Strategic Consulting Expert Victor BURUNSUS: „The A7 Highway will directly contribute to improving the investment climate in Moldova”
100 economic opportunities for the development of the Moldova Region on the A7 Highway route
Victor Burunsus is a strategic consulting expert focused on supporting the development of the business environment and investment climate in the Republic of Moldova
The construction of the A7 Highway brings new opportunities for economic integration and attracting investments, facilitating access to external markets essential for sustainable economic growth.
How do you see the impact of the A7 Highway construction on the development of corporate strategies and the business environment in the Republic of Moldova?
The construction of the A7 Highway will have a major impact on corporate strategies, particularly in terms of connecting the Republic of Moldova with Romania and Europe. Once the highway is completed, it will become a true catalyst for strategies aimed at integration into regional and European supply chains. However, until that point, it is necessary to focus on improving the business environment by optimizing regulations and institutional performance, especially customs services. Integrating the customs services of Romania and Moldova, including at the informational level, will increase business attractiveness and boost cross-border collaboration.
What anticipated opportunities do you see for Moldovan companies in terms of integrated development and access to markets in Romania and Europe?
For Moldovan companies, the A7 represents an opportunity to expand their operations and gain easier access to European markets. Especially for businesses in the manufacturing industry, locating work points near access routes to the A7 and A8 (Tg. Mureș – Ungheni) will optimize logistics costs and facilitate exports. Quick access to European markets will improve the competitiveness of these companies and stimulate economic growth.
How can this infrastructure contribute to improving the investment climate in Moldova?
The A7 Highway will directly contribute to improving the investment climate in Moldova by providing modern infrastructure that will attract investors. Efficient infrastructure means lower transportation costs and quicker access to international markets. Additionally, integrating transport infrastructure with telecommunications and electricity networks will create an attractive environment for investments in sectors such as ICT, renewable energy, and industrial production. The government can play a crucial role by offering fiscal incentives and investing in shared infrastructure, such as water pipelines and digital infrastructure.
What initiatives should companies and the government take to capitalize on the opportunities offered by the A7 Highway in terms of industrialization and integrated development?
Companies are already familiar with vertical and horizontal integration, but the government needs to support these processes through the strategic planning of industrial clusters. For example, the government should invest in shared public infrastructures such as wastewater treatment and communications infrastructure. It is much more efficient and cost-effective to integrate these networks during the construction of highways, thus avoiding additional costs. Integrating underground communication networks instead of overhead lines, especially in rural areas, will bring long-term benefits, such as increased reliability and lower maintenance costs.
Have you had discussions with authorities or investors from Romania to develop strategic projects that would benefit from this infrastructure?
In 2019, when I was the Economic Advisor to Prime Minister Maia Sandu, I participated in discussions with Romanian authorities regarding the integration of cross-border infrastructure. One of the topics discussed was transforming existing bridges, such as the one at Leova, from rail to road, as well as developing other essential connections, such as the bridge near Ungheni, which will facilitate Moldova’s connection to the A7 through the A8. These projects will have a significant impact on the flow of goods and people between Romania and Moldova.
What measures should be prioritized to stimulate competitiveness and sustainable development?
Sustainable development should be a priority for both governments and companies. Governments should offer incentives, not prohibitions, to companies investing in CO2 capture and sequestration, as well as those adopting green technologies. Another essential aspect is stimulating investments in education and reskilling of the workforce. I believe that financial incentives, such as tax reductions for companies investing in green technology and employee training, will contribute to long-term sustainable economic development.
How do you think the A7 Highway will contribute to increasing the attractiveness of the investment climate and stimulating IT and industrialization in Moldova?
The A7 Highway will contribute to increasing attractiveness for investors, especially in the ICT and logistics sectors. Software applications that allow fleet monitoring and shipment traceability will become essential. For example, a start-up from Moldova collaborated with a company in Iași to transform how a large German transport company optimized its operations. Additionally, the A7 will facilitate the development of telecommunications and digital infrastructure, which are key to the digital transformation and industrialization of Moldova’s economy.
Which sectors will benefit the most from this infrastructure, and how will it support digital transformation and industrialization?
The logistics, transport, IT, and telecommunications sectors will benefit the most from the construction of the A7 Highway. Additionally, the agricultural and industrial sectors will have new export opportunities and better access to foreign markets due to improved connectivity. Digital transformation will be supported through the development of infrastructure related to highways, such as data networks and real-time monitoring solutions, which will contribute to the optimization of production and logistics processes.
Do you have any suggestions to maximize the positive impact of the A7 Highway on Moldova’s economic development and investment climate?
I suggest focusing on connecting the road infrastructure through Ungheni and continuing the development of the A8. It is also essential to align Moldova’s road rehabilitation program with Romania’s and the European strategy for the development of TEN-T corridors. These initiatives will boost Moldova’s economy and attract new investments.
What public policies should be implemented to create a favorable framework for investments and integrated economic development?
The government should develop a national integrated infrastructure development strategy that includes intermodal transport and investments in digital and ecological infrastructure. This would contribute to creating a favorable investment environment and allow companies to benefit from modern infrastructure, which is essential for economic competitiveness. Integrating transport and communication networks during highway construction will reduce costs and increase long-term economic efficiency.
Logistics Performance and Investment Climate
Time and cost for goods and people to reach their destination are probably the most concise measure of performance in transportation.
In these two areas, the A7 Highway will reduce the time it takes for people and goods to travel within the Moldova region on the North-South axis. Currently, we must recognize that prices will remain unchanged because there are many factors involved (the cost of road taxes, indirect fuel taxes, and how these influence per-ton/km rates).
What matters for businesses and investors when deciding where to locate their operations is the perspective of recovering investments and risk-adjusted profitability.
By breaking down risks, we inevitably come to logistics performance. To be competitive, businesses need timely deliveries (on time) for both supply and sales. As Romania and Moldova are outsourcing destinations for production of components and assemblies, mainly for Germany’s automotive industry, the ability of suppliers to deliver, or as we say in Moldova, “just-in-time,” is critical.
To gain an overview of logistics performance, I will refer to data provided by the World Bank, which continuously monitors a series of disaggregated indicators that together form the Logistics Performance Index (LPI): customs services, infrastructure, international shipments, logistics competence, delivery timeliness, and shipment traceability. Each aspect is evaluated by professionals in their respective fields on a scale of 1 to 5 (maximum score).
Without delving into historical data when Romania was ranked 51st in 2018, I will present a summary table that helps understand the situation in 2023, when several countries, including Romania, have advanced significantly in rankings. I intentionally included data for neighboring countries, as well as some reference countries that provide benchmarks for global and European best practices, including two landlocked countries of interest for potential benchmarking with Moldova.
I will reproduce the significance of each indicator/factor:
- Customs: efficiency of customs procedures in terms of time, simplicity, predictability of formalities, including both customs services and intermediaries;
- Infrastructure: quality of infrastructure related to trade and transport (ports, railways, roads, information technology);
- International Shipments: ease of accessing competitively priced services;
- Competence: quality of logistics services (transport operators, customs brokers);
- Timeliness: the likelihood of deliveries within the scheduled timeframe;
- Traceability: ability to track shipment movements.
Thus, roads and highways, as part of the infrastructure factor, play a critical role among the factors that require major capital allocations, making public infrastructure projects major challenges for both Romania and, especially, Moldova. We note the scores of 2.9 and 1.9, along with the disparities compared to neighboring countries and top reference states.
We note that Romania’s aggregate performance is on par with the neighboring EU countries, Bulgaria and Hungary, both ranked 51st. However, as Romania progresses in infrastructure, it has the potential to surpass them due to improvements in other factors.
Regarding Moldova, it remains behind Romania with score differences between 0.5-1, with the largest gap in infrastructure, reflecting largely the lack of true seaports and a poor railway infrastructure. However, the performance of Austria and Switzerland, which are also landlocked countries, provides an indication that deeper integration into European transport networks through Romania is the way forward.
Table: Summary of logistics performance for Romania, Moldova, and neighboring countries, as well as top-performing countries.
https://lpi.worldbank.org/international/global
| Country (Rank) | LPI Overall Score | Customs | Infrastructure | International Shipments | Logistics Competence | Timeliness | Traceability |
|---|---|---|---|---|---|---|---|
| Romania (51) | 3.2 | 2.7 | 2.9 | 3.4 | 3.3 | 3.6 | 3.5 |
| Moldova (97) | 2.5 | 1.9 | 1.9 | 2.7 | 2.8 | 3.0 | 2.8 |
| Singapore (1) | 4.3 | 4.2 | 4.6 | 4.0 | 4.4 | 4.3 | 4.4 |
| Finland (2) | 4.2 | 4.0 | 4.2 | 4.1 | 4.2 | 4.3 | 4.2 |
| Switzerland (4) | 4.1 | 4.1 | 4.4 | 3.6 | 4.3 | 4.2 | 4.2 |
| Austria (7) | 4.0 | 3.7 | 3.9 | 3.8 | 4.0 | 4.3 | 4.2 |
| Hungary (51) | 3.2 | 2.7 | 3.1 | 3.4 | 3.1 | 3.6 | 3.4 |
| Bulgaria (51) | 3.2 | 3.1 | 3.1 | 3.0 | 3.3 | 3.5 | 3.3 |
| Ukraine (79) | 2.7 | 2.4 | 2.4 | 2.8 | 2.6 | 3.1 | 2.6 |
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