Moldova Investment Climate Reform Phase II

During October 2015 – September 2019 the Project has advised the Government on implementation of an ambitious set of reforms.  Its Component 1 Enabling business environment, aimed to improve the economy-wide investment climate and to contribute to increased competitiveness of the private sector.  In line with the initially proposed approach the Project has promoted the reform of permits and licenses. The objectives of this second phase have been achieved. Component 1 Enabling business environment, aimed to improve the economywide investment climate and to contribute to increased competitiveness of the private sector. Component 1 “Improve Regulatory Environment for Business” was completed and closed as of September 30, 2019. Following the extension, the Project continues with Component 2 “Enhance Market Access with focus on Agribusiness” and Component 3 “Increase the level of investment protection”. Component 1 focused on streamlining regulations governing business operations, in particular permits and licensing, and inspections. Activities of this component  achieved USD 11.7 million in Compliance Cost Savings. More cost savings are expected and will be calculated by project end, especially as related to the full impact from implementing a large-scale inspection reform. Component 2 aimed to support increasing exports of selected agri products, perform regulatory streamlining of agricultural inputs market. In this context, experts carried out technical visits to each company to check how they progressed in implementing the assignments and to provide feedback and further guidance on how to proceed. The Project supported the National Food Safety Agency (ANSA) in establishing a new Risk Assessment Unit (RAU) aimed to strengthen the country’s food safety system as per the market opening requirements. Component 3 focused on putting in place legal and regulatory measures aimed at protecting and retaining investments. The Project supported the Economic Council under the Prime Minister – a public-private dialogue platform established to resolve investor issues to attract and retain investors. The resolved issues ranged from finding legal solutions to comply with Moldovan requirements for labeling imported food, to harmonizing Moldovan requirements for consumer information about food products with those of the EU and streamlining warehousing requirements for importers. The Project has continued to support public consultations on the Apprenticeship Law, aiming to contribute to the solution of the skilled workforce shortage raised by investors. The Project also delivered to the authorities the draft Law on Preventing Food Waste and the accompanying Regulatory Impact Assessment and information notes, as well as assisted in several rounds of public consultations. 

Despite the Government standstill during February – June 2019 caused by the results of the Parliamentary elections, the overall Project progress has not been severely affected. Some activities were slightly delayed, assuming uninterrupted operations by the Government but it were implemented and completed by the end of phase II agreed as of September 30, 2019. The overall goal of the Project is to enhance Moldova’s exports and investments by improving the business enabling environment, thus boosting the private sector’s market competitiveness to take full advantage of the AA/DCFTA with the EU. The Project was fully funded by the Government of Sweden, represented by the Swedish International Development Agency (SIDA) in the volume of 33,200,000 Swedish Kronor (SEK).    The Advisory Agreement with the Ministry of Economy (key project counterpart) has been concluded on 24th of July 2017, and then endorsed and ratified by the Parliament of Moldova in October 2017. The agreement set a client cash contribution of 5% of the total project amount (i.e. USD 160,000), which has been collected in July 2018, based on an additional agreement between the Government of Moldova and IFC with regard to the date of the full payment (a Waiver Letter confirming this has been signed by IFC and the Ministry of Economy). The Government in-kind contribution of at least USD 100,000 provided for in the Agreement, was estimated during this reporting period to be already over-achieved at USD 154,000.   On September 30, 2019, the Project has finalized its Phase II (Nov 2015 - Sept 2019). The Project has been extended for Phase III till June 30, 2023, for which an Amendment no.4 and no.5 to the Annex A to the Administration Agreement was signed with SIDA for preparatory activities (Inception phase) and afterwards for implementation of Phase III.