Hello, Ana. In the last interviews, I wrote about the IT Park and the Free Economic Zone (FEZ) "Balti". That's how I realized that most of us often don't have a clear picture of the scale of some organizations. So let's start with statistics. What does the Foreign Investors Association (FIA) represent in figures?

The Foreign Investors Association (FIA) was created in 2003 by eight foreign investors. Today, FIA consists of 22 companies, which have created more than 24,000 jobs and invested around €1.4 billion in business development in Moldova, which represents 13% of the gross national product (GDP).

The figures are impressive. You know, recently, during a discussion with one of the largest banks in Moldova, I found out the number of active current accounts of legal entities. Taking into account the presence of other banks in the market, I think we are talking about 50,000 companies, most of which are Small and Medium Enterprises (SMEs). FIA comprises only 22 companies out of the 50,000 but accounts for 13% of GDP. Comparing the figures, one realizes how important qualitative foreign investment is for Moldova.

The share of these investments is even higher than you might guess. FIA is made up of only 22 companies, whereas there are many more foreign investment-based companies in Moldova. A study we conducted recently showed that Foreign Direct Investment (FDI) accounts for only 7% of all Moldovan enterprises, but employs 16.9% of the workforce, produces 40% of GDP, pays 29% of all taxes to the state budget, and 24% of all social fund revenues.

Basically, representing 22 companies, we actually represent the interests of all foreign investment-based enterprises. Therefore, our mission is to create a favorable investment environment in the Republic of Moldova.

This mission can only be achieved by certain means...

Our main means is to ensure dialogue between state-level decision-makers and foreign investors.

Who are your "discussion partners"?

We try to cooperate with all the structures that are available to us for dialogue. These include the Economic Council under the Prime Minister and the Advisory Council under the Ministry of Finance, parliamentary committees, and government leaders. The format is varied, starting with legislative initiatives and ending with an informal breakfast with the Prime Minister. By the way, the last such breakfast took place just the other day. It openly discussed labor shortage issues and ways out of the pandemic crisis, as well as the sharp rise in electricity costs. 

What is the message you are trying to convey?

Our flagship book is the White Book. In fact, the last one was presented quite recently. On 27 September, in a hybrid format, we had as speakers - CEOs of FIA member companies and representatives of authorities. It is encouraging that all relevant ministries are working together.

What is the "White Book" and how is it created?

The "White Paper" is a policy document in the form of recommendations based on the international experience of our investors. I would like to stress that it is not a report on what has been done, but a look at what needs to be done.

How often does it appear?

"The White Book" is not a regular publication. In some periods, it has been published every five years, in others, it has appeared annually. It is not the periodicity that matters, but the dynamics of implementing its recommendations.

When more than 30% of the proposals in the previous White Book have been implemented or are in the process of being implemented, we start thinking seriously about a new White Book.

What are the key issues in the new edition of the White Book?

One aspect would be the reform of the judicial system, where the FIA proposes the creation of a special monitoring commission, whose members would have access to the files of all court cases, except those classified as state secrets. The purpose of monitoring is to examine the objectivity and legality of decisions at any stage of the judicial process.

Does corruption remain one of the main obstacles to attracting foreign investment to Moldova?

According to Transparency International's Corruption Perceptions Index for 2020, Moldova scored 34 points, ranking 115 out of 180 countries. Understandably, the authorities' inability to enforce the law and the uneven playing field make foreign investors uneasy. After all, they always have the option of choosing another country to invest in.

I believe that, besides corruption, another major constraint is the labor issue. Moldova is facing a huge shortage of skilled and unskilled labor. 

In the White Book, the problem of labor is ranked third, after the problem of justice and taxes. It is an extremely acute problem. Within the FIA some companies transport their employees from villages to their workplaces seventy to one hundred kilometers away every day. That is why, together with other major associations such as AmCham and EBA, we support 'open borders for the import of labor and changes in labor law, especially as regards temporary work agencies. In the case of Romania, these changes have been made since 2011.

What are temporary work agencies?

These are legal entities authorized by the Ministry of Labour and Social Protection to conclude temporary employment contracts with temporary workers. The conditions of activity of the temporary employment agency, as well as the authorization procedure, are laid down by government decree. 

And then they "rent" the employees, assuming all legal formalities related to their presence and activity in Moldova?

Exactly, so that foreign investors don't have to take on tasks that are not specific to them. A temporary employment agent enjoys all the rights and obligations of an employer under the Labour Code. 

What other issues are highlighted in the latest edition of the White Book?

The document is freely available, here is the link. The FIA recommendations are very comprehensive. They cover competition, waste management, digitization of the economy, and land issues. As the FIA includes companies from all major sectors of the national economy, separate chapters are dedicated to the telecoms, medicine, and pharmaceuticals industries. Overall, we believe that the role of foreign investment in Moldova's economy is so large and important that we need to improve the investment climate so that Moldova can increase its investment attractiveness among countries in the region.

By the way, since you are producing the "Dialog Pro-Business" column together with the Invest Moldova Agency, how do you collaborate with them?

Our partnership has been going on for a long time and our roles are complementary. The role of the Agency is to show the advantages of working in Moldova. We support this trend with both hands, but we complement the Agency's work with practical advice and recommendations, which we gather daily by communicating with FIA member companies.

It is surprising that FIA, being a prominent part of the foreign investment ecosystem, has only 22 member companies. Have you thought about expanding the Association?

This is exactly what I wanted to point out. FIA does not want to expand. Our current formula - where every member's voice is heard - is very effective. Informal communication is a prerequisite for complex and informed decisions. And we can hear each other very well.

In fact, as you noted, the AIF, even in its small size, accounts for 13% of Moldova's GDP. 

P.S. 

Here is the link to the FIA 2021 White Paper 

https://fia.md/wp-content/uploads/2021/09/RO-Cartea-Alba-2021.pdf 

And the link to the study "On the Effectiveness of Foreign Investment"

https://fia.md/wp-content/uploads/2021/09/FIA-Raport_Impactul-ISD-asupra-Economiei-RM.pdf

Pavel Zingan