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Moldova’s impressive FDI performance may be threatened if the country swings fully into Russia’s orbit during the upcoming elections. Emerson Davis reports.

Moldova is in an election year with the national contest scheduled for November. Two of the country’s largest municipalities, Chisinau and Balti, held mayoral elections in late May. In both ballots, pro-Russian candidates won, thereby reflecting the Moldova’s political environment: a tussle between its Russian and European identities.

Moldovan president Igor Dodon supports close ties with the Kremlin. After taking office in 2017, Mr Dodon’s first international visit was to Moscow. This year he is hosting an event for Russian investors in September, who are currently restricted by a series of embargos that limit Russia’s importation of fruit, cattle, beef and wine from Moldova.

Despite being criticised by the EU for the country's pervasive corruption, Moldova prime minister Pavel Filip has a pro-Europe agenda.

At the recent general assembly of Moldova’s National Confederation of Employers, Mr Filip publicly confronted the perception of institutional weakness by announcing a three-year fiscal plan, saying: “There is nothing more important for business than to know that they are working in a fair and predictable market.” Despite these words, national politics are in flux, and many are worried that this could influence foreign investment patterns. 

Moldova has received sustained FDI over the past 16 years, amounting to roughly $3.76bn and 22,086 new jobs, according to greenfield investment monitor fDi Markets.

The software and IT services industry has garnered the highest number of investment projects. In March 2018, Cloudflare, the US website performance company, established a new data centre in the capital, Chisinau, for $63.5m.

Citing the strong labour pool, foreign investors are recognising the potential benefits of investing in Moldova  – though the government’s uncertain alignment towards the EU and Russia could be a barrier for some of them.

For Russian investors, a pro-EU Moldovan government could result in retaliatory actions by Russia, probably in the form of a trade embargo. For investors from the EU or Western offshoots, a pro-Moscow government could lead to concerns about data security for companies interested in investing in the software and IT services industry.

Despite this short-term political ambivalence, Moldova offers an exciting investment environment likely to attract further attention from either Russia or the West.

This article is sourced from fDi Magazine
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