2012 Investment Climate Statement - Moldova
Openness to, and Restrictions upon, Foreign Investment
Moldova continues to take steps toward developing a stronger economy, reforming a cumbersome regulatory framework, combating corruption, and adopting reforms aimed at improving the business climate. The Government of Moldova (GOM), re-elected in November 2010 and representing a coalition which initially came into office in September 2009, pledged to accelerate democratic and economic reforms begun in 2009 and reemphasized European orientation and integration as its fundamental foreign policy goal. After a prolonged recession in the 1990s, Moldova's GDP grew for eight straight years between 2001 and 2008, primarily driven by soaring remittances from migrant workers abroad. In 2009, like most countries in the region, Moldova was affected severely by the global economic crisis, experiencing a six percent drop in GDP caused by plummeting remittances from abroad. In 2010, the economic growth again turned positive, with GDP expanding 6.9 percent as growth in major economic sectors accelerated. This growth trend has continued into 2011 at a rate of 6.7 percent in the first nine months, with a predicted final rate of 6.5 percent.
Moldova, consistently ranked as one of the poorest countries in Europe, relies heavily on investments, foreign trade, and remittances sent by Moldovans working abroad for economic growth. Moldova profits from increased inflows of foreign direct investment (FDI) with eastward expansion of the EU, which became the country’s immediate neighbor following Romania's accession to the EU on January 1, 2007. However, the global crisis significantly decreased FDI in Moldova, which fell more than 60 percent in 2009. Although the economy returned to pre-crisis growth rates in 2010, FDI inflows did not rebound. Remittances went up in 2010 and grew further in 2011, but still have to yet to return to 2008 peak year levels, reflecting sluggish economic recovery in countries with large numbers of Moldovan migrant workers. The country created an Action Plan with the EU from 2004-2008 that established a roadmap for democratic and economic reforms so that Moldovan laws and regulations would better conform to Moldovan laws and in compliance with European standards. Following the expiration of the Action Plan in February 2008, Moldova explored other trade options with the EU before starting negotiations with the EU on an Association Agreement in January 2010, which the GOM hoped would raise the bilateral relationship to a new level. The GOM sees the Agreement as a framework that will bring Moldova closer to the EU through political association and economic integration.
As a country with a small market, Moldova implements a liberalized trade and investment strategy to promote the export of its goods and services. A member of the WTO since 2001, Moldova has signed free trade agreements with countries of the former Soviet Union (CIS). In December 2006, Moldova joined the Central European Free Trade Agreement. In 2008, Moldova moved from the extended generalized system of preferences (GSP-plus) with the EU to autonomous trade preferences, which expanded the duty-free access of Moldovan goods to EU markets. In 2010, the EU market accounted for $747 million (47 percent of total Moldovan exports). In January through October 2011, Moldovan exports to the EU increased 56.9 percent over 2010 levels with $871 million (49.5 percent of total exports). Originally valid until 2012, the EU extended the autonomous trade preferences through 2015. Moldova seeks further to deepen its preferential trade arrangements with the EU by negotiating a Deep and Comprehensive Free Trade Agreement (DCFTA). After achieving progress in implementing key EU recommendations in 2011, the GOM was invited to the first round of DCFTA negotiations in February 2012. As Moldova moves toward a DCFTA with the EU, the GOM adopted policies and laws reflecting EU norms concerning technical barriers to trade, standards, customs procedures and business regulations that ultimately aim at creating a friendlier business environment.
Attracting FDI is critical to enhancing Moldova's economic competitiveness. The GOM has created an adequate legal base, including a favorable tax treatment for investors. Under Moldovan law, foreign companies enjoy the same treatment as local companies – also known as the "national treatment principle." The GOM views investments as vital for sustainable economic growth and poverty reduction. However, despite the investment-friendly climate, the amount of FDI is far below what Moldova needs to create jobs and promote economic growth.
After years of low FDI in the 1990s, FDI inflows steadily increased from 2004 to 2008. According to the National Bank of Moldova (NBM), FDI inflows amounted to a record high $873.38 million in 2008. The world economic crisis contributed to an abrupt drop in foreign investment in 2009, when FDI fell by more than a 50 percent, totaling $360.01 million. Since then, annual FDI inflows have never reached higher than 2008 levels. Recent years have seen large-scale investments by Germany's Metro Cash & Carry, Germany's Draexlmaier, France's Societe Generale, Austria's Grawe Insurance Company, Austria's Raiffeisen Investment, the Netherlands' Easeur Holding B.V., Italy's Gruppo Veneto Banca, the U.S. investment fund NCH Capital and U.S. equity fund Horizon Capital. American investments in Moldova are primarily in the wine and food industry, cosmetics, telecommunications, banking, and real estate.
Over the years, the GOM has made efforts to lower tax rates, strengthen tax administration, increase transparency, and simplify business regulations. Nevertheless, decision-making remains sometimes opaque and the application of laws and regulations inconsistent. While the coalition government provided more transparency and openness to the private sector, public service at lower levels remained cumbersome. The GOM must take more steps to reform public service and improve the quality of administrative performance. Moldova has a history of government interference in business decisions in order to protect influential individuals, use of governmental powers to pressure businesses for personal or political gains, and selective application of regulations.
Following the parliamentary elections of July 2009, the GOM approved an Economic Stabilization and Recovery Program (ESRP), which focused on balancing public finances and liberalizing the highly regulated economy. The ESRP received the backing of the International Monetary Fund (IMF) in January 2010 with the approval of a combined three-year $580 million Extended Credit Facility/Extended Fund Facility to support the country’s economic program by restoring fiscal and external sustainability. Developed in 2009 to address problems at hand, the ESRP does not represent a substitute for the GOM's longer-term reform agenda. The National Development Strategy 2008-2011 (NDS) was at the heart of the current cabinet’s vision. Seeking to improve living standards, the NDS was based on five basic pillars: consolidation of the rule of law, Transnistrian conflict resolution, competitiveness enhancement, human development, and regional development. The current NDS expired and the new GOM is focusing on developing a new strategy through 2020.
On January 22, 2010, Millennium Challenge Corporation (MCC) CEO Daniel Yohannes and Moldovan Deputy Prime Minister Iurie Leanca signed a five-year, $262 million MCC Compact intended to reduce poverty and accelerate economic growth by improving Moldova's transportation and agricultural sectors. The Compact funds two projects, one for road rehabilitation and the other for a transition to high value agriculture project, which focuses on rehabilitating centralized irrigation systems, providing technical assistance, and providing access to financing for farmers.
The GOM launched the first privatization in Moldova in 1994. It has adopted three separate privatization programs, including privatization via National Patrimonial Bonds (foreigners were not allowed to participate); via cash transactions for both locals and foreigners; and via a program, which involved only cash privatization. The third program began in 1997-1998 and was extended to 2000. The program was later extended with some modifications to the end of 2006. Foreign investors have successfully participated in these privatizations. In 2007, Parliament passed a new privatization law, which introduced a new plan for privatizing and managing state-owned assets with a focus on economic efficiency. The law has a list of assets, connected to the security of the state, which are not subject to privatization. The GOM also adopted regulations on the privatization of state-owned, non-agricultural land through commercial tenders. The GOM has approved a list of assets subject to privatization.
The Law on Investment in Entrepreneurship prohibits discrimination against investments based on citizenship, domicile, residence, place of registration, place of activity, state of origin or any other grounds. The law provides for equitable and level-field conditions for all investors. It rules out discriminatory measures hindering the management, operation, maintenance, utilization, acquisition, extension or disposal of investments. Local companies and foreigners are to be treated equally with regard to licensing, approval, and procurement.
Rankings for Moldova:
TI Corruption Index
112 of 183(2010 105 of 176)
Heritage Economic Freedom
120 of 183(2010 125 of 183)
World Bank Doing Business
81 of 183(2010 99 of 183)
MCC Government Effectiveness
0.23 (73%) (Median 0.00)
MCC Rule of Law
0.53 (90%) (Median 0.00)
MCC Control of Corruption
0.05 (58%) (Median 0.00)
MCC Fiscal Policy
-3.3 (39%) (Median -2.7)
MCC Trade Policy
79.0 (86%) (Median 69.1)
MCC Regulatory Quality
0.62 (97%) (Median 0.00)
MCC Business Start Up
0.986 (95%) (Median 0.937)
MCC Land Rights Access
0.920 (100%) (Median 0.638)
MCC Natural Resource Mgmt
69.46 (71%) (Median 60.60)
Moldova receives an annual scorecard from MCC assessing its performance in the three policy categories: Ruling Justly, Investing in People, and Economic Freedom. For each indicator Moldova receives a score and percentile ranking in its income peer group (0 percent is worst; 50 percent is the median; 100 percent is best). Moldova receives its peer group median for each percentile ranking. Country performance is evaluated relative to the peer group median. Scores above the peer group median meet the MCC required performance standard for eligibility for MCC programs. Scores at or below the median do not meet the performance standard.
Conversion and Transfer Policies
Moldova accepted Article VIII of the IMF Charter in 1995, which required liberalization of foreign exchange operations. There are no restrictions on the conversion or transfer of funds associated with foreign investment in Moldova. After the payment of taxes, foreign investors are permitted to repatriate residual funds. Residual-funds transfers are not subject to any other duties or taxes, and do not require special permission. There are no significant delays in the remittances of investment returns, since domestic commercial banks have accounts in leading multinational banks. Foreign investors enjoy the right to repatriate their earnings.
Generally, there are no difficulties associated with the exchange of foreign or local currency in Moldova. However, shortages of Moldovan currency do occur in exchange offices, usually at times of sharp exchange rate fluctuations. After a tumultuous period of inflation and devaluation of the 1990s, the local currency, the Moldovan leu (plural, lei) (MDL), has been generally stable. The leu is the only accepted legal tender in the retail and service sectors in Moldova. The foreign exchange regulation of the National Bank allows foreigners and residents to use foreign currencies in some current and capital transactions in the territory of Moldova. After depreciation in 2009 and 2010 in the aftermath of the global crisis, the leu strengthened its position in 2011 with the growth of the Moldovan economy. In 2011, the MDL began the year at 12.15 to one U.S. dollar and finished at 11.71.
The U.S. Embassy has received no complaints from U.S. investors regarding converting or remitting funds associated with investments in Moldova.
Expropriation and Compensation
The Law on Investment in Entrepreneurship states that investments cannot be subject to expropriation or to measures with a similar effect. An investment may be expropriated only if all three of the following conditions are present: the expropriation is done for purposes of public utility, is not discriminatory, and is done with just and preliminary compensation. If a public authority violates an investor's rights, the investor is entitled to reparation of damages. The compensation will be equivalent to the real extent of the damage at the time of occurrence. The public authorities concerned will pay compensation for any damage caused, including any lost profits. Compensation must be paid in the currency in which the original investment was made or in any other convertible currency.
The government has given no evidence of intent to discriminate against U.S. investments, companies, or representatives by expropriation, or of intent to expropriate property owned by citizens of other countries. No particular sectors are at greater risk of expropriation or similar actions in Moldova.
Moldovan law restricts the right to purchase agricultural and forestland to Moldovan citizens. Foreigners may become owners of such land only through inheritance and may only transfer the land to Moldovan citizens. In 2006, Parliament further restricted the right of sale and purchase of agricultural land to the state, Moldovan citizens, and legal entities without foreign capital. However, foreigners are permitted to buy all other forms of property in Moldova, including land plots under privatized enterprises and land designated for construction. Moldovan-registered companies with foreign capital are known to own agricultural land, by means of loopholes in the previous law. In the past, the limit on foreign ownership of agricultural land was used in lawsuits as an argument against foreign companies. The only straightforward option available to foreigners who wish to use agricultural land in Moldova at this time is to rent agricultural land.
Since 2001, the GOM has cancelled several privatizations, citing the failure of investors to meet investment schedules or irregularities committed during privatization. While the government agreed to repay investors in such disputes, payment of compensations was delayed. Often, investors had to apply to the European Court of Human Rights (ECHR) to enforce payment of compensation from the Moldovan government. The GOM has been compliant with the ECHR rulings involving foreign businesses.
Investors should be aware that most Moldovan territory east of the Nistru (Dniester) River is under the control of a separatist regime that does not recognize the sovereignty of the legitimate Moldovan authorities in Chisinau. These separatists have declared a self-proclaimed "Dniester Moldovan Republic," commonly known as "Transnistria." The U.S. Embassy advises any potential investors that it is limited in its ability to provide any assistance, including consular and commercial services, in areas east of the Nistru River. Also, the GOM has indicated in the past that it will not recognize the validity of contracts for the privatization of firms in Transnistria that are concluded without the approval of the appropriate Moldovan authorities. In March 2006, Ukraine imposed new customs regulations under which Transnistrian companies seeking to engage in cross-border trade had to register in Chisinau. Despite initial protests by the local regime, most of Transnistria's large companies subsequently registered with Moldovan authorities.
In 2000, a U.S. company claimed that it exported packing equipment and other capital goods to a privatized Transnistrian factory, only to be forced out later by the local factory manager working in collusion with local authorities. The company's representatives reported that they had been harassed by Transnistrian authorities until they decided that the safety of their company's employees could not be guaranteed and the company decided to pull out.
Moldova has a record of disputes over past privatizations involving foreign investors. Party of Communists (PCRM) officials, when in opposition prior to 2001, were critical of what they regarded as "sweetheart deals" in many privatizations. Consequently, once in power in 2001, the first PCRM-backed government increased its scrutiny of the privatization process, including previously concluded contracts. (The PCRM lost power following the July 2009 parliamentary elections.) The GOM cancelled some privatizations because of alleged irregularities in the privatization procedures or the failure of investors to meet an investment timetable. There have been allegations in recent years from companies that they became politically motivated targets of investigations by the Center for Combating Economic Crimes and Corruption (CCECC), while others complained of bureaucratic red tape or arbitrary decisions made by government agencies, and police or tax authorities.
As a result of negotiations connected with Moldova's accession to the WTO, modern commercial legislation was adopted in accordance with WTO rules. The main challenges to the business climate remain the lack of effective and equitable implementation of laws and regulations, and arbitrary, non-transparent decisions by government officials. In circumvention of WTO principles, the GOM nevertheless applies measures that put domestic producers at an advantage in comparison with foreign competitors in certain areas. For example, an environmental tax is applied on bottles and other packaging of imported goods, while such a tax is not levied on bottles and packaging produced in Moldova. Additionally, the GOM may intervene in the economy, in defiance of the declared respect for market principles, under the excuse of public security or general social welfare.
In 2003, the government restructured the judiciary by eliminating the lower-tier of appellate courts (called tribunals) and the Higher Court of Appeals. The judiciary now consists of lower courts (i.e., trial courts), five courts of appeals, and the Supreme Court of Justice. Moreover, a separate layer of courts covering the judicial settlement of economic/trade-related litigation was created. This quasi-separate court system consists of the District Economic Court as a trial court, the Economic Court of Appeals, and the Supreme Court of Justice, whose jurisdiction includes the adjudication of economic litigation. In July 2011, Parliament finally enacted a series of amendments, which reorganized the judicial system and dissolved the economic courts. Thus within six months from the date of enactment, the jurisdiction of economic courts will be gradually transferred to common law courts, namely appellate and trial level courts. The economic courts' assets and budgetary resources were re-directed to the common law courts. The judges and court personnel will also be re-appointed. According to the law, the entire transition process will end in March 2012.
Moldovan courts are nominally independent from government and political interference, suffering from low levels of efficiency and citizen trust. The Ministry of Justice controls their administration and budget, and reports of interference in lawsuits by influential figures are commonplace. In January 2008, the Judicial Administration Department was created under the Ministry of Justice to deal with all judiciary-related administrative and financial matters. Despite suggestions to transfer this Department under the supervision of the Superior Council of Magistrates, currently it is still subordinated to the Ministry of Justice. In 2010, the judiciary underwent a series of internal reforms. New members were elected to the three judicial system administration entities, namely, the Superior Council of Magistrates, the Qualifications Board and the Disciplinary Board. The newly-elected members of these three judicial administration entities worked more efficiently in terms of the dismissals and promotions of judges. In comparison with previous years, the number of dismissed judges increased. In 2011, GOM again initiated a comprehensive reform of its justice system. These reforms included the process of drafting and endorsement of the National Strategy in Justice Sector, the Plan of Actions of implementing the Strategy as well as the development of in-depth amendments of justice-related legislative and institutional cadre.
The GOM accepts binding international arbitration of investment disputes between foreign investors and the state. By law, investment disputes can be solved in Moldovan courts or through arbitration. In the event of ad hoc arbitration, the law requires compliance with the United Nations Commission on International Trade Law (UNCITRAL) rules, arbitration rules of the Paris International Chamber of Commerce (ICC) of January 1, 1998, and other rules, principles, and norms agreed upon by the parties.
In 2011, Moldova ratified the Convention on the International Center for the Settlement of Investment Disputes (ICSID - Washington Convention). The country also ratified the New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards. Moldova is also a party to the Geneva European Convention on International Commercial Arbitration of April 21, 1961, and the Paris Agreement relating to the application of the European Convention on International Commercial Arbitration of December 17, 1962. Moldova has also ratified various trade agreements establishing bilateral investment protection with 37 countries, including with the United States.
Moldova enjoys normal trade relations with the United States. However, Moldova is still subject to the Jackson-Vanik Act, which denied "most favored" trade status to the Soviet Union, but there are efforts to repeal application of the Jackson-Vanik Act on Moldova on a permanent basis. In the past, Moldova has benefited from its eligibility for U.S. Generalized System of Preferences (GSP) trade status by exporting various categories of goods to the United States. Under Congressional authorization, the GSP program is designed to promote economic growth in the developing world by providing preferential duty-free entry for up to 4,800 products from 129 designated beneficiary countries and territories.
Performance Requirements and Incentives
All incentives are applied uniformly to both domestic and foreign investors. Unlike its predecessor, the Law on Investment in Entrepreneurship, in effect since 2004, no longer protects new investors from legislative changes for ten years. However, the new law left in effect past privileges and guarantees granted to foreign investors under the old Law on Foreign Investment. One such privilege provides for exemptions from customs duties on imports until April 23, 2014, if the imports are used to manufacture goods bound for export.
After a four-year period with no corporate income tax, the GOM reintroduced a 12 percent corporate income tax beginning in January 1, 2012. Small businesses also can now opt for simplified taxation that replaces all taxes with a single 4 percent levy on gross sales. Starting 2012, the Tax Code will have fewer corporate income tax breaks and reliefs available for businesses.
No formal requirements exist for investors to purchase from local sources or to export a certain percentage of their output.
No limitations exist on access to foreign exchange in relation to a company's exports. There are no special requirements that nationals own shares of a company. Both joint ventures and wholly foreign-owned companies may be set up in Moldova.
While this is not official policy, in strategic sectors of the economy, such as energy and telecommunications, the GOM has always preferred to have experienced foreign investors instead of local investors. In all other sectors, foreign and local investors are nominally treated the same.
The government does not impose "offset" requirements on procurements. Moldovan law allows investments in any area of the country in any sector, provided that national security interests, anti-monopoly legislation, environmental protection, public health, and public order are respected.
Enforcement procedures for performance requirements to enjoy tax incentives are described in the Tax Code and related governmental decisions and Ministry of Finance instructions.
Foreign investors are required to disclose the same information as local ones. Moldova has no discriminatory visa, residence, or work-permit requirements inhibiting foreign investors' mobility in Moldova. However, the government administers a quota system limiting the number of available residence permits. In 2010, the GOM set up a one-stop shop for foreigners applying for Moldovan residence and work permits in a bid to streamline a rather complicated procedure.
Moldova has commercial relations with over 100 countries. It has a liberal commercial regime. According to the Tax Code, Moldovan exports are exempt from value added tax. Although there are no formal import price controls, some businesses have complained about arbitrary price assessments on imported goods by the Moldovan Customs Service.
Right to Private Ownership and Establishment
The Constitution of the Republic of Moldova guarantees the inviolability of investments by all natural and legal entities, including foreigners. Key constitutional principles include the supremacy of international law, a market economy, private property, provisions against unjust expropriation, provisions against confiscation of property, and separation of powers among government branches. The Constitution provides for an independent judiciary; however, government interference and corruption remain problems in the application of laws and regulations and in the impartiality of the courts.
Current investment legislation is based on nondiscrimination between foreign and local investors. Moldovan law ensures full and permanent security and protection of all investments, regardless of their form. There are no economic or industrial strategies that have a discriminatory effect on foreign-owned investors in Moldova, and no limits on foreign ownership or control, except in the right to purchase and sell agricultural and forest land, which is restricted to Moldovan citizens.
In addition to international treaties, Moldovan law regulates business activity, including foreign investments. Such laws include, but are not limited to, the Civil Code, the Law on Property, the Law on Investment in Entrepreneurship, the Law on Entrepreneurship and Enterprises, the Law on Joint Stock Companies, the Law on Small Business Support, the Law on Financial Institutions, the Law on Franchising, the Tax Code, the Customs Code, the Law on Licensing Certain Activities, and the Law on Insolvency.
The current Law on Investment in Entrepreneurship came into effect on April 23, 2004. It was designed to be compatible with European legislative standards and defines types of local and foreign investment. It also provides guarantees for the respect of investors' rights, non-application of expropriation or actions similar to expropriation, and for payment of damages in the event investors' rights are violated. The law permits investment in all sectors of the economy, while certain activities require a business license.
There is no screening of foreign investment in Moldova and legislation permits 100 percent foreign ownership in companies. By statute, special forms of legal organizations and certain activities require a minimum of capital to be invested (e.g., Moldovan Lei (MDL) 5,400 ($460) for limited liability companies, MDL 20,000 ($1,707) for joint stock companies, MDL 15 million ($1.28 million) for insurance companies and MDL 100 million ($8.5 million) for banks.
Protection of Property Rights
The legal system protects and facilitates the acquisition and disposition of all property rights. Moldova has adopted laws on property and on mortgages. A system for recording property titles and mortgages is in place; however, the mortgage market is still underdeveloped.
However, the judicial sector remains weak and does not always guarantee the rights of citizens and foreign investors from alleged governmental or private sector misdeeds. A clear example of judicial malfeasance involves four cases, where Moldovan and Foreign investors were illegally dispossessed of their shares in Moldovan financial institutions, and were not protected in dubious Moldovan lower courts' decisions. Only one of the cases was appealed to the Moldovan Supreme Court, where in ruled in favor of the investors.
Moldova technically adheres to key international agreements on intellectual property rights. Moldova is a signatory to the International Convention Establishing the World Intellectual Property Organization. However, the Business Software Alliance (BSA) consistently ranks Moldova among the top ten offenders in the world for IT piracy. According to the annual BSA global piracy study released in 2011, Moldova is among the countries with the highest software piracy rate at 90 percent.
Moldova took measures to implement and enforce the WTO TRIPS agreement before its official accession to the WTO, and adopted local laws to protect intellectual property, patents, copyrights, trademarks, and trade secrets. The country has an agency for the protection of copyrights, the State Agency for Intellectual Property. The country also has a few professional associations dedicated to protecting its members' copyrights. Although many basic policies are in place and the country is taking steps of legal approximation with EU norms in the field, enforcement is sporadic. The GOM undertook measures to crack down on sales of unauthorized copies of CDs and DVDs. It also has attempted to deal with internet piracy. However, copyright infringements are rarely prosecuted, if at all. An upcoming motion picture association, which will be established in 2012, will confront the issue of unlicensed broadcasting of films by TV stations. A new law on copyright and related rights went into effect on January 1, 2011, increasing the role of internet providers in preventing the spread of pirated materials. To make the new copyright law effective and toughen penalties for copyright infringements, in 2011 Moldova passed changes to its Code of Administrative Contraventions and Criminal Code.
Transparency of the Regulatory System
Bureaucratic procedures are not always transparent and red tape often makes processing registrations, ownership, etc. unnecessarily long, costly, and burdensome. Discretionary decisions by state functionaries provide room for corruption. The GOM has been taking steps to reduce excessive government regulation of business activity since 2004. In 2004, a so-called "guillotine law" eliminated costly and obsolete regulations and forced the publication of all business-related regulations. All regulations and governmental decisions related to business activity have been published in a special business registry - also known as the "Register of Regulations on Business Activity." These steps were intended to raise the awareness of business people about their rights, increase the transparency of business regulations, and help fight corruption. A second "guillotine law," the Law on Basic Principles Regulating Entrepreneurial Activity, was passed in August 2007. The GOM started applying a regulatory impact assessment to all draft laws and acts bearing on business activity to enhance transparency in the drafting of laws and regulatory acts. The GOM vetted 100 laws with the goal of reducing payments to regulatory and control bodies and streamlining business-licensing procedures and economic-financial controls. As part of the USAID-backed "Guillotine 2+", the Ministry of Economy reviewed the number of permits and authorizations issued to businesses as well as the number of authorities issuing such documents. Out of 406 such permits, 96 were cancelled. In 2011, Parliament approved the concept of one-stop shop to introduce clear and uniform rules for the release of information and standardized documents through a "one-stop window." The GOM took further steps to deregulate construction projects by reducing the number, cost, and time of administrative procedures needed to obtain building permits. Another notable achievement is the implementation of electronic reporting by the National Statistics Bureau and State Social Insurance House.
The legal framework for anti-monopoly regulation is the Law on Protection of Competition. Based upon EU standards, the law establishes the fundamental principles for regulating the activity of enterprises with a de facto monopoly and support for development of competition. After several years of delay, the government established a National Competition Agency in 2007. However, the agency's targeted actions against major foreign investors from its outset drew accusations of abuse, lack of experience, and flawed antitrust legislation. In 2011, the GOM took steps to update the regulatory framework dealing with competition and state aid as per the EU recommendations.
In 2010, the government moved forward in streamlining business registration with the implementation of a "one-window" approach. Despite the creation of a Licensing Chamber in 2002 and a significant reduction in the number of regulated business activities requiring licensing, businesses still must provide a great deal of supporting documentation to receive a license. In the World Bank's 2011 Doing Business global ranking, Moldova rose from 99 to 81 out of 183 countries, with Moldova being runner-up in a list of ten top global reformers of business regulations. The GOM has made progress in simplifying registration procedures during the startup stage, established the first private credit bureau and changed the insolvency law giving priority to secured creditors. The GOM still must continue to ease day-to-day business activity and simplify regulation of foreign trade transactions. In 2011, the GOM adopted an action plan that called for the removal of the non-tariff barriers to trade and elimination a series of customs fees until 2014.
The government usually publishes significant laws in draft form for public comment. Business and trade associations represent other opportunities for comment. The working group of the State Commission for Regulation of Entrepreneurial Activity, which was established as a filter to eliminate excessive business regulations, meets weekly to vet draft governmental regulations dealing with entrepreneurship. The working group's meetings are open to interested businesses.
The Foreign Investors Association (FIA) was established in 2004 with the support of the OECD. The FIA engages in a dialogue with the GOM on topics related to the investment climate and produces an annual publication of concerns and recommendations for the improvement of the investment climate. In 2006, the American Chamber of Commerce (AmCham) registered in Moldova, representing another voice for the business community. In fall 2009, the AmCham produced a Roadmap for the Development of Moldova's Business and Economic Climate, which it presented to the new Prime Minister. The Roadmap made a number of recommendations to improve business regulation. In 2011, a group of ten large EU investors founded the European Business Association (EBA) with the support of the EU Ambassador to Moldova.
Since 2008, the National Business Agenda supported by the U.S. Center for International Private Enterprise (CIPE) has organized 30 domestic business associations putting forth an annual list of priorities in their dialog with the authorities. These priorities deal with the general business environment and regulatory framework.
In 2003, the GOM passed new criminal and civil codes and ratified several important international conventions that, in general, create a better environment for the market system.
Moldova introduced its National Accounting Standards (NAS), based on International Accounting Standards (IAS), in 1998. While this meant greater transparency of financial information and compatibility with IAS, the NAS has not been updated since then, leaving it outdated. NAS is not compatible with the International Financial Reporting Standards (IFRS). A new law on accounting took effect on January 1, 2008. The law has undergone changes and the original dates of application of IFRS were postponed indefinitely. Only banks, insurance companies, non-governmental pension funds, investment funds, and publicly listed companies are obliged by law to apply the IFRS beginning January 1, 2011, in parallel with NAS for comparison purposes.
Efficient Capital Markets and Portfolio Investment
Laws, governmental decisions, securities regulations, NBM regulations, and Stock Exchange regulations provide the framework for capital markets and portfolio investment in Moldova. The GOM began regulatory reform in this area in 2007 with a view to spurring the development of the weak non-banking financial market. In particular, since 2008 only two bodies – the NBM and the National Commission on the Financial Market – regulate financial and capital markets.
Credit is allocated on market terms with banks being the only reliable source of business financing. The GOM regulates credit policy via credits from the NBM, auctions through commercial banks, compulsory reserves, credits secured through collateral, open market operations, and T-bill auctions on the primary market. Foreign investors may obtain credit on the local market. However, local commercial banks provide mostly short-term, high interest loans, which require large amounts of collateral, reflecting the country's perceived high economic risk. After the economic downturn of 2009, which put a strain on the country's banking sector, the following two years saw growth in lending activity and a drop in interest rates, which at reached an unprecedented low level of 14% in 2011. While banks managed to improve their loan portfolios, the share of non-performing loans in total credits remains well above pre-crisis levels. Large investments rarely can be financed through a single bank and require a bank consortium. Recent years have seen a growth in leasing and micro-financing. Raiffeisen Leasing remains the only international leasing company to have opened a representative office in Moldova.
The private sector's access to credit instruments is difficult because of the insufficiency of long-term funding and excessively high interest rates. Financing through local private investment funds is virtually non-existent. A few U.S. investment funds have been active on the Moldovan market, notably NCH Advisors, Western NIS Enterprise Fund, and Emerging Europe Growth Fund, the latter two managed by Horizon Capital equity fund managers.
Moldova's securities market is underdeveloped. In 2007, a "mega-regulator," the National Commission on the Financial Market (NCFM), replaced the National Securities Commission. The NCFM supervises the securities market, insurance sector and non-bank financing. The NCFM is operationally independent. Starting October 1, 2008, it acquired the right to issue and to withdraw licenses for all non-bank financial sectors it supervises. The Commission adopted a Corporate Governance Code and passed new regulations intended to simplify the issuance of corporate securities and increase the transparency of transactions on the Moldovan Stock Exchange. In 2011, the GOM adopted a new Strategy for the Development of the Non-Banking Financial Strategy through 2014 that focuses on adopting European standards in financial market regulation and supervision. Amendments were passed in 2011 to the law on joint-stock companies to strengthen minority shareholder rights and improve disclosure obligations for transactions involving conflicts of interest.
Moldovan banks are the main source of business financing, with non-bank financing, albeit growing, still playing a minor role. The banking system has two levels: the NBM and 15 commercial banks. The NBM supervises the commercial banks and reports to Parliament. The GOM holds a controlling stake in one bank, Banca de Economii. Foreign investors' share in Moldovan banks' capital is around 75 percent.
As of October 31, 2011, total bank assets were MDL 46,838 million ($3.7 billion). Moldova's five largest commercial banks account for almost 70 percent of the total bank assets, as follows (as of October 31, 2011): MoldovaAgroindbank: MDL 9,271 million ($789 million) in assets; Victoriabank: MDL 7,885 million ($671 million); Moldindconbank: MDL 6,175 million ($526 million); Banca de Economii: MDL 5,727 million ($487 million); and Eximbank: MDL 3,559 million ($303 million).
Competition from State-Owned Enterprises
Moldovan legislation does not formally discriminate between state-owned enterprises and private-run businesses. By law, governmental authorities have to provide a level legal and economic playing field to all enterprises.
The Law on Entrepreneurship and Enterprises permits only state enterprises to participate in the following activities:
- Some types of human and animal medical research;
- Manufacture of orders and medals;
- Production of symbols verifying payment of state taxes and fees;
- Postal services (except express mail) and production of postage stamps;
- Sale and production of combat and special military technical equipment, explosives (except gun powder), and all weapons;
- State registry, tracking and technical inventory of real estate, restoration of ownership titles, and administration of real estate;
- Printing and minting of currency and printing of state securities; and
- Certain scientific activities.
The GOM has privatized most state-owned enterprises, and some sectors of the economy are almost entirely in private hands. However, some large enterprises are still controlled by the government and their privatization has been either postponed indefinitely or abandoned altogether. The major government-owned enterprises are two northern electrical distribution companies, the Chisinau heating companies, the fixed-line telephone operator Moldtelecom, the state airline Air Moldova, the state railway company, and the majority state-owned bank Banca de Economii. State-owned enterprises are sometimes seen to be at an advantage relative to privately-run businesses. Some of these state-run companies use their dominant position in the industry to stifle competition from the private sector.
The GOM restarted efforts to sell a series of attractive assets in 2008 by privatizing the footwear manufacturer Zorile, the former Soviet military-industrial complex Mezon, and the Codru Hotel, causing controversy because they were sold at prices below market value. The coalition government, which came into office in 2009, continued the selloff of government assets. With the onset of the global economic crisis and uncertain political situation in Moldova, the GOM's privatization efforts generated weak results. In 2011, the GOM was able to achieve only a third of its annual privatization target of 360 million lei ($30.7 million). In 2011, the GOM consequently removed a number of major companies from the list of government-owned enterprises not subject to privatization. In 2012, the GOM intends to privatize the largest tobacco company Tutun CTC, cosmetics company Viorica, and carpet manufacturer Floare Carpet.
Corporate Social Responsibility
Corporate Social Responsibility (CSR) and a culture of volunteerism and philanthropy are not highly developed in Moldova. Many Moldovans still have a view widely held from Soviet times of a paternalistic government being responsible for maintaining the social welfare of all citizens. With the entry of foreign companies into the Moldovan economy, the concept of CSR is being introduced. AmCham has taken a lead by organizing an annual CSR conference at the end of October for the past five years. AmCham has also set an example with its corporate members in the business sector by engaging in a forestation project, in the rehabilitation of medical facilities, and in Christmas collection projects for orphanages.
Foreign investors have incorporated CSR principles into their operations. CSR activities are viewed positively by Moldovans, but are largely centered in the capital of Chisinau.
In 2011, the U.S. Embassy Chisinau sponsored a CSR expert to visit Moldova. The speaker gave presentations to several groups in Moldova about CSR and how better to implement its practices in developing economies and businesses.
The U.S. Embassy has received no reports over the past ten years involving politically-motivated damage to business projects or installations in Moldova. Following parliamentary elections in April 2009, protestors severely damaged the Parliament and the Presidential Administration buildings. However, the unrest was very limited and no business facilities or projects were targeted.
Separatists control the Transnistrian region of Moldova, located between the Nistru River and the eastern border with Ukraine. Although a brief armed conflict took place in 1991-1992, both sides signed a ceasefire in July 1992, which has generally been observed. Local authorities in Transnistria maintain a separate monetary unit, the Transnistrian ruble (current market exchange rate is approximately 10.9 rubles per U.S. dollar), and a separate customs system. Despite the political separation, economic cooperation takes place in various sectors. The GOM has implemented measures requiring businesses in Transnistria to register with Moldovan authorities (see chapter A.3.Expropriation and Compensation). The Organization for Security and Cooperation in Europe (OSCE), Russia, and Ukraine acting as guarantors/mediators and the U.S. and EU as observers continue to support negotiations between Moldova and the separatist region Transnistria (known as the "five plus two" format). Throughout the years, negotiations have been piecemeal at best, with talks stalling in 2006 and resumed again in 2008. In late November 2011, a new round of formal settlement talks was held, with second round expected in February 2012.
Moldova is making efforts to adopt European and international standards to combat corruption and organized crime. In 2007, Moldova ratified the United Nations Convention against Corruption, subsequently adopting amendments to its domestic anti-corruption legislation. In 2008, the GOM developed and enacted a series of companion laws designed to address current legislative gaps such as the Law on Preventing and Combating Corruption, the Law on Conflict of Interests and the Law on the Code of Conduct for Public Servants. However, in 2009, an Anticorruption Prosecutor's Office report stated that a lack of experience and a rushed enactment process of these laws led to a series of shortcomings that were identified throughout 2009. In 2010, the situation remained similar. For example, the Law on Conflict of Interests provides for the creation of an Ethics Commission, responsible for handling conflict of interest issues among public officials. In July 2011 the Moldovan Parliament passed the Law on the Main Ethics Commission. The Main Ethics Commission is designed to become the sole public authority responsible for the regulation and implementation of policies in conflicts of interests in the Moldovan public service. It is also in charge of scrutinizing the disclosure of assets by judges, prosecutors and other public officials. This commission is lead by a Chairman, who is appointed by Parliament, for a five-year term. Although the law was passed in July, the Commission is yet to be fully functional, i.e. to be staffed and to be provided an office.
Moldova's Criminal Code (effective June 12, 2003) includes articles on public and private sector corruption, combating economic crimes, criminal responsibility of public officials, active and passive corruption, and trade of influence. These additions put the legislation more in line with international, anti-bribery standards by criminalizing the act of offering a bribe. Under this definition, the act of promising, offering or giving a bribe to a public official is a crime. In 2009, the GOM initiated and implemented a comprehensive legislative initiative generically called "humanization of criminal penalties." This initiative aimed at introducing a series of amendments to the Criminal Code, which were meant to repeal certain terms that were not in line with EU standards. In terms of penalties, the amendments aimed at decreasing the imprisonment time and increasing fines. This initiative has also affected the corruption crimes category.
According to the Moldovan Criminal Code, offering a bribe is regulated by Art. 325 entitled "Active Corruption." Penalties for offering a bribe include prison terms up to 12 years and fines of up to 60,000 MDL (approximately $5,100). The minimum penalty for offering a bribe is now imprisonment for up to five years with a fine of 20,000 MDL (approximately $1,700) to 60,000 MDL (approximately $5,100). If committed by two or more persons or on a large scale, the offering of a bribe is punishable with imprisonment from three to seven years with a fine of 20,000 MDL (approximately $1,700) to 60,000 MDL (approximately $5,100). The maximum penalty for offering a bribe in its aggravated forms, on an especially large scale, in the interest of an organized criminal group or criminal organization is punishable with imprisonment from six to twelve years with a fine from 20,000 MDL (approximately $1,700) to 60,000 MDL (approximately $5,100).
Accepting a bribe is regulated by the Moldovan Criminal Code under Art. 324 - "Passive Corruption." Penalties for accepting a bribe include prison terms up to 15 years and fines of up to 60,000 MDL (approximately $5,100) the deprivation of the right to hold certain positions or practice certain activities for two to five years.
Moldova is not a signatory of the Organization for Economic Cooperation and Development (OECD) Convention on Combating Bribery. However, Moldova is part of two regional anti-corruption initiatives: the Stability Pact Anti-Corruption Initiative for South East Europe (SPAI) and the Group of States against Corruption (GRECO) of the Council of Europe. Moldova cooperates closely with the OECD through SPAI and with GRECO, especially on country evaluations. In 1999, Moldova signed the Council of Europe's Criminal Law Convention on Corruption and Civil Law Convention on Corruption. Moldova ratified both conventions in 2003.
In past years, the U.S. Embassy received reports from foreign investors of serious problems with corruption and bribery. For example, in 2008, when a foreign investor discovered that he had under-paid his taxes and wished to remedy the situation, the tax inspector assigned to the company attempted to extort money. The tax service later lauded the investor for his self-reporting and negotiated a reduced payment. The Embassy also has received reports of "informal" hostile takeovers of profitable businesses. In these cases, business owners were approached by politically-connected individuals who wished to acquire part of the businesses. When business owners refused, they were soon forced to close via non-transparent measures.
According to the Global Corruption Barometer 2010 carried out by Transparency International, corruption is most pervasive in the following areas: law enforcement; the judicial system; public service; political parties; the educational system; and the legislative system.
The Corruption Perception Indicator (CPI) as estimated on annual basis by Transparency International indicates that the population of the country and the international community perceive Moldova as a country with widespread corruption. In the past 12 years, the index for Moldova varied between 2.1 and 3.3, on a 0-10 scale. In 2011, Moldova’s index was 2.9.
In 2011, the Moldovan Government initiated a comprehensive reform of its justice and law enforcement system, with support from the U.S. and EU. The Ministry of Justice (MOJ) in extensive consultations with the public and key institutions from the justice sector developed the Strategy of Justice Sector Reform. In order to prepare the Strategy, the MOJ identified the outstanding issues necessary to create a professional justice sector, consistent with international standards. The Strategy also dedicated a separate chapter entitled “Integrity of Justice Sector Stakeholders,” which detailed several practices and policies to fight corruption within the justice sector. Moldovan Parliament enacted the Strategy on November 25, 2011.
In July 2011, the Moldovan Parliament enacted a more comprehensive National Anti-Corruption Strategy for 2011-2015, which lays out future actions needed by the GOM authorities in order to prevent and combat corruption.
Bilateral Investment Agreements
Moldova has signed bilateral investment protection and promotion agreements with 37 countries. In addition to the United States, these include Albania, Austria, Azerbaijan, Belarus, Belgium, Bosnia and Herzegovina, Bulgaria, China, Croatia, the Czech Republic, Cyprus, Estonia, Finland, France, Georgia, Germany, Greece, Hungary, Israel, Italy, Kuwait, Kyrgyzstan, Latvia, Lithuania, the Netherlands, Poland, Romania, Russia, Slovakia, Slovenia, Spain, Switzerland, Tajikistan, Turkey, Ukraine, the United Kingdom, and Uzbekistan.
Moldova has a bilateral treaty with the United States on the Encouragement and Reciprocal Protection of Investment. Moldova has not signed a separate bilateral taxation treaty with the U.S. However, the U.S. Government applies the Convention on Matters of Taxation signed with the USSR on June 20, 1973, which also deals with avoidance of double taxation, to all former Soviet republics, including Moldova.
OPIC and Other Investment Insurance Programs
In 1992, the Moldovan and U.S. governments signed an investment incentive agreement that exempts OPIC from Moldovan taxes on loan interest and fees. OPIC became active in Moldova in September 1997, providing political-risk insurance to an American company investing in an agribusiness. Since then, OPIC has provided a number of financial and insurance products to U.S. businesses operating in Moldova in such fields as agribusiness, telecommunications, banking, consulting, transportation logistics, and mortgage financing.
The U.S. Export-Import Bank (Ex-Im) provides U.S. companies investing in Moldova short- and medium-term financing in the private sector under its insurance, loan, and guarantee programs. In 2000, the Ex-Im Bank and Moldova signed a Framework Guarantee Agreement setting the terms for the GOM to issue sovereign guarantees to facilitate Ex-Im Bank financing of U.S. exports to Moldova. Also in 2000, the Ex-Im Bank and Moldova signed a Project Incentive Agreement that enabled the Bank to consider financing of U.S. exports for credit-worthy private sector projects in Moldova on a non-sovereign risk basis, but which required host-government support in project-related activities such as permit and license approvals. Under the agreement, repayment of Ex-Im Bank financing is based on the capture of financed projects' revenue streams in special escrow accounts held in banks approved by the Ex-Im Bank.
In 2002, the Ex-Im Bank signed a memorandum of cooperation with the Black Sea Trade and Development Bank. Under the memorandum, the Ex-Im Bank's financing products can be used to support exports of U.S. goods and services to any country located in the Black Sea region, including Albania, Armenia, Azerbaijan, Bulgaria, Georgia, Greece, Moldova, Romania, Russia, Turkey, and Ukraine. The agreement enables the Black Sea Trade Development Bank to act as a guarantor of specific transactions and also provides for parallel financing arrangements.
Moldova is eligible for U.S. Trade and Development Agency (USTDA) funding for feasibility studies, orientation visits, specialized training grants, business workshops, and other forms of technical assistance. USTDA considers funding for a wide range of sectors with export potential for U.S. companies. In 2003, USTDA approved funding for a study on upgrading the telecom system for the Moldovan Customs Service.
Institutions such as the European Bank for Reconstruction and Development and the World Bank are very active in Moldova in both the private and public sectors, offering various financial tools for both insurance and credit. Moldova is a member of the Multilateral Investment Guarantee Agency (MIGA) and a member of the World Bank group. MIGA promotes foreign direct investment into developing countries by insuring investors against political risk, advising governments on attracting investment, sharing information through on-line investment information services, and mediating disputes between investors and governments. Moldova is also eligible for project and trade financing from the Black Sea Trade and Development Bank. The country has also benefitted from loans extended by the EU's European Investment Bank and the Council of Europe Development Bank.
For years, Moldova prided itself on its skilled labor force, including numerous workers with specialized and technical skills. However, with past economic turmoil, many skilled laborers left for better paying jobs in other countries, leading to shortages in skilled workers in Moldova. Moldova's Constitution guarantees all employees the right to establish or join a trade union. Trade unions have influence in the large and mostly state-owned enterprises, historically negotiating for strong labor relations, minimum wage and basic worker rights. Unions are less active and effective in small private companies. Moldova is a signatory to numerous conventions on the protection of workers' rights.
The Moldovan General Federation of Trade Unions has been a member of the ILO since 1992, and has been affiliated with the International Confederation of Free Unions (ICFU) since 1997. The Federation split into two separate unions in 2000, but merged in 2007, forming the National Trade Union Confederation (CNSM). After attempts of the previous Communist-led government to interfere in the activity of unions, the CNSM was isolated from the international trade unions movement. With a change in government in 2009 and the election of new trade union leaders, CNSM was given membership in the International Trade Union Confederation in 2010.
Foreign Trade Zones/Free Ports
One of the GOM's stated economic policies is the establishment and development of free economic zones (FEZ). At present, seven FEZs, one international free port – Giurgiulesti – and one international free airport – Marculesti - are registered in Moldova. According to Moldovan law, job creation, attraction of foreign and domestic investments and export-oriented production are the main goals of such zones. FEZ activity is regulated by the Law on Free Economic Zones (2001). Foreigners have the same investment opportunities as local entities. FEZ commercial entities enjoy the following advantages: 25 percent exemption from income tax; 50 percent exemption from tax on income from exports; for investments of more than $1 million, a three-year exemption from tax on income resulting from exports, and for investments of more than $5 million, a five-year exemption from tax on income from exports; zero value-added tax; exemption from excises; and protection of residents against any changes in the law for 10 years.
The GOM also passed a law on industrial parks in 2008 with the aim of attracting investments in industrial projects. Businesses operating in industrial parks do not enjoy special tax treatment, but typically have access to ready-to-use production facilities and offices and lower office rent fees for 25-30 years. The GOM set up four industrial parks, with feasibility studies being conducted to identify other prospective areas for industrial parks. There are also three technical-scientific parks and one innovation incubator, the residents of which enjoy exemptions on VAT and customs duties.
Similar to the FEZs, the Giurgiulesti Free International Port, Moldova's only port accessible to sea-going vessels was established in 2005 for 25 years. Commercial residents of the port enjoy the following advantages: 25 percent exemption from income tax for the first 10 years following the first year when taxable income is reported; 50 percent exemption from tax on income for the remaining years; exemption from value-added tax and excises on imports and exports outside Moldova's customs territory; zero valued-added tax on imports from Moldova; and protection of commercial residents against any changes in the law until February 17, 2030.
The Marculesti International Free Airport, a former military air base, was created in 2008 for 25 years as a free enterprise zone to develop cargo air transport. The airport management also plans to turn Marculesti into a regional hub for low-cost passenger airlines.
Foreign Direct Investment Statistics
As of January 1, 2011, the total stock of foreign direct investment (FDI) inflows in Moldova since independence amounted to $2.879.64 billion, according to the NBM.
FDI grew steadily in recent years, but inflows dropped in 2009 as result of the global economic crisis and have yet to reach pre-crisis levels. According to NBM data, FDI inflows (in millions of U.S. dollars) were as follows: $ 873.38 (2008); $ 378.16(2009); $362.44 (2010); and $311.06 (Jan-Sep 2011).
FDI by country in 2010, according to NBM data and based on charter capital was as follows:
1. Cyprus $23.87 million
2. Romania $23.32 million
3. Germany $13.16 million
4. Turkey $10.82 million
5. USA $9.01 million
6. Italy $8.49 million
7. Austria $8.2 million
8. UK $5.61 million
9. Netherlands $5.01 million
10. Switzerland $3.8 million
According to the NBM, the stock of FDI inflows by country of origin for the ten largest investing countries for the period 1992 to 2010 was:
1. Russia $170.82 million
2. Cyprus $146.29 million
3. Italy $138.57 million
4. Romania $131.54 million
5. Germany $130.23 million
6. USA $129.41 million
7. Netherlands $97.27 million
8. France $89.45 million
9. Austria $55.8 million
10. Switzerland $49.77 million
Based on figures from the National Bureau of Statistics, FDI by sectors as a percentage of total FDI since 1992 has been:
Financial activities: 22.9 percent
Real estate transactions: 20.9 percent
Wholesale, retail & repair services: 21.0 percent
Food processing: 15.9 percent
Electricity, gas, and water supply: 8.1percent
Transportation and communications: 6.1 percent
Hotels and restaurants: 1.2 percent
Other activities: 4.6 percent
According to NBM data, at the end of 2010, Moldova's direct investment abroad since independence amounted to $65.95 million.
In 2010, FDI inflows were 6.3 percent of annual GDP ($5.810 billion), while the FDI stock was 49.6 percent of GDP.
Major U.S. investors or representatives of U.S. companies in Moldova include:
NCH Group of Investment Funds: real estate and financing companies
Horizon Capital: equity investment fund managing the investments of Western NIS Enterprise Fund (which is phasing out its local activity) and the Emerging Europe Growth Funds I and II with holdings in banking, food processing, and glass manufacturing
Transoil: farming, agribusiness, and grains trading
McDonald's: fast food
Coca-Cola: soft drinks
Development Group USA: food processing, wine, and media
Lion Gri: wine
Mary Kay: perfumes and cosmetics
Avon: perfumes and cosmetics
Lear Corporation: car seat covers
Ford: car dealership
Chevrolet: car dealership
PricewaterhouseCoopers: auditing and tax advisory
KPMG: auditing and tax advisory
Deloitte: auditing and tax advisory
Ernst & Young: auditing and tax advisory.