The volume of Foreign Direct Investment (FDI) in Moldova amounted to $357.2 million in 2023, decreasing by 39% after a hike to $586 million in the previous year
This is stated in the updated study “Impact of Foreign Direct Investments on Moldova's Economy, 2014-2023”, prepared by the Business Intelligent Services (BIS) consulting company at the request of the Investment Agency of Moldova and the Foreign Investors Association (FIA). The study notes that the net FDI inflows attracted by Moldova in 2014-2023 show fluctuations, with signs of stabilization in the last 3 years: after a hike in 2022, FDI in 2023 was $357.2. Despite the problems caused by the pandemic and the war in Ukraine, which increased uncertainty, risks and pressure on FDI, foreign investors have not reacted with massive capital withdrawals, indicating a constant level of confidence in the Moldovan economy even in a difficult external environment. Meanwhile, significant growth in 2023 was demonstrated by FDI in the form of stocks and shares from EU countries, which for the first time exceeded the historical threshold of $3 billion, accounting for 84% of total FDI in Moldova. “Foreign investors continue to believe in Moldova's future. We see the efforts made by the country's leadership and Moldovan citizens on their European path, despite the challenges in the world and in the region. In turn, we continue to invest in the sustainable development of our companies, local communities and Moldova's economy as a whole” - said Alphan Akpece, Chairman of the FIA Board, CEO of Efes Vitanta Moldova Brewery. The study notes that over the last 10-15 years, the processing industry (including the production of automotive and electrical components) has remained the main target of FDI in Moldova, both in terms of the number of projects and capital investments. However, these investments have had a limited impact on domestic production due to a number of factors: low technological sophistication, limited productivity, weak integration of local companies into the value chains of FDI companies. At the same time, the structure of GDP generated by FDI enterprises differs significantly from the overall structure of the Moldovan economy: they play a decisive role in the industrial and technological sectors, while the national economy remains more dependent on traditional sectors - agriculture, construction and real estate operations. It is also noted that FDI enterprises play a significant role in job creation and productivity growth in Moldova. Although they represent only 6% of the total number of enterprises in the country, they employ 14.6% of the labor force and their share of sales revenue in 2023 was 25.5%, indicating higher labor productivity than the national average - 83% higher than local private enterprises. All this also confirms the efficient utilization of human and other resources by enterprises with FDI and their crucial role in driving economic growth. In contrast, local private and state-owned enterprises need to invest in modernization and efficiency improvements to enhance their competitiveness. In 2023, enterprises with FDI contributed 3.3 billion lei (14.8% of the total) to the state insurance budget: on average, about 41.2 thousand lei per employee (in comparison, this indicator for private enterprises amounted to 19.5 thousand lei per employee, reflecting the relatively lower level of wages in these enterprises). The study notes that the global environment for international investment remains challenging in 2024. Weakening growth prospects, trends towards a fractured economy, trade and geopolitical tensions, industrial policy and supply chain diversification are changing FDI patterns, making some multinationals cautious about expanding abroad. It is noted that the level of FDI in Moldova remains relatively low compared to other Eastern European countries. In order to increase the competitiveness of our country, it is necessary to further substantially improve the policies and practices of FDI attraction, which will increase the attractiveness of investments and will contribute to the sustainable economic development of Moldova. Let us remind you that FIA is the first non-commercial and non-political association of companies with foreign capital active in the country. It includes 26 companies from 15 countries - these are the largest FDI enterprises in Moldova, employing more than 23 thousand people. The total volume of investments is more than 2.6 billion euros, which is 19% of Moldova's GDP. These are the most active enterprises influencing Moldova's sustainable development and generating progress in all its key sectors: agriculture, industry, wine production, telecommunications and IT, oil products, medicine, pharmaceuticals, banks and insurance, distribution, consulting and auditing, etc., as well as in other sectors. // 17.12.2024 - InfoMarket.
