The war in Ukraine involves major economic and logistical challenges for the private sector, but at the same time an opportunity to rethink the country's economy. Business associations, in turn, are trying to adapt to the situation and turn these current challenges into opportunities. These are some of the conclusions of the public discussion "The impact of the war in Ukraine on the private sector in Moldova and the adaptation of economic activity to current conditions", held on October 18.

The event was organized by the Center for Entrepreneurship and Economic Policies (CAPE), with the support of the International Center for Private Entrepreneurship (CIPE).

"We expect that through these discussion sessions we will get a comprehensive picture of how business in Moldova adapts to the threats and risks of the war in Ukraine", said the director of CAPE, Tatiana Lariușin.

The pandemic and the military conflict in Ukraine have exposed the vulnerabilities of the economy and entrepreneurial environment in Moldova, substantially affecting both commercial chains and the development plans of the private sector. The business environment faces various economic, logistical and social challenges. At the same time, some companies have managed to adapt to the situation and turn these challenges into opportunities.

The first to feel the effects of the war were transporters, and the transport of goods to and from Moldova was affected due to the blocking of land and sea routes through the port of Odessa, and the redirection of Ukrainian and Moldovan goods flows by road overburdened Moldovan customs, creating queues tens of kilometers. In this context, Moldovan companies have adapted and found alternative routes for the transport of goods, but the additional costs are borne by the consumer.

At the same time, business associations are affected by the labor shortage and there is a migration of businesses from Moldova, the fears of the business environment being caused by the risks related to regional security. And as far as the energy field is concerned, the uncertainty related to providing the country with natural gas and electricity affects the planning and financial stability of companies. In this sense, the Government must initiate discussions with business associations whose members are gas consumers in the production process to identify mechanisms that would allow them to remain competitive.

"The pandemic, but also the war, represent two great challenges for the private and public sectors, but at the same time also an opportunity to rethink the country's economy. Considering the emerging risks, it is necessary for political factors, business associations and the expert community to outline a series of areas that must be addressed in order to identify complex solutions. In this sense, a strong and competitive private sector will contribute not only to economic and social development, but also to the strengthening of democracy and public institutions", says the CAPE program director, Ion Butmalai.

"The business environment is facing a difficult period, involving various economic, logistical and social challenges, which, at the same time, could be turned into opportunities. In order to come up with certain recommendations and solutions to support entrepreneurship activity, it is important to have a justified understanding of the essence of the risks", said Veronica Russu-Marin, CAPE program director.

The Center for Entrepreneurship and Economic Policies, through Moldovan business associations, according to the report signed by CAPE, Economic resilience in times of crisis: business concerns regarding the management of the effects of the crisis note the lack of a strategic vision on the part of public institutions regarding the economic sectors that need to be developed and what the private sector should look like in the long run. At the same time, the business environment is subject to a rapid adaptation to reality.

Aneta Zasaviţchi, the president of the employer's association "National Association of Restaurants and Leisure Venues of the Republic of Moldova" (MĂR) mentioned "We directly feel the costs of products and the energy crisis has also come to the package, which increases other costs for utilities and products from the service of public food".

"Business does not stop at political statements. We need concrete actions to unlock the situation. Economic change must go forward and we want to be heard", said Dumitru Albulesa, the president of the Association of Shippers and Customs Brokers from the Republic of Moldova.

"Help from colleagues in the neighboring country is welcome, but we would like some good roads for heavy goods trucks and a preparation and renovation of customs posts for the large flow of transport. A large flow of aid to Ukraine is expected, but the transporters in the country will also have work and will pay taxes and fees", emphasized the administrator of the International Association of Transporters - AITA, Ghenadie Țaulean.

For her part, Ina Gladii, program coordinator at the National Association for Inbound and Domestic Tourism of Moldova (ANTRIM) emphasized "The tourism industry in our country is characterized by a lack of resources and a strategic plan for positioning the Republic of Moldova on the international arena, as a safe tourist destination. For example, travel agencies have reoriented their activity and provide event organization services”.

At the same time, in order to identify the problems, but also the proposals from the private sector, a survey was conducted among those present during the discussion. The survey aimed to understand how the business environment is aware of operating during wartime and the risks of expansion, and how risk factors influence the decision to further develop businesses that are already launched.

To overcome the economic effects caused by the war in Ukraine, the experts of the Center for Entrepreneurship and Economic Policies formulate a series of measures. Among them are the identification of mechanisms for ensuring the ability to honor obligations for current credits; the development of investment subsidy programs in the renewable energy sector, the introduction of the Cuciurgan thermoelectric plant as part of the energy balancing system or the reduction of indirect costs borne by companies through the digitization of processes in the interaction with the state.

The public discussion is part of a series of sessions held by the Center for Entrepreneurship and Economic Policies to assess and discuss the risks of the impact of the war in Ukraine on the economy of the Republic of Moldova. Afterwards, the conclusions and recommendations presented during the discussions will be translated into a position paper addressed to the public authorities that will include proposals to support the entrepreneurial environment in the context of the current crises.

………….

The Center for Entrepreneurship and Economic Policy (CAPE) is an independent analytical center whose mission is to support the development of democracy and a functioning economy through public policies focused on the development of the private sector and the stimulation of private initiative. Through this, CAPE supports the participation of the business environment in the democratic process, the promotion of well-structured public-private dialogue, offers support to associations through expertise, facilitating the introduction of international anti-corruption and conduct standards, training and knowledge transfer.

"Economy without monopolies, freedom without privileges"