Assessing Competitiveness In Moldova's Economy - Economic Growth
Assessing Competitiveness In Moldova's Economy - Economic Growth
Assessing Competitiveness In Moldova's Economy - Economic Growth
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Development Alternatives, <strong>In</strong>c. Moldova <strong>Competitiveness</strong> Assessment: Market Architectures<br />
Transportation Services<br />
Overview<br />
There are no Moldovan companies that offer more than one transport mode, cargo handling,<br />
and related information services. There are a limited number of Moldovan trucking<br />
companies, freight forwarding, warehousing, and other logistics-related services—and not<br />
much competition among them. Only a few of these companies have international experience<br />
and none of the major international logistics firms have established operations in Moldova.<br />
Foreign firms regard Moldova as a “logistically unfriendly” place, with complicated customs<br />
regulations, unpredictable rules and procedures, and often corrupt practices. As a result, the<br />
quality of services is low and the prices are high. According to the World Bank’s Moldova<br />
Trade Diagnostic Study, total logistics costs in Moldova are about 22 percent of Gross<br />
Domestic Product (GDP)—the highest in Europe. The corresponding figure for the EU<br />
accession countries is between 10-16 percent of GDP. Domestic distribution is poorly<br />
developed: there are no logistics operators that offer a countrywide terminal network or<br />
regular parcel services.<br />
Over 80 percent of Moldova’s exports and over 66 percent of its imports are time-sensitive<br />
goods. Just-in-time European producers are increasingly sourcing from nearby Eastern<br />
Europe and Moldova, but they require on-time deliveries of inputs. Manufacturers<br />
assembling electronic and mechanical goods require accurate inbound shipments of<br />
components, careful inventory management practices, and accurate paperwork. The fashion<br />
industry is highly time-sensitive and requires that producers of ready-made garments deliver<br />
on time and quickly. The home furnishings industry, including home textiles such as<br />
tablecloths, napkins, and bed linens, is also becoming fashion-oriented and thereby more<br />
time-sensitive.<br />
Unfortunately, delays at the Moldovan border crossings are notoriously lengthy. “While total<br />
border crossing waiting time is usually around 5 to 15 percent of total transport time in<br />
import and export to and from Romania, Bulgaria, Bosnia and Herzegovina … it tends to be<br />
30 to 50 percent in Moldova in comparable cases.” Border delays and time-consuming<br />
paperwork severely reduce Moldova’s competitiveness in trade and in the goods they trade.<br />
As a result, imported items become unnecessarily costly; firms must hold higher inventories,<br />
reducing their efficiencies and raising their costs; and Moldovan exporters lose their<br />
competitive advantage in fast and on-time deliveries and are thrown back to competing<br />
primarily on cost—exploiting an elusive advantage.<br />
Trucking<br />
There are three types of operators in the Moldovan trucking industry: (1) operators with<br />
multilateral permits that allow them into Europe and with some equipment complying to<br />
EURO standards, (2) operators with aging equipment meeting CIS standards and having<br />
bilateral permits into CIS countries, and (3) domestic operators with old equipment and no<br />
permits allowing them to bring good into or out of Moldova. There is excess capacity in the<br />
last two categories and a shortage in the first category. And the operators with multilateral<br />
July 2004 • DRAFT Page 8