99819
Building a Better Business Environment in Moldova
Victor Neagu, Communications Associate in the Moldova
World Bank Office, offers this story.
                                                                  Photo Gallery
Moldova has seen little foreign direct investment in its short
two decades of independence, while the country has
struggled with massive outward migration, and an
occasionally bumpy business environment for those
attempting to build a lucrative enterprise.

As far as ease of doing business goes, Moldova is good at
enforcing contracts and making it easy and affordable to
register a company, but the country has fared worse when it
comes to trading across borders, protecting investors or          Related Links
paying taxes. Addressing these and other challenges facing
the country have been the focus of World Bank support.            The World Bank in Moldova
Policy dialogues to build a competitive and liberalized           Chamber of Commerce and Industry
business environment have been flanked by efforts to support      Competitiveness Enhancement Project
the promotion of exports, adopt international quality standards
                                                                  CEP Project Beneficiary
and provide private enterprises with access to financing.
                                                                  Ministry of Economy of the Republic of
Proximity to the European Union is the country's undisputable    Moldova
advantage, but to fully realize this opportunity, Moldova needs
to produce higher quality and more competitive exports. The
World Bank Competitiveness Enhancement Project aims to help the government position Moldova as a
competitor in outside markets and a desirable investment destination by enhancing Moldova's private
sector through improvements in access to finance and higher standards and quality.

Cartnord, a cardboard and paper company, is one of the beneficiaries of this project. The company
secured a $200,000 loan of working capital to help it purchase high-quality raw materials and cater to
more demanding customers.

                         It is a major supplier of cardboard and paper products to domestic buyers,
                         ranging from pizza restaurants, to candy factories and cement producers. The
                         company employs about 200 staff and has well-established business relations
                         with companies in Europe and the Commonwealth of Independent States. It
                         says the World Bank's credit line has helped it focus on quality and grow as a
                         business.

                         "We succeeded in increasing our output and today we sell more and better
Victor Morgun            quality products to companies in Moldova and other countries in the region,"
                         said Victor Morgun, General Director of Cartnord.

Six Moldovan banks have been competitively selected under the project to provide low interest loans to
Moldovan exporters. To date 49 companies have accessed loans to improve production and boost
sales.

Another successful example is that of Vladimir Hmelnitchi and his pharmaceutical company Depofarm,
located 25 kilometers from the capital city of Chisinau. Based in the small town of Anenii-Noi,
Hmelnitchi's pharmaceutical business provides appealing, well-paid employment for around 110 people
in the community. A competitive salary and modern working conditions are the result of decades of
entrepreneurial activity. The son of a pharmacist, Vladimir stepped into his father's shoes and expanded
his business over the past 15 years. Today, his company is the main supplier of medicinal teas and
vitamins in pharmacies across Moldova. The bulk of his exports are destined for countries like Belarus,
Russia and Armenia, but he has exported to Italy and sees the EU market as a higher value export
destination.

                         "We would like to export to the EU, but we must follow very strict standards
                         when it comes to safety. Thanks to the loan we received from the World Bank
                        we will be able to produce at international standards," says Hmelnitchi, General
                        Director of Depofarm.

                        Hmelnitchi got a loan of over $ 1 million through the Competitiveness
                        Enhancement Project. It has enabled him to equip a new production facility, to
                        install solar panels and other energy saving machinery and to purchase
Vladimir Hmelnitchi     equipment which conforms to international Good Manufacturing Practices
                        (GMP) standards, an essential condition for pharmaceutical exports to the EU in
coming years.

With quality and standards being such a critical issue and the entryway for Moldovan goods into the EU,
a second component of the World Bank's Competitiveness Enhancement Project has provided matching
grants to over 160 companies in the adoption and implementation of international quality management
systems. In Hmelnitchi's case, his commitment to quality will enable him to export freely his medicinal
teas to Italy and other EU markets.