry of state-owned assets, which is available on the website on the Public Property Agency http://www.app.gov.md/registrul-patrimoniului-public-3-384.

SOEs are governed by the law on stock companies and the law on state enterprises as well as several governmental decisions. SOEs have boards of directors usually comprised of representatives of the line ministry, the Ministry of Economy and Digital Development, and the Ministry of Finance. As a rule, SOEs report to the respective ministries, with those registered as joint stock companies being required to make their financial reports public. Moldovan legislation does not discriminate between SOEs and private-run businesses. By law, governmental authorities must provide a level legal and economic playing field to all enterprises. However, SOEs are generally seen as better positioned to influence decision-makers than private sector competitors. In some cases, SOEs have allegedly used these advantages to prevent open competition in individual sectors.

The Law on Entrepreneurship and Enterprises has a list of activities restricted solely to SOEs, which includes, among others, human and animal medical research, manufacture of orders and medals, postal services (except express mail), sale and production of combat equipment and weapons, minting, and real estate registration.

In 2022, the government approved a 2023-2030 Strategy on State-Owned Enterprises intended to establish unifrom rules and to transform all SOEs into joint stock companies or limited liabilities by 2030. The strategy adopts the OECD Guidelines on Corporate Governance of State-Owned Enterprises.  It will help identify public enterprises to undergo reorganization, privatization, or liquidation, as well as plans to strengthen their governance.  The Public Property Agency will conduct an assessment of state-owned enterprises in 2023-2024to guide small and large privatizations and set economic benchmarks to identify the most opportune conditions for launching de-nationalization efforts.

### 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.

							8. Responsible Business Conduct					

While Moldovan legislation deals with issues pertaining to environment, workers’ rights, social fairness or governance, there is little awareness of the concept of the due diligence approach to ensuring responsible business conduct. The country’s corporate culture and private sector are still at an early stage of development and still seeking to define the nature of interactions between private business, government authorities, broader stakeholders, and the public at large. There is no governmental policy to encourage enterprises to follow OECD or UN Guidelines in this area.

Foreign companies operating in Moldova are gradually introducing the concept of corporate social responsibility as an aspect of responsible business conduct. AmCham Moldova has set a leading example, with its corporate members engaging in a forestation project, in the rehabilitation of medical facilities, and in Christmas collection projects for orphanages. The COVID pandemic prompted many businesses to make donations of personal protection equipment and meals to frontline workers. A number of private companies also played a role in providing assistance to refugees fleeing Ukraine following Russia’s further invasion in 2022.

Moldova is among countries where children engage in the worst forms of child labor, including commercial sexual exploitation, sometimes as a result of human trafficking. Children also engage in child labor in agriculture. Moldova is not a signatory of the Montreux Document of the Private Military and Security Companies.

### 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.

							9. Corruption					

While Moldova has taken steps to adopt European and international standards to combat corruption and organized crime, corruption remains a major problem. The current government’s focus on anti-corruption marks the third wave of anti-corruption reform efforts in Moldova.

Since winning a majority in Parliament in July 2021 elections, the ruling Action and Solidarity Party (PAS) has focused on several facets of the fight against corruption. The government replaced or suspended under-performing or corrupt officials. In its first months in office, the government increased transparency regarding beneficial ownership by offshore interests, amended the constitution to increase judicial independence, enacted national security screening legislation for foreign investments, passed a bill to vet judicial and prosecutorial oversight bodies for integrity issues, and implemented measures to increase accountability in the Prosecutor General’s office. A Constitutional Court ruling allowed for confiscation of unjustified assets from government officials with a lower burden of proof. The government also started implementation of plans to conduct extraordinary vetting of judges and prosecutors, and to reform anti-corruption agencies.

The National Anticorruption Center (NAC), created in 2012, focuses on investigating public corruption and bribery crimes, and is subordinated to the Parliament (the CCECC had been organized under the executive branch). In 2018, a new statutorily created agency, the Criminal Assets Recovery Agency (CARA), began operating as a specialized unit within NAC. The selection and appointment of the agency’s leadership is coordinated through a competitive process by the NAC. Moldovan judges, who previously enjoyed full immunity from corruption investigations, can now be prosecuted for crimes of corruption without prior permission from their self-governing body, although the Superior Council of Magistrates still must approve any search or arrest warrant against a judge.

The government has developed and enacted a series of laws designed to address legislative gaps such as the Law on Preventing and Combating Corruption, the Law on Conflict of Interests, and the Law on the Code of Conduct for Public Servants. The Criminal Code criminalizes two forms of public sector corruption: passive and active. These statutes apply only to corrupt acts and bribery committed by public officials. In 2016, part of the reform of the prosecution system, Moldova adopted the Law on the Prosecution Service, and created two specialized prosecution agencies – the Anticorruption Prosecution Office (APO) and the Prosecution Office for Combating Organized Crime and Special Cases (PCCOCS). Beginning in 2015, specialized prosecution offices began to investigate and prosecute individuals allegedly involved in the “billion dollar” banking theft and a series of high-profile bribery, corruption, and tax evasion cases, though with limited progress. These offices face multiple challenges, including lack of independent budgets, high workload, external interference, and serious questions about their independence, transparency and impartiality. In August 2022 a new APO Chief, with U.S. prosecutorial system experience, was appointed following a competition process developed by the Superior Council of Prosecutors.

In 2016, Parliament passed the Law on the National Integrity Authority (NIA) and the Law on Disclosure of Assets and Conflict of Interest by public officials. The NIA became operational in 2018. The director, deputy director, and all inspectors are hired in competitive processes, but the agency has not yet hired a full complement of inspectors. NIA continues to lack staff and sufficient resources to fulfill its mission. The issuance of “integrity certificates” to individuals with well-known ties to the billion-dollar heist further degraded the organization’s reputation. The transparency and efficiency of NIA needs further improvement.

In 2018, APO and PCCOCS started recruitment for seconding investigators to their offices. According to the 2016 prosecution reform law, these investigators are responsible for supporting prosecutors to investigate complex corruption cases. However, even with a nearly full complement of seconded investigators, APO still relies on NAC investigators to conduct many corruption-related investigations and prosecutions. The government further plans to restructure the anticorruption agencies to focus on high-level corruption after Parliament approved the proposal in a preliminary vote. In August 2022 a new APO Chief, with U.S. prosecutorial system experience, was appointed following a competition process developed by the Superior Council of Prosecutors.

In 2022, as in the previous year, dozens of criminal cases dealing with high-level corruption were opened against current and former high-ranking officials, including the suspended prosecutor general. However, most cases are still under investigation and only a few were sent to courts. In 2022, Parliament approved the 2023-2027 national program and action plan for better efficiency and international and interagency cooperation in criminal asset recovery.

Moldovan law requires private companies to establish internal codes of conduct that prohibit corruption and corrupt behavior. Moldova’s Criminal Code also includes articles addressing private sector corruption, combatting economic crime, criminal responsibility of public officials, active and passive corruption, and trading of influence. This largely aligns Moldovan statutory law with international anti-bribery standards by criminalizing the acts of promising, offering, or giving a bribe to a public official. In 2022, new provisions in the law consolidated whistleblower protections and requirements for disclosure of ultimate beneficiary owners.

A new illicit enrichment law allows a simplified procedure for unjustified asset confiscation. A record 40 criminal cases on illicit enrichment were initiated in 2022 against mostly former top officials, including a former president of the country, but only one case reached the courts.

The country has laws regulating conflicts of interest in awarding contracts and the government procurement process; however these laws are not effectively enforced. In 2016, Parliament added two new statutes to the Criminal Code criminalizing the misuse of international assistance funds. These provisions provide a statutory basis for prosecutors to investigate and prosecute misuse of international donor assistance by Moldovan public officials in public acquisitions, technical assistance programs, and grants. Starting in 2022, the Public Procurement Agency can apply sanctions for violation of public procurement procedures. Small value procurements still lack transparency and are prone to corruption.

In 2022, Moldova ranked 91 out of 180 (from 105 the prior year) among countries evaluated in the Transparency International Corruption Perceptions Index. This was the country’s best score in a decade, with Transparency International mentioning Moldova among the eight countries globally that improved their score over the past five years.

Opinion polls show the fight against corruption is a top priority for the Moldovan public. The 2022 edition of the Economist Intelligence Unit’s Democracy Index maintained Moldova in the “flawed democracy” category with an overall score of 6.23 at rank 69 out of 167 countries. Moldova’s modest improvement of 0.13 points from 2021 was attributed to “improvements in the electoral process and pluralism and in political participation,” with scores of 7.42 for electoral process and pluralism (on a scale of 0 to 8) and 7.22 for political participation. Moldova maintained the score of 6.76 for civil liberties and 4.38 for democratic political culture and dropped 0.35 points to 5.36 for functioning of government.

The Freedom House Moldova “Nations in Transit Report” 2022 noted the commitment by President Sandu to implement anti-corruption policies, which she had begun during a brief period as Prime Minister in 2019. Public competitions have been mostly non-transparent and based on controversial regulations or political loyalty to, or membership in, the ruling political group, rather than on the basis of merit.

The investigation into the “billion-dollar” banking sector has been progressing relatively slowly despite the government’s renewed efforts to prosecute the organizers. Official data reported that as of March 2022, only USD 187 million has been recovered, mainly from taxes, credits, and the sale of assets belonging to the three banks liquidated following the theft. The stolen assets have not been recovered; there remains no assurance that they will be.

Freedom House’s most recent report, *Democracy in Retreat: Freedom in the World**2022*, found Moldova continues to be only “partially free,” earning 62/100 points for political rights/civil liberties.

Although the PAS government has prioritized transparency, several issues persist, including the late publication of plans, draft policies, budgets, and bills for consultation. Procedural shortcomings and allegations of political bias by opposition parties have led to criticism in some cases that the appointment of public officials was not transparent.

Opinion surveys conducted by reputable pollsters like the International Republican Institute (IRI) show that a majority of Moldovans see corruption as a major problem for the country, though it ranks below other economic issues. In 2007, Moldova ratified the United Nations Convention Against Corruption, subsequently adopting amendments to its domestic anticorruption legislation. Moldova does not adhere to the Organization for Economic Cooperation and Development (OECD) Convention on Combating Bribery. However, Moldova is part of two regional anticorruption initiatives: the Stability Pact Anticorruption Initiative for South East Europe (SPAI), and the Group of States against Corruption (GRECO) of the Council of Europe. Moldova cooperates closely with the OECD through SPAI and with GRECO, especially on country evaluations. In 1999, Moldova signed the Council of Europe’s Criminal Law Convention on Corruption and Civil Law Convention on Corruption. Moldova ratified both conventions in 2003. In 2020, Moldova joined OECD’s Istanbul Anticorruption Action Plan.

Moldova is one of the participating countries in the Anti-Corruption Network for Eastern Europe and Central Asia (ACN), a driver of anticorruption reforms in the region.

In October 2020, Moldova’s second Compliance Report, adopted by the Group of States against Corruption (GRECO) in the fourth round of evaluation, concluded the current level of compliance of Moldova with the GRECO recommendations is generally insufficient. Following the evaluation, 18 recommendations were addressed to Moldova. Subsequently, out of 18 recommendations, four were rated as satisfactorily treated or implemented, and 10 were partially implemented, and four remain unimplemented.

### Resources to Report Corruption

Iulian RusuDirectorNational Anti-Corruption CenterBulevardul Stefan cel Mare si Sfant 168,Chisinau MD2004, MoldovaTel. +373 22-257 257 (secretariat)/800-55555 (hotline)/22-740 777(special line)secretariat@cna.md

Lilia ZahariaExecutive DirectorTransparency International MoldovaStrada 31August 1989 nr. 98, of.205, Chisinau MD2004, MoldovaTel. +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.

							10. Political and Security Environment					

Levels of street crime and other types of violent crime are equal or lower in Moldova than in neighboring countries and businesses typically only employ the most basic security procedures to safeguard their personnel.  Moldova has not had significant instances of transnational terrorism.  Moldova’s security situation has remained stable in the wake of Russia’s brutal war of aggression in Ukraine. The government has focused on maintaining stability and law enforcement effectively mitigated Russia-backed destabilization efforts. The Embassy has eased its travel advisory for Moldova amid the stable security situation. While there have been occasional instances of protests that have escalated into clashes with police in the past decade, these have not generally impacted the international business community in Moldova.  There have been no significant instances of political violence in the last four years and all recent large demonstrations have been peaceful.

The Embassy has received no reports over the past ten years of politically motivated damage to business projects or installations in Moldova. In 2015 and early 2016, there was public outcry over the political class’s failure to prevent (and even its facilitation of) a massive bank fraud in which about 11 percent of GDP disappeared from the country’s then-three largest banks. Round-the-clock anti-government protests culminated in January 2016 in clashes with riot police when protesters tried to prevent Parliament from voting in a new government. The clashes were limited and did not turn into full-blown violence or cause extensive damage that would affect businesses in any way, and the government remained in power.

In 2022, protesters held rallies in front of Parliament, Presidency, and other government buildings leading to road closures and traffic congestion without causing significant damages or clashing violently with police. Rallies may continue to occur in 2023 in response to political or economic issues.

Separatists control the Transnistria region of Moldova, located between the Nistru River and the eastern border with Ukraine. Although a brief armed conflict took place in 1991-1992, the sides signed a cease-fire in July 1992. Despite Russia’s brutal war of aggression in Ukraine, the security situation in Transnistria remains stable. Local authorities in Transnistria maintain a separate monetary unit, the Transnistrian ruble, and a separate customs system. Despite the political separation, economic cooperation takes place in various sectors. The government has implemented measures requiring businesses in Transnistria to register with Moldovan authorities. The Organization for Security and Cooperation in Europe (OSCE), with Russia, and Ukraine acting as guarantors/mediators and the United States and EU as observers, supports negotiations between Moldova and the separatist region Transnistria (known as the “5+2” format).

							11. Labor Policies and Practices					

Skilled workers leave Moldova every year for better-paying jobs in other countries. About one-fifth of Moldova’s labor force, more than 800,000 Moldovan citizens, live and work abroad. There are imbalances in the labor market arising from a general lack of workers with vocational training that employers need on one hand, and lack of job opportunities for academically educated people on the other. Labor shortages are reported in manufacturing, engineering, and IT. Low birth rates, emigration, and an aging population, coupled with a lack of immigration, represent a challenge to Moldova’s labor pool more generally. According to World Bank population projections, if current emigration trends continue, Moldova will lose another 20 percent of its population by 2050. In an attempt to attract skilled labor, the government eliminated the need for work permits for certain nationalities, including the United States, Canada, and the EU in 2023.

The informal economy accounts for an estimated 25% of GDP or more, particularly in agriculture and the construction sector. According to official statistics, approximately 16 percent of the working population is employed in the informal economy; the non-agricultural workforce in the informal economy is 11.3 percent. UNDP studies indicate that during the COVID-19 pandemic the informal economy shrank because of the lockdown that affected businesses in industries where the informal economy is mostly spread (agriculture, hospitality, restaurants, trade, and transportation). During the pandemic, both formal and informal employment decreased, but informal employment at a much faster pace. In 2022, the government reinstated unannounced labor inspections in line with international best practices. Business community representatives applauded this move to prevent labor law violators from having a competitive advantage over law-abiding companies.

Official unemployment was 3.1 percent in 2022, which is misleading given the low labor participation rate of 40.5 percent, owing to large numbers of Moldovans migrating abroad, which reduces the number of job seekers at home. Youth unemployment is more than double the national average at 10.7 percent. Employment in Moldova is largely based on agriculture, low productivity sectors, and crafts.

Moldova’s Constitution guarantees the right to establish or join a trade union, and nearly 40% of Moldovan workers belong to a union. Most trade union membership is in the public sector and state-owned enterprises. Unions collectively bargain and advocate for public policies which support the rights and interests of workers. Unions are less active and effective in small private companies.

Moldova is a signatory to numerous conventions on the protection of workers’ rights. The country has moved toward adopting international standards in labor laws and regulations. In recent years, the government made changes to labor legislation, somewhat reducing unions’ input on issues related to hiring and firing personnel. Nevertheless, labor legislation is stringent in matters dealing with severance payments or leave, regulations that some foreign investors view as an impediment to labor flexibility and as putting a heavy burden on employers.

The government has drafted legislation to modernize the labor market, with a focus on skills development and vocational education reforms as well as cutting red tape associated with employee leave.

The Moldovan National Trade Union Confederation has been a member of the ILO since 1992, affiliated with the International Confederation of Free Unions (ICFU) since 1997, and obtained membership in the International Trade Union Confederation in 2010.

							12. U.S. International Development Finance Corporation (DFC), and Other Investment Insurance or Development Finance Programs					

In 1992, the Moldovan and U.S. governments signed an investment incentive agreement that exempts DFC’s predecessor, Overseas Private Investment Corporation (OPIC), from Moldovan taxes on loan interest and fees. OPIC became active in Moldova in September 1997. Since then, OPIC has provided a number of financial and insurance products, including political risk insurance, to U.S. businesses operating in Moldova in such fields as agribusiness, telecommunications, banking, consulting, transportation logistics, and finance.

The U.S. Export-Import Bank (EXIM) provides U.S. companies exporting to Moldova with short- and medium-term financing in the public and private sectors under its insurance, loan, and loan guarantee programs. In 2000, EXIM and Moldova signed a Framework Guarantee Agreement setting the terms for the Government of Moldova to issue sovereign guarantees to facilitate EXIM financing U.S. exports to Moldova. Also in 2000, EXIM and Moldova signed a Project Incentive Agreement that enabled EXIM to consider financing U.S. exports for creditworthy private sector projects in Moldova on a non-sovereign risk basis.

In 2002, EXIM signed a memorandum of cooperation with the Black Sea Trade and Development Bank. Under the memorandum, EXIM’s financing can be used to support exports of U.S. goods and services to any country located in the Black Sea region, including Albania, Armenia, Azerbaijan, Bulgaria, Georgia, Greece, Moldova, Romania, Russia, Turkiye, and Ukraine. The agreement enables the Black Sea Trade Development Bank to act as obligor or guarantor of specific transactions and provides for parallel financing arrangements.

Moldova is eligible for U.S. Trade and Development Agency (USTDA) funding for feasibility studies, orientation visits, specialized training grants, business workshops, and other forms of technical assistance with U.S. export potential.

Institutions such as the European Bank for Reconstruction and Development and the World Bank are active in Moldova in both the private and public sectors, offering various financial tools for both insurance and credit. Moldova is a member of the World Bank Group, including the Multilateral Investment Guarantee Agency (MIGA), which promotes foreign direct investment into developing countries by insuring investors against political risk, advising governments on attracting investment, sharing information through on-line investment information services, and mediating disputes between investors and governments. Moldova is also eligible for project and trade financing from the Black Sea Trade and Development Bank, and benefits from loans extended by the EU’s European Investment Bank and the Council of Europe Development Bank.

							13. Foreign Direct Investment Statistics