Association Agreement with the EU to bring financial and institutional support for Moldova’s SME’s

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Foto: www.budgetstories.md Foto: www.budgetstories.md
Publishing date: Thursday, 26 March 2015
Views: 17019

Small and Medium Enterprises, or SMEs, play an important role in Moldova’s economy. According to National Bureau of Statistics, the share of such enterprises out of total businesses is 97.4%, employing 56.9% from total workers in the real economy.

One of the basic prerequisites of developing SME’s is diversifying their markets, ie exports. However, due to lack of competitiveness and burdensome customs procedures, only 11.6% of Moldovan companies are exporting products (compared to 25.1% in Romania and almost 50% in Estonia), all while entrepreneurs in Moldova need on average more than 21 days to complete the export customs procedures, as against one day needed in Romania and two days in Estonia.

Association Agreement comes with several support tools for entrepreneurs, which aim to enable them to expand their businesses, such as: Program for Competitiveness of Small and Medium-sized Enterprises (COSME), Financing Mechanism of SMEs from countries that signed the Association Agreements (DCFTA instrument) and non-financial benefits within the EU Association Agreement.

COSME is an 800 million Euros’ Program which offers: (i) instruments for penetrating foreign markets (ii) development of a favorable regulation framework for SMEs, and (iii) initiatives for encouraging entrepreneurship and entrepreneurial culture.

On the other hand, the DCFTA instrument - addressed for Moldova, Georgia and Ukraine, includes 1.5 billion Euros worth of loans intended to assist business expansion, loans offered by financial institutions and also financial instruments for minimizing currency risk. Also, these tools include an EU grant program worth 150 million euros.

In addition, the additional benefits of the EU Association Agreement for entrepreneurs involve two aspects: (1) Adjusting customs procedures according to European standards, which will result in reducing the time for completing the export customs procedures from the average 21 days to 3-4 days and eliminating fees for customs procedures and (2) opportunities for temporary residence in EU for employees of the Moldovan companies who will conduct business in the EU.

 

This material has been financed from a grant offered by the US Department of State. Its opinions, findings and conclusions belong the author and do not necessarily reflect those of the US State Department.

 

See the policy brief in Romanian  See the infographic in Romanian

Tags: Natalia Chitii

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