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Mihail Formuzal: “Membership in the Customs Union as guarantee of efficiency of the Moldavian economy”

Supporters of Alliance ruling in Moldova convince that there is only one course for the country – the fastest integration with the European Union and every possible rapprochement with Romania. Those who don't accept this course are declared as the politicians who are lagging behind modern realities and not understanding true interests of Moldova. However, in Moldova there are politicians, with figures in hands proving that not everything is so unambiguous and there is an alternative actually!

Bashkan of Gagauzia, the head of the Gagauz autonomy as a part of the Republic of Moldova Mihail Formuzal made the report on a theme “Republic of Moldova and Prospects of the Eurasian Integration” in a course during the international conference:

Membership in the Customs Union as guarantee of efficiency of the Moldavian economy

Before starting discussion of possible advantages and problems which can face the Republic of Moldova at potential entry into the Customs union and EurAsEC, it would be desirable to stop on a number of macroeconomic indicators with which our country entered in 2013.

Firstly, Moldova which so takes in recent years a steady last place in Europe on the gross domestic product level per capita, from the second half of the year of last year was included also into recession: in the III quarter the Moldavian economy failed at once for 1,7% by the corresponding period of previous year. And in IV for 2, 5%, that as a whole gave a minus of 0, 8% by a year. And it besides that our next neighbours finished 2012 with profit: in Romania the gross domestic product for 2012 increased in 0,7%, and in CIS countries – in general in 3,4%.

Secondly, if to sum up for 2012, then the agriculture was in the red 22,4% in a branch section, the industry -3,1%, installation and construction works -4,0%, transportation of goods -2,9%, goods turnover -3,5%, retail trade -0,5% and wholesale –2,5% (in established prices). It means, it is even more in the comparable prices.

But the most depressing not these indicators, but that for last year the direct investments in internal economy cardinally decreased. Thereby the negative basis for prospects of already current year and not only was put. And after all in 2008 they made 711, 5 million dollars. But per capita it nevertheless also was not much in comparison with our neighbours. Nevertheless, in 2011 only $211, 0 million already were enclosed or 3,4 times less. In a past only $159.2 million that is even one quarter lower! Thus very impartial nuance was issued in addition: if in 2011 the business reinvested $94,4 million from the earned profit, so in 2012 it began to withdraw it already – minus $9,8 million!

But not only money – people continue to leave the country intensively. In recent years the number of the active population (occupied and jobless) was annually reduced, approximately, in 3% per year. Only for their last year it became 43 thousand less or 3,4%. And it is our citizens, as a rule, at the most able-bodied age - till 45 years! However now they already create the gross domestic product in other countries, increasing their national wealth and strengthening their economy. And it is a time bomb!

The part of their high-powered work results while come our way. As a whole for 2012, 30,4 billion lei come to the consumer market of Moldova from currency cash desks of the country that became already comparable to three quarters of an annual turnover of the enterprises of retail trade and a services sector! And the sum of these lei, despite the world crisis, increased in comparison with previous year in 12,9%. (for 2011 the growth made 15,5%).

The paradoxical picture turns out: in others countries our compatriots increase productivity of the work by incredible rates and stagnate in the native state.

But even taking into account these huge coming the income of households, i.e. the population began to decrease for the first time for many years. For the IV quarter 0,4% by the corresponding period of 2011. Thus, the salary in the total income was reduced from 665,8 lei to 655,7 lei that already gives 5,4% taking into account real purchasing power of this money. Thus, the costs of the food increased from 42,5% in the general expenses of our fellow citizens to 43,3%. And it is not because they began to eat better. But because the prices of this group of goods grow by advancing rates.

Probably taking into account the listed indicators it isn't necessary to be the economist in order to realize: the economy of Moldova is seriously sick and the diagnosis for the majority is available. It is corroded by corruption, based on cartel arrangements, monopolization of commodity markets and services and mass smuggling. And the inadequate tax and customs policy, the broken roads (the last place in the world), low effective and high spending power, and also a number of other, first of all, internal problems often kill the numerous attempts to organize own business.

But there is one more major factor of efficiency of national economy round which the discussions will be conducted today …

Let's say that in Moldova nevertheless the internal environment will change and production will start reviving. And the first question which right rises before business: to whom to sell the made and on what conditions? And as the capacity of domestic market in our country by the sizes is very modest, there is a logical need to analyse the potential opportunities for export.

As a whole for 2012 the Moldavian export made 2,2 billion US dollars that is 2,5% less than in 2011. Thus export deliveries to EU countries made $1 billion or are already in 6,4% less. At the same time the volume of export to CIS countries increased in 0,9% and reached $928 million. From them 786 million dollars to the countries of the Customs union or 85% from export to the CIS.

The advancing growth rates of export to CIS countries remain in the current year too. (In the first two months of this year export made 360,9 million dollars that is 18,2% more than in the corresponding period of 2012. But it increased in 14,0% to EU countries and in 18,7 % to CIS countries).

Certainly, it is necessary to consider that we generally deliver production with a high value added to the CIS, and in EU the considerable volumes make goods of so-called raw materials supplied by the customer: sewing and knitted products, footwear and leather accessories, etc. in which, practically, there is no Moldavian intellectual component.

Recently very famous Draexlmaier Automotive is in the ear – the plant on production of accessories and electric equipment for cars. It is known that this enterprise works in Beltsy from 2007 year. Its floor spaces are occupied by about 8 thousand square metres and outputs and production export for working hours of firm removed this enterprise in number of the largest companies of Moldova. But all intelligence of local workers is reduced only in cutting an imported cable and to collect the electrical wiring sets for cars from it.

Many dithyrambs are distributed concerning the forthcoming agreement on a free trade zone with EU, but the long list of withdrawals for some reason is thus suppressed. In particular, their number included also the Moldavian tomatoes which we will be forbidden to deliver even in far prospect.

And constantly “modernized” non-tariff barriers doing by unpromising all attempts to break on the western market? And agriculture subsidizing in sizes of 250-350 and more than euro for hectare against our 20 Euro?

At the same time, the east market works according to normative documents habitual for the Moldavian producers. It is necessary for us to tighten prime the cost of the production to competitive level … And here big reserves are put in preferential prices of energy carriers for the participating countries of the Customs union and also in practice of use of the Customs Union of export duties.

It is clear that coordination procedures on entry into the Customs Union aren't simple and long. But Moldova could offer in the short term already the plan of action which is including two stages as we see.

I stage:

1.1. To acquire the right to become observers in Customs Union bodies.

1.2. To coordinate and issue the associated membership in the Customs Union.

1.3. To start the segmental entry into the Customs Union (plant growing production, production of animal husbandry, subsector of the food industry, etc.)

After studying the efficiency of segmental participation in the Customs Union, to pass to the second stage.

II stage:

2.1. Development of the detailed plan of measures and procedures of the introduction in the Customs Union.

2.2. Organization and carrying out of referendum.

2.3. Application for the introduction in the Customs Union.

2.4. Implementation of the plan of measures according to the introduction in the Customs Union.

It is indicative that approximately in the same direction the next Ukraine works much today.

Viewed : 1407   Commented: 0

Author: Vladimir Kuzmenkin

Publication date : 16 May 2013 01:00

Source: The world and we

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