The country of Moldova, located in Eastern Europe, is increasing its efforts to attract foreign businesses, amidst uncertainty and the pressures of politics, and still remains an attractive destination for entrepreneurs.
Luc Vocks is a Dutch entrepreneur who describes his experience of living in Moldova since 2007: “Moldova was just totally cheap when I first came here. Foreign entrepreneurs were, so to speak, very visible.”.
He currently operates DevelopmentAid based in the capital Chisinau, and 180 people are working with him to offer job listings in the international development sector. According to him, business tax rates are very low in Moldova, where the standard corporate tax rate is just 12%, much lower than the 25% found in countries like the UK and Netherlands.
In 2018, Moldovan government launched the Moldova IT Park, an online initiative to foster the country’s IT sector. Companies participating in the park benefit from reduced corporation tax at 7% and other favorable advantages like there are no employer social security contributions and income tax for employees.
The MITP scale has greatly increased, hosting more than 2,000 companies from various parts of the world, including foreign ones. As for the latter, their contribution to Moldova’s GDP reaches 6% in the first half of 2024.
Despite these improvements, much remains to be overcome. The Moldovan economy, though improving, remains vulnerable to outside forces, including the Ukrainian conflict. It has only recently that the war finally put a few companies of the West apprehensive about investing in Moldova.
This influx of foreign tech companies has driven up salaries in that sector, which is a challenge to smaller firms such as Trabia, the German-owned IT services business: they cannot compete against the bigger companies on higher wages paid.
As if all of the above were not enough, Moldova’s political landscape is a field prone to tension. On voting constitutional amendments designed to enforce the pro-European Union profile, suspicions of influence exercised by the Russians forced an inconclusive vote of reform through. Emigration is another issue, particularly IT professionals, who often emigrate as a result of changing business conditions.
The government, led by pro-EU President Maia Sandu, has a positive outlook despite the country’s intense aspiration to join the European Union by 2030. In his speech, Deputy Prime Minister Dumitru Alaiba mentioned the “rapid progress for Moldova in the last decade.” Perceptions of corruption improved, plus several economic reforms, he said; however, there is still much to go before it can fully realize its ambitions for the EU.
General, the continuity of the economic modernization programs of Moldova, IT sphere and generally tax-friendly policies attract international business, however, geopolitical challenges and the challenge of emigration as a domestic concern still do not allow for continuous development.
