Alexander Koss, Südzucker Moldova: The establishment of the first foreign investors’ association in Moldova is a major achievement
For 20 years, the largest foreign investors in Moldova, united in the Foreign Investors Association (FIA), have been working together with the authorities to improve the investment climate in the country. These are the most active enterprises generating progress in their sectors and influencing the sustainable development of the Moldovan economy at large and its social sphere. About “Why and how” FIA was established, its achievements over the past 20 years and what are the foreign investors’ priorities as of today and in the future – you will find out in the interview with Dr. Alexander KOSS, Chairman of FIA, Speaker of the Board of Südzucker Moldova.
– Why did the foreign investors create the Association 20 years ago?
Out of boredom, because Moldova has always been characterized by political and economic stability and, most importantly, by ideal conditions for attracting foreign investments. It was a sad joke, of course …
On a serious note, Südzucker came to Moldova when the authorities did not understand the importance of systemic foreign investments for the development of the economy, and decisions were taken subjectively, often against the interests of investors, almost every one of whom encountered some problems and turned to the authorities for support. However, individually, we were not taken into account and were refused to be listened to, not to mention any constructive dialogue on improving the investment climate.
Under these conditions, several foreign companies with impeccable reputation, which had invested in the Moldovan economy, decided back in 2003 to unite their efforts and find similarly trustworthy allies from other countries, so that foreign investors would finally be heard in Moldova. Let me remind you that those were the years of the beginning of the Communist Party’s rule, which was supported by a large part of society, which perceived “foreign capitalists” no less negatively than criminal “businessmen” born in the ” stormy” 90s. Therefore, it was necessary for us to systematically oppose it, using all our expertise and intellectual potential.
Initially, we had to unite, systematize and analyze the whole range of problems we face. And our first encountered problem was… the authorities’ reluctance to register our Association. Only one year later, in 2004, after the authorities realized the importance of foreign investments and changed their attitude towards business, the Ministry of Justice issued the long-awaited registration certificate. This is how the Association of Foreign Investors was created 20 years ago, by 8 companies, Südzucker Moldova being one of the founders.
– According to your opinion, which of FIA’s main achievements over these 20 years are to be emphasized?
The establishment of the first foreign investors’ business association in Moldova is already a serious achievement. Over the years, other foreign investors have joined us and today FIA members include 26 major companies representing all key sectors of the Moldovan economy.
We managed to create a unique format of expert interaction and communication with the authorities, which allowed us to gain their trust in a relatively short time and reach an understanding of the similarity of our goals. It was not easy, because at first, we were perceived as “unprincipled lobbyists”, thinking only about their own profit, and not particularly interested in the growth of the economy and the well-being of Moldovans. And the greater was the surprise of the authorities when many of our proposals aimed at building a market economy of the “Western type” made it difficult for us to do business. At the same time, we managed to expand the format of expert “brainstorming” on finding effective solutions, which is the basis of our association, and to make it a collaborative form of discussion together with employees of ministries and other authorities.
This format still works today, so we do not aim to significantly expand the number of members of the Association, but retain the atmosphere of a “business club”, allowing everyone to express their vision and then working together to develop effective proposals.
At the beginning, we conducted an in-depth analysis of the legislation and saw the enormous potential for corruption in the system that existed in the early 2000s. We approached the problem comprehensively and started in 2005 with the publication of FIA’s White Book, which synthesized our proposals and recommendations to radically improve the investment environment in Moldova. This work gave a tremendous result – the inflow of investments to Moldova increased consistently in those years, despite the “communist” name of the ruling party.
Of course, there are sections in the White Book that improve the regulation of a particular sector. But the main thing is that the beneficiaries of the improvement of the business environment are not only the companies that identified the problem and proposed a solution, but the entire business community and, as a result, the Republic of Moldova as a country. For example, based on our initiative the Labour Law of Moldova was amended, which was synchronized with the European one and made the labour force more mobile and adequate. We promoted proposals to streamline the use of water resources, which allowed us to move the development of irrigation in Moldova forward. Finally, we were the first ones to start talking about real reforms in the justice system and the need for its external monitoring. We are confident that the Moldovan authorities will be able to overcome the resistance of corrupt officials entrenched in this system.
– What are the main objectives of the Foreign Investors Association today and in the future?
FIA will continue to focus on combating corruption, on overcoming the crisis in Moldova’s justice system, on making justice for real, not formal. Today we consider this problem to be a key issue. As long as corrupt judges are working in the courts, as long as those who supported the oligarchic capture of the state, ignored or “covered” the “$1 billion fraud” and in fact became its accomplices continue to work in the prosecutor’s office, we cannot count on new substantial investments. We cannot claim that the current authorities are flawless, but only those who stand still do not stumble. It is important that they are moving in the right direction, even if not fast enough, and we hope that a solution will be found to the deadlock with the Supreme Court, that an effective legislative initiative will be introduced to create a parallel monitoring system to better combat money laundering, identify the real assets of judges, prosecutors, investigators, and SIS employees, and initiate fair investigations and punishment.
The second basic priority is a fundamental change in the attitude towards state support for investment, including foreign investment. Today, the government’s efforts are based mainly on short-term and absolutely ineffective from the economic point of view, aimed exclusively at “putting out fires” and satisfying the needs of a marginalized and infantile electorate. This priority seems to be understandable – it is necessary to keep the situation in Moldova under control in the conditions of unprecedented crises and attempts of external negative influence. However, if we continue along this path, Moldova risks losing the potential of foreign investors, who push the economy forward, seeking to expand the range of local suppliers, giving them the opportunity to earn money, rather than demanding it from the state. We have shown how this works.
Our Association elaborated a Study and proved the effectiveness of foreign investments and how they can make Moldova and its inhabitants richer.
Another basic priority remains the “land issue”. We believe that land should “work”, and for this purpose it should become a real property and foreign investors should have the right to acquire it. Why a Moldovan can come to Germany and buy land there, but a German cannot do it in Moldova? Today, as well as 20 and 30 years ago, it is resisted by those who are against the fact that land has a real price. As soon as foreign investors come to the agricultural land market, everyone will benefit, except maybe a small part of large Moldovan agrarian enterprises, which can be counted on fingers. Whoever wants to sell land in the future will get more money. And the one who will buy land for more money, including foreign investors, will use it carefully and invest in its fertility.