Edition 2020
AUTOMOTIVE COMPONENTS AND INDUSTRY OVERVIEW Republic of Moldova Name Doing Business Key facts Republic of Moldova 2020 Rank 48 Capital: Chisinau ca. 814,000 Employment Population: rate, 2019 3.55 million 40.1% January 1st, 2019
Area: Inflation rate, 33,847 km2 2019 Language: 4.23% Romanian (official) Other spoken languages: GDP per capita at PPP, 2019 $13.574
Currency MDL: GDP current 1 EUR = 20 MDL prices, 2019, October, 2020 billion $10.262
AUTOMOTIVE & INDUSTRY 2020/2021
+ 2,000 7% 20,000 EUR/ job created Unique tax on turnover People employed in the Job creation incentive in IT virtual Parks automotive industry in 2018
+ 2.8 149 500 ha EUR/hour EUR/month Free buildable area Full load labor cost Minimum salary in FEZ all over the country Sector average in 2020
Free Trade Agreements signed with 43 countries, including: • DCFTA (Deep and Comprehensive Free Trade Area with the European Union) - 500 million population; • FTA with CIS countries (Armenia, Azerbaijan, Tajikistan, Uzbekistan) - 250 million population; • FTA with Turkey - 80 million population; • CEFTA UNMIK (Kosovo) - 30 million population; • GUAM Organization for Democracy and Economic Development (Georgia, Ukraine, Azerbaijan and Moldova) - 60 million population
880 million customers duty-free market Contents
Industry overview...... 2
Automotive components industry...... 3
Human resources...... 4
Education...... 4
Educational institutions, map...... 6
Education system in the Republic of Moldova, structure...... 7
Operating costs and taxes...... 8
Structure of the average salary in Moldova, 2020 (EUR)...... 9
Utility costs, 2020...... 9
Job creation subsidies...... 10
Virtual Park incentives for R&D and Engineering ...... 11
Favorable Business Climate...... 12
Favorable Location...... 12
Giurgiulesti International Free Port...... 13
Competitive products...... 14
Automotive Supply Chain structure ...... 14
Success Stories &Industrial Competences...... 15
Free Economic Zones (FEZ) and Industrial Parks (IP)...... 16
Free Economic Zones Greenfield...... 18
Testimonials...... 19
Invest Moldova Agency...... 21
1 Industry overview
Moldova’s modern automotive industry of those companies, running low capacities. foundations are built on the country’s strong On top of it, Moldova managed to continue it’s industrial past, registering a confident revival strong, fundamental technical and engineering period. The share of the industry in Moldova’s education. GDP represented 60% until early 1990s. Back The industrial production reached 14,2% of then, Moldova was one of most important GDP in 2019, increasing by 2% compared to producers of industrial goods and components, the previous year. The development was mainly as well as an important R&D player among the driven by the growth of the manufacturing CIS countries. industry: the production of electrical cable and Up to early 1990s, 558 industrial enterprises, wire harnesses has increased by 24,4%, followed 21 R&D institutions and 392 thousand workers by metal construction industry +18.8% and the were part of the industry, representing 97 production of plastic and rubber products +17,8%. industrial branches. Moldova successfully exported 90% of its products in the machine building industry, which represented 20% of Share of industry in GDP, % the total industry output. 15.6 The key drivers of the local industry were 15.4 huge companies, producing a large variety 15.2 15.2 14.9 of products: TV sets, refrigerators, washing 15 14.6 machines to tractors, and exported them to 15.0 over 60 different countries. 14.2 14 After the local industrial network collapsed 2012 2013 2014 2015 2016 2017 2018 2019 due to social economic and political changes in the region, the country managed to keep a part Source: National Bureau of Statistics, 2020
Photo credit: Alpha Industries ⁄ Spamol SRL
2 Automotive components industry
Nowadays, the automotive industry is a key Production concentrates on cables, wiring growing sector for the Moldovan economy. harnesses for cars, seat and car covers, steering This is due to an increased focus on the wheels, injection molding, metal processing, unused industrial potential of Moldova and electronics, electronic components and the maintained industrial orientation in the systems. education system (Technical University, This production is executed in Tier 1, 2, and 3 technical colleges and vocational schools). supplier plants, as well as local subcontractor The total export in the automotive industry companies. registered a growth of 30%, with a share of 20,5% in total exports. Important examples are Lear Corporation, Dräxlmaier Automotive, Gebauer & Automotive Components Exports, M EUR Griller, Sammy Cablaggi / Kablem, Elektromanufacturing / SUMIDA, Confezioni 571 Andrea Carcover, Fujikura Automotive, 437 394 WeWire harness - part of Coroplast Fritz 290 228 257 Mueller, Blacksea EMS, Dräxlmaier DSM, Arobs Software, Whetec / MG2C, Multico / Quality Hub , Equip-Test and Magnetec. 2014 2015 2016 2017 2018 2019 Source: Invest Moldova, based on information from companies Number of employees in Automotive 19,000 20,150 Up to now, large direct investors prefer to 15,000 locate themselves in Moldova’s Free Economic 9,100 Zones (FEZ), which represents an excellent 6,900 7,650 location for industrial development and production relocation oriented for exports. 2014 2015 2016 2017 2018 2019 Source: Invest Moldova, based on information from companies
Photo credit: FEZ Expo-Business Chisinau I Fujikura Automotive
3 Human resources
Moldova offers an active, educated, and Polytechnic Colleges, Technical College of multilingual workforce. It is a melting pot UTM, Microelectronics College, Informatics of several nationalities, such as Romanians, College, Light Industry College, Technological Russians, Ukrainians, and others. The official College etc. language is Romanian, however there are more languages in use: Russian, English, Ukrainian, Total number of students in 2019/2020 Bulgarian, and Gagauz language (close to Turkish). In addition, many Moldovans speak 56,840 Universities French, Italian and German. The population of Moldova comprises ca. 3.55 28,891 million people, with ca. 2.9 million above 15 years 14,673 Colleges Vocational and ca. 1.2 million representing the active labor schools force. The unemployment rate is 5.1% (2019), Source: National Bureau of Statistics, 2020 however the employment rate stands at 40.1 % (2019) compared to EU average of 73.1% (2019). Total number of graduates in 2019 A considerable additional labor force could potentially be represented by Moldovan migrants 16,266 Universities abroad, willing to return back home and find a (cycle I, II) decent job.
Education 5,724 Vocational 6,586 Well-educated young students, in sector- schools Colleges specific faculties, are available to work in companies and increase their productivity. Moldova has strong technical faculties and specific colleges, e.g. Chisinau and Balti Source: National Bureau of Statistics, 2020
4
Photo credit: Chișinău, Dräxlmaier Group The Technical University of Moldova has Number of graduates in universities competences in textile, microelectronics, (Engineering & Exact Sciences), 2019 mechanical engineering, etc. Technical education is one of the strongest 945 cycle 1 in the Republic of Moldova, comprising best engineers known for their expertise. cycle 2 The Technical University of Moldova (UTM), located in Chisinau, is the main high education institution for technical education. The number of engineers, managers and other specialists 296 249 is sufficient to meet the investor’s demand in 248 225 most sectors. 121 93 51 In contrast to other Eastern European Exact Engineering Architecture Engineering countries, Moldova’s unit labor cost is stable sciences Manufacturing & and growing very slowly. & Processing Construction Source: National Bureau of Statistics, 2020
Number of students in universities Number of graduates in colleges (Engineering (Engineering & Exact Sciences), 2019/2020 & Manufacturing), 2019 2.266 Industry 3,608 4,252 Information Engineering Technology & Communication
1,274 1,303 579 Engineering Architecture Information 1,033Manufacturing & 475 Technology & Exact & Processing Construction 308 Communication sciences Transport Architecture &Construction
Source: National Bureau of Statistics, 2020 Source: National Bureau of Statistics, 2020
Graduates Stu- Gradu- Higher Education Colleges, 2019 dents ates Institutions, 2019 Cycle I Cycle II Economic sciences 2,669 864 Economics 5,601 1,164 Information Technologies Law 1,634 1,083 & Communication 2,861 579 Engineering and 945 225 Electronics and Engineering activities energetics 981 294
Arts and Humanitarian 590 287 Mechanics & metal sciences working 1,319 322
Architecture and 248 93 Services (transport, construction hospitality) 3, 208 586 Manufacturing Electronics and technology and 296 51 automation 1, 012 321 processing Apparel Industry 641 185 Exact Sciences 249 121 Construction 1, 086 329 Source: National Bureau of Statistics, 2020
5 Educational institutions
Briceni VET VET
VET VET x2
Glodeni VET VET x5 x6 x2 Rezina Sîngerei
VET Orhei VET Population of Moldova Ungheni x2 in 2019, VET VET Criuleni thousand people VET Nisporeni Population VET Population of the rayon of the rayon City capital city VET /thousand x12 x19 x2 6 /thousand Anenii Noi VET 83.0 8.8 Anenii Noi Ialoveni 28.0 12.4 Basarabeasca
71.4 9.9 Briceni VET
124.1 39.4 Cahul VET Leova VET 76.6 16.1 Călărași VET VET 61.3 5.7 Cantemir 89.4 20.0 Căușeni 58.6 14.2 Cimișlia Cantemir 73.4 8.5 Criuleni COMRAT 41.7 10.1 Dondușeni VET x3 85.5 20.3 Drochia 35.0 20.5 Dubăsari 79.2 18.4 Edineț Cahul 90.3 16.8 Fălești VET x2 x2 Taraclia VETT LEGEND: 85.6 15.4 Florești VET Secondary Vocational Institutions 58.7 11.2 Glodeni (vocational schools) 118.6 17.3 Hâncești 101.8 16.8 Ialoveni Dual Secondary Vocational Institutions 52.0 10.7 Leova 64.8 14.3 Nisporeni Post secondary Vocational source: www.ipt.md Institutions (colleges) 52.9 9.3 Ocnița Interactive map of Technical 124.0 34.1 Orhei Vocational Education Institutions Higher Education Institutions (universities) 49.9 12.9 Rezina 66.5 12.9 Râșcani 91.4 14.8 Sângerei Population, thousand people Population of ATU Găgăuzia, thousand people 40.9 7.4 Șoldănești 3,542.7 Republic of Moldova, total 99.4 37.9 Soroca 161.7 ATU Găgăuzia 69.4 8.5 Ștefan Vodă 832.9 Chișinău Municipality, 695.4 Chișinău City 26.4 Comrat Municipality 92.1 20.8 Strășeni 42.2 15.0 Taraclia 151.8 Bălți Municipality, 22.8 Ciadâr-Lunga 71.0 8.1 Telenești 146.9 Bălți City 16.7 Vulcănești 116.7 38.3 Ungheni
6 Education system in the Republic of Moldova
Age Post-doctorate
27 6 Doctorate 26 3-4 years
25
24 5 Second Cycle Master 23 1-2 years
22
21 5 First Cycle Licentiate (Bachelor) 20 Higher Education 3-4 years 4 19
18 3 College 2-5 years 17 3 Grammar 3 General School Professional 16 3 Secondary School 3 years School Trade School 2 years X - XII 2 years 15
14 2
13 Secondary school 12 5 years V - IX 11
10
9 1
8 Education Compulsory Primary school 4 years 7 I - IV
6
5 0 One year compulsory pre-schooltraining 4 Kindergarden 3
ISCED Competition based The baccalaureate Exit to labor Dual Vocational level enrolment exam market Education
7 Operating costs and taxes
Moldova offers a highly-skilled, factor for a strong business performance. The competitively priced workforce. Labor costs quality of the labor force also derives from the are among the lowest in the region and low industrial experience and history of Moldova, enough to ensure cost-effective operations. as it was one of the most industrialized This provides an attractive basis for a republics in former Soviet times. successful business. Evolution of the average gross salary in the The gross wages in Moldova for workers economy 390€ in the industry sector range from 180 EUR 357€ to 450 EUR, depending on the region and 298€ 307€ professional level of the employee, which is 225€ 224€ 220€ 235€ lower than the wages in the region. A newly- graduated university student of engineering could earn up to 600 EUR.
Moldova’s labor force combines low-cost 2013 2014 2015 2016 2017 2018 2019 2020 with high productivity, thus reflecting the key Source: National Bureau of Statistics, 2020
Evolution of the minimum wage in the Republic of Moldova and Romania 482€ 482€ 411€ 445€ 460€ 325€ 276€ 199€ 215€ 154€ 177€ 117€ 130€ 142€ 149€ 85€ 87€ 83€ 95€ 96€
2012 2013 2014 2015 2016 2017 2018 2019 2020 Moldova Romania for people with a University Degree Source: National Bureau of Statistics Moldova, Romania The minimum wage in Moldova developed very slow, in some years even decreasing. In Romania, the minimum gross salary doubled in the last six years and is maintaining a clear growth trend.
Statutory Corporate Tax Rate-by Country , 2018 FEZ Moldova
Moldova
19% Germany 19% 20% Turkey 16% 21% Poland
15% Czech Republic
33% Romania 12% Slovakia
6% France
Source: PWC, Worldwide Tax Summaries 2018
8 Average monthly wages in comparison, 2019 1280 Czech 1154 1191 Republic 1075 1086 Hungary Poland Romania Slovakia
752 Bosnia & 657 690 Herzegovina Macedonia Bulgaria 520 475 Russia 422 435 Serbia 390 Albania 341 Moldova Belarus Ukraine
Source: Trading Economics, Wages, 2018. Structure of the average salary in Moldova, 2021 (EUR)
Total Labor Cost, 514.66
Personal Income Tax (PIT) (12%) 33.32 Employer Net Salary Social Fund (24%) 344.38 99.61
Employee Health Insurance Tax (9%)
Gross Salary 37.35 415.05 * This table is using the average forecasted salary for 2021 – ca. 415 EUR (8,716 MDL) ** The calculation was made using the personal allowance for the employee (2,100 MDL/month) Annual personal allowance 25,200 MDL is valid only for residents with annual taxable income under 360,000 MDL.
Source: Invest Moldova Utility costs, 2020
Electricity Water Sewerage Gas “Premier Energy” 1.8 EUR/m3 - Ceadir-Lunga 1.12 EUR/m3 - Ceadir-Lunga 0.19 EUR/m3 - high pressure 0.09 EUR/kWh - 0.4 kV 1.62 EUR/m3 - Calarasi 1.33 EUR/m3 - Calarasi 0.2 EUR/m3 - medium pressure 0.07 EUR/kWh - 6,10 kV 1.72 EUR/m3 - Soroca 1.13 EUR/m3 - Soroca 0.22 EUR/m3 - low pressure ”FEE Nord” 0.1 EUR/kWh - 0.4 kV 0.08 EUR/kWh - 6,10 kV
Water and sewerage is subject of change, depending on the region.
9 Job creation subsidies
40,000 MD (approximately 2,000 Euro) per job created at least 200,000 Euro per company. ATU Gagauzia grants additional 20,000 MD (approximately 1,000 Euro) per job created, and incentives for training costs (50% for first 3 months’ salary).
Reservation of the subsidy
Submission of the Approval of the Submission of the application to the application application for payment Ministry of Finance to the Ministry of Finance 31 July 15 September 1 June-30 September
COMPANY COMPANY
SUBMIT SUBMIT
MINISTRY MINISTRY OF FINANCE OF FINANCE Year N Year N N 1
Payment of the subsidy
Approval of the Payment of the subsidy Payment of the second application installment (50%) subsidy installment (50%)