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  • Discussion Brief for the Export Strategy-Maker

    Challenging times for Moldovan exporters

    Building relationship with exporters, local and international supporting institutions is making strategies happen

    Table of Content 

    Trade is very important to the economic development of a country. Studies show a strong link between the rate of development of trade, and of economic growth. Countries have human, natural, industrial and financial resources in different measure. Economic activity should concentrate on areas of comparative advantage, in order to supply goods and services competitively to countries with a different balance of specialisations. Countries such as Moldova, with small size and limited natural resources, must use their human skills and investment capital to become efficient at adding value. This means effective import of inputs, efficient conversion/addition of value and professional exporting. This high-level business performance can only be achieved through skilled staff, capital investment, technology transfer and competition. 

     1. Economic Background 

    Given the limited energy and other natural resources, the immature and small domestic market and the decline in the economic relationships with other former Soviet Republics, development of new export markets will play a critical role for the economic development and political stability of the country. Balanced export growth can only be achieved through the development of efficient and competitive companies and by diversification of export markets. 

    Recent statistics show that the recession of the Moldovan domestic economy may be coming to an end. Moldova must now focus on exports in order to finance increases in domestic consumption. 

    Moldova’s main export markets are Russia, Romania, Italy, and Germany. 80% of exports go to these countries, with Russia still the predominant trading partner. This represents an unhealthy balance, with Moldova exposed to and dependent on one major market. Romania has been an important market but, despite the cultural ties, Moldova is currently losing market share in most sectors. 

    The dependence on agriculture leaves Moldova vulnerable to the vagaries of the weather. Nearly all industrial raw materials, sophisticated machinery and energy are imported, and so a relatively small part of the value of exports is added in Moldova. Thus, Moldova must improve the strategic balance of its exports, and become a highly efficient trading country. 

    However, a number of factors have a negative impact on export development: 

    • History of political and economic instability 
    • Inconsistent & contradictory legislation 
    • Underdeveloped infrastructure 
    • Bureaucratic and other official procedures 
    • Limited awareness of open market principles 
    • Relatively high cost of energy 
    • Emigration of educated and trained people of 25 – 45 years of age. 

     2. Moldovan Export Strategy 

    Since its independence, proclaimed in 1991, there have been many changes in both government and the attendant policies. The legal framework has evolved towards one appropriate to a market economy, but has done so erratically. As a consequence the legal environment is not particularly friendly to business. Moldova enjoys very few close or preferential trading relations with other countries. The close ties of the Soviet Union have been converted into a number of trade agreements of questionable value, and a Free Trade Agreement was negotiated with Romania. Moldova acceded WTO in July. 

    Faced with the difficulties of 1998, the Ministry of Economy and Reforms published a National Export Strategy for the years 1999 – 2001. This strategy addressed most of the appropriate subject areas, and, for the most part, was based on current international best practice and policy. However, it was very ambitious, lacked focus and had no implementation component. It was also optimistic. It forecast a rapid recovery from the difficulties of 1998. 

    In the event, 1999 was another year of serious decline, and only in 2000 did the position start look a little better. The National Bank returned to similar but slightly gentler policies. The exchange rate is drifting up only slowly and inflation is on its way down again. Increasing remittances and some privatisation receipts holds up demand for Lei, but the terms of trade are deteriorating. Imports are growing strongly whilst exports have just turned up, but only slightly. The subjects identified in the Ministry’s export strategy remain problems to this day. Only the chapter on the creation of MEPO has been acted on. 

    Given that most of the economic and trade problems remain much as they were in 1998, and that a new Government has come to power, MEPO has proposed that the Government strategy should be revised, refocused and given an implementation capability. The Ministry of Economy and Reforms has indicated its willingness to participate in this process. 

    The strategy involves political risk and some hardship, but it is the only way for a small country with limited natural resources to achieve developed status. Reliance on protection and the rural economy is a certain recipe for inefficient industry and it virtually guarantees relatively low standards of living for ever. Preparation of domestic business for international competition is an essential part of the strategy, but the only way to capitalise the country and to achieve advanced industry and services status is through the involvement of enterprises that already have that capacity. This conclusion inevitably leads to a programme of business partnerships with foreign firms and to Foreign Direct Investment. Such co-operation is essential if the country is to make the major improvements in technology and expertise needed to achieve world-class performance. Gradual improvement of the existing economic base will not succeed because other countries will use their access to capital and technology to improve at a faster pace. 

    It is essential to adopt the whole model. Each part of the model sustains the others, and results will not come from a piecemeal or a faltering effort. 

    Therefore a strong argument for the government deciding to adopt a five years integrated programme of measures to achieve the first phase of this transformation. Such an integrated programme offers several advantages 

    • it will help generate confidence at home and abroad 
    • it blunts political opposition to individual elements if they were presented in isolation 
    • it will win credibility with external funding agencies 
    • it facilitates setting targets which are mutually consistent 
    • it helps the government break out from Departmental allegiances that can undermine the capacity for reform 

    The overall mission of the programme should be to expand competitive production of goods and services that can be sold profitably on export markets. This is the basis on which employment growth and higher income standards will be built. 

    The end point of a policy which is committed to an export-led strategy in open competitive markets will be an economy where 

    • There are no tariff or non-tariff barriers to trade in its international markets 
    • A competitive tax regime makes Moldova a profitable location for business 
    • There is flexibility for business so that it is easy to establish and to adapt to changing markets 
    • All sectors are open to private sector investment 
    • Foreign investment helps develop new sectors in areas of competitive advantage for Moldova 
    • A high level of investment in human resources supports growing levels of value-added per worker 
    • A strong core of export experience within companies is developed 
    • Product lines adapt quickly to changing markets with high quality products 

    A major transformation in the existing structure, product profile, market outlets, management experience, business environment, and investment pattern, must occur to make this a reality. The role of the government is to encourage and facilitate this transformation. 

    Moldovan enterprises cannot succeed internationally and international companies will not come to Moldova without all of the following elements in place. 

    •  Access to target markets:
      preferential trade terms should be agreed with target markets and the process of trading should be simplified;
    • Open the domestic economy
      efficient National companies can only develop and thrive in a small economy if they are subject to competition. Foreign companies find a closed market unattractive in the longer run;
    • Climate for foreign investment
      the Moldovan economy can only re-capitalise and develop high-quality, high-value products through working with international companies of best-practice;
    • Hospitable business environment
      Moldovan companies will benefit from a business climate of international standard. Foreign companies will not come to Moldova without one;
    • Target sectors and enterprises
      Moldovan economic activity and economic infrastructure, including that relating to foreign companies, should be concentrated on areas where Moldova has comparative advantage;
    • The Role of the State
      The role of the State falls into a number of areas
      • to maintain a long-term consistent approach to policy where there is business certainty and no surprises 
      • to mobilise public spending and taxation policies so that they make maximum contribution to the development of productive export capacity 
      • to maintain impetus in the reform of the framework for doing business so that there is ease of entry, free competition and a regulatory environment which understands the implication of the export-led strategy 
      • to maintain fiscal and monetary stability 

      The State should empower the process of change and should monitor developments, but should not become actively involved. A stable and consistent direction should be maintained and the short-term social consequences of change should be moderated through enlightened policies; 

      These components are now examined in more detail. 

       a) Access to target markets 

      Both foreign and domestic firms will want good access to substantial markets. Moldova should select its target markets and dedicate a programme to negotiating the best possible access. This will include a PTA with the EC on the best terms possible, bilateral FTAs with all EU accession countries, especially those geographically close, and major programmes to improve the effective access to Russia and Ukraine (also improve the Romanian FTA). Discussions should start on joining the pan-European cumulation system, including reform of the customs service. The government should provide an exchange rate policy to the National Bank which will maintain commercial parity with major markets. 

      b) Open the domestic economy 

      It is essential to open the local market. In general, this approach provides best value goods and services to Moldova. It also develops efficient Moldovan companies able to compete abroad, supply of low-cost materials and components, a negotiating position to achieve balanced FTAs and avoids retaliatory action from target market countries. Moldova can not expect to gain genuine market access for its exports unless it offers the same terms to importers. At the stage of negotiating FTAs, a balance will be expected between concessions on both sides; at the stage of implementation, unfair or restrictive trading practices (especially NTBs) will produce a corresponding defensive reaction from partner market countries. 

      The MFN applied tariffs should be made as liberal as possible, and in any case, no state import charges should be passed on to exports. All obstructive (as opposed to necessary) non-tariff measures should be dismantled, including all inessential licensing. All trade and customs procedures should be revised to make them as light a burden as is possible. A competition authority should ensure fair market access, and non-distorting and transparent use of state aid. Provision of public services and public procurement should be opened to international competition. With all these measures, the principle of "National Treatment (foreign businesses working in Moldova receive exactly the same treatment in all respects as do Moldovan companies)" should be respected absolutely. 

      c) Climate for foreign investment 

      Policies to support foreign investors at all levels, broadly in line with those proposed by the ANAI, should be adopted. Key amongst these are transparent, consistent and durable policies, a positive and supportive environment in all sectors, full effective ownership of the business – free from unwarranted interference, full convertibility and freedom to move money – including repatriation of profits, competitive tax and other advantages and an effective after-care service. The strategy should have a sectoral focus, which reflects the national sectoral policy. The approach should be progressive, working through privatisation, encouragement of Technology Transfer, Joint Ventures and leading on to green-field investment. An incentives policy should be carefully crafted to have maximum effect at modest cost. The comparative offer of near neighbours should be considered, since FDI is highly competitive. The policy will almost certainly involve more favourable tax treatment for investors, especially exporters. The role of the Free Enterprise Zones should be strictly reviewed so that they complement the overall policy. This may involve closure of the zones. 

      d) Hospitable business environment 

      Moldova must offer monetary & fiscal stability. This will come from achieving a lasting social and political commitment as described below. Business should be offered relatively low taxation, the burden of taxation should fall on consumption. 

      This will imply an improvement in the effectiveness of tax-collection. Part of this improvement should come from work with the banks to reduce the costs of visible transactions such as electronic transfers and to reduce the incentive to pay in cash. This should be part of a general initiative to reduce the grey/black economy and to fight corruption. At the same time, the inspection and control of tax collection should be based on "due cause" and the level of administrative bureaucracy should be reduced. This would be achieved through a due process of enforcement, effective and open appeal mechanisms, and feedback and adaptation of the regime through a process of consultation. The key principle underlying tax collection will be to minimise the intrusion and compliance costs of businesses which are meeting their obligations but reserving strong investigative powers and stringent penalties for those who evade. 

      The procedures for acquiring necessary permits should be simplified. Where possible an emphasis should be placed on self-regulation rather than burdensome controls. Where controls are necessary, the emphasis should not be predominantly on catching people out but rather on promoting compliance systems in cooperation with business. Officials should be supportive and work with a light touch. The costs of employing and redeploying labour should be reduced. Non-wage costs should be cut to a minimum and legislation and practices, which encourage labour flexibility, should be pursued. Transport & transaction costs should be reduced through a committed programme of action between officials and the private sector. Protection of Intellectual Property should be assured. 

      e) Target sectors and enterprises 

      Several sectors clearly have export potential. They are hampered by lack of capital, and lack of export experience. Improved technology and product ranges will be needed to win and hold export markets. Industrial policy must focus on building up the capability of firms with export potential. It must seek to improve their capacity to obtain capital. It must focus education and training resources to develop the needed skills of management and the workforce. 

      The government should work with business to identify obstacles and opportunities in different sectors. 

      Direct State Aid to support industrial development is scarce. It must be used to best strategic effect. This means subsidies designed to sustain companies with poor potential must be brought to an end. Support programmes will necessarily be selective and only companies with demonstrable capacity and a well-developed strategy will receive State assistance. 

      High added value segments of sectors (especially in agriculture and forest products) should be targeted, weaknesses analysed and training and resources should be provided to transform them into effective exporters. Policies to improve the supply chain (importers and Moldovan suppliers of components, assemblies and ingredients) to these sectors should be strongly encouraged. Individual enterprises within favoured sectors should receive (affordable) direct support, but only on the basis of ability to succeed, and without prejudice to competitors. State support for survival should be rigorously curtailed. Bankruptcy procedures should be reviewed to ensure that they remove dead companies from the system, but that they allow viable parts of the business to succeed. Obstructions to international involvement in [advantaged] companies (through technology transfer, joint ventures, privatisation etc.) should be removed. The work of the restructuring agencies should be co-ordinated with these policies, and progress should be reviewed publicly from time to time. 

      f) The Role of the State 

      Agreeing a Long Term Approach. 

      The most important role for the State is to generate confidence in the strategy and to achieve social and political consensus and commitment. To do so will require a major debate, both within the political system and in public. It is unlikely that results will become evident within the period of one parliament, and so the present government should seek cross-party consensus for the major components of the strategy. If this is done, the next political debate will be over who is best able to implement the strategy, not on what strategy to pursue. This consensus is essential if the strategy is to carry weight with foreign investors and with the International Financing Institutions. Broad commitment to the policies will ensure that Moldova maintains continuity and confidence, and does not go through another destructive period of frequently changing programs. 

      Spending and Taxation Policies 

      The government should review its spending programmes to adopt them to contribute to the effort of building competitive export capacity:- 

      • Public investment priority should go to programmes which build productive capacity and to key economic infrastructures that facilitate development (eg Transport, Communications, Energy …) 
      • Education spending should recognise the important skill areas that need to be developed and give them priority 
      • Public investment should concentrate on priority locations which enjoy a competitive advantage to become major Growth Centres, and correspondingly curtail spending programmes that seek to locate industry in areas of the country where it will be difficult to compete 
      • Sectoral support should focus exclusively on activities and techniques that enhance export competitiveness (eg not generalised subsidies on output or inputs but on measures to increase capacity or quality) 
      • The government should review its tax structure to identify changes that would promote private saving and investment in export capacity, such as: 

      • the possibility of sharply reducing tax on corporate profits should be examined to encourage investment generally 
      • the possibility of special tax status for savings put into business expansion in non-mortgageable assets 
      • the possibility of reducing taxes on employment 
      • the elimination of all export taxes 

      Maintaining Impetus of Reform. 

      The government must drive the agenda of regulatory reform necessary to create a good business environment. This means identifying the specific legal and administrative reforms that need to be made and sustaining the impetus for reform. The impetus should be launched through public policy pronouncements and debate. The impetus should be created by setting up appropriate structures to pursue the changes. The reform should be sustained through a process of target setting, monitoring, evaluation and consultation. Key tasks within the programme could be implemented through executive agencies outside the Departmental structures. They would have specific mandates and performance criteria. These agencies should be mandated through decrees; they should have clear responsibilities and powers, codes of conduct and declarations of interest. The government should set the objectives, timeframe and should define the resources of the agencies. All executive aspects of the agencies should be decided by appropriately constituted boards, which work only to the objectives, entirely free of political influence. 

      Commitment to a detailed national strategy is the first step in this process. Impetus can be created through public investment projects; a public/private model should be adopted wherever possible. 

      The major contributions to the economic infrastructure should be co-ordinated with the plan. This includes education, transport and telecommunications. In many situations, private participation will offer the most effective and efficient approach. Education and employment policies should be co-ordinated to encourage the youth of Moldova to enter business and services. It is essential to offer the new generation an expectation of prosperity to reverse the emigration exodus. The prospects for a Moldova left with only an ageing and old population is profoundly depressing, A re-training programme should also be co-ordinated with the policy, so that the required skills are available. This strategy is one for full employment of appropriately skilled and trained people. Some people will be unable to retrain. There should be a social safety net for them, to ensure that they are not casualties and to help to build social consensus for the approach. 

      Fiscal and Monetary Stability. 

      While room must be found for funding new productive capacity, this must be done within a fiscal and monetary framework that commands confidence.

      The financial implications of the changes should be modelled by the Ministry of Finance and by the National Bank. The strategy will produce full employment and budget surpluses in the medium term, but most of the proposals will produce a short-term fall in government revenues and an increase in government expenditures. Increasing Moldova’s indebtedness, at an already difficult time, may seem unattractive. It should be viewed as an investment in the future and as the only way to repay the ineffective borrowing of the past. An acceptable policy balance between urgent reform and limiting the debt should be agreed. This balance, together with the commitment to the strategy, should be presented as part of the on-going discussion with the International Financing Institutions. 

      Within the broad strategy outlined here the government should consider the merits of two alternative approachesa bold reformist programme which front-loads the major changes in protection, in taxation, in the business environment for investment tariff or a gradualist approach where reforms are phased over several years and gradual adaptation is sought 

      The attractions of the bold programme of reform are it gives Moldova a first mover advantage over some of its regional competitors it forces the pace of reform that might, given time, be eroded by political lobbying it creates immediate interest for investors it wins support from external funding agencies it takes advantage of the political cycle by using the substantial government majority to make difficult changes early in its period in government  

      As against these advantages it has certain drawbacks by forcing immediate adaptation, some firms may not be able to achieve the rapid transition necessary to open trading conditions it gives less time for the various stakeholders to "buy in" to the strategy  

       3. Current Trade Promotion Network 

    During the last period Moldovan trade promotion network has been gradually expanding and developing. More trade promotion institutions (including governmental, non-governmental and private organisations) have been established. The most important should be: 

    Ministry of Economy (Department of Foreign Economic Relations) 

    Starting with the principles that Government is responsible for supervision of the correct enforcement of the market economy principles it has the main functions: 

    • Development of export strategy, coordination and supervision of export promotion activities, as well as the other elements of the system at macro level. 
    • The Government is in charge to coordinate the export promotion activities through the Ministry of Economy (Department of Foreign Economic Relations). 

    Chamber of Commerce and Industry of Moldova 

    Chamber of Commerce and Industry (CCI) is a non-governmental and independent organization based on its membership and representing joint interests of Moldovan businessmen. 

    The main objective of CCI of Moldova is to create favourable conditions for the thriving business community and to represent and protect its members’ interests within foreign economic relation system of the Republic of Moldova and in their relations . 

    Moldovan Export Promotion Organisation (MEPO) 

    National Export Agencies and Chambers of Commerce traditionally share a difficult relationship. Focus of activities into unique areas of competence is not always easy, and co-ordination and co-operation is frequently problematic. Nevertheless, there are clear areas where each organisation can concentrate, to provide a wider more effective set of export services to business and government. MEPO will propose a set of discussions with the National Export Agencies with the intention of defining areas of concentration and modes of co-operation. The success of this initiative will depend on the perception by the agencies of the value that may be derived from this co-operation. 

    MEPO has chosen to focus, and to provide a limited number of services to exporters. MEPO will co-operate actively with any agency that is able to deliver export-related services that MEPO has chosen not to deliver. These include restructuring and reform agencies, product development agencies, training agencies and business development associations etc. 

    Commercial Sections Abroad 

    Trade Promotion Organizations have traditionally delivered in-market services either through wholly owned foreign offices or to a lesser extent through their embassies. Assistance in foreign markets is an important part of export promotion and a desirable objective and resource for MEPO. At this stage MEPO does not have any representations abroad. To be successful the organisation conducted a study regarding possibilities of placing his commercial sections in order to deliver experienced assistance to enterprises in key export markets. As shown in the study the markets of most interest across the range of sectors were: (for EU) Germany, France, Italy, Holland, UK and for non-EU: Romania, Ukraine, Russia, Hungary. Based on the discussions with exporter enterprises, the following services were considered desirable in any in-market facility: Identification of/introduction to foreign clients, arranging meetings with potential partners, market research, promotion support, feedback on competitive products, etc. Moldovan exporters could benefit from such services in some EU, key CIS and CEE markets. 

    Business Associations 

    There are currently dozens of non-governmental business associations in Moldova. Some of them are: Union of Oenologs, Association of Dairy Producers, Association of Sugar Producers, Union of Handicraftsmen, Farmers Federation, etc. The functions of afore named associations are: to co-ordinate the activity of enterprises in the specific sector; support and represent interests of the enterprises in the Government; attracting investments and elaboration of programs for development of companies in each association. These associations have also an important contribution in export development by discussing with the government the specific issues of the industry and proposing adequate policies and solutions for export development. 

    MEPO co-operates with every association, especially with those from high export potential sectors and encourage them to participate in MEPO’s activities. 

    Business Centres of Moldova 

    In Moldova there are two business centres and a Found for supporting the small business. Business centres, as well as the other organisations, are the key elements in the institutional framework of export promotion. 

    Business centres support the enterprises in the improvement of their management systems, organizational structures, deliver consultancy services, elaborate business plans and investment projects, that are on the basis of production activities, insuring the pre-export operations. 

    National Agency for Attracting Investments (ANAI) 

    NAAI provides general information on Moldovan's economic climate and the incentives offered to foreign investors. NAAI expert advisers help foreign businesspeople find joint venture partners in Moldova and supply investors with legal, financial and project advisory services. Agency's Investment Division has developed an extensive database on investment possibilities and a wide range of company profiles of Moldovan companies seeking foreign cooperation, assembly operation or joint venture participation. Investment ideas and proposals of Moldovan companies are disseminated at investment seminars and exhibitions, as well as by various publications, trade promotion institutions, bank, large companies, investment agencies and management consultants. 

    Agency for Enterprise Restructuring and Assistance (ARIA) 

    ARIA has been organized early in 1995 with a very ambitious mission:
    - to develop a new generation of leaders and managers able to act as change agents to create a new business, social and cultural environment;
    - and to provide our clients with customized solutions and services, in order to help them make sustainable improvements towards world-class performance.

    ARIA objective is to build a leading company as a unique team of ambitious, energized, goal-oriented people, sharing common values, willing to continuously grow with the organization and taking pride in customer satisfaction and company's performance.
    Currently ARIA is active in Management Consulting, Training, and Investment & New Business Development.

    Central Agricultural Market Information Bureau (CAMIB) 

    CAMIB is a Moldovan NGO created by the EU/TACIS "Improved Marketing of Agricultural Products" project (IMAPP) in February 1999. CAMIB is a non-governmental and non-profit organisation. CAMIB was created in order to continue all market and export support activities that IMAPP was able to implement since it started activities in Moldova in September 1996. During the project activity and CAMIB as itself have been carried out a wide range of marketing and export promotion services. 

    Centre for Productivity and Competitiveness (CPC) 

    Competitiveness and Productivity Centre has been set up by Resolution 335 of the Government of Moldova on April 9, 1997 as an independent, non-governmental, non-profit agency in charge of implementation of the Second Private Sector Development Project (PSD II) in Moldova, which has been promoted in close cooperation with the World Bank. 

    PSD II continues to support a broad program of reforms initiated by the Government of Moldova in the enterprise and financial sectors. The project builds on already achieved results of PSD I in the enterprise sector and facilitates further adjustment of Moldovan enterprises towards regional and international levels of competitiveness. 

    Moldovan enterprises have to buy energy and raw materials at world prices and are facing growing competition in their domestic and traditional markets. PSD I began to address these issues through the transfer of restructuring skills and the provision of medium-term credit by participating banks. The initial results have provided a good starting point for a number of restructured enterprises to maintain and continue improving their competitiveness. These enterprises and many others currently embarking on the restructuring path require additional and increasingly more sophisticated assistance. Enterprises which have successfully gone through their initial restructuring must accept continued improvement efforts as a normal mode of operation and address insufficient product or process flexibility, poor quality and outmoded design as they try to shift to more competitive markets. 

    Other Export Support Institutions 

    A great support in export promotion belongs to the creation and development of free enterprise zones. Actually there are five FEZ. Their support can be estimated as follows: 

    • co-optation of foreign investments, new technologies and equipment, studying and applying the new methods of management; 
    • creation of the production units, oriented towards exporting; 
    • satisfying the internal market with components, utilized in future for production of export goods; 
    • development of modern infrastructure; 
    • development of marketing, packaging and transit activities. 

    Except the above-mentioned institutions export promotion is undertaken by trade houses and international fairs and exhibitions, organized by specialized institutions. There are several trading houses opened in different CIS countries by the biggest Moldovan enterprises. The major companies specialized in trade fairs and exhibitions are: Moldexpo, Poliproject Exhibitions, Interservice, JET system, Axar etc. 

       4. Positioning of MEPO 

    In order to reverse the recent decline in trading performance, the Government established the Moldovan Export Promotion Organisation (МЕРО), with objectives and structures based on successful models from other countries. MEPO is a State-financed organisation, but these resources are substantially increased by financial and technical support from the European Union’s Tacis programme. MEPO began working in March 2000, and launched its services in September of that year. MEPO now offers a wide range of services to Moldovan exporters. MEPO has operational autonomy, but it has a formal relationship with both Government and the private sector through its Co-ordination Council. Officials from the main economic ministries and businessmen from key sectors of the economy review strategic issues and support MEPO as necessary. 

    MEPO’s mission is to support private companies in achieving profitable export sales, to the general economic and social development of Moldova. 

    Role of MEPO 

    MEPO’s role is to provide enterprises with direct assistance in increasing their exports and to also work on a general level to improve the knowledge, skills and the business environment for Moldovan enterprises. MEPO needs to be seen by enterprises as a valued resource that can be trusted and relied upon to give them practical help and support. MEPO also needs to be seen by government as an authoritative body that is making an important contribution to national policy objectives and whose advice should be taken seriously. 

    Many of the threats and weaknesses that impair export growth are outside MEPO’s ability to improve directly. MEPO nonetheless sees its responsibilities to include working with government, industry and other parties to identify and address issues that affect exporters. MEPO’s policy unit has the specific task of bringing such issues – and possible corrective actions – to the attention of those with responsibility and authority. 

    MEPO is in a position to directly address some of the client needs that are very evident from the SWOT analysis. These are: 

    Management skills: 

    - MEPO has instituted a management-training programme, which covers all aspects of export marketing. 

    Lack of finance for marketing;- 

    - MEPO’s cost sharing grant scheme supports the export marketing costs for enterprises. 

    Lack of knowledge of export markets: 

    - MEPO’s Trade Information Centre provides enterprises with a wide range of information. 

    Absence of Marketing skills and techniques: 

    - MEPO’s Export Advisory team works with individual enterprises to help them prepare and implement export-marketing plans. 

    Vision, Mission and Strategy Objectives 

    MEPO’s vision; 

    - Moldova will reach its full potential – based on its historical and traditional strengths – as an exporter of high quality goods and services in its chosen fields; 

    - Moldova will exploit its advantages in location, education, language proficiency and familiarity with regional markets to become a major regional trade centre; 

    - Moldova will be fully integrated into the European economy and will achieve strategic balance in its export markets; 

    - The successful development of Moldovan exports and trade will result in a rapid and significant rise in living standards in Moldova. 

    MEPO’s mission statement; 

    - to improve the business climate by increasing awareness and understanding among government and the business community of the fundamentals of entrepreneurship and international trade; 

    - to promote the vital role of exports as a key driver of the Moldovan economy; 

    - to help individual enterprises achieve profitable export sales by providing them with information, advice, training and enabling finance for export activities. 

    Strategy Objectives 

    MEPO’s Strategic Objective is to be an indispensable resource for Moldovan exporters by providing them with valued services resulting in export success. 

    MEPO’s promotional strategy is to place the organisation at the centre of export activity in Moldova. The specific objectives are: 

    - MEPO will provide services to enterprises resulting in new export sales. 

    - Moldovan exporters look to MEPO for advice and assistance 

    - MEPO is regarded as a valuable resource by start up companies 

    - MEPO is seen as an authority on export matters 

    - MEPO has influence on Government policy on trade matters 

       5. MEPO Experience to Date 

    MEPO has recruited and trained well-educated, active and committed staff. Each has at least some applied business experience. Through these staff, MEPO provides a range of services to exporters. 

    The Trade Information Centre 

    To address the information needs of Moldovan companies, MEPO has developed its Trade Information Centre. TIC has access to a great number of information sources on entry conditions to markets, international quotations and tenders, tariffs, price quotations, import/export statistics, agents & distributors, and large and small buying organisations. The TIC provides services directly to exporting companies to help them to compete for foreign orders, explore new markets, develop appropriate marketing strategies, identify new customers, and also to MEPO’s own consultants as they prepare advice and marketing plans for clients. Trade Information Consultants, working in TIC, are responsible for maintaining MEPO’s official home page, which can be accessed at www.MEPO.net. The MEPO site provides both foreigners and local people with on-line information and also shows business opportunities and introductions between exporters and importers. Currently, the Centre is in charge for completing MEPO’s Exporters Database, which at the moment accounts for approximately 300 exporters. This can be accessed free of charge by any person at www.MEPO.net. 

    Export Development 

    MEPO gives hands-on support to enterprises through a number of direct export development activities, including: 

    • Organisation of trade missions 
    • In-country visits by foreign buyers 
    • Participation in exhibitions and trade fairs 
    • Specific product promotions in target markets 
    • Sectoral development programmes 

    All these activities may be supported directly by MEPO, or indirectly through the Cost-Sharing Grant Scheme (explained below). Examples include: 

    MEPO has conducted three business missions: One to the U.K. in November last year, the second to Germany this March and third to Romania end of June.In all cases the objectives were: to increase exports to the target markets, raise awareness of Moldovan exporters to the existing market opportunities and to promote Moldova’s supply and manufacturing capability in these markets. 

    In all cases, the product offering was prepared and expectations were created before departure. 6 companies went to the U.K. where 18 quality meetings were held with buyers. 10 companies went to Germany, to conduct 50 meetings. 6 companies went to Romania where 34 meetings were held. MEPO’s Export Advisers accompanied the Moldovan company executives to meetings wherever possible. At the final stage, MEPO is monitoring the results of the missions, assisting the companies in the follow-up activities. Substantial orders may time, but the first signs of business are evident. 

    Plans for the remainder of 2001 include two more sales missions, one of them in Romania, an inward buyer mission to Moldova, participation in a major trade fair, Tallinn Food Fair and a promotional campaign for a specific product. 

    The Cost Sharing Grant Scheme (CSGS) supports and bears part of the development costs of individual companies in their pursuit of their international marketing strategies. The company must have a marketing plan with a clear strategy to achieve significant and continuing sales. MEPO’s Export Advisers help to develop the strategy and marketing plan as necessary. A Grant’s Committee, composed of MEPO staff, TACIS consultants and independent external members, review applications and take decisions to support part of the costs. Grants are limited to 10,000 Euro per company, and may cover an average of 50% of approved costs. 99 grants, amounting to 477 701 Euro, have been awarded so far. MEPO’s contribution was 250201 Euro, or 52,4% from total. 

    Because the marketing strategy belongs to individual enterprises, the grants are targeted at a wide range of markets including the U.K., Germany, Russia, Canada, Romania, and Israel. Products include wine, fruit juice, dairy products, textiles, leather goods, machine components, and soft drinks (mineral water). Some new business has already been recorded and other projects are developing towards sales orders. 

    The CSGS is strictly resource-limited. With additional funding, more companies could be helped to overcome the barriers of limited market knowledge and weak supply and distribution networks. 

    Human Resource Development; MEPO’s Training Programme 

    The Training Programme is in several parts. The main focus is to provide practical exporting knowledge and experience to sales and marketing managers of exporting companies. Other participants in exporting such as Ministries, industry associations and banks are also targeted. A series of 8 workshops, each covering a range of subjects, were delivered to enterprises and one specialised course was provided for commercial banks. The programmes ran in both Chişinău and Bălţi. 106 managers from 59 companies and 17 bankers participated. Certificates were awarded to those who attended the majority of the workshops. 

    In December 2000 МЕРО co-operated with the Greek Export Promotion Organisation to provide training to the managers of 18 exporting companies in Athens. The theme was the application of modern export promotion techniques and methods. 

    MEPO has organised a workshop for senior officials to improve the strategic co-ordination between Ministries, Embassies, offices abroad and MEPO. 

    Policy & Planning Department 

    MEPO’s Strategy and Planning Department has done the following; 

    • assessed the economic policy environment in Moldova, concentrating on specific subjects, such as the Free Enterprise Zones, the FTA with Romania, certification of food products for export etc. 
    • prepared a one-year and three-year business plan for MEPO 
    • is launching a revision of the National Export Promotion Strategy. The existing strategy is expiring, is very broad and general, concentrates only on exports - not on trade and development in total - and it lacks any implementation components. A new, clear, focused and realistic strategy will co-ordinate the trade development efforts of government and the private sector, following the examples of other countries, such as: Slovenia, Hungary, Ireland, etc. 
    • MEPO organises regular round table sessions to promote awareness of MEPO services and to discuss barriers to international business. Regional workshops were delivered. The meetings are attended by officials of local Government, by exporters, and by special guests, including representatives of Customs and local Finance Departments. Issues raised may become the subject of recommendations to Government. Issues and recommendations are publicised by MEPO through discussions in the press. 

    MEPO focuses strongly on its mission to provide services to exporters, but it co-operates with other agencies in Moldova to provide a suite of services for economic development. 

    Where an enterprise has export potential, but is not yet export ready, MEPO co-operates with ARIA, the re-structuring agency, the Centre for Productivity & Competitiveness or other sector-based organisations providing similar services. 

    Foreign Direct Investment is probably the most effective instrument to promote both economic development and also exports. MEPO co-operates directly with the Moldovan Agency for Attraction of Investments, and indirectly with international investment initiatives. 

    The ability to export efficiently and effectively is one of the major criteria considered by a foreign investor in choosing to invest in a relatively small country. MEPO’s work to improve the climate for investment and trade though its Policy Unit benefits all companies operating in Moldova. MEPO’s more direct support to enterprises is available to both Moldovan and foreign-owned companies, provided they meet some minimum criteria for the extent to which they are involved in the Moldovan economy. 

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    Posted 18 August 2010 
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