Assessing Competitiveness In Moldova's Economy - Economic Growth

Development Alternatives, Inc. Moldova Competitiveness Assessment: The ICT Cluster
Moldova has one national telecom provider, MoldTelecom, and seven Internet service
providers operating officially in the country. Currently there are no sources of venture capital
and few foreign direct investors for the ICT industry, but the prospects for the future are
promising. Local banks are generally not considered a good source of capital because of their
reluctance to lend at affordable rates. BIZPRO is working with banks to develop new
instruments for providing financing to small and medium-sized enterprises, which might
include ICT operations.
Most ICT products and services are sold directly by the providers to their end customers in
Moldova and some foreign markets. In cases where companies are exporting services,
partners or joint ventures in the target markets normally perform the sales and marketing. The
Moldovan company’s identity remains concealed or is exposed later in the sales process.
There are no other downstream providers of intermediation services.
Firm Structure and Rivalry
Degree of Competition and Cooperation
There is virtually no competition in the Moldovan ICT market among product developers.
Among service providers, such as web development and hosting, there is some competition
for building web sites for larger companies. However, the market for corporate web
development in Moldova is small, approximately US$100,000 annually.
With the exception of accounting software for the local market, and web design services, the
ICT industry is highly specialized, to the point where no meaningful competition exists
among companies. Low domestic demand drives most companies and professionals to be
outwardly focused in pursuit of higher wages and profit potential. As such, the ICT sector has
fragmented into specialization areas or niches that enable the companies to avoid competing
locally. According to a report by the Moldova Export Promotion Organization (MEPO),
“there is no usually strong competition among the local producers concerning ready-made
software products because they normally offer quite unique for the market products … the
number of products approximately is equal to the number of companies.”
There is also surprisingly little cooperation within the industry. Moldova has no ICT
association to provide a unifying force for collaboration and advocacy. There are no
professional societies, clubs, or other groups to facilitate communication and the sharing of
ideas. This fragmentation has left the companies in the industry isolated and self-dependent.
Some companies focus exclusively on exporting, without any attention to or association with
the local market.
Innovative Capacity and Productivity
The lack of reliable data because of the size of the shadow market and the unwillingness of
companies to disclose financial information makes it impossible accurately to measure the
productivity of the industry, using standard per capita metrics. The best data available
July 2004 • DRAFT Page 3