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Textile, Apparel, Footwear and Leather Goods Textile, Apparel, Footwear and Leather Goods Republic of Moldova FREE TRADE AGREEMENTS Contents Population: 3.55 million Employment rate in Moldova: 39.3% (2013) increased, versus Area: 33,846 km2 38.4% (2012) GDP per capita at PPP: $3,927 Corporate tax: 12%, 6% in Free Economic Zone, 3% in Free Port Textile, Apparel, Footwear and Leather goods (TAFL) Industry Overview ...............................2 Economic growth 2013: 8.9% Labor costs (gross salary): averaging 250 EUR/month Inflation: 5% Full load labor cost: cca 2 EUR/hour Top Reasons to Invest in TAFL Sector in Moldova ..................................................................2 Proximity to: • Major markets: cca 800 million customers (FTA with EU, CEFTA, CIS, GUAM). Textile sub-sector overview .....................................................................................................3 • OEMs, TIER 1 & 2 suppliers (i.e. RO, PL, HU, CZ, SK, RU, etc.); Apparel sub-sector overview ...................................................................................................6 Free Trade Agreements signed - 42. • DCFTA (Deep and Comprehensive Free Trade Area) - 500 million; • CEFTA Central European Free Trade Agreement (Moldova, Macedonia, Albania, Serbia, Footwear, Leather goods and Accessories sub-sector overview ..........................................11 Montenegro, Bosnia and Herzegovina and UNMIK (Kosovo) - 30 million; • CIS Commonwealth of Independent States (Armenia, Azerbaijan, Belarus, Kazakhstan, Specific incentives, Investment Opportunities .......................................................................12 Kyrgyzstan, Moldova, Russia, Tajikistan, Uzbekistan) - 250 million; • GUAM Organization for Democracy and Economic Development - (members:Georgia, Main reasons to choose Moldova ..........................................................................................13 Ukraine, Azerbaijan, and Moldova; observers: Turkey and Latvija) - 60 million. Attractive opportunities for your investment - Free Economic Zones ...................................14 800 million Free Economic Zones Map ....................................................................................................15 Customers Success Stories and Industrial Competences .......................................................................16 duty-free market FIN SWE NOR RUS EST LVA LTU BLR GBR DEU POL CIS EU CZE UKR AUS KAZ HUN FRA ROM ITA CEFTA GUAM BGR UZB ESP GRC TUR The Textile, Apparel, cent of which is exported to the EU countries and As manufacturing moves to lower cost countries, and medium size companies, most of them being the rest is being consumed in the domestic market. Moldova remains an attractive opportunity for in- registered in 1990 – 2000. Footwear and Leather The manufactured products are being exported to vestment in a sector. The textile/apparel cluster has goods (TAFL) Industry countries such as: Italy, Germany, Romania, Austria, become one of the leading exporting sectors in the Most companies chose one of the following corpo- France, USA, UK, Belgium, Bulgaria, Netherlands, country. Its proximity to the EU is a key element rate forms: overview Poland, Greece, as well as to the CIS. Famous among its strategic advantages as a supplier of tex- • Joint Stock Company (JSC) brands like Versace, Armani, United Colors of Ben- tiles and apparel to consumer markets. • Limited Liability Company (LLC) etton, Max & Co., NafNaf, Trussardi, Primark, Max Moldova’s modern light industry • Joint Ventures - partially local investment and Mara, Prada, Nike, Dolce & Gabbana, Calvin Klein A large number of enterprises, around 61 percent, are foundations build on its strong partially foreign capital produce their clothes in Moldova. located in the central region of the country (Chisinau, industrial past. The share of industry in laloveni, Orhei, Straseni); 21 percent are situated in- • Companies with Foreign Capital - 100 percent Moldova’s GDP represented 60% until TAFL manufacturing is an industry with long-standing the north of the country (Bălţi, Soroca, Floreşti, Edineţ, owned by Moldova’s non-residents the 1990s. Then, Moldova was one of traditions in producing and exporting a wide range Rîşcani, Sîngerei); and 18 percent in the south of Mol- The only company in the sector with a share of the the important creators of industrial of products. Since 1990, this important industry has dova (Cahul, Taraclia, ATU Gagauzia). state is “Floare Carpet” which produces carpets. products among the CIS states – and been restructured, upgraded and re-equipped in or- Now it represents a great investment opportunity as The competitiveness of the Moldovan products in now it revives. der to meet market economy demands. the state share is announced to be for sale. the TAFL industry is a direct result of a combination The TAFL industry has recorded a continuous of high quality levels of finished production that are Considering the regional distribution of enterprises The Moldovan industrial sector has developed growth since 2000, significantly outperforming the guaranteed by modern systems of quality control, of the sector, it should be noted that the light in- along with the privatization and liberalization in overall development of Moldova’s industry. TAFL the timely realization of contractual obligations with dustry is developed in all regions, but the textile and trade, especially since 2005, when the quotas in sector’s contribution to the total industrial produc- foreign clients, and a speedy delivery to the main apparel industry is prevalent. The ratio of the en- textile and apparel trade were eliminated by the tion grew up to 8.5 percent in 2013. This sector markets in EU and CIS countries. This helps pro- terprises for the production of textiles and clothing WTO (World Trade Organization). also significantly contributes to Moldovan exports. mote a broadening of collaboration between Mol- in relation to companies that produce shoes in the TAFL industry exports rose from around 16 percent dovan enterprises and foreign business partners. Manufacturing textiles, apparel, leather, leather arti- north and in the center is 85 percent to 15 percent, in 2003 to up to 20 percent in 2013. In terms of em- cles, and footwear (TAFL) represents the sector that in the south - 90 percent to 10 percent. ployment, according to the National Bureau of Sta- The sector is structured as follows: is referred to as the Light Industry. It is an industry tistics there were nearly 26,000. Most of these jobs Textile manufacturing Several international practices of collaboration are branch that started its successful development after are rural-based and occupied by women who make established in the light industry, which are well de- World War II, and remains to be one of the most im- Apparel manufacturing up 85-95 percent of all TAFL industry workers. fined and known: CM, CMT, FOB, Own Label and portant industries of the Republic of Moldova. Footwear manufacturing Private Label. Nowadays, the sector is vibrant and growing, and Industry TAFL Leather, leather products, accesories Inward processing customs regime, hereafter represents approximately 600 enterprises. They are “CM”/Toll Manufacturing or “ Lohnarbeit “ - a pro- active in producing: Companies in Moldova’s TAFL industry duction cycle system, comprises: cutting, sewing, • textiles (knitted garments, carpets, fabrics) ironing and packaging. 65 • wearable apparel Leather, accesories “CMT” or “semi-lohn”, includes CM plus accesso- • leather and leather accessories, travel accesso- 80 ries and packaging supplies (buttons, thread, card- ries Footwear board, labels, bags, plastic etc.). • footwear The Government’s Industry Development Strategy Another form is “FOB”. In this case, the foreign client for 2009-2015 lists the Light Industry as one of the 127 comes with a sample and places the order. The goods Textile 344 key economic branches, given its significant advan- Apparel are subsequently shipped from the manufacturer to tages, such as: The possibility to engage a large the destination specified by the customer. In many number of employees into various branch activi- cases, the customer indicates where the raw materials ties, a relatively fast rotation cycle of current assets, and accessories may be purchased, and sometimes even negotiates prices on behalf of the manufacturer. moderate investment need and a professional train- Source: Ministry of Economy. ing system for employees in place. “Own label” - the stage at which the company is This number of companies represents around 11% active starting from the product’s idea, its develop- Presently, the TAFL industry plays an important role out of the total number of enterprises activating in ment, production, promotion, own brand develop- in the Moldovan economy, representing nearly 20 Moldovan industry. Mainly these are small and small percent of the total country’s export volume, 86 per- ment, marketing and sales. 4 5 Different degrees of value creation: However, the main business model in the light in- Value of production in the textile, apparel, footwear and leather goods in 2013 dustry is processing of raw materials (Toll manufac- turing, or “Lohnarbeit”). Local companies can turn 2013 20% this model into an advantage by using it to access Private label / new technologies and by accumulating funds for Activity Million lei (MDL) Share in total own label modernization. In this model, about 80 percent of Current prices industry, % the sector products are manufactured. 80% Textile 1314.5
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