Moldova and Romania are boosting economic cooperation and consolidating the interconnection of their capital markets as new investment opportunities arise from Moldova’s prospective EU accession, government officials and private investors said at a conference hosted by the Bucharest Stock Exchange (BVB) on Wednesday.
"The Republic of Moldova is in a crucial stage for its development, for its future, and for the affirmation of its potential at the EU level," Anca Dragu, governor of Moldova's central bank, NBM, said during the Moldova-Romania Capital Bridges 2024 conference organised by the BVB in partnership with investment banking group WOOD&Co, Raiffaisen Bank International, the European Banking Authority, AmCham, and Moldova's largest lender, Maib.
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Moldova applied for EU membership in March 2022, shortly after Russia launched its invasion of neighbouring Ukraine, and was granted candidate country status in June the same year. In December 2023, the European Council decided to open accession negotiations with the country. In the autumn, Moldova will hold a referendum on accession to the European Union, aiming to ensure that future governments do not derail it from its European trajectory.
"Those who do not invest in the Republic of Moldova today, will regret it in five to ten years," Dragu added, stressing the country's significant potential for growth.
Moldova is targeting economic growth rate of 8-10% in the coming years, deputy prime minister Dumitru Alaiba told the conference. To achieve this objective and attract investors, the government is carrying out a series of regulatory reforms to cut red tape, boost digitalisation, and support small and medium-sized enterprises (SMEs). The country has 0% corporate income taxation on retained earnings for SMEs.
Moreover, Moldova’s IT park tax regime supports the technology sector with a single 7% flat tax rate, encouraging companies in the field to set up branches in the country.
Romania is the largest investor in Moldova and its primary trading partner, absorbing nearly a third of its exports. Romanian investments in Moldova have reached 400 million euro, according to Senate president Nicolae Ciuca.
Yet, untapped potential for cooperation exists in further consolidating the interconnection of two countries capital markets.
The Bucharest Stock Exchange can act as a springboard for the regional expansion of Moldovan companies, Romanian prime minister Marcel Ciolacu commented.
The Bucharest bourse is open to collaborating with Moldova’s National Commission of Financial Markets to facilitate access for Moldovan citizens to competitive savings products, including highly liquid shares, government securities, municipal bonds, and pension schemes, BVB general director Adrian Tanase said.
Large foreign investors in Romania are already acknowledging the growth opportunities stemming from Moldova's integration into the larger European markets.
"We have a large business in Romania, so for us there is a lot of convergence and a lot of integration happening with Moldova and with other Southeastern European countries," said Peter Stohr, CFO of power and gas distributor and supplier, Premier Energy Group operating in Romania and Moldova.
As much as 75% of Moldovans' electricity needs are being covered by Premier, Stohr stressed, adding that the company made significant investments in the network over the last years, to make sure that it is able to work “in a world where [...] you have an increased demand for electricity throughout the day."
Premier Energy’s operations posted sharp growth over the past decade, generating 13 million euro eleven years ago, to reach close to 1 billion euro last year.
"We see a lot of potential for growth, especially on the electricity generation side of renewables and that requires capital, so we are always on the lookout for diversifying out financing sources. And so you need to always keep your mind open and look at opportunities including in the capital markets,” Stohr also said.
The largest institutional investor in Moldova, the European Bank for Reconstruction and Development (EBRD), too strongly supports the country's European integration.
"As Moldova’s largest institutional investor, we support its private sector and banking sector," Odile Renaud-Basso, EBRD President, said. "Having been closely involved with the reform of the Moldova’s banking sector since the crisis of 2014, we continue to support authorities to bring Moldova’s financial infrastructure closer into the EU."
"As Moldova moves towards Europe, the EBRD will be at its side, providing hands on support locally," Renaud-Basso stressed.