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Feasibility study
for the
Establishment of the Industrial park in
Cainari
FinAsist Consulting SRL
Tel: +37322 270035 e-mail: [email protected]
2
CONTENTS
1. Industrial park concept ............................................................................................................................................... 6
1.1 Aims and objectives of the feasibility study .............................................................................................. 8
1.2 Methodology of the study ................................................................................................................................. 8
1.3 Types of resident enterprises of the industrial park ............................................................................. 9
1.4 Legal expertise on the Law provisions regarding the establishment of Industrial Parks ... 10
1.4.1 Incentives provided upon the creation and functioning of industrial parks .................. 12
2 The establishment of the industrial park in Cainari ..................................................................................... 14
2.1 Defining the problem ....................................................................................................................................... 14
2.1.1 Net foreign investment flow ................................................................................................................ 17
2.2 The concept of the industrial park in the town of Cainari ................................................................ 21
2.2.1 Legal status of adjacent land ............................................................................................................... 22
2.2.2 Conclusion of a commodatum contract with an investor on the free use of the
adjacent land for a period of 30 years. The investor is expected to invest in the infrastructure
construction. ................................................................................................................................................................. 23
2.2.3 Rental of the adjacent land by an investor for a 30 year-term, expected to invest in the
industrial park infrastructure ................................................................................................................................ 25
2.2.4 The establishment of the industrial park based on the publicly-owned adjacent land,
using different cooperation and association models under the Law on public-private
partnership .................................................................................................................................................................... 26
2.2.5 Opinions ....................................................................................................................................................... 27
2.2.6 Steps to create the industrial park in Cainari ............................................................................... 28
2.3 Economic activities description and assessment of industrial park residents attraction
possibilities ......................................................................................................................................................................... 28
2.3.1 South Development Region (SDR) economic advance ............................................................. 28
2.3.2 Causeni district economic development ........................................................................................ 29
2.3.3 Town of Cainari situation ..................................................................................................................... 35
2.3.4 Description of local human potential for the industrial park activity ............................... 35
2.3.5 Industrial park activity regional infrastructure .......................................................................... 39
2.3.6 Technical and production infrastructure to be connected to the industrial park ........ 42
2.4 Assessing the viability of creating an industrial park in the town of Cainari, according to
the unanimously recognized criteria ....................................................................................................................... 44
2.5 Estimated investment amount necessary for the establishment of the industrial park ...... 49
2.6 The economic and financial forecast of the activity performed by the administration entity
of the park ........................................................................................................................................................................... 50
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2.6.1 Hypotheses (forecasts expressed in euro) .................................................................................... 50
2.7 Social and economic impacts of the industrial park on the regional development ............... 55
2.7.1 Impact assessment .................................................................................................................................. 55
2.7.2 Indirect impact forecast (multiplicative economic effect) ..................................................... 58
2.8 Investment appraisal ....................................................................................................................................... 58
2.8.1 Opinions ....................................................................................................................................................... 59
2.9 Environmental impact assessment upon the creation of an industrial park ............................ 59
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LIST OF TABLES
Table 1 Comparative macroeconomic evolution of the Republic of Moldova, in relation to Europe
and Central Asia region ...................................................................................................................................................... 17
Table 2 Distribution of net FI flow by areas of activity (area, share), 2009-2006 .................................... 18
Table 3 Scoreboard of the foreign investment stocks in equities, granted loans and credits (by value
of investments), end of 2009 ........................................................................................................................................... 19
Table 4 Rental revenue for 1 ha public property, normative price, MDL ...................................................... 24
Table 5 Cumulative lease revenue for the 23.44 ha IP adjacent land for a 30-year term ....................... 24
Table 6 Adjacent land sale revenue in 29 years, MDL ........................................................................................... 24
Table 7 Profits generated by IP Cainari in 30 years, MDL ................................................................................... 24
Table 8 Methods for establishing the Industrial Park in Cainari, advantages and drawbacks ............. 27
Table 9 Educational infrastructure in SDR ................................................................................................................. 29
Table 10 Căuşeni district main economic and social indicators ....................................................................... 29
Table 11 Foreign investments stock, Causeni district ........................................................................................... 30
Table 12 Fixed capital investments in 2010, Causeni district ............................................................................ 31
Table 13 Construction investments in 2010, Causeni district ........................................................................... 31
Table 14 Goods transportation in 2010, Causeni district .................................................................................... 32
Table 15 Companies, Căuşeni district, 2005-2009 ................................................................................................. 33
Table 16 Breakdown of total sales/employees by type of company, Căuşeni district ............................. 34
Table 17 Demography situation in SDR ...................................................................................................................... 36
Table 18 Average salary in Căuşeni district in 2010 .............................................................................................. 38
Table 19 Human potential in the Cainari 30 km radius ........................................................................................ 39
Table 20 The list of criteria for assessing the IP location, Urban Land Institute ....................................... 45
Table 21 Estimate guide on the location of the industrial park in Cainari ................................................... 48
Table 22 Technical and production infrastructure to be connected to the industrial park .................. 49
Table 23 Estimation of basic financial forecasts (€) .............................................................................................. 51
Table 24 Estimated minimum rental price of 1sq.m. of land, Euro.................................................................. 51
Table 25 Evolution of the land normative prices, (€)............................................................................................ 52
Table 26 Estimating the minimum rental price for 1sq.m. in the Industrial park Cainari ..................... 52
Table 27 Flexibility of the demand-supply upon the rental of 1 sq.m. of land in the IP .......................... 53
Table 28 Estimated rental price flexibility in relation to the investor's profit ........................................... 54
Table 29 Production investments performed by the future IP residents ..................................................... 56
Table 30 Investment amount required for the infrastructure of the IP in Cainari .................................... 56
Table 31 Anticipated cash flow generated by the industrial park residents (a) ........................................ 57
Table 32 Anticipated cash flow generated by the industrial park residents (b) ........................................ 57
Table 33 Indirect impact forecast (multiplicative economic effect) ............................................................... 58
Table 34 Estimate of investment amount (€) ........................................................................................................... 58
Table 35 Gas emission parameters ............................................................................................................................... 61
Table 36 Estimate of the effects of the ambient noise ........................................................................................... 62
LIST OF FIGURES
Figure 1 Industrial sector share in GDP, % ................................................................................................................ 15
Figure 2 Dynamics of Industrial Production Growth, % compared to previous year .............................. 15
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Figure 3 Growth dynamic of fixed investments in industry, % year-over-year ......................................... 16
Figure 4 Evolution of the annual net flow of foreign investments in Moldova (direct, portfolio etc.),
2004-2009 ............................................................................................................................................................................... 17
Figure 5 Scoreboard of foreign investment stocks by areas of activity 2009, % ....................................... 19
Figure 6 Estimate on changes in business environment ...................................................................................... 20
Figure 7 Typology of difficulties encountered by companies (5- highly difficult, 1- not difficult) ..... 20
Figure 9 Activity break of private investments in Căuşeni district, % ........................................................... 30
Figure 10 Fixed per capita investments in 2010, Căuşeni district, MDL ....................................................... 31
Figure 11 Global and average yield for agricultural crops, Căuşeni district ................................................ 32
Figure 12 Industrial output, 2007-2010, mil. lei, Căuşeni district, SDR, national economy .................. 33
Figure 13 Total sales and number of employees ratio by type of companies breakdown ..................... 35
Figure 14 Inhabitants according to age categories, development regions breakdown (% of total) .. 36
Figure 15 Căuşeni district population .......................................................................................................................... 37
Figure 16 Căuşeni district population, breakdown by age groups .................................................................. 37
Figure 17 Estimated working force dispersion ........................................................................................................ 39
Figure 18 Adjacent land of the Industrial park ........................................................................................................ 43
Figure 19 Spatial location of the Industrial Park in Cainari (a) ......................................................................... 43
Figure 20 Spatial location of the Industrial Park in Cainari (b)......................................................................... 44
Figure 21 Access to the border crossing points – export markets of Cainari .............................................. 48
Figure 22 Spatial representation of the technical infrastructure located in the Industrial park in
Cainari ....................................................................................................................................................................................... 50
Figure 23 Rental price flexibility compared to the final rental price .............................................................. 53
1. INDUSTRIAL PARK CONCEPT The phenomenon of globalization accounts for the change in the economic status of the
developed countries and is an important and prominent feature of the current economic
development. The existing pressures on the structural adaptations in the area of
production, investment and business are a common feature of the world economic
development. The experience and know-how of most developed European countries show
that the creation of capital resources and their uses represent one of the most crucial and
important questions to ensure the sustainability of the economic progress, whose
fundament dwells in capital tapping and the development of industrial parks. For the
Republic of Moldova, industrial parks represent an opportunity to attract investment
inflows, including foreign, and is a direct factor to lower unemployment.
Various definitions of Industrial Parks (hereinafter IP) have been made. But the definition
made by the United Nations Industrial Development Organization is considered to be the
broadest. According to UNIDO’s definition, “An industrial park can be defined as a tract of
land developed and subdivided into plots according to a comprehensive plan with or
without built-up (advance) factories, sometimes with common facilities and sometimes
without them, for the use of a group of industrialists” (UNIDO, 1997, p.10). Two points in
the definition above need amplification. The comprehensive plan refers not only to the
physical planning of the park, but also to its immediate economic and social environment,
and its role assigned in the regional or urban development plan.
UNIDO have also described some of the characteristic features of industrial parks, as
follows:
A defined geographical area which contains enterprises of an industrial nature. The
essential element is that the park is administered or managed by a single authority
that has defined jurisdiction with respect to tenant companies;
Industrial Parks cover up a relatively large surface area of 40-80 ha;
There are some restrictions on companies residing in the park;
A plan concerning the type of construction and the size of individual objects is
required, which would set out the overall use of the infrastructure. Finally, the IPs
development complies with the set-out plan, covering the physical layout of the park
and its economic and social environment, depending on the role within the regional
or urban development plan.
The national legislation uses the term „industrial park”, which is, in fact, very similar to the
term "industrial district", “production area” or “production cluster”. Nonetheless, English
economic literature uses terms such as industrial estate, commercial estate, factory estate,
or employment areas.
According to the legal provisions in force of the Republic of Moldova – particularly the Law no.
182 of 15.07.2010 on Industrial Parks, an Industrial park is defined as a “delimited territory with
technical and production infrastructure, where economic activities are being carried out, mainly
industrial production, service provision, implementation of the scientific researches and/or
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technological development, under a specific facilities regime, for the purpose of capitalizing human
and material potential of the respective region”.
The „industrial agglomeration” term can also be added to theoretically define IP
peculiarities. In recent decades, there existed an increased interest for the theory of
industrial agglomerations, based on Marshall’s economic studies, location theory of Weber
and others, and later the additions by the contemporary specialists in industrial economies,
regional economies and international trade, etc. who discussed the factors, formation
mechanism and functioning of the industrial agglomeration1.
Industrial agglomeration refers to the spatial accumulation of enterprises, belonging to the
same branch/industry or immediate braches/industries.2 Whether on vertical division or
horizontal cooperation, such enterprises make up an organic whole that brings about
„agglomerate” profits and an overall increase. To sum up, the main peculiarities of the
industrial agglomerations are the regional concentration and industrial symbiosis.
The agglomeration of enterprises of a certain industrial chain can raise the production in a
great degree, then lower the average costs and realize the industrial economy of scale. The
infrastructure facilities and labour pool greatly raise enterprises’ abilities of competition
and innovation (synergic effect). Industrial agglomerations lead to a decrease in
transaction costs. Near-by location of enterprises can greatly decrease the transport costs
and give a rise to the industrial climate, attracting more external suppliers and consumers,
thus strengthening the negotiation ability3.
Industrial parks underwent several steps of development and we can talk about few
generations of industrial parks. Typically, the first generation of industrial parks, which
were built in the 1970s, can be distinguished from the other generations by assembly halls
and storages and a rather simplistic architecture. The area of administrative buildings took
about only 10 to 15 per cent of the total area of the park. In the period between 1975 and
1985, the industrial parks included offices, used by companies dealing with science,
technologies and business. Characteristic of this second generation of industrial parks was
a challenging and more complicated architecture. Since the second half of the 1980s, the
third generation industrial parks was built; these were typical by elastic use of the area and
a wide portfolio of services, as well as by an increase in the number of administrative staff
and furthermore, more space was offered to offices focusing on IT. Administrative
buildings and a wide portfolio of services was characteristic for fourth generation
industrial parks which begun to arise from the mid-1990s. Storage houses were usually
located outside the park itself and there was an increase in the importance of recreational
areas connected to the park that were used by people working in them. Since the second
1 Economics of agglomeration cities, industrial location, and regional growth. Masahisa Fujita 2002. Cambridge University, UK. 2 Territorial agglomeration as a local innovation environment: The case of a digital media agglomeration in tampere, Finland. Jari
Kolehmainen 2003. MIT IPC-LIS Working Paper, Cambridge, US. 3 McCann, P., Arita.T. & Gordon, I.R. (2002). Industrial clusters, transactions costs and the institutional determinants of MNE
location behavior. International Business Review.
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half of the 1990s, industrial parks have been a part of an international network of
cooperating parks.
This study will analyse the feasibility of establishing an industrial park in the town of
Cainari.
1.1 AIMS AND OBJECTIVES OF THE FEASIBILITY STUDY The objective of the feasibility study on the creation of an industrial park in Cainari
comprises a detailed analysis of legal, economic, financial, social and technical
circumstances, aiming to demonstrate the viability of creating the industrial park:
Economic and social impact analysis, performed to demonstrate the rationale for the
creation and support of an industrial park;
Analysis of economic profile and legal compliance of the existing enterprises and
enterprises in need of restructuration, that will be assigned administrative/resident
status within the concerned industrial park;
Upon the provision of positive argumentation concerning the creation of the
industrial park, there will be developed the strategic plan on the creation of the IP,
the implementation of the strategy and the further development of the IP.
The objectives for the creation of industrial parks have been set out in the Law no. 182 of
15.07.2010 on Industrial Parks, as well as by the characteristics of the industrial parks
referred to in the chapter on industrial park concept:
Attraction of domestic and foreign investments;
Formation of competitive industry sectors based on modern and innovative
technologies;
Deployment of economic activities consistent with the specific development
opportunities of the area, including more efficient use of public assets;
Development of small and medium enterprises;
Job creation;
Creation of specific conditions for the industrial agglomeration of enterprises
belonging to the same industry/industry or branches of industry/immediate
industry;
Increasing productivity at a significant level and cost optimization by facilitating
enterprise agglomerations of a specific industrial chain;
Creation of an optimal industrial climate to attract more suppliers and external
customers in order to strengthen the negotiating capacity with them.
1.2 METHODOLOGY OF THE STUDY The methodology applied in the preparation of the feasibility study was based on the
following research and analysis tools:
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1. Considering the current reality regarding the existing IPs in Moldova, as well as the
analysis of sector strategies or existing program documents, lessons learned from
the past and barriers identified.
2. Using primary research methods, quantitative and qualitative methods that ensure
the effective collection of analytical data for the proposed deployment.
3. Policy formulation and provision of real solutions to be implemented in a way that
government can become a trusted partner, providing quality services and protecting
both public and private interests, development of innovative partnerships and
business development within the IP, ensuring the best financial and investment
practices in the area, and finally, establishment of development levers and
implementation of IPs. This included, but was not limited to structured and
unstructured interviews with people in positions of responsibility in the field, group
interviews and focus groups, using best international practices in reasoning the
creation of IP (UNIDO methodology).
4. Resorting to and applying the experience in the development of IPs in different
countries, including those in South East Europe, involving the legal and economic
circumstances of the internal situation. There have been carried out SWOT analyses
of various scenarios for the involvement of private partners in the creation and
development of IPs. As a result a series of recommendations will be made, the
opportunities and risks shall be listed, that could be considered upon the
development of IPs.
5. Use of techniques for the identification and analysis of regional characteristics.
Using these criteria as a research guide will help present the locations of the future
IP. In collecting the data, a variety of research methods will be used, including the
examination of the local, regional and technical documentation for planning,
geographic data layers, and interviews with staff members from public and private
agencies.
6. Use of appropriate methodologies for the analysis of the IP management company
and of the economic activities deployed by its future residents, such as business
efficiency through business and dividend forecasting, as assessment methods,
financial results forecasting, analysis of existing financial situations (balance sheet
and profit account), cash flow forecasting and liquidity of enterprises, current
industrial and investment risk analysis, etc.
1.3 TYPES OF RESIDENT ENTERPRISES OF THE INDUSTRIAL PARK Despite the abundance of information and studies on the location of the enterprises and its
determinants, little attention has been paid to the attractiveness of the locations depending
on the type of enterprise. Industrial parks fall into a category with "special attributes"
which could be enhanced to attract certain types of companies.
Industrial parks possess peculiar characteristics that affect their attractiveness as
compared to other companies.
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Applying the economic and fundamental marketing theories, we can generate a set of
hypotheses concerning the location of enterprises within the industrial parks:
More likely the small enterprises will be the future residents of the park, to the
detriment of their larger counterparts;
There is a high probability that light industry, rather than heavy industry, will be
located in the park;
The point of optimal transportation includes long distance transportation costs - the
ratio between the weight of the raw material and the finished product. Industrial
parks are more attractive to the industries that accumulate raw material and
produce heavy finished goods4;
The larger the outlet of an undertaking, from geographical point of view, the more
attractive the option to perform its activities in an industrial park;
It is improbable that high consuming energy companies will locate in the industrial
park.
Microenterprises may encounter difficulties related to the resident payment of the
industrial park, while large companies generally operate more efficiently performing on
their own industrial land. Therefore, the main residents of the industrial park are expected
to be small and medium enterprises.
The number of residents employed in the industrial park may vary, but on average, given
the characteristics of small and medium enterprises, it may indicate an area of about 5000
sq. m. occupation.
The "point of optimal transportation": weight-gaining industries are usually placed at a
greater distance from their raw material sources, compared with industries using heavy
and bulky raw materials (weight loss industries), which are normally located nearby their
raw material sources.
The industrial park provides a preset territory with a previously established infrastructure.
Therefore, performing an activity in the industrial park may not constitute an attractive
location for a company with special energy needs, that would rather consider the
development of its own production area.
1.4 LEGAL EXPERTISE ON THE LAW PROVISIONS REGARDING THE ESTABLISHMENT OF
INDUSTRIAL PARKS The process of creating and functioning of industrial parks in the Republic of Moldova is
regulated by Law on Industrial Parks Nr. 182 of 15.07.2010.
4 Wilhelm Launhardt, Alfred Weber “Least cost theory of industrial location”. Theory of the Location of Industries, according to their type.
11
The legislation defines the park as “delimited territory with technical and production
infrastructure, where economic activities are being carried out, mainly industrial production,
service provision, implementation of the scientific researches and/or technological development,
under a specific facilities regime, for the purpose of capitalizing human and material potential of the
respective region”.
Therefore, in order to be granted legal status of an industrial park, a certain territory has to meet
the following conditions:
Delimited territory of at least 5 ha area;
Existing technical and manufacturing infrastructure within the territory;
Performing an economic activity, including entrepreneurship, mainly of industrial
nature.
The conditions are rather simple, though the legislation did not apply an exhaustive notion,
leaving the opportunity to create an industrial park to the current economic environment.
In this respect, the Law nr. 182 established the technical and production infrastructure as a
mandatory element of an industrial park, as “buildings and facilities, electricity supply
systems, telecommunications networks, gas and water supplies, sewage and pluvial systems,
transportation, public lighting etc.” Formally, it is important that the land destined for the
industrial park accommodated at least one infrastructure connection, e.g. public lighting, in
order to be regarded as a subject for the creation of an industrial park.
Moreover, the law allows the pursuit of non-production activities within the industrial park
territory, provided they would be "mainly of industrial nature".
Industrial parks can be created both by public entities (central agencies or local
administrative authorities), as well as private economic agents (commercial
companies or state enterprises).
As promoters for the creation of industrial parks, public entities are entitled to two
opportunities, provided by law:
Establishment of a public or public-private commercial company;
Selection of a commercial company in accordance with the Law on public-private
partnership, that will be transferred the publicly owned property for the
establishment of the industrial park.
Article 106, par.2 of the Civil Code of the Republic of Moldova, enacted by law Nr. 1107
of 06.06.2002, provides an exhaustive list of the companies entitled with the commercial
company status: “A commercial company can only be established as a collective society, in
limited partnership, limited liability company and joint stock company.”
Therefore, public entities can establish limited liability companies or joint stock
companies in order to create industrial parks. The public capital of these companies
delimits only the commercial companies whose registered capital is formed entirely from
state’s contribution or from that of the administrative-territorial unit (Law on
administration and deetatization of public property Nr. 121 of 04.05.2007). State’s
contribution to the registered capital of the companies can only be submitted either
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through the assets under the state-owned public property or the administrative-territorial
units, as the public property assets make the exclusive object of the public property and
their civil circuit is prohibited
The legal notion of a public-private commercial company is exposed in the Law on
administration and deetatization of public property that approaches state and private
capital commercial companies. The correct perception of the notions of public commercial
company and that of commercial company with public controlling interest is of great
importance, since they belong to separate groups of commercial companies.
Therefore, compliant with the Law on industrial parks, the authorized public entities are
entitled to establish industrial parks by means of commercial companies with public-
private capital, that is, commercial companies whose registered capital is not formed
entirely from state’s contribution neither from state’s controlling contribution (50%+). In
this context, the legislator has provided the state with all the possible opportunities for the
establishment of industrial parks.
The second modality for the establishment of industrial parks, with the participation of
public entities, can be carried out through the private-public partnership. In this case,
unlike the private-public companies, there will be supplementarily added the legal
provision of Law Nr. 179 of 10.07.2008, on public-private partnership. Compliant with this
law, the public-private partnership can be accomplished via the association of the private
and public partners, through the establishment of a commercial company (limited liability
company or joint stock company), based on joint capital (public-private).
The Ministry of Economy of Republic of Moldova represents the body empowered by law to
examine the applications for registration of the industrial parks. In case a positive opinion
is issued, the industrial park will be established through a government decision.
In addition to the registration procedure for the industrial parks, the legislator provides a
"consultative" procedure, where local public administrations are involved. Under this
procedure, the developer of the industrial park has the right to file the application with the
local council, who has jurisdiction over the land plot destined for the park. It should be
retained that the law provides the initiator with the right and not the obligation to submit
the said application for the establishment of an industrial park with the local council.
Formally this procedure is not mandatory, thus it cannot be a legal impediment for the
creation of an industrial park. The involvement of the Local Council, from legal point of
view, consists in „support in obtaining the necessary documents for the creation and
development of the industrial park and to prevent the occurrence and/or remove of any
possible impediment in solving the eventual problems related to the establishment and
development of the industrial park. (art. 7, paragraph 11, Law on Industrial Parks)”.
1.4.1 INCENTIVES PROVIDED UPON THE CREATION AND FUNCTIONING OF INDUSTRIAL PARKS
The incentives are stipulated by article 12 of Law on industrial parks no. 182 of
15.07.2010:
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a) exemption from compensation of losses caused by the exclusion of land from
agricultural land category according to the Law on Normative price and procedure
for sale of land;
b) free alienation or commodatum of public property goods to the management
company for the creation and development of the industrial park by owner's
decision under the Law on administration and deetatization of public property;
c) the right to privatize the publicly owned territory, adjacent to the constructions, at
the normative price of the land, set at the time of giving it into use to the
management company or into lease to the residents of the industrial park, only after
the purchase and/or putting into service of the constructions and industrial and
related facilities under the Law on Normative Price and procedure for purchase
and sale of land. The incentive is granted for the investments in buildings and
facilities covered by the project, based on which the resident or the management
company was selected. Its value is higher the amount of three normative prices of
the land, set at the time of its release to the management company or leased to the
residents. Additionally, the compensation payment for losses is performed, caused
by the exclusion of land from agricultural land category, whose amount has been
settled upon the change of the land-use purpose, whether it took place;
d) providing fiscal incentives according to the Fiscal Code;
e) the management company applies the decrease coefficient down to 0.3 on the
tariff for the annual fee for public land rental according to the Law on the
Normative Price and the procedure for sale/purchase of land, or the base rate for
the annual rental of the publicly-owned goods, established by the Law on state
budget for the year.
f) optimization of state controls over the activity of residents by carrying out
scheduled checks according to annually approved schedules by government
decision or unannounced checks carried out in agreement with the Ministry of
Economy under the laws in force;
g) allocation of financial resources, where appropriate, for the creation of technical and
production infrastructure.
2 THE ESTABLISHMENT OF THE INDUSTRIAL PARK IN CAINARI
2.1 DEFINING THE PROBLEM The Ministry of Economy in Moldova, as a centralized body empowered by law to set out
industrialization policies, has laid down a range of barrier hypotheses, which now
vehemently tell against the industry revitalization, as follows:
Limited access to the industrial land for launching and carrying out an industrial
activity.
High costs and risks posed by the bureaucratic procedures upon the initiation and
deployment of industrial activities.
High costs and risks related to government control over the entrepreneurial activity.
High expenses on import equipment, raw materials and other launching-related
goods.
Major expenses and risks related to import-export procedures.
High expenses on utility connections. Other expenses met by the industrial investors related to taxes in Moldova.
The identified causes work out as barriers to be overcome through appropriate solutions.
Over the years several industry recovery programs and strategies have been undertaken.
Among them:
Government of the Republic of Moldova, Program of activity „European Integration:
Freedom, Democracy and Welfare” 2009-2013, which provides for the creation of a
network of industrial parks under the aegis of local public administration,
particularly in adjacent border areas to encourage integration of enterprises in
international technological networks.
Economic Stabilization and Recovery program of the Republic of Moldova 2009-
2011, where the component "Improving the investment climate" establishes further
development of industrial parks concept by setting up new units and examining the
option of expanding the incentives for residents of such parks.
The National Development Strategy for 2008-2011, which focuses, in the chapter of
"Attracting investments, in particular foreign direct investments" on promoting
investment opportunities by providing investors with access to free economic
zones, industrial and innovation parks, etc. In the chapter on "Promoting effective
tools to facilitate the convergence of the development and economic growth of
cities, as well as the network consolidation of small towns "refers to the
development of economic infrastructure (free economic zones, industrial parks,
logistics centers).
Action Plan for the implementation of the National Development Strategy for 2008-
2011: Creation of three industrial parks in the regional growth area until 2011.
The Strategy for attracting investments and Promoting Exports 2006-2015.
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Industrial Development Strategy until 2015, approved by Government Decision no.
1149 of 05.10.2006, refers to the creation of industrial parks and monitoring their
activities.
These adopted policies and strategies are called upon to improve the situation in the
industrial sector in Moldova, which currently shows a negative trend. Even though 2010
has seen an approx. 7% rise in the industrial production, this increase recorded a negative
value in the development figures of the previous years.
The indicators in the chapter on investments in industry show a low investment situation
in the industrial sector and a decreasing trend over the last decade, confirmed by the
Figures 1-3:
Figure 1 Industrial sector share in GDP, %
Source: National Bureau of Statistics
As evidenced, the share of industry in GDP presents low figures and shows a decreasing
trend in the last decade, accounting for only 13% in 2009.
The low share of industry in GDP is confirmed by the negative evolutions of the industrial
production volume after 2006:
Figure 2 Dynamics of Industrial Production Growth, % compared to previous year
Source: National Bureau of Statistics
The growth dynamic of fixed investments in the industrial sector registered a positive
trend over the recent years, but still insufficient for the recovery and development of this
sector.
16
The gross fixed capital formation decreased as a result of the economic crisis in 2009
(Figure 3). Up to the economic crisis in 2009, Moldova has registered improvements both
in fixed investments in industry and in foreign direct investments. Nonetheless, the amount
of FDI per capita was much lower than in Central and Eastern Europe.
Figure 3 Growth dynamic of fixed investments in industry, % year-over-year
Source: National Bureau of Statistics
The national economy currently experiences an overheating of the structure indicators.
Moldova performs poorly in promoting a sustainable economic model. The economic
processes throughout 1999-2009 depict a striding progress towards a veritable market
economy. These processes varied generally between periods of economic growth and
overall enhancements of macroeconomic vulnerabilities.
The hallmark of this post-soviet scenario has translated into Moldova's economic
competitiveness fundamental feature: comparative regression. As per the World Economic
Forum data, between 2005-2009, Moldova has constantly dropped positions: from the 89th
out of 125 down to the 95th out of 134 analysed states. According to statistics, the most
precarious areas in 2009 have been: the level of business sophistication (ranked 131st out
of 134 states), innovation (rank 116) and infrastructure (ranked 113th). Among the most
problematic factors for doing business have been: access to finance, corruption, inflation
and precarious infrastructure availability. The highlight area of the Moldovan economic
competitiveness refers to the labour market efficiency (ranked 55 out of 134)5.
Overall, the national economy is defined by a disproportionate aspect of the final
consumption in relation to GDP (117, 5%) which is the highest among 3 of the 57 countries
in Europe and Central Asia (ECA)6. This accounts mainly to imports (72, 4% of GDP) and
has been achieved due to the significant volume of remittances (22,4% of GDP).
5 Global Competitiveness Index, World Economic Forum 6 Europe and Central Asia – reference region in the World Bank statistics, comprising 58 countries, including Europe and former USSR states
17
Table 1 Comparative macroeconomic evolution of the Republic of Moldova, in relation to Europe and Central Asia region
# 1999 2009
% of GDP Pos. ECA % of GDP Pos. ECA
Gross final consumption 115,3 5 150,5 2 Remittances 9,5 4 22,4 2 Imports 67,4 9 72,4 3 Exports 52 13 40,7 30
Source: World Bank data,NBS,NBM
Among the major misbalances in the national economy are the formation and use of
resources. The added value in agriculture accounted for slightly over 10% of GDP last year
(28% in 1999), similar to the added value in industry (19% in 1999) and, at the same time,
much lower compared to the services sector – 79% (53% in 1999). The existing situation
requires measures that would increase the share of other 'laggard' sectors in GDP,
especially of industry.
One of the solutions submitted within the programs is the creation of industrial parks, in
support of which the Parliament of the Republic of Moldova adopted the new law (nr. 182)
of 15.07.2010, which repealed the existing law from 13.07.2007 on industrial parks.
2.1.1 NET FOREIGN INVESTMENT FLOW The period 2004-2009 recorded a divergent performance in terms of the net FI flows
evolution (see figure below). Determined as the input and output balance on each of the
relevant positions (FI in registered capital, credits & loans etc.), net FI flow revealed an
implicit synchronization reflex with the world economic crisis in 2008: the net trend
described a sharp change towards a negative dynamic. In 2009, the net FI flow was 1,7
times higher than the level reported in 2004.
Figure 4 Evolution of the annual net flow of foreign investments in Moldova (direct, portfolio etc.), 2004-2009
18
As compared to the previous year, 2009 recorded a sharper decrease of FI. At the 2008
year-end, the net flow of FI was particularly noticeable by its fragile structure. The severe
contraction of FDI net balance in the registered capital and the crunch of credits and loans
granted by the foreign founders to the resident enterprises show an obvious kickback of
the foreign investments from the national economy.
The shifts in the net flow value and structure of FI are visible in both their origin and
sectorial destination.
Real estate transactions accounted for nearly 2/3 of the net FI flow in 2009. Electrical and
thermal energies, gas and water sectors recorded a negative net flow, equivalent to more
than half of the net FI flow volume (Table 2).
Table 2 Distribution of net FI flow by areas of activity (area, share), 2009-2006
# 2009 2008 2007 Area
Area % Area % Area % Area %
1 Real estate transactions
73,1 Financial activities
36,5
Financial activities
37,1
Transports & Communications
26,9
2 Trade 23,5 Trade 27,8
Real estate transactions
29,4 Trade 24,2
3 Construction 22,5 Real estate transactions
13,5
Trade 15,7 Real estate transactions
15,5
4 Manufacturing Ind.
14,2 Manufacturing Ind.
9,5 Manufacturing Ind.
5,8 Manufacturing Ind.
15,2
5 Transports & Communications
13,3 Transports & Communications
5,9 Constructions 5,1 Financial activities
15,0
6 Other 7,6 Agriculture 2,6 Transports & Communications
4,1 Constructions 2,0
7 Health 6,9 Constructions 2,5 Hotels & Restaurants
2,8 Agriculture 1,0
8 Hotels & Restaurants
4,6 Other 2,3 Other 0,8 Other 0,6
9 Agriculture 2,1 Hotels & Restaurants
0,2 Agriculture 0,7 Hotels & Restaurants
0,3
10 Financial activities
-14,6 Health 0,0 Energy, gas, water
-1,5 Health 0,1
11 Energy, gas, water
-53,3 Energy, gas, water -0,8 Education 0,0 Energy, gas, water
-0,9
Author’s calculations based on statistical data
According to estimates, foreign investments aim most often at financial activities, trade,
manufacturing industry and real estate transactions (Figure 5):
19
Figure 5 Scoreboard of foreign investment stocks by areas of activity 2009, %
The most indebted areas are those of financial activities, manufacturing and trade
industries. Most direct investments in the registered capital go for the real estate
transactions, financial investments and trade areas (Table 3).
Table 3 Scoreboard of the foreign investment stocks in equities, granted loans and credits (by value of investments), end of 2009
# Direct investments in
registered capital Credits and loans, %
1 Real estate transactions 26,3 Financial activities 25,1
2 Financial activities 20,4 Manufacturing Industry 22,6
3 Trade 18,8 Trade 20,5
4 Transport&communications 13,1 Energy, gas, water 12,6
5 Manufacturing Industry 10,2 Real estate transactions 8,0
6 Constructions 4,7 Transports&communications 4,8
7 Energy, gas, water 4,1 Hotels&Restaurants 2,1
8 Agriculture 0,9 other 4,3
9 other 1,5
Source: NBM data, NBS publications
According to the legal provisions of Law no. 182 of 15.07.2010 on industrial parks, the list
of incentives in article 12 offered for industrial parks mentions a key issue for investors
and private producers, particularly to facilitate optimization of state controls over the
activity of industrial park residents by carrying out planned checks according to the annually
approved schedule by Government decisions or unannounced controls carried out in
agreement with the Ministry of Economy under the laws in force.
The importance of the facilities referred to upon the creation of industrial parks is
confirmed by the results of the study on perceptions of the national investment climate
state and dynamics. The study was carried based on the analysis of 621 companies selected
among the resident companies in the Republic of Moldova. This study has identified that
the general indicator of time, which is a general estimate of state's involvement in the
activity of businesses, had a downward trend in 2010 observed during the last six years,
decreasing from 11.2% to 9,9%. Managers' view on the business environment became
more positive compared to the previous year (Figure 6). Over the past year the percentage
20
of respondents who stated that the business situation worsened fell from 42% to 26%. In
addition, the share of those who have noticed improvements increased significantly from 5
to 22%. Taking into account these results and the mentioned facility, the creation of
industrial parks turns out as an important precondition for revitalizing the business sector
in general and the industrial profiled in particular:
Figure 6 Estimate on changes in business environment
The most specific characteristic of the industrial park is the concentrations of businesses
on a determined territory and the tight relationships among the IP residents with third
parties, with the possibility of establishing a single one stop shop for the entire park.
Such specific feature of the industrial park, i.e. of the industrial agglomeration of
enterprises within a given territory will lead to the improvements in the bureaucratic
procedures related to the deployment of own businesses. According to the same study, the
most difficult matters in 2010 arose in licensing procedures, taxation system, the process of
obtaining permits and frequent inspections, difficulties that could be overcome through the
establishment of a single one stop shop in the industrial park. The situation did not change
significantly over the last year, as shown in the Figure 7:
Figure 7 Typology of difficulties encountered by companies (5- highly difficult, 1- not difficult)
21
Moldova's industrial policy is focused on strengthening and encouraging factors
determining the creation of a technologically advanced industrial sector of the economy,
efficient and competitive - compliant with the European standards. This objective can also
be achieved through the establishment of industrial parks.
In this context, the Government adopted the Strategy for industrial development for the
period until 2015 by Government Decision no. 1149 of 5 October 2006. The strategy refers
to a number of tools and mechanisms to implement industrial policies of the country which
will influence positively the fulfilment of industrial policy's strategic objective. In this
respect, the main instruments are:
Formation of professionally qualified staff;
Strengthening the structural reforms in the industrial sector – IP contribution;
Development of innovation process and technology transfer – IP contribution;
Stimulating entrepreneurship and ensuring fair competition – IP contribution;
Support of investment activity – IP contribution;
Increasing product quality. Improving the product standardization and certification
– IP contribution;
Promotion of industrial products exports – IP contribution concurrently with free
economic zones;
Optimizing the regional location of the industry – IP contribution;
The implementation of the concerned instruments and creation of a network of industrial
parks across the territory of the Republic of Moldova will help and ensure in the projected
perspective:
1. An annual growth rate of industrial products of cca 8-10%;
2. Increase of industry share in GDP to 20-22% by 2015;
3. Achieve the 2% share of the production in science-intensive and advanced
technology branches in the overall industrial output;
4. Increase the share of employees in the industrial sector to 20% of the total number
of employees in national economy by 2015.
2.2 THE CONCEPT OF THE INDUSTRIAL PARK IN THE TOWN OF CAINARI
The legal basis for the industrial parks in the Republic of Moldova has undergone two
stages of development, particularly:
1. The adoption of Law no. 164 of 13.07.2007 on industrial parks and
2. The adoption of the New Law on industrial parks no. 182, of 15.07.2010 and the
repeal of the previous Law no. 164 of 13.07.2007 on industrial parks.
The Industrial Park Cainari was established on 26 august 2008, by Government Decision
no. 988 of 26.08.2008, compliant with the Law no. 164 of 13.07.2007 on industrial parks.
Although the Law was later repealed, the new Law no. 182 of 15.07.2010 on industrial
22
parks does not have a retroactive effect. Thereupon, the industrial park in Cainari existed
de jure up to the present day.
The Government Decision no. 988 of 26.08.2008 on the establishment of the industrial park
Cainari included the following provisions:
Accepting under the state ownership the 23.4 ha adjacent land of the industrial park,
free of charge, according to the decision by the Cainari town Council;
Establishing the State Enterprise „Cainari Industrial Park”;
The Ministry of Economy and Trade in Moldova was settled as the empowered body
to exercise the founder rights.
Despite the Law on industrial parks of 2007 and the Government Decision on the industrial
park in Cainari, the park did not perform any activities since its establishment.
2.2.1 LEGAL STATUS OF ADJACENT LAND Cainari City Council decision No.4/1 of 19 March 2008 sets out the free transfer of 23.44 ha
of land under the state property for the establishment of an industrial park. The land
transfer was performed by Government Decisions no. 988 of 26.08.2008 on the
establishment of the industrial park in Cainari.
Since the adjacent land has not been registered at the Real Estate Cadastre, the records
show that the tract of land is still property of the Cainari town hall, although legally it is
state-owned. Paragraph 371 Law no. 1543 of 25.02.1998 on real estate cadastre stipulates
the situations where the property right is granted without a cadastre record if they
originate through succession, accession, enforced sale or normative act, expropriation or
pursuant to a court decision.
Thus, Cainari industrial park provides two components at the moment:
State-owned adjacent land, that must be recorded in the real estate cadastre,
SE "Industrial Park Cainari" as the management company of the park, created and
enforced by Government Decisions no. 988 of 26.08.2008 on the establishment of
Cainari industrial park.
No studies on the establishment of the industrial park in 2008 have been identified to
analyse the viability of an industrial park in Cainari. Consequently, a feasibility study was
proposed to determine the preservation, reorganization or liquidation of the esblished
park.
Three options will be analysed in formulating the concept of the Cainari industrial
park:
1. Conclusion of a commodatum contract with an investor on the free use of the
adjacent land for a period of 30 years. The investor is expected to invest in the
infrastructure construction.
2. Adjacent land rental agreement with an investor for 30 years. The investor is
expected to invest in the infrastructure construction.
23
3. Establishment of the industrial park based on the state-owned adjacent land, using
different cooperation and association examples laid down in the Law on public-
private partnership.
All three options involve the creation and development of the industrial park by a private
investor. The adoption of any of these solutions implies the liquidation of SE "Industrial
Park Cainari", which did not perform activities since its establishment in 2008 and did not
demonstrate the capacity to develop the industrial park received under administration.
2.2.2 CONCLUSION OF A COMMODATUM CONTRACT WITH AN INVESTOR ON THE FREE USE OF
THE ADJACENT LAND FOR A PERIOD OF 30 YEARS. THE INVESTOR IS EXPECTED TO
INVEST IN THE INFRASTRUCTURE CONSTRUCTION. Commodatum contract refers here to a gratuitous loan offered into use by the state (bailor)
to a private investor (bailee) which binds the latter to return the concerned tract of land
after the commodatum term expires.
Article 859 of the Civil Code stipulates the gratuity of the commmodatum agreement: "one
party (the bailor) offers a good into gratuitous use". The gratuitous character of the
commodatum agreement distinguishes it from the rental agreement (which implies a
remuneration for the good used).
The commodatum contract binds the private investor to perform the technical and
production infrastructure investments without the right to request the return of the
amount invested. The investor does not have the right to request the value of the
investments performed since they will constitute part of the IP adjacent land.
Article 862 of the Civil Code stipulates that the investor is bind to use the land according to
its land-use provided in the contract. Contract non-compliance entails compensation of
damages or termination of contract.
Compliant with the Civil Code, the investor is not granted the right to retain the adjacent
tract of land even if it has public debts, as he was not entitled to its ownership right. The
Code establishes in this way, legal limits for the use the land under an industrial park.
The gratuitous characteristic of the commodatum will establish the balance between the
missed revenues of the state and the investment amount incurred by the investor. In this
regard, the rental value of the lease term for 30 years is expected to equal to the
investment amount performed for the establishment of the Cainari industrial park..
As evidenced in Table 4, the annual rental revenue of the 23.44 ha adjacent land7 would
amount cca 3 million lei.
7 See p. 2.2.9 Technical and production infrastructure to be connected to the industrial park.
24
Table 4 Rental revenue for 1 ha public property, normative price, MDL
The normative price of 1 ha land for sale 1 291 680
Normative lease price for 1ha land, 10%* 129 168
Total annual revenue land lease, 23,44 ha 3 027 698
*art. 10, p. 8 Law No. 1308 of 25.07.1997 on normative price of Land and Procedure for
Sale and Purchase of Land. The 10% quota represents the maximum absolute value
provided by law.
Anticipating a 5% annual growth of the normative price we can forecast the accumulated
lease revenue for the 23.44 ha land for a 30 year-term, as shown in Table 5.
Table 5 Cumulative lease revenue for the 23.44 ha IP adjacent land for a 30-year term
Years 1 2 3 4 5 6 7 8 9 10
Revenue 1-10
3 027 698 3 179 083 3 338 037
3 504 939 3 680 186 3 864 195 4 057 405 4 260 275 4 473 289 4696953
Years 11 12 13 14 15 16 17 18 19 20
Revenue 11-20
4 931 801 5 178 391 5 437 310
5 709 176 5 994 635 6 294 367 6 609 085 6 939 539 7 286 516 7650842
Years 21 22 23 24 25 26 27 28 29 30
Revenue 21-30 y
8 033 384 8 435 053 8 856 806
9 299 646 9 764 628 10 252 860 10 765 503 11 303 778 11 868 967 12 462 415
Total MDL
201 156 760
Accordingly, the cumulative rental revenue would amount approx. 202 million lei.
Table 6 depicts the situation where the state would decide on selling of the tract of land in
the 29th year of the lease:
Table 6 Adjacent land sale revenue in 29 years, MDL
Normative sale price 1ha land in 2011 1 291 680
Normative price annual growth 5%
Sale normative price for 1ha land 2041, in 29 years 5 582 567
23,44 ha land sale revenue in 29 years 130 855 370
Accordingly, the state will lose cca 332 million lei revenues (lease+sale) during the 30
years of the park existence, since the gratuitous loan provides that the state can not
exploit the sources of income presented in Tables 5 and 6.
At the same time, the state will benefit of other income sources provided by the activities
performed by the park and its residents, as shown in the Table 78.
Table 7 Profits generated by IP Cainari in 30 years, MDL
Duties and taxes to the budget 870 000 000
Payroll payments within the IP 1 504 000 000
8 Please refer to p. 2.7.1 Impact Assessment, Table 31
25
The economic and financial impact of the industrial park will exceed 2.4 billion lei, direct
sources of income provided for the state and its citizens. This alternative prevails over the
option for the rental of the land destined for the creation of the industrial park.
2.2.3 RENTAL OF THE ADJACENT LAND BY AN INVESTOR FOR A 30 YEAR-TERM, EXPECTED TO
INVEST IN THE INDUSTRIAL PARK INFRASTRUCTURE Rental of the state-owned adjacent land represents one of the options for the creation of
the industrial park Cainari.
A lease contract implies that the state (owner) submits the adjacent tract of land of the
industrial park to the investor (managing company) under temporary use and possession
in return for a rental payment.
Whereas SE "Industrial Park Cainari" is the management company of the industrial park in
Cainari and was transferred the state-owned adjacent land, the lease of the land can occur
according to two scenarios:
1. Adjacent land rental, where the SE „Industrial park Cainari” acts in the capacity of lessor.
Here the SE „Industrial park Cainari is listed as a vicious intermediary between the investor
and the park residents, as expressed graphically below:
The existing SE "Industrial park Cainari" and the adjacent land transferred by the state in
its registered capital will minimize the probability to indentify an investor to invest and
develop the industrial park Cainari, for the following reasons:
Both the investor and the park residents shall incur additional costs related to the
operational activity of SE "Industrial Park Cainari", since the revenues of SE
"Industrial Park Cainari" are constituted (according to GD 988 of 26.08.2008 on the
establishment of Industrial Park Cainari) from the rental payment for the tracts of
land, technical and production infrastructure objects, the 0,1% of the residents total
SE „Industrial Park
Cainari
Land transfer
Land
Rental
Industrial
park
residents
Foreign investor
IP developer
Lease
in parcels
State
Figure 8 IP Cainari adjacent land rental by SE „Industrial park Cainari”
26
sales amount; the payments and fees for the participation in competitions for
obtaining the right of park resident and resident registration.
The term for the establishment of the industrial park Cainari was set at 15 years;
2. Liquidation of SE "Industrial Park Cainari" and the direct lease of the adjacent land to a
private investor. The investor shall be assigned the managing role of the park and will be
able to lease the parcelled tract of land to the potential residents. The implementation of
this scenario can lead to the de facto establishment of Cainari industrial park, as long as it
did not perform any economic activity since its creation in 2008.
The significant capital investments related to the technical and production infrastructure
incurred by the investor/developer and the future residents must be reflected in the lease
contract. The amount invested shall determine the range of incentives granted, calculated
according to the same algorithm described in the division 2.2.2 on the commodatum
agreement.
Unlike the situation of commodatum, the investor will incur both the capital investments
and the lease payments for the adjacent land use.The investor shall recover the
investments performed for the establishment of the industrial park on the account of the
positive financial result of the management activity carried out within the industrial park.9.
2.2.4 THE ESTABLISHMENT OF THE INDUSTRIAL PARK BASED ON THE PUBLICLY-OWNED
ADJACENT LAND, USING DIFFERENT COOPERATION AND ASSOCIATION MODELS UNDER
THE LAW ON PUBLIC-PRIVATE PARTNERSHIP
The establishment of industrial park Cainari based on public-private partnership refers to
the establishment of an industrial park based on the publicly-owned adjacent land, wholly
or partly funded by a private investor or via the financial resources attracted by him, using
different cooperation and association models set out in the Law no. 179 of 10.07.2008 on
public-private partnership.
The cooperation and association models applicable to the creation of the industrial park in
Cainari in a legal relationship of public-private partnership, are set out as follows:
Fiduciary management. A theoretically viable solution, given that fiduciary
management has not been yet implemented in the Republic of Moldova.
Consequently, Moldovan legislation does not provide regulations and acts regulating
the fiduciary management of the state patrimony. Thus, the establishment of the
industrial park via fiduciary management requires respective law adjustments.
Adjacent land rental. The implementation of the public-private partnership through
a lease contract implies the transmission of the adjacent land under temporary
possession and use. The private investor shall be responsible for the land use in the
park creation process. The contract price is determined by the parties and cannot be
9 Please see p. 2.5 Economic and financial forecast on the managing company of the IP
27
lower than the minimum annual rent amount established in the state budget annual
law. This fact excludes the use of incentives for the reduced lease payment by
applying the reduction coefficient (article 12, Law no. 182 of 15.07.2010 on
industrial parks). Moreover, the lease relationships may be established without
setting up a public-private partnership10, that can act out as a bureaucratic barrier
in creating the industrial park Cainari.
Public-private partnership can also be established through the association of a
public partner with a private entity. This can be achived either under a civil
contract, without creating a legal person, or by creating a commercial company (LLC
or JSC), based on joint capital (public-private). The lack of any experience related to
this type of contractual relationships may compromise, however, the establishment
of the industrial park Cainari.
2.2.5 OPINIONS
The following table outlines the advantages and disadvantages of each of the methods for
establishing the industrial park, described in p. 2.2.2 -2.2.4.
The establishment of the industrial park by transferring the adjacent land into use through
a commodatum agreement appears as the optimal solution. The option of leasing the
adjacent land looks also viable. However, it depends on the negotiation outcome with the
potential investor and the attractiveness of the industrial park Cainari. The investor shall
also decide whether to accept these payments in his operational activity.
Table 8 Methods for establishing the Industrial Park in Cainari, advantages and drawbacks
Commodatum Rental Public-private partnership
Attractiveness to investor
++ + -
Difficulties in performing the transaction
Low +
Low +
Average -
Possibility to use the 0,3 reduction coefficient for the land use payment
++ + -
Prior experience in performing transaction
+ + -
Transaction accomplishment term
1 month +
1 month +
3> months -
Complexity of carrying out the monitoring the implementation of contractual clauses
Low +
Low +
Average -
Level of state costs related to the transaction
Low +
Low +
High -
Total advantages 9 7 0
Note: + advantage; - drawback
10 Refer to p. 2.2.3
28
2.2.6 STEPS TO CREATE THE INDUSTRIAL PARK IN CAINARI11
Step 1. Identification of an investor to perform investments intended for the construction
of the necessary infrastructure along with carrying out the industrial park management.
Step 2. The repeal of Government Decision no. 988 of 26 august 2008 on the establishment
of the industrial park Cainari.
Step 3. Liquidation of SE „Industrial park Cainari”.
Step 4. The repeal of Cainari City Council decision no. 4/1 of 19 march 2008 on the free
transfer of 23,44 ha of land from the reserve fund of Cainari under the state ownership, in
order to set up an industrial park. Preservation of the IP adjacent land under the ownership
of the town of Cainari.
Step 5. Conclusion of a commodatum agreement on the transfer under free use of the
adjacent land by the public administration to the identified investor. The transfer of the
right to use the land destined for the park to a private investor can also occur as a result of
direct negotiations for a lease agreement.
Step 6. The resolution of the Government Decision regarding the establishment of the
industrial park Cainari and the assignment of the identified investor with the industrial
park - the management company.
Step 7. Commencement of the investment process for the construction of technical and
production infrastructure. Identification of IP residents.
2.3 ECONOMIC ACTIVITIES DESCRIPTION AND ASSESSMENT OF INDUSTRIAL PARK
RESIDENTS ATTRACTION POSSIBILITIES
2.3.1 SOUTH DEVELOPMENT REGION (SDR) ECONOMIC ADVANCE SDR is mostly an agrarian region. Annually, the region is accounts for almost 40-50% of the
national grapes output, 30,3% of the national cereals output and 15-20% of the national
sunflower production. There are 3 economic zones located in SDR: Free Entrepreneurship
Zone “Taraclia Production Park”, Free Entrepreneurship Zone “Tvardita” and Free
International Port “Giurgiulesti”.
12% from Moldova’s biggest companies are located in SDR. The most economically
dynamic districts are Cahul, Caușeni, and Ștefan Vodă. There is a visible small business bi-
polar economic development: Cantemir, Leova, Basarabeasca and Taraclia districts provide
for nearly 10% of these companies. Other 4 districts provide for the other 90% of the
regional businesses.
Services are increasing their share in GDP. Retail and services are ascending. From a local
perspective, the main service providers are government and non-government institutions
and organisations and regional development bodies.
11
29
Education institutions are generally fulfilling local needs. Preschool education institutions
need are covered 72,1%. There is a better picture for the primary and gymnasium
education system. These institutions cover 96.9% of the local needs, compared to 99.88%
nationwide. Gymnasium institutions are particularly 99.04% available compared to 96.9%
nationwide. Education infrastructure is complex in SDR and prepared to provide education
at different levels.
Table 9 Educational infrastructure in SDR
Type of educational institutions Share per republic
266 preschool institutions 20,5% 270 day schools, gymnasiums, high-schools 17,4% 12 secondary-vocational education institutions 15% 3 Universities 9,67%
In 2004, there was drop in the number of available places in hospitals as well as in the
hospital beds - population number ratio, lower than the national average. There were 62.4
available places for 10 000 inhabitants nationally and only 37 available beds for 10 000
inhabitants in SDR. The mostly doctor-covered districts were Cahul, Căuşeni and Stefan
Voda, where one can find the largest number of medical institutions.
2.3.2 CAUSENI DISTRICT ECONOMIC DEVELOPMENT The south-east located district of Causeni is bordering Ukraine. Thus, Causeni has 4 border
villages. There is also a customs post in Saiti. The district is neighbouring Ştefan – Vodă,
Anenii – Noi and Cimişlia districts.
The district surface is 116.3 thousand ha, of which 93.7 thousand ha are agricultural lands
(80% of all surfaces). Arable land covers 70.6 thousand ha, vineyards - 5.2 thousand ha and
orchards are 4.3 thousand ha. The hydrological network is constituted form Botna and
Nistru rivers. The next table showcases the economic and social progress of Căuşeni
district.
Table 10 Căuşeni district main economic and social indicators
2006 2007 2007 2008
Inhabitants, thousand 93,4 93,6 92,9 92,7
Industrial output, % compared to the previous year 59,2 61,1 120,1 75,5 Fixed capital investments, % compared to the previous year 73,8 69,5 93,5 44,5
Retail, % compared to the previous year 116,1 107,6 119,5 93,8
Population services, % compared to the previous year 112,8 104,1 95,7 97,5
District budget revenue, % from overall revenues 35,1 30,3 23,8 20,8
Real salary, % compared to the previous year 135,2 117,1 119,4 117
2.3.2.1.1 Investment activity
According to the Regional Investment Performance Rating, Causeni district is the 27th out
of 38, which is a relatively low score, triggered by the very low investment stability score
30
(#31) and a very poor investment diversity (#28). Same time, the district is relatively
competitive in historical investment performance (#10), determined by the per-capita
private investments growth rate from the early 2004-2008.
Table 11 Foreign investments stock, Causeni district
Foreign capital companies, units
Foreign capital
companies social
capital,
thousands lei
Net Foreign
Investment flow,
thousands lei
Foreign
Investments
stock, thousands
lei
15 40229 30841 96716
The structure of Causeni district private investments showcases the mainly agrarian
economy profile: these investments account for 21% of the overall private investment flow.
(See next figure). It is worth mentioning the relatively high share of transport and
communications investments share (24%), which is a strong premise for the industrial
sector development. This sector presently accounts for only 7% of regional economy. The
high investment rate in transports will ensure a stable local economy in case large
investments shall emerge within the infrastructure of the industrial park, providing
resources for transportation needs, supply chains an import-export transactions .
Figure 9 Activity break of private investments in Căuşeni district, %
The overall private investment trend for Causeni district before the economic downturn is
negative (see next figure), which stresses the need for decisions aiming to change the
course of the things, like creating industrial parks.
In 2008, Causeni investments to SDR investments ratio was only 83,1% (1031,3 lei against
1240,7 lei per capita). Same time, per capita foreign investments balance was 4,5 times
bigger compared to the regional statistics (1311,7 lei against 375,4 lei).
31
Figure 10 Fixed per capita investments in 2010, Căuşeni district, MDL
Causeni district fixed investments switched to a positive turn in 2010, which is an
extremely positive evolution in terms of the construction of the industrial park (see table
below). The exhilaration of having a 20-22% increase in investments as compared to 2009
shows an investment environment enhancement, bringing private investors to consider
Căuşeni district as a potential investment destination. Initiating the industrial park may
catalyze the whole process.
Table 12 Fixed capital investments in 2010, Causeni district
Fixed capital investments
Total, million lei
Of which
% against 2009 total State budget
Local public administration
budget
State budget
134,4 8,9 19,2 106,3 119,6
Construction works
Total, million lei
Of which
% against 2009 total State budget
Local public administration
budget
State budget
64 6,2 14,1 43,7 100
Table 13 Construction investments in 2010, Causeni district
Construction contracts value Dwellings
Total millions lei % against 2009 total Total s.m.
surface Of which on behalf
of population % against 2009 total
26,2 de 2,1 ori 2051 2051 123,4
32
In 2010 there was also a positive jump in advancing from the economical crisis, especially
in goods transportation, which is a direct attribute to fixed capital investments growth and
contributes to raising interest towards the industrial park (see next table).
Table 14 Goods transportation in 2010, Causeni district
Transport companies goods transportation
Thousands tones % against 2009 Thousands tones km
113,2 de 5,1 ori 37240,7
Căuşeni district is additionally endowed with a series of geographic and infrastructure
pluses advantaging the creation of the industrial park, like the access to Bender customs
and other communication means (national roads density is 27,7 % bigger the national
average), the good soil quality which served as an attraction to several large foreign
investors in the agrarian business (e.g. IM „Elevator Kelley-Grains”, „KWBCROUP”SRL, SA
„Ghermes-Service” etc.).
2.3.2.1.2 The agriculture
The arable soil is more than 28% seeded with autumn cereals:
Wheat - 17662 ha,
Barley – 6568 ha,
Rape – 4807 ha.
Soil fertility is 62 compared to 59 for the SDR. There are also less eroded soils as compared
to the 27,4 % average nationwide, which ranks Căuşeni district the third in the SDR in the
harvest yield breakdown.
Figure 11 Global and average yield for agricultural crops, Căuşeni district
2.3.2.1.3 The industry
Căuşeni is rather a non-industrialized district, which brings back the idea of creating the
industrial park. 93,5% of the local industrial activity is manufacturing, which is a historic
legacy of a district mainly involved in agriculture, mostly wine industry, cannery, milk
industry and flour production. Per capita industrial production is 2 times lower against the
regional average (770.2 thousands lei against 1614,1 thousands lei). The industry is highly
33
fragmented into a large number of small companies. This way, despite an above the region
average of industrial companies (108 companies against 94 companies) the incumbent
production output is relatively small (0.7 mil. lei per company against 1.05 mil. lei per
company in SDR). The situation can be positively enhanced through a concept of small
companies industrial agglomeration into an industrial park, which can stimulate business
expansion and new companies entering the industry business in the region.
Figure 12 Industrial output, 2007-2010, mil. lei, Căuşeni district, SDR, national economy
59 71 50 97
810 876 625 661
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2007 2008 2009 2010
RDS
Căuşeni
810 876 625 661
29448 29654 25286 27057
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2007 2008 2009 2010
Economia Naţională
RDS
From the latest figure on can observe growing industry potential for Căuşeni, SDR and
national economy. In 2007-2008, Căuşeni district had better industry output delivery
(20% annual growth) as compared o the SDR (+8%) and the national economy as a whole
(0,7%). 2009 saw industry output exploding for Căuşeni (+29,68%) as well as for SDR
(+28,67%) and the national economy (+14,73%). Out of the economic downturn of 2007-
2009, Căuşeni succeeded to almost double its industrial output (93,2%) in 2009-2010,
performing well above the SDR (+5,7%) and the national economy in particularly (7%).
This brings the great industrial potential that Căuşeni even-though it is considered an
agricultural district. Building the industrial park can only contribute to this highly positive
trend.
2.3.2.1.4 Entrepreneurship
Data from the National Statistics Bureau shows that 332 companies have legally activated
in Căuşeni district in 2009 (see table).
Table 15 Companies, Căuşeni district, 2005-2009
Big companies
2005 2006 2007 2008 2009
6 5 5 8 9
Medium-size companies
2005 2006 2007 2008 2009
26 26 21 19 18
Small companies
2005 2006 2007 2008 2009
69 67 75 82 88
Mico-companies
2005 2006 2007 2008 2009
203 243 274 309 332
34
During the 2005-2009 period, the number of companies reporting their economic activity grew by
49%, from 304 to 447 units. Small and medium-sized enterprises (SME) accounted for 24%
from total, of which micro-companies accounted for almost 74%. Still, their share in total
sales volume and total number of employees was near 8% and 17% respectively. There is,
somehow, a balanced picture between the number of employees and annual sales volumes
of large companies and small/micro-companies.
SME-s will probably benefit the most from the creation of the industrial park, which is
pretty acceptable, and there will also be a downgrade in the risk of having a large company
going bankrupt and impacting the whole economic system due to its large contribution to
the total production output and the prominent share of employees.
We must recall that Taiwan begun industrializing by having SME outputting over 90% of its
industrial production averaging 15 employees per company. From this point of view, the
concept of developing the SME sector is of a high importance for countries like Moldova,
undergoing reforms and aiming to further development.
Table 16 Breakdown of total sales/employees by type of company, Căuşeni district
Big companies
Average nr. Of employees Sales revenue, mln. lei
2005 2006 2007 2008 2009 2005 2006 2007 2008 2009
2 353 1 950 1 837 1 804 1 876 199,75 166,47 319,69 477,79 421,77
Medium-size companies
Average nr. Of employees Sales revenue, mln. lei
2005 2006 2007 2008 2009 2005 2006 2007 2008 2009
2 252 1 865 1 473 1 300 1 203 115,79 154,77 162,33 237,13 148,15
Small companies
Average nr. Of employees Sales revenue, mln. lei
2005 2006 2007 2008 2009 2005 2006 2007 2008 2009
1 267 1 054 1 246 1 349 1 303 143,8 156,94 247,84 283,44 234,24
Micro-companies
Average nr. Of employees Sales revenue, mln. lei
2005 2006 2007 2008 2009 2005 2006 2007 2008 2009
551 751 807 866 898 32,96 58,18 63,52 73,75 69,7
35
Figure 13 Total sales and number of employees ratio by type of companies breakdown
2.3.3 TOWN OF CAINARI SITUATION
Presently, there are 140 companies operating in Cainari. Additional 30% from 140 are
registered and are set to begin their activity. There are also 85 farms (farming households).
The largest companies are: the winery which recently underwent a bottling conveyor
upgrade, and the cereals elevator which rebound its activity after changing the owner.
„Persolvit-Prim”, with more than 500 employees is also a noticeable company activating in
the agriculture sector.
The town is a regional regular host for agricultural fairs and exhibitions. Tourism has good
perspectives due to curative water resources and accommodation capacities of the local
sanatorium. An agricultural market, a public catering unit and the local branch of a
commercial bank are also implanted in Cainari.
The structure of 4284 ha of Cainari land is as follows:
arable area - 2073 ha,
Inside town land - 524 ha,
Lakes -19,5 ha,
Pastures - 611 ha,
Forests - 524 ha, (Moldsilva).
2.3.4 DESCRIPTION OF LOCAL HUMAN POTENTIAL FOR THE INDUSTRIAL PARK ACTIVITY SDR encompasses 8 districts: Basarabeasca, Cahul, Cantemir, Căuşeni, Cimişlia, Leova,
Ştefan-Vodă, Taraclia covering 24% of the national area. Population is 15% of the total
national population. Town infrastructure consists of 10 towns without municipality status
(of which 8 are district capital) and 278 rural localities organized in 177 communes. The
36
SDR towns are: Basarabeasca, Cahul, Cantemir, Căuşeni, Cainari, Cimişlia, Leova, Iargara,
Ştefan-Vodă and Taraclia. The region's largest town is Cahul. As compared to other
development regions in Moldova, the SDR is less industrialized. The land is one of the most
important natural resources; the surface of agricultural land is 74% from total. The context
is consistent with the aim of raising the industrial output in the region.
2.3.4.1 SDR human potential
SDR population is 15% from the total Moldova population. The population natural increase
is decelerating to the lowest level among other development regions. The average
population density is 75 persons/km2, the lowest as compared to other regions.
Economically active inhabitants are almost 60% of total. More than 60% of them are in the
agriculture, 9% in education, 8,7% in trade, 8,6% in industry, 4,9% in transport, 4,4% in
health system, 2,3% in construction etc. As compared to the national picture, people in
agriculture is more considerable than nationwide. The following table showcases some
statistical data about SDR population.
Table 17 Demography situation in SDR
524,5 thousand inhabitants (94% against 1989) Density- 71 pers/km2 Urbanization: 26% Economically active people: 301,7 th. persons (60%). 524,5 th. inhabitants (94% against 1989) Density- 71 pers/km2 Urbanization: 25,1%
Te next figure reflects some base population statistics for SDR. People capable of working
are relatively numerous, which is a plus for the industrial park creation.
Figure 14 Inhabitants according to age categories, development regions breakdown (% of total)
37
2.3.4.2 Căuşeni district human potential
According to the 2004 census, Căuşeni district population is 90612 persons, almost 3%
from Moldova population, distributed in two towns, 40 communes and villages. There are
27 city and village halls. Urban population was 24,2% (21,941 persons).
Figure 15 Căuşeni district population
38,6%
61,4%
24,2%
75,8%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Urban Rural
Raionul Căuşeni
Pe republică
48% 49%
52% 51%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Pe republică Raionul Căuşeni
Femei
Bărbaţi
The previous figure outlines the generally rural population which is also well balanced
through male/female ratio: 48%/52%. According to age groups, Căuşeni population has
the following profile:
Figure 16 Căuşeni district population, breakdown by age groups
0 2000 4000 6000 8000 10000
0 - 45 - 9
10 - 1415 - 1920 - 2425 - 2930 - 34
35 - 3940 - 4445 - 4950 - 5455 - 5960 - 6465 - 6970 - 74
75 + Număr locuitori
0,00 2,00 4,00 6,00 8,00 10,00
0 - 45 - 9
10 - 1415 - 1920 - 2425 - 2930 - 34
35 - 3940 - 4445 - 4950 - 5455 - 5960 - 6465 - 6970 - 74
75 +Ponderea în % din total locuitori
Nearly 63% of Căuşeni district population is in the working age population group, which is
65% from all district male population and 60% from all district female population. The
population average age is 35 years. This way, population is not an impediment for
implementing industrial parks in Cainari or other places in Căuşeni district.
Căuşeni district is one of the most affected by emigration. Stable population is about 15.6%
more than the present population. This is one of the highest level reported for Moldova,
with a nationwide average of 9.3%. This process has considerably diminished the pressure
on the local working force. Unemployed people vs. working population ratio is 0,8%
against 0,86% nationwide. The low unemployment may be explained by the fact that large
part of employees is in the retail sector being unofficially employed. In result, locals are
consuming more than the regional average (2008 retail is 114,6% from the regional
average) despite a 5,9% lower salary as compared to the region (1647,1 lei against 1750,3
lei).
38
Implementing an industrial park in the region would impact emigration and would
increase the number of people in industry, which is a greater value-added sector, including
better salaries. It would also balance the number of employees in agriculture and retail.
The anticipated cost of working force for potential investors and park residents seems to
be convenient. On average, the net unqualified employee salary would be 1600-2000 lei.
More qualified personnel would cost 3200-3500 a month net.
The average salary in Căuşeni district was 2300 lei in 2010, increasing at a slower pace
than the annual inflation of 8% (see next table). This can also be considered as an
advantage for building an industrial park in the region (Cainari).
Table 18 Average salary in Căuşeni district in 2010
Development regions/municipalities, districts
Average monthly salary in: Increase rate January-December, lei (preliminary data)
December, lei January-December 2010 versus January-December 2009
December 2010 versus 2009
South 2110,9 2399,9 108,7 102,9 Basarabeasca 2531,9 2735,9 105,7 100,8 Cahul 2288,6 2543,3 108,3 106,2 Cantemir 1899,5 2504,4 106,2 99,8 Causeni 2080,1 2227,6 108,0 100,0 Cimislia 2039,1 2433,7 111,5 107,6 Leova 2054,5 2165,7 112,9 100,7 Stefan Voda 1893,5 2134,4 106,0 92,9 Taraclia 2012,1 2372,4 112,5 111,3
Education is provided by 9 high-schools, 23 general schools, 5 gymnasiums, 1 school of
sports, a Creation Center, Sălcuța Teaching Center, 2 family-type orphanages, one auxiliary
school in Tocuz, 2 vocational schools, 33 preschool institutions. There are 197
professionals in the preschool education system teaching 2485 kids.
2.3.4.3 Cainari town population description
Cainari population is nearly 4700 inhabitants. The ethnic composition is 97% Moldovans,
3% Ukrainians. Gender breakdown shows 52% women and 48% men. 5 villages are 5-7 km
distance displaced around Cainari. Their aggregated population is nearly 13000 people.
Generally, there are 28000 inhabitants in Cainari region (ex Cainari district). The education
system in Cainari consists of 2 preschool institutions, a gymnasium teaching 1100 students
and „Alexei Mateevici” high-school teaching 1100 students. It is easily observable that over
40% of the town population consists of students (2000 persons), which is explained by the
fact that Cainari is a regional education pole, teaching students from different proximate
areas. In order to estimate the potential human resources available in the framework of the
industrial park, calculations were made for population within a 30 km radius around
Cainari.
39
Figure 17 Estimated working force dispersion
Table 19 Human potential in the Cainari 30 km radius
Locality
Available capable of
work population, pers. Distance to Cainari, km
Căuşeni town 30000 35
Anenii Noi town 9000 31 Within 30 km distance 35000 30
65% of the region population is economically active, which is a positive input to having the
industrial park located in Cainari.
2.3.5 INDUSTRIAL PARK ACTIVITY REGIONAL INFRASTRUCTURE SDR enjoys a dense and extended road network with intra- and inter-regional access ways.
The region is also playing a potentially important role in ensuring Moldova access to Black
Sea side countries. Public roads length is 22.3% of total national public roads. Out of these
roads, 23.8% are national rigidly paved roads and 21.5% are local roads out of which 20%
are also rigidly paved. There are also roads connecting all urban areas.
40
Public utility infrastructure is less present in SDR than nationwide. Towns are regularly
better with infrastructure than villages. Differences are obvious in water access, drainage,
roads, natural gazes etc.
The gas supply network is expanding each ear, but it reaches fewer consumers than the
national average. In 2005, only 34.2% households had access to gas supply network.
Taraclia district boasts the highest level (84,2%) while Leova registers the lowest level
(2,8%).
The drainage network covers only 12% of the region, given that big locations such as the
town of Cainari do not feature such systems.
Share of the residential accommodation supplied with:
natural gas (34,22%)
aqueducts – (44,5%)
drainage installations – 12,8%
transportation: auto, rail road; prospective: air, naval
volumes of loads transported – 0,1 tonnes/person
Seven checkpoints and border crossing points operate in the region: road customs -
Giurgiulesti, Cahul, Cantemir, Basarabeasca, Saiti (Causeni), Palanca (Stefan Voda) and
Tudora (Stefan Voda).
2.3.5.1 About Causeni
The total area of the district is 116,300 ha, including 93,700 ha of agricultural land or 80%
per total district. Arable land totals 70 600 hectares, vineyards - 5.2 hectares, orchards - 4,3
ha. The hydrologic network is represented by Botna and Nistru rivers.
The 34 km high voltage line Anenii Noi - Causeni has been recently put into operation.
Alternative electric supply actions have been carried out serving consumers residing in
Stefan Voda district, Causeni district (22 locations per total).
The district of Causeni features a network of auto roads and railroads of national and
international importance. The total length of the road network expanding throughout the
district covers 387,3 km, including 190,4 km of modernized roads.
A total length of 253,072 km of the roads expanding within the district of Causeni is being
served by JSC "Drumuri-Causeni", including:
asphalt concrete – 141, 074 km
Pavement – 2,8 km
asphalt macadam – 18,59 km
Crushed stone – 20,73 km
41
Profiled ground – 24,03 km
National roads – 110, 157 km:
Asphalt concrete – 79,621 km
Pavement – 1,8 km
Asphalt macadam – 13,86 km
Crushed stone – 0, 670 km
Gravel – 14,206 km
Local roads – 142,915 km:
Asphalt concrete – 61,453 km
Pavement – 1,0 km
Asphalt macadam – 4,73 km
Crushed stone – 20, 06 km
Gravel – 31,642 km
Profiled ground – 24,03 km
The share of the gas-supplied localities by 2006 constituted about 41,7% as per the final
available data provided by the Causeni City Council.
3.4.5.2 About the town of Cainari
The town of Cainari has direct access to the railroad. The railway consists of seven railway
lines.
The locomotive depot is in a great operating condition at the moment. The railway
infrastructure is highly maintained due to the new line connecting Chisinau and the
annually perfomed maintenance.
The railway enterprise currently employs 70 people, residents of the town of Cainari and
nearby locations.
The railroad performs services of goods transportation to Chisinau, Bender, Cimislia, Reni-
Basarabeasca, Giurgiulesti.
The road and connection network of Cainari town consists of:
National Auto road R-32, Puhoi-Cainari-Salcuta (asphalted)
The distance from Cainari to Chisinau is 55 km. This road connects the following
directions: Causeni, Cimislia, Bender, Palanca, Saiti.
42
The territory of Cainari town is crossed by high voltage lines of 100KVT, 35KVT and
10KVT. The power station serving the whole district of Cainari is located nearby the
railway station.
Fixed telephone, CDMA mobile telephony and internet access through fibre optic cable
services are provided the JSC "Moldtelecom" subsidiary in Cainari. The subsidiary currently
employs 60 persons.
The main economic agents, institutions and organizations operating in Cainari are:
15-thousand ton elevator.
Wine factory endowed with wine bottling line.
JSC „Banca de Economii”.
SE „Poşta Moldovei”subsidiary .
296-bed Family Medicine Center.
Theoretical Lyceum „Alexei Mateevici” attended by 1260 students.
Three kindergartens totalling 580 places.
Subsidiary of the National Social Insurance House.
Two petrol stations.
Cainari territorial cadastre body.
Division of population evidence and documentation.
Eight artesian wells supply the town of Cainari with drinking water:
Water-supply station of 2000 meter cube per hour.
Sewerage network of 7 km length.
Wastewater treatment station of 400 cube meters and the wastewater pumping
station
It may be noted that Cainari town has the entire necessary infrastructure to initiate the
construction project for an industrial park.
2.3.6 TECHNICAL AND PRODUCTION INFRASTRUCTURE TO BE CONNECTED TO THE
INDUSTRIAL PARK The industrial park Cainari will be located within the territory of Cainari town and is not
expected to jeopardize the activities of the town and its residents.
43
The territory of the adjacent land covers an area of 23,44 ha located on the outskirts of the
town. The following figure represents the cadastre plan of the tract of land adjacent to the
future industrial park.
Figure 18 Adjacent land of the Industrial park
Figure 19 (a;b) shows the spatial location of the future industrial park in Cainari, in relation
to the main transportation networks. The figure also indicates the possibilities to expand
the industrial park:
Figure 19 Spatial location of the Industrial Park in Cainari (a)
Railways to Chisinau, Bender, Cimislia, Reni-
Basarabeasca, Djiurgiulesti
To Chisinau
To Ialoveni
To Tighina
IP
44
Figure 20 Spatial location of the Industrial Park in Cainari (b)
Staţia de epurare
PI or. CăinariIP Cainari
2.3.6.1 Infrastructure networks
The electricity supply line lies at a 300 m. distance from the industrial park. The line can be set to generate energy according to the necessities.
The sewerage network lies at a 500m. distance from the industrial park The drinking water line lies at a 300 meter distance from the industrial park. The industrial park has direct access to the main road. However, in order to prevent
the transportation of goods and other heavy throughout the town, it is recommended the construction of a bypass measuring 2580 meters beginning at the park boundary.
Gas-connecting pipes with an 80-100mm diameter located at a 500m distance from the boundary of the park.
The Cainari town hall is prepared to allot, if required, a building for the park administration and a 5-story building with hotel and accommodation services intended for the potential employees of the industrial park.
2.4 ASSESSING THE VIABILITY OF CREATING AN INDUSTRIAL PARK IN THE TOWN OF
CAINARI, ACCORDING TO THE UNANIMOUSLY RECOGNIZED CRITERIA
In order to justify the location selection of the industrial park in Cainari, taking into account
a potential investor/developer, there should be performed an evaluation based on a set of
predetermined criteria.
45
In this feasibility study we will use a set of general evaluation criteria proposed by the
Urban Land Institute12 (http://www.uli.org/).
The assessment criteria used in evaluating the location of the industrial park Cainari were
divided into four major categories:
Table 20 The list of criteria for assessing the IP location, Urban Land Institute
I. Aspect general 1. Compliance with regional and local development plans 2. Zoning 3. Division into lots 4. Topography 5. soils/drainage
II. Environmental aspects 1. Environmental requirements in the construction of IP 2. Potential environmental constraints
III. Infrastructure 1. Water supply 2. Sewerage/treatment systems 3. Access to internet 4. Access roads 5. Natural gas supply, electrical energy
IV. Transportation network 1. Access to highways 2. Access to airports 3. Access to railway network
2.4.1.1 General aspect
Compliance with regional and local development plans
The plan for the creation of the industrial park in Cainari must be encompassed in the
projected development objectives of the region.
Additionally, the site for the establishment of the industrial park is consistent with the
related local plans:
Community development plans;
Recreational plans;
Urban planning
Local Economic Development Plans.
Zoning
Industrial park developers are usually looking for sites intended for industrial purposes.
The need to change the purpose of the land and its zone in an industrial one constitutes a
supplementary step in the IP development. This effort requires additional time and costs.
The industrial park in Cainari will be assigned an industrial tract of land located in
an industrial type of zone.
12 Urban Land Institute’s Business and Industrial Park Development Handbook, 2008, second edition
46
Division into lots
According to the Urban Land Institute, the ideal location for an industrial park
encompasses an area of 20-40 ha. Such surface has the capacity of meeting large scale
economic activities. The area can also be later extended. In addition, the infrastructure
networks are used more efficiently throughout larger land lots.
The industrial park Cainari will be assigned a tract of land of 23,44 ha.
Topography
Steep slopes located on a territory intended for an industrial park represent a major
drawback in that they imply additional costs related to levelling operations. Accordingly,
developers usually opt for relatively flat locations. Areas featuring slopes steeper than 15%
are generally considered unsuitable for the establishment of an industrial park.
The tract of land intended for the industrial park Cainari is a 7% slope.
Soils/drainage
The development of the industrial park implies the construction of many areas with many
impervious surfaces (paved roads, roofs, parking lots, etc.). The imperviousness of these
surfaces can lead to large rainwater accumulations. One of the key factors in this regard is
the capacity of the ground to absorb the leaking rainwater. Different soil types have
different absorbing capacity of the rainwater.
Preliminary analysis of the ground in the industrial park in Cainari revealed that it is
very well drained and therefore is able to absorb and evacuate the rainwater.
When necessary, the storm water can be collected using one of the methods, such as:
reduction of the impervious surface in the parking lots by placing gravel or special graving
materials, temporary retention basins and the retention of water in special underground
tanks. The development of the industrial park requires the conduct of a technical study on
the absorption and flow of the rainwater. The study will show if the precipitations falling
on the territory of the industrial park are absorbed and return to their natural hydrological
cycle.
2.4.1.2 Environmental aspects
Please refer to chapter 2.8 "Environmental Impact Assessment upon the establishment of
the industrial park".
Several comprehensive environmental studies will be developed during the establishment
process of the industrial park, in order to ensure the minimum negative impact on the
environment.
2.4.1.3 Infrastructure
Please refer to chapter 2.3.6 "Technical and production infrastructure to be connected to
the industrial park".
47
The location intended for the creation of the industrial park has the entire required
infrastructure.
2.4.1.4 Transportation network
The territory set for the establishment of the industrial park is located 20-30 meters away
from the national railroad network. The network performs transportation of goods to
Chisinau, Bender, Cimislia, Reni-Basarabeasca, Giurgiulesti.
The road and connection networks of the Cainari town consist from:
National Auto road R-32, Puhoi-Cainari-Salcuta, paved.
The distance from Cainari to Chisinau is 55 km. This road connects Causeni, Cimislia,
Bender, Palanca, Saiti.
The following figure represents graphically the 7 border crossing points that grant Cainari
the access to the export markets - Giurgiulesti, Cahul, Cantemir, Basarabeasca, Saiti
(Causeni), Palanca (Stefan Voda) and Tudora (Stefan Voda).
Figure 21 Access to the border crossing points – export markets of Cainari
Căinari
Giurgiuleşti
Basarabeasca
Săiţi
Palanca + Tudora
2.4.1.5 Opinions
In the following we shall present a diagram serving as a guide for the potential
investors/developers of the industrial park in that it shows the advantages and
disadvantages of creating an industrial park based on the above characteristics.
The guide will be analysed based on the following table:
Table 21 Estimate guide on the location of the industrial park in Cainari
Advantages Drawbacks One or several lots with a single owner Multiple lots with multiple owners Lot surface 20-50 ha Lot surface < 20 ha Topography – lot inclination <15% Topography – lot inclination >15%
Adjacent water networks Water networks not lot adjacent Sufficient water supply debit Insufficient water supply debit Wastewater station Wastewater station not lot adjacent Natural gas pipeline Natural gas pipeline not adjacent to the lot
49
Zoning – the purpose-use change of the lot and zone is not required
Zoning – the purpose of lot and zone is required
Exploitation of a zone previously industrialized
Exploitation of zone previously unindustrialized
Lot adjacent to the national/international routes
Lot not adjacent to the national/international routes
Proximity of the railroad Far location of the railroad Less that 20% of the lot is located on groundwater
More than 20% of the lot is located on groundwater
No damp areas on the land Several damp areas on the lot Less that 25% of the lot is considered as area with specific environmental constraints
More that 25% of the lot is considered as area with specific environmental constraints
Total advantages 14 Total drawbacks 1
1.1 ESTIMATED INVESTMENT AMOUNT NECESSARY FOR THE ESTABLISHMENT OF THE
INDUSTRIAL PARK An estimation of the infrastructure costs was carried out considering the infrastructure
network situation previously described. The projected investment costs are shown in the
table below:
Table 22 Technical and production infrastructure to be connected to the industrial park
1 Investment subject Units Total,
thousand lei
2 Elaboration of a project and construction of a electric energy line supplied by feeder 6 by an existing station
300 m 500
3 Project and construction of the sewerage system, including the sewage pumping station and the 500m collector
500 m 1500
4 Project and construction of the drinking water supply system 300 m 320 5 Project and construction of a bypass road with a 2580m length 2580 m 15000 6 Project and construction of a pipeline branch with a 100mm diameter 500 m 500
7 Unprojected expenditure, 5% 890
Total, thousand lei 18710
The investment amount required for the construction of the technical infrastructure in the
industrial park in Cainari will therefore amount approximately 19 million lei.
The spatial location of the infrastructure networks are shown in the Figure below:
Figure 22 Spatial representation of the technical infrastructure located in the Industrial park in Cainari
Gaz 12 atm
IP Cainari
Existing sewerage system
Electricity 35 KVT
Water 350 mm
2.6 THE ECONOMIC AND FINANCIAL FORECAST OF THE ACTIVITY PERFORMED BY THE
ADMINISTRATION ENTITY OF THE PARK This section will provide a forecast on the profit expected by the investor in the upcoming
30 years, as well as the minimum economic and financial conditions met by the investor in
order to take over the investment risk posed by the establishment of the industrial park.
2.6.1 HYPOTHESES (FORECASTS EXPRESSED IN EURO)
2.6.1.1.1 Investment amount
As it was mentioned previously, the investment amount projected for the creation of the
industrial park in Cainari is estimated at 1 187 500 Euro (18 710 000 lei).
The investor has the option to choose whether to invest this amount in the industrial park
for a period of 30 years or to deposit the money in a bank for the same period, assuming a
much lower risk.
The option for the bank deposit with a 5% annual interest rate during 30 years would
guarantee the capitalization of the deposited 1 187 500 Euro to 5 132 307 Euro.
Consequently, the amount of 5 132 307 Euro will de facto represent the investment amount
intended for the park, comprising the initial sum of 1 187 500 Euro and the missed
prospective profit guaranteed by the bank deposit.
51
2.6.1.1.2 Operational activity of the industrial park
The industrial park Cainari is expected to feature the following operational characteristics:
The average surface area leased to an enterprise will constitute 5000sq.m.;
30 companies will reside in the industrial park.
2.6.1.2 Financial forecast – revenue assumptions regarding the managing
entity if the industrial park (investor, euro)
Table 23 Estimation of basic financial forecasts (€)
Investment amount 5 132 307
No. of residents 30
Area rented by 1 company, m2 5000
Rental term, months 360
As stated previously, the investment amount provided by the investor amounts 5 132 307
Euro, including the 5% annual interest rate. The investor will lease out the land to 30
residents, 5000 sq.m. provided for every resident. The table below presents the leasing
price for 1 sq.m. of land.
Table 24 Estimated minimum rental price of 1sq.m. of land, Euro
Investment amount 5 132 307
No. of residents 30
Area rented by 1 company, m2 5000
Total rented surface, m2 150 000
Lease term, months 360
Net expected rental profit - 1 m2/month, Euro 0,10
Taxes 30%
Minimum rental price value 1m2/month, Euro 0,14
The investor will therefore expect a minimum rental price of 0,14 euro per 1 sq.m.
The following step consists in identifying the rental price of 1sq.m. of land accepted by the
resident and determining whether the price exceeds the 0,14 euro/sq.m. expected by the
investor.
The calculation of the expected price by the resident will be performed according to the
prices stipulated by the law and the minimum rates accepted by the state regarding the
rental of public property (Law no. 1308 of 25.07.1997 on normative price and the
procedure for sale/purchase of land).
The normative price set for the land within settlements was modified three times since
2006, as shown in the following table:
52
Table 25 Evolution of the land normative prices, (€)
2006 2009 2010
Degree-hectare unit, Euro 579 869 1242
As shown, the normative price increased around 21% per annum:
, where the exponent value equals to four years: 2006-2010.
The elaboration of the financial projections is determined by the normative rental prices
set for 1sq.m. of land within the industrial park, considering the anticipated increases in
the normative prices throughout the next 30 years.
A 21% annual rise can be considered as exaggerated; therefore a pessimistic rise of 5% per
annum will be taken into account.
As a result, the minimum rental price projected for 1 sq.m. of land within the industrial
park Cainari will be set at:
Table 26 Estimating the minimum rental price for 1sq.m. in the Industrial park Cainari
Current normative price, euro 1242 Average worthiness 65 Sale normative price 1ha 80 734 Rental normative price 1ha/y, 2%* 1 615 Rental normative price 1m2/y. 0,16 Annual normative price increase 5% Normative rental price 1m2/y, 5% annual increase 0,698 Up to 0,3** reduction coefficient 0,3 Final rental price 1sq.m./year 0,21
*article 10, p. 8, Law no. 1308 of 25.07.1997 on normative price and the procedure for
sale/purchase of land. The 2% quota represents the minimum absolute value laid down by
the law.
** article 12, p. e), Law no. 182 of 15.07.2010 on industrial parks.
The projections established that the minimum monthly rental price accepted by the
investor is 0,14 euro/sq.m. At the same time, the law provides that the minimum monthly
rental price for the publicly-owned land in the upcoming 30 years is set at 0,21 euro per
sq.m. The fact that the minimum rental price provided by law is well above the price
accepted by the investor diminishes the attractiveness of the business within the industrial
park.
2.6.1.2.1 Sensitivity analysis of the financial forecasts
It should be hereby conducted an analyses on the potential rental prices set by the investor
without affecting the resident's interest. In other words, the investor may gradually
increase the prices in order to maximize the revenues, while the resident will struggle to
minimize the rental costs.
53
This supply-demand relationship is eloquently represented in the following table and
figure:
Table 27 Flexibility of the demand-supply upon the rental of 1 sq.m. of land in the IP
Increase of rental price 1 m2 by 20% 30% 40% 50% 53%
Rental price 1m2, Euro 0,16 0,18 0,19 0,20 0,2077
Net rental profit 1 m2, Euro 0,114 0,124 0,133 0,143 0,145 Net profit after 30 years (investment capitalization), Euro
6 158 768
6 671 999
7 185 229
7 698 460
7 852 429
Gained interest from the IP investments 5,64% 5,92% 6,18% 6,43% 6,50%
Figure 23 Rental price flexibility compared to the final rental price
Price for rent of 1sq.m, Euro
Final price for rent of 1sq.m, Euro
The calculations in the table explain that the investor may gradually increase the rental
price for 1sq.m. by 53% up to the normative price value stipulated by law. The investor
may also apply the 0,3 rental reduction coefficient, compliant with the incentives set out in
the law on industrial parks.
The investor will obtain an annual rise in the net cash flow from 5,64% to 6,50% for every
euro invested, by setting price increases. The returns generated will be higher than the 5%
interest level rate. The awarding percentage will cover the risks related to the
establishment of the industrial park.
It should be hereby noted that the 5% interest rate was intentionally used for calculations,
given that the interest rates set for 30-year deposits do not exceed 3%. The calculation
based on the 5% interest rate was intended to perform a most pessimistic forecast.
54
2.6.1.2.2 Stimulating the investment amount intended for the creation of the industrial park
The state is the key entity in stimulating and influencing indirectly the investment
amount provided by the investor.
The forecasts performed in this study considered the minimum rates provided by law
regarding the land rental payments for the public land within the industrial park:
2% land rental according to the normative price of the land, although the law
provides an up to 10% rate - article 10, p. 8 Law no. 1308 of 25.07.1997 on
normative price and procedure for sale/purchase of land. The 2% rate represents
the minimum absolute value provided by law.
Applying the 0,3 coefficient, although the law allows coefficients ranging between
0,3-1,0 - article 12, point e), Law no. 182 of 15.07.2010 on industrial parks.
The state, in its ownership capacity over the adjacent land and as the law empowered body
to grant incentives may carry out changes in the incentives provided in order to stimulate
the investment amount in the area.
Assuming that the state will keep unchanged the 0,3 coefficient, but will increase the rental
rate for the normative price of the land to 5%, the investor will implicitly gain higher net
profits. The state can therefore negotiate an increase in the investment amount
corresponding to the incentives granted.
Table 28 Estimated rental price flexibility in relation to the investor's profit
Rental price increase 1sq.m.
100% 150% 200% 250%
Net profit in 30 years (investment capitalization), euro
10 264 613 12 830 766 15 396 920 17 963 073
Expected net profit 5 132 307 5 132 307 5 132 307 5 132 307
Expected interest 5% 5% 5% 5%
Obtained interest 7,45% 8,26% 8,92% 9,84%
Additional award in absolute values
5 132 307 12 830 766 15 396 920 17 963 073
Additional percentage award
2,45% 3,26% 3,92% 4,48%
An analyses of the above table indicates that the 5% increase of the rental rate of the land
normative price will allow the investor to increase the rental price by almost 2,5 times.
Such increase will bring about an additional 18 million euro.
Part of this award can be reinvested either in the expansion of the industrial park or other
industrial activities.
The study established the financial viability of the proposed industrial park in Cainari for
both the potential investor and the future residents.
55
2.7 SOCIAL AND ECONOMIC IMPACTS OF THE INDUSTRIAL PARK ON THE REGIONAL
DEVELOPMENT The methodology for defining the impact of public policies, of the decision to create the industrial park, was laid out in the document called "Guidelines for the ex-ante analysis of the public policies impact”13. This guide provides ways of assessing the anticipated impact, through which were
identified the key indicators for assessing the potential impact of creating an industrial
park, namely:
Job creation;
Fiscal impacts;
Economic impacts;
Social and poverty impact;
Environment impact;
Administrative impacts.
The evaluated scope of the expected impact reflected in the guide will serve as a guideline
in presenting a more detailed impact analysis in this feasibility report, with deeper analysis
on the calculated evaluation of the possible impacts and their argumentation.
2.7.1 IMPACT ASSESSMENT The economic impacts of the establishment of an industrial park can be estimated through
the direct and indirect results.
The economic impact presumes an envisaged change of an economic activity. E.g. investing
in a warehouse would create an economic impact. All the money earned in finished
products sales has a multiplicative effect on the economy.
The returns are created directly, i.e. there is a direct impact of the raw materials
procurement, wages, goods and services needed for production, taxes, dividends and
savings. SMEs that obtain the payments for goods and services from consumptions (direct
economic impact), also the employees who receive salaries - these returns are
consequently used in local consumption or outside of it, which generates an indirect
economic multiplier. This methodology will provide a snapshot of the extra income of the
industrial park area: how much does a leu obtained from storage generate, from
manufacturing and marketing of goods and services, i.e. what revenue flights will occur
outside the industrial park area for their later use in the national economy.
13 Selection of public policy proposals Volume II, 2010.
56
The direct economic impact of a group of companies is estimated by calculating the volume
of goods produced (estimated as sales revenue), creation of jobs and payroll, tax payments,
and other annual income generated by their annual operations.
The indirect impact results from:
The resident companies of the park purchasing goods and services from the local
and regional suppliers;
Employees of the park spending their salaries to consume goods and services. These
indirect effects generate additional income, job opportunities in the adjacent
segments of the industrial park.
The overall economic impact totals both the direct and indirect effects.
The indirect effects are calculated using the economic multiplier coefficients14.
According to the analytical data provided by the Ministry of Economy in the Information on
the implementation of the State Program to support small and medium enterprises sector,
in 2009 the average sales revenue of an enterprise amounted to cca MDL 1,581,100. The
average number of employees per enterprise in 2008 was of eight people, posting identical
data as of 2008.
The development of the industrial park, that requires a proper use of the reconstruction
investments and funding of production factors, is expected to be carried out over a period
of 2 years. Consequently, the optimal sales volume of the industrial park residents is to be
achieved in the second year, i.e. the moment the park will fully operate.
The annual growth in sales and salaries is expected to rise by 7%. The financial and
economic forecasts cover a period of 30 years. The calculations have been performed in
terms of Euro.
Table 29 Production investments performed by the future IP residents
m2
Construction cost per unit, euro
Total, euro
Production area 150 000 190 28 500 000
Equipment investments x x 20 000 000
Total 48 000 000
Table 30 Investment amount required for the infrastructure of the IP in Cainari
Total, Euro
Investment amount required for the infrastructure of the IP in Cainari 1 187 500
14 Marginal Propensity to Consume Locally; Marginal Propensity to Leak Locally
57
Table 31 Anticipated cash flow generated by the industrial park residents (a)
Table 32 Anticipated cash flow generated by the industrial park residents (b)
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 Net cashflow residents 2 075 2 220 2 376 2 542 2 720 2 910 3 114 3 332 3 565 3 815 4 082 4 368 4 673 5 001 5 351 Salaries paid by residents 918 982 1 051 1 125 1 203 1 288 1 378 1 474 1 577 1 688 1 806 1 932 2 068 2 212 2 367 Net cashflow management company 1 178 1 174 1 233 1 294 1 359 1 427 1 498 1 573 1 652 1 735 1 748 1 766 1 783 1 801 1 819 Salaries paid by management company 161 172 184 197 211 225 241 258 276 295 316 338 362 387 414 Taxes/duties 623 666 713 763 816 873 934 1 000 1 070 1 144 1 225 1 310 1 402 1 500 1 605 Total Direct Impact 4 954 5 215 5 556 5 920 6 309 6 723 7 165 7 637 8 140 8 677 9 177 9 714 10 288 10 901 11 556
2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 Total Net cashflow resident 5 725 6 126 6 555 7 014 7 505 8 030 8 592 9 193 9 837 10 525 11 262 12 051 12 894 13 797 181 250 Salaries by resident
2 533 2 710 2 900 3 103 3 320 3 552 3 801 4 067 4 352 4 656 4 982 5 331 5 704 6 104 80 184 Net cashflow management company 1 837 1 856 1 874 1 893 1 912 1 931 1 950 1 970 1 990 2 009 2 030 2 050 2 070 2 091 50 503 Salaries paid by management company 443 474 507 543 581 622 665 712 762 815 872 933 998 1 068 14 032 Taxes/duties 1 718 1 838 1 966 2 104 2 251 2 409 2 578 2 758 2 951 3 158 3 379 3 615 3 868 4 139 54 375 Totoal Direct Impact 12 256 13 004 13 803 14 656 15 569 16 544 17 586 18 700 19 891 21 164 22 525 23 980 25 535 27 199 380 344
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2.7.2 INDIRECT IMPACT FORECAST (MULTIPLICATIVE ECONOMIC EFFECT)
The indirect impact is calculated by means of the economic multiplying coefficients. Their
values were estimated based on the experience of similar parks in Eastern Europe and the
impact values of the investment projects implemented in Moldova15, where investments
have been made in SMEs at an average rate of 80%; 20% of which representing
investments in the working capital.
Table 33 Indirect impact forecast (multiplicative economic effect)
Economic multiplication Within the Industrial
Park region Chisinau
National Economy
Sales revenues, coefficient 1,254 1,323 1,689
Sales revenue, euro 290 618 306 609 391 430
Job creation, coefficient 1,497 1,586 1,807
Job creation, places 844 895 1 019
The interpretation is simple. Every euro of the sales revenue, earned in the industrial park,
will increase the region' total revenue (Cainari town) by 1.254 EUR, by 1.323euro the
revenue of Chisinau and by 1.689 euro - the national economy. Similar calculations apply to
the job creation algorithm.
2.8 INVESTMENT APPRAISAL 16 The appraisal of investment projects consists in defining the usefulness of the projected
investments, in order to determine the soundness of an investment initiation. The bottom
line in this process refers to the investment assessment in time, considering future
monetary depreciations, though currently invested. Both net present value and the internal
rate of return of the project are used to perform this assessment:
a) Discount rate – 8% annual;
b) Forecast period – 30 years.
c) Consolidated results
Table 34 Estimate of investment amount (€)
Investment amount, thousand euro 49 188
Direct sales impact, thousand euro 231 753
Indirect sales impact, thousand euro 159 678
Job creation, direct, people 480
Job creation, indirect, people 387
Taxes/duties, thousand euro 54 375
NPV thousand euro 49 188
IRR 20%
Payback period, years 6
15 The World Bank Rural Investment and Services Project (RISP II), Competitiveness Enhancement Project, IFAD Program for the Development Rural Affairs 16 Capital budgeting/investment appraisal
59
2.8.1 OPINIONS
Both economic and financial forecasts, as well as the impact assessments of the industrial
park creation in Cainari, have fully demonstrated the viability of this project.
The strategic location of the industrial park, existence of an infrastructure that requires
comparatively no major investments, access to local and external markets, availability of
skilled labour, make the necessary hypotheses to establish a successful industrial park.
2.9 ENVIRONMENTAL IMPACT ASSESSMENT UPON THE CREATION OF AN INDUSTRIAL
PARK The Law of the Republic of Moldova "On environmental protection" (No. 1515 of
16.06.1993) is the legal framework governing the legal relations concerning projects
implementations that can pose damage to the environment.
The Law on Environmental Protection comprises general provisions on the State Ecological
Expertise (No. 851 of 29.05.1996). Article 21 determines the purposes of the expertise, and
(b) is of special importance, as it refers to the environmental impact evaluation of all
economic activities, taken separately or together, which may affect the environment,
people's health, their living standards (the same legal stipulation is foreseen in Art. 6 (1) of
the Law on Ecological Expertise and Environmental Impact assessment).
Therefore, any project is required to undergo the state ecological expertise. According to
article 25 (Law on Environmental Protection), the state ecological expertise can evaluate
any project upon the initiative of the environmental bodies, other departments and
ministries or public organizations.
Article 23 stipulates that all new programs and projects on building, expansion,
reconstruction and modernization of economic and social objectives that may affect the
environment, regardless of location, financing sources and other conditions, are subject to
expertise. Accordingly (Art. 24), beneficiaries are to provide the project documents
according to [i] regulations in force, [ii] in agreement with the ministries, local
administration departments, and with the organizations interested in the location and
technical supply of the object, and [iii ] authorization issued by the surveillance and state
control authorities to perform such type of economic activity [iv] under the state-approved
list.
In addition to the national legal provisions, it is important to assess the negative
environmental impact limits, occurring following the creation of the industrial park, from
the international organizations perspective.
Considering the contribution of the World Bank project, that funded a number of studies on
the creation of industrial parks in Moldova, and more importantly, that such organizations
can contribute substantially to parks financing, this study will refer to the World Bank
institutions' provisions on the environmental impact that may actually serve as an
60
environmental guide to attract foreign investments to finance the needs of the industrial
park.
The key document for the development of an industrial park, which is normally, the
Development Plan, covers issues such as: details about the specifics of the industrial park
location (e.g., avoidance of food contamination by ensuring that the adjacent and nearby
units are compatible), water and air quality management, including the use of water
treatment facilities, solid waste management, including their recycling, waste and
hazardous materials management, noise control, work safety.
A major benefit of the environmental impact (in terms of industrial parks), represents the
possibility to benefit from the economy of scale, sharing facilities and waste effluents. At
the same time, enterprises, as individual units, must follow individual methodologies for
the environmental impact improvement, depending on their separate production activity
(State Ecological Expertise). The environmental impact management plan for each resident
should be included in the contract signed with the management company.
2.9.1.1 Polluting indicators
The following recommendations should be taking into account upon the creation of an
industrial park.
To encourage the use of vapour recovery systems, where appropriate, to control the losses
of volatile organic compounds (VOCs) from the storage tanks, in order to achieve a 90-
100% recovery rate.
To encourage the residents to use of low-nitrogen oxide emissions (NOx) of the thermal
units. The use of fuels with low sulphur content (or an emission level of 2.000 milligrams
per cubic meter mg/Nm3 SOx). A sulphur recovery system may be feasible for large
installations, when the concentration of hydrogen sulphide from exhaust pipes exceeds
230mg/Nm3.
The emission level for the design and functioning of the industrial park must be established
through the environmental assessment (ecological expertise for example).
There will hereby be presented the following emission levels accepted by the World Bank
Group in making decisions regarding the provision of financial assistance. Any deviations
from these levels will be described in the project documentation. The dilution of emissions
or effluents to achieve the prescribed limits is unacceptable.
61
Emissions into the atmosphere. Acceptable pollution limits
For individual or common stacks:
Table 35 Gas emission parameters
Parameter Maximum value
mg/Nm3
Particles 50 for large units (PM)* 150 for small units
NOx For energy consumption lower than 10 Giga Joules per hour: 750 (solid fuel) 460 (liquid fuel) 320 (gaseous fuel)
SOx 2000
Hydrogen sulfide 15
* For units that emit significant quantities of toxic metals, the emission limit is 20 mg / Nm. Liquid effluents. The following maximum levels are to be obtained:
Parameter Maximum value, miligrams per litre
PH 6 - 9 Oils and fats 10 Cadmium 0.1 Chromium (hexavalent)
0.1
Chromium (total) 0.5 Copper 0.5 Lead 0.1 Nickel 0.5 Zinc 2 Phenol 0.5 AOX 1 Benzene 0.05 Benzo(a)pyrene 0.05 Sulfide 1
Solid waste and sludges
The generation of sludge should be minimized to the lowest level possible. The sludge must
be treated or stabilized in case that toxic metals are identified.
Ambient noise
62
The noise abatement measures should achieve either the levels given below or a maximum
increase in background levels of 3 dB (A). Measurements shall be taken by the noise
receptors located outside the noise units (sources).
Table 36 Estimate of the effects of the ambient noise
Highest allowed, Leq (h), in db (A)
Day Night Receptor 07:00 - 22:00 - 22:00 07:00 Residential; 55 45 Industrial; 70 70 Commercial
Monitoring and reporting
The closure tests should be repeated frequently, both upon the project initiation and at
later stages of the development.
A daily monitoring of the particle emissions from stacks is recommended, along with a
monthly monitoring of the sulphur content in the used fuel, in combustion sources. A daily
monitoring of the liquid effluents for all the applicable parameters mentioned above,
except for aromatics, metals, and sulphides, which must be monitored at least once a
month.
The Industrial Park Administration shall encourage the residents in monitoring the data
analysis, performing regular reviews, and comparing the data with the operating standards
in order to undertake all necessary corrective actions. It is recommended to keep the
records of the monitoring results in an acceptable format. The records must be reported to
the competent authorities and stakeholders, as appropriate (e.g. financier). Industrial parks
must maintain records of the accidental environmental pollutants emissions and take
appropriate corrective action to prevent their future occurrence. The industrial park
administration is recommended to organize appropriate trainings for the residents on how
to improve the environmental impact.
63
Annexes
64
Annex 1: Action plan for the establishment of the Industrial park in the town of Cainari
no. Actions Executives Term Month
1 2 3 4 5 6 7 8
STEP I.
1
Promotion of the project on the establishment and functioning of the
industrial park through the mass media: newspapers and magazines,
placement of promotional materials on ME website, MIEPO and
other pages, TV, etc.
MIEPO, ME, LPA Permanent
2
Project promotion through the national and international
organizations: MIEPO, Chamber of Commerce and Industry,
embassy and diplomatic representations of the Republic of Moldova
abroad and foreign countries consulates in Moldova, bilateral
Chambers of Commerce, consulting companies, investment funds,
international financial institutions.
MIEPO, ME, LPA Permanent
STEP II.
3 Promotion of draft Government Decision to repeal Government
Decision no. 988 of 26.08.2008 on the establishment of the industrial
park in Cainari.
ME 2 w.
STEP III.
4 Liquidation of „Industrial Park Cainari. ME 2 months
STEP IV-V
5 The repeal of the decision no. 4/1 of 19.03.2008 by the City Council
of Cainari; transmission under free use of the adjacent land by the
local public administration to the identified investor, based on the
commodatum agreement.
LPA 2 w.
STEP VI
65
6 Identified investor: elaboration of documents on the assignment of
the industrial park title (art. 8, Law 182/2010) Private investor 4 w.
7 Filing for consideration the documentation with the Ministry of
economy Private investor,
LPA
1 day
8 Examination of submitted documentation. Elaboration of the draft
GD on the assigning the private investor the IP title and the statute
of managing company.
ME 4 w.
9 Promotion of draft GD on assigning the title of "Industrial park in
Cainari". ME 2 w.
STEP VII
10
Launching the investment process Private investor 4-5
months