– Mr. Lutsik, I must admit that you surprised us. After all, FTAs are called “engines of the economy”, attractive to investors. But for you, it turns out, the charms of “free enterprise” have become a burden….
– They may not have become a burden. But at one time, as you know, FTAs were created for the development of export-oriented industries. And all our enterprises have been working mainly for export all this time. About 20 years ago, free zones had real privileges, and this really helped to attract investments and increase export opportunities for residents.
Today the situation has changed dramatically. Foreign markets have become unstable and competition has increased. And benefits for FTA residents have been gradually cut in recent years.
As a result, our calculations show that the status of FTA resident severely limits our opportunities on the Moldovan domestic market, and activity on foreign markets does not compensate these losses in full.
Therefore, yes, the closure of the Tvardita FZ and the loss of the resident status will be a relief for us. We will be able to sell our products both on the domestic market of Moldova and on foreign markets. Due to this, we hope to noticeably increase the production of the whole range of our products.
– But the status of the FZP “Tvarditsa” will remain until the end of 2025, and the residents can enjoy the benefits until 2034. Do you not intend to take advantage of these opportunities?
– We have not yet decided whether we will ask for the preservation of benefits for residents. We are assessing all the risks and additional opportunities. I repeat – the benefits for residents are practically ineffective, and we see many more barriers. Today it is more profitable to sell goods on the domestic market of Moldova than for export. And the prices are often higher and there are fewer problems, including in terms of logistics.
– Can you confirm this with concrete examples?
– Of course. Take, for example, the production of alcoholic beverages, which is our main product. In Italy, a bottle of wine costs from 4 to 10 euros. It is already on the shelf in the store. Look at the statistics – the average export price of a bottle of Moldovan wine is less than 2 EUR. And on the Moldovan domestic market, the average price of a bottle of wine is 7-8 EUR.
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Vinimpex Holding intends to sell 6 million bottles of cognac and 8 million bottles of sparkling wines on the Moldovan domestic market next year |
Analyzing these figures, we understand that it is more profitable and less troublesome to sell on the domestic market. We intend to almost double the production of alcoholic beverages next year. And sell about 6 million bottles of cognac and 8 million bottles of sparkling wines on the domestic market. This is shown by the results of the research we have carried out.
Not to mention that we will be able to enter the Moldovan domestic market with our perfume products. Our joint Moldovan-French enterprise Natural Product has been working only for export so far, Moldovan consumers were deprived of the opportunity to buy these quality products. And we sold about 2 million EURO per year for export. We hope to increase production in this segment as well.
– But export supplies give the possibility of VAT refund, which is not the case when selling on the domestic market….
– First of all, exports will remain, and we will not lose anything in this aspect. We will increase sales in the domestic market by increasing production volumes. And this is where we will get noticeable advantages compared to operating as a resident.
For example, now we have to pay all excise duties and taxes at once when exporting products from the territory of the FTA to the domestic market of Moldova. This is a serious barrier for us, it diverts large sums of money even before the goods are sold. Without resident status, we will pay them in a month.
In addition, when supplying alcoholic beverages to the domestic market, we pay a duty of 5%. And during the production process, import and export of each batch of raw materials, components, services and finished products was subject to customs clearance fees. According to our calculations, in total, these payments amount to 7% of the cost of production.
– You talk about serious expansion into the domestic market. But there is also very serious competition, especially among producers of alcoholic beverages.
– We are not afraid of competition and are ready for it. The same thing is happening on foreign markets. Our products are of high quality, and many people know it. Last year we were among the TOP-10 best champagne producers. And this year, at the most prestigious international competition Effervescents du Monde, our sparkling wine Maestro – Cuvée Rosé Brut Nature (distributor in Moldova – Consalkom SRL) received a gold medal.
We are sure that the natural perfumery and cosmetic products Natural Product will find its buyer on the Moldovan market. So far it has not been sold here, but in terms of price-quality ratio it will certainly be a worthy competitor to imported cosmetics.
So the fact that we will go beyond the FTA and start to sell our products more actively on the domestic market of Moldova will benefit both us and the buyers. And we are very happy about it!
