RFI MISRA January 2022 (1).pdf

REQUEST FOR INFORMATION (RFI)

Subject: Request for Information No. RFI-117-22-000002 Issued Date: January 31, 2022 Comments Due Date and Time: February 15, 2022, 16:00 PM Chisinau, Moldova Local Time

Reference: Moldova Institutional and Structural Reforms Activity (MISRA)

The United States Government, represented by the U.S. Agency for International Development (USAID) in Moldova, is in the process of designing a new activity entitled Moldova Institutional and Structural Reforms Activity (MISRA). We are seeking public comments, clarifications, and suggestions on the DRAFT Statement of Work (SOW) to inform the design process. Pursuant to FAR 52.215-3 “Request for Information or Solicitation for Planning Purposes”, responses to this request for information are not binding on the U.S. Government and do not obligate USAID to issue a solicitation, nor does it commit USAID to pay any cost incurred in the preparation and submission of comments.

Brief Project Description

The goal of the Moldova Institutional and Structural Reform Activity (MISRA) is to improve the institutional, business, and trade enabling environment in Moldova by supporting Moldova’s public institutions and the private sector to accelerate the implementation of trade liberalization mechanisms, adopt structural and investment climate reforms, accelerate financial sector reforms, improve economic governance in the public sector, and enhance strategic communications between the private and public actors.

Requested Information

To inform the design and maximize potential program impact, USAID invites constructive feedback on the proposed SOW. These comments will be taken into consideration in the design of a final activity.

Comments in response to this RFI must be submitted via email to the Acquisition and Assistance Specialist, Lucia Sandefur at lsandefur@usaid.gov and Dan Prodan at dprodan@usaid.gov with the subject entitled: “Request for Information (RFI): Moldova Institutional and Structural Reforms Activity (MISRA)” no later than the date and time stated above.

Thank you for your interest in the subject request for information.

Sincerely, Robert Parnell Regional Contracting Officer mailto:lsandefur@usaid.gov mailto:dprodan@usaid.gov

Moldova Institutional and Structural Reforms Activity (MISRA)

RFI-117-22-000002

Section C - DRAFT STATEMENT OF WORK (SOW)

MOLDOVA INSTITUTIONAL AND

STRUCTURAL REFORMS ACTIVITY (MISRA)

C.1 Activity Objective and Purpose

The objective of the Moldova Institutional and Structural Reform Activity (MISRA) is to improve the institutional, business, and trade enabling environment in Moldova by supporting Moldova’s public institutions and the private sector to accelerate the implementation of trade liberalization mechanisms, adopt structural and investment climate reforms, accelerate financial sector reforms, improve economic governance in the public sector, and enhance strategic communications between the private and public actors. The Moldova Institutional and Structural Reform Activity will build on prior and on-going USAID and USG activities in the business enabling environment and trade facilitation space to strengthen Moldova’s economic growth and resilience, and by doing so, reduce vulnerable areas for corruption.

USAID’s principal government counterparts for this endeavor are the Ministry of Economy, Ministry of Infrastructure and Regional development, the Ministry of Finance, Financial Markets Regulators, the Prime Minister’s Economic Council, the E-Government Agency, the Customs Service, National Food Safety Agency (ANSA), and others. Additional partners will be key entities from the private sector, civil society, media, Parliament, and local government.

C.2 Background

C.2.a General Background

Moldova is a mid-sized, landlocked country with significant economic, geographic, and political challenges. In 2020, Moldova's economy collapsed due to the COVID-19 outbreak, reporting a negative growth balance of 7.5%, compared to 3.6% in 2019. GDP per capita (PPP based) in Moldova is expected to reach 13,000 USD by the end of 2021, according to Trading Economics global macro models and analysts expectations. In 2021 the economy has started to rebound gradually, but most of the short-term indicators remain in negative territory. According to the World Bank’s October 2021 Europe and Central Asia Economic Update report, Moldova's economy is expected to expand by 6.8% in 2021 and by 5.2% (IMF projection) in 2022, contingent upon implementation of a broad-based reforms program, sustained fiscal support and control of the pandemics rates.

The country's goal of European Union (EU) integration has resulted in some market-oriented progress.

Moldova signed an Association Agreement (AA) and a Deep and Comprehensive Free Trade Agreement (DCFTA) with the EU during the fall of 2014, connecting Moldovan products to the world’s largest market. Since 2014, the Moldovan exports have registered a significant trade reorientation from the traditional Russian/CIS markets. Exports to the EU and other countries have grown from 69% to 85% while those to the CIS have reduced from 31% to 15%.

While exports have grown over the last decade, imports have soared even faster. Moldova’s trade deficit accounts for around 40 percent of GDP as remittances fuel imports of household goods. As such, Moldova's trade deficit widened to $1.57 billion, by $572.5 million (1.6 times) more compared to the same period of 2020.

Small and Medium Enterprises (SMEs) predominate, with few, if any, large manufacturing enterprises that can reap economies of scale and compete on international markets. SMEs are constrained by a small domestic market, limited access to finance, a cumbersome and often corrupt business environment, and a limited number of skilled workers and professionals.

Moldova’s Transparency International’s assessment shows that all governance institutions assessed have a high vulnerability to corruption and lack transparency and integrity, positioning Moldova 115th out of 179 economies in the 2020 Corruption Perception Index.

A vulnerable political system, a polarized society, corruption, weak institutions, low labor productivity, demographic challenges, skills mismatches, and a high vulnerability to both climate-related and external shocks are Moldova’s biggest economic challenges. The influence of entrenched elites and corruption are seen as major obstacles to implementation of economic reforms.

Further, uncertainties around the evolution of the pandemic are expected to keep the economy below potential.

C.2.b Country’s Political Context

Postcommunist Moldova is wedged between Ukraine and EU member Romania, with which it shares a common language. The ruling Party of Action and Solidarity (PAS) won majority mandates during early parliamentary elections in July 2021. PAS had campaigned on a platform of carrying out reforms and tackling corruption, and advocated closer ties with the European Union and the United States. Prime Minister Natalia Gavrilița's new government was confirmed by the Moldovan Parliament on August 6, 2021. Gavrilița's appointment marked the end of the six-month absence of government in the country after the previous government resigned in December 2020. The Cabinet is currently composed of 13 ministries, each headed by a minister and 3-4 state secretaries, responsible for specific domains within the ministry.

The current Government has a strong mandate and parliamentary support and is regaining trust among citizens and international partners. Nevertheless, the economic and social recovery will have to be complemented by improved governance and strengthened capacity to implement reforms. Expectations for quick results by the new government are high.

C.2.c Relationship to the Country Development Cooperation Strategy (CDCS)

The proposed activity (MISRA) supports USAID Moldova’s recently-approved CDCS and is aligned with US Embassy Chisinau’s Integrated Country Strategy (ICS). Under the CDCS, USAID’s goal for the strategy period 2020 – 2025 is that Moldova will be a competitive and democratic European country that resists malign influences while being powered by an aspiring citizenry and robust private sector partnerships. As part of this goal, “USAID will work in partnership (with) … government entities to seek necessary policy reforms and address regulatory and trading constraints”1

Specifically, MISRA contributes to CDCS DO2: Sustainable Economic Growth Rooted in Euro-Atlantic Integration, IR 2.1 Western-Oriented Market Integration Increased, and will support Sub-IR 2.1.1 Targeted Regulatory Implementation Strengthened; Sub-IR 2.1.2 Trade Facilitation Improved and with further IR 2.2 Competitiveness in Transformative Sectors, specifically Sub-IR 2.2.3 Access to Finance Improved.

The Activity will also contribute to DO1 Strengthened Participatory Democracy, IR 1.2. Responsiveness of Targeted Public Institutions Strengthened; and partially to IR1.3. The Activity will also address CDCS

1 USAID Moldova Country Development Cooperation Strategy (CDCS), December 18, 2020 – December 18, 2025, p.

23.

https://www.usaid.gov/sites/default/files/documents/Moldova_CDCS-external_December-2025_508_COVER.pdf

Cross-Cutting Priorities: Out-Migration, Inclusion of Youth and Women, and Climate Change.

C.2.d Relationship to Government of Moldova’s Strategy and to Other Donor Assistance Programs

The GoM committed to improving its business and institutional environment through a number of documents approved over the last several years, and through the most recent Government Action Plan for 2021-2022.

These strategic documents emphasize European integration and the need for better public services, improved business regulatory environment, digitization of processes and services, and development of e-commerce, enabling Moldova to build on its competitiveness factors and build economic resilience.

Throughout the project lifetime, the contractor must coordinate and interact closely with the majority of public sector stakeholders, including: the Ministry of Economy, Ministry of Infrastructure and Regional Development, Ministry of Finance, government-established public institutions, key think tanks, and other strategic industry and private sector groups and associations.

Other relevant donor activities and coordination

The World Bank:

● MD Second Competitiveness Enhancement Project works to (i) improve the business environment through regulatory reforms that reduce the cost of doing business; (ii) help SMEs and exporters to get access to business development services; and (iii) improve access to medium-and long-term finance for export oriented enterprises. Closing date: 31 Dec. 2021

● Modernization of Government Services in the Republic of Moldova works to improve access, efficiency, and quality of delivery of selected government administrative services. Closing date:

30 June 2023

● Tax Administration Modernization Project, with the objective to support business survival and sustain employment in the context of the COVID-19 pandemic, through temporary tax relief, and improve taxpayer services in the Republic of Moldova. Closing date: 30 Nov. 2023.

EU:

On June 2, 2021, the European Commission announced an Economic Recovery Plan for the Republic of Moldova, which will mobilize up to €600 million in macro-financial assistance, grants, and investments, supported by blended financial guarantees. This new funding will be mobilized over the next three years to promote investment that underpins a sustainable and inclusive recovery from the COVID-19 crisis in the country. Programs to be defined.

Ongoing programs:

● Support the Moldovan Government in identifying and preparing projects linked to the implementation of the Association Agreement. The objective of the project is to strengthen project preparation competences of national authorities ensuring complementarity between the implementation of the AA and external assistance. Closing date: 01.07.2025

● EU Twinning Project: "Enhancing the System of Prevention and Combating Money Laundering and Terrorism Financing in the Republic of Moldova" aims at providing support to Moldova in fighting money laundering and terrorism financing by sharing best practices and the experience of Lithuanian, Polish, and German administrations in this field. Closing date: 12.12.2021

● EU High Level Advisers Programme in Moldova - Deployment of European Union High Level Advisers to support the Government to implement its reform Agenda - partially ended. This included support on strategic communications.

● The European Union's EU4Digital Initiative supports the digital reform agenda in the Republic of Moldova with a range of actions to promote key areas of the digital economy and society in line with EU norms and practices.

● Strengthen the rule of law and anti-corruption mechanisms in the Republic of Moldova. The project will provide advice on strengthening state institutions tasked with preventing and combating corruption. Implemented by German Corporation for International Cooperation.

Closing date: 31.03.2024

● Technical assistance on developing e-procurement systems in the Republic of Moldova. The project aims to support the Government of Moldova in the implementation of its public procurement reforms in line with the European Principles of Public Administration, by offering technical support to the Ministry of Finance for the development of an electronic public procurement system to better serve the citizens and businesses in Moldova. Closing date:

31.10.2021

GIZ:

● Economic policy advice to the Moldovan Government. The project comprises advisory services in the following four, mutually reinforcing, areas: 1) Enabling framework; 2) Investment promotion; 3) Linkages; and 4) Disadvantaged groups. Closing date: 2022

● Support to the Moldovan Government in the Implementation of the 2030 Agenda. The project aims to develop structures and skills for successfully implementing the 2030 Agenda in the Republic of Moldova.

● Rule of law and anti-corruption support for integrity institutions in Moldova. The project focuses on capacity-building, amendments to the legislation and IT equipment endowment to the anti-corruption, and integrity institutions in Moldova. Project period: 2020-2024.

Support to the National Bank of Moldova (NBM):

1. EU Twinning Project - “Enhancing the system of prevention and combating money laundering and terrorism financing in the Republic of Moldova.” The primary objective of the project is to consolidate and develop the supervisory mechanisms of reporting entities. This is to be done by implementing and improving internal procedures, evaluating risks, and building capacities through training on newest trends in ML/TF. Beneficiaries include around 15 public authorities from the Republic of Moldova with dedicated functions in preventing and combating money laundering and terrorist financing, including the NBM. Expected completion date: December 2021.

2. EU Twinning project - “Strengthening supervision, corporate governance, and risk management in the financial sector.” The project started in October 2021, and has an implementation period of 24 months. The project has five components, three of which are related to the NBM:

● Component 1: The macro prudential framework enhanced through improved capacities of the regulators to mitigate a build-up of systemic risks.

● Component 4: NBM internal regulations on oversight activities revised, developed, and enhanced.

● Component 5: Moldovan legislation and regulatory framework is compliant with the Single Euro Payments Area (SEPA).

Support to the National Commission for Financial Markets (NCFM):

● EU Twinning project - “Strengthening supervision, corporate governance, and risk management in the financial sector.” The project started in October 2021, and has an implementation period of 24 months. The project has five components, two of which are related to the NCFM:

○ Component 2: New legal framework on supervision of insurance sector and on third party liability motor insurance aligned to EU acquis is developed and enforced.

○ Component 3: A new legal framework strengthening supervision of non-bank credit organizations is developed and enforced.

● The World Bank technical assistance program in the financial sector: improving the regulatory framework in insurance and strengthening the financial security mechanism. It covers two areas:

○ Non-bank credit organizations and savings and credit associations (SCA): Technical assistance supports creation and implementation of the deposit protection system in the SCA sector, by strengthening the Resolution Fund and the Deposit Guarantee Scheme.

○ Insurance sector: The project aims to strengthen the regulatory framework of the insurance sector and implement supervision based on risk prevention and management, both by finalizing and promoting the new regulatory framework.

USG Activity Coordination In addition to closely coordinating with the Government of Moldova’s efforts and other donor-supported activities in Moldova, to the extent there is alignment with the activity’s objectives, the contractor must also leverage and coordinate with other USG and USAID activities in governance and economic growth areas. It is critical for the contractor to understand relevant parts of the USG portfolio of activities in Moldova and to actively seek for ways to collaborate and address needs in a cross-cutting manner, where appropriate, particularly related to capacity-building.

There is a particular emphasis on the need to coordinate and build upon activities started within the following USAID projects:

Moldova Structural Reform Program (MSRP) supports Moldova’s continued integration into regional and worldwide systems of commerce and trade. The program works to help improve the general business environment, particularly with regard to regulation, and is also working to help develop Moldova’s e-commerce and the overall trade environment. MSRP works with the Agency for Auto Transportation (ANTA), the national postal operator - Posta Moldovei, the Customs Service, several ministries, public sector institutions involved in the regulation of businesses, think tanks, business associations, etc.

Financial Sector Transparency Activity (FSTA) is strengthening the capacity of the National Bank of Moldova (NBM), the Moldova Central Securities Depository (CSD) and of the Moldova National Commission for Financial Markets (NCFM) to combat financial crimes, automate the monitoring of shareholder transparency and fight systemic money laundering in the banking sector and by enhancing the efficiency and reliability of the securities settlement and registry infrastructure in Moldova. The Activity is also supporting development of a securities retail Platform at the Ministry of Finance (Treasury), supporting the NCFM with the preparation of transition to NBM of some regulatory functions.

Moldova Future Technologies Activity (FTA) aims to enhance competitiveness and expand global market integration of transformative economic sectors in Moldova -- information and communication technology, engineering, light manufacturing, creative industries, and digital media. FTA will help to build a digitally-skilled, future-ready, and adaptive workforce, strengthening the link between education and the private sector. FTA is also to provide firm level e-commerce support.

MEDIA-M Project plays an important role in monitoring and reporting on political and financial influences. The MEDIA-M activity promotes the development of independent, professional media, strengthening the ability of independent media to fulfill their role as watchdogs over the government, and works to rebalance the toxic monopolistic political and financial control over the media market.

In the justice sector, USAID’s Model Court Project seeks to promote a more effective and transparent justice system. USAID investments in IT solutions have greatly enhanced judicial efficiency and transparency, improved access to justice, and reduced the ability to manipulate the process. The current

3.5 year Model Court Initiative is designed to embed improved court performance standards and better justice for court beneficiaries, in two pilot courts, to later expand to other first instance courts throughout Moldova. The overall goal of the project aims at strengthening the justice system to contribute to increasing the level of confidence in state institutions and promotion of the rule of law.

Similarly, the Moldova Commercial Arbitration and Mediation Project, implemented by EBRD, seeks to enhance the use of alternative dispute resolution mechanisms in the country, so as to advance extrajudicial, amiable resolution of disputes. The current phase of the Project will concentrate on assisting the GoM to promote the use of commercial mediation and arbitration at the national level, in line with the ADR Chapter of the Justice Reform Strategy for years 2021-2022. Improved business environment with more efficient means of dispute resolution through improved regulatory framework is one of the objectives of this project.

The US Treasury is considering supporting the Moldova Railway Company to increase management efficiency of this State Owned Enterprise. Also the OTA is currently providing technical assistance to the State Tax Service of Moldova. The Department of Commerce’s Commercial Law Development Program (CLDP) will conduct assessment meetings with the Moldovan Railroad (CFM) to pilot a State Owned Enterprise reform project. This work will complement planned Treasury OTA assistance. While OTA’s work will likely focus on financing and liquidity, CLDP plans to work with CFM to develop voluntary codes of compliance and corporate governance rules to improve CFM’s competitiveness and efficiency.

C.3 Theory of Change

C.4 Statement of Work

The following section describes the components and the expected results that the Contractor must accomplish under this contract. The following sections provide a brief description of the development context under each of the components, as well as a set of guiding principles that should guide the Contractor in addressing the four components below. The Contractor must propose a set of interventions to achieve the expected results.

C.4.1 Contract Components and Expected Results

Component 1: Strengthening public economic governance institutions for resilience and accountability

Goal: The main objective of this component is to support modernization and rethinking of business/citizen-centered public services by streamlining processes and incorporating digital tools into the public systems, creating a regulatory and operational environment favorable for development and growth of businesses and service delivery in the virtual environments, and stimulating the development of the digital economy. This component will contribute towards implementation of Objective 1, 2 and 16 of the GoM Action Plan for 2021-2022 and its subsequent iterations.

Background: The effectiveness, efficiency, and integrity of government in the formulation and implementation of sound policy, and in the provision of services provided by a meritocratic civil service are foundational to a country’s progress. Moldova needs to continue strengthening its governing institutions, accountability systems, and efficiency and transparency of its public sector to better serve people, businesses, and the country. Weak governance institutions associated with a lack of transparency and rent-seeking behavior, as well as poor interagency coordination, have compromised resource allocation decisions and significantly undermined the population’s faith in the ability of the political class and government to deliver public goods and services to its citizens.

Despite advancements in the regulatory framework, effective implementation of often well-designed policies remains an issue. Access to information and monitoring the use of public resources still require implementation of more transparency mechanisms. The system of public procurements, especially at the level of Ministries and Agencies is still considered vulnerable to corruption and exploitation by public servants. At a more operational level, these issues translate into problems with credibility of the budget, quality and predictability of public investments/procurements, and capabilities and stability of the civil service.

Agility, competence, and digitization in delivering government services to the public, inter and intra-agency coordination, as well as transparency of information in this regard would be essential for ensuring accountability and effectiveness of the government response actions, economic sectors’ reforms, and building trust in the state.

Illustrative Activities:

1. Support public sector institutions to implement streamlined procedures and systems to improve their effectiveness and transparency

● On behalf of USAID and at the Government of Moldova’s request, assess the feasibility of supporting a series of public, economic-governance institutions, which cover the economic portfolio and have a direct impact on businesses, such as Ministry of Economy (MoE), Ministry of Infrastructure and Regional Development (MoIRD), Ministry of Finance (MoF), Ministry of Agriculture (MoAg), National Food Safety Agency (ANSA), Agency for Auto Transportation (ANTA), Competition Council, Customs Service, State Tax Service, Licensing Chamber, Procurement Agency, Public Services Agency, the Agency for Consumer Protection and Markets Supervision, etc.

○ Activities can include, but are not limited to: reviewing internal procedures and proposing business processes reengineering, by enabling procedures’ automation and digitalization and development of integrated management systems. Provide capacity building and support development and implementation of Institutional Development Plans (IDP). These will provide clarity on work streams and requirements and mitigate discretionary processes within institutions, reduce face-to-face interactions between government service staff and constituents, which will contribute to enhancing efficiency, transparency and accountability.

● Support the upgrade of the technological capacities and innovation skills of relevant economic governance institutions so that they can process the enormous amount of data needed to inform policy formulation. For example, to identify suspicious transactions, prepare for new technological opportunities, etc.

● Support development of a Governmental Regulatory Information System (RIS) for legislative and normative acts (decisions that create legal consequences for more than one individual). This would be an IT system that would incorporate the entire process of creating and passing normative acts within the GoM, from the initiation of the act by an authority up to the approval by the Government and, if required, its submission to the Parliament.

2. Help supported institutions to reinforce integrity by complying with international standards, including among others, the United Nations Convention against Corruption, High Level Principles on Fiscal Transparency, Participation, and Accountability, INTOSAI-ISSAI 12, the EITI, Open Contracting, Anti-Money Laundering and Combating the Financing of Terrorism (AML-CFT) and the use of the Global Legal Entity Identifier.

Expected Results:

● Government capacity to implement economic policies and programs increased to benefit international trade and doing business environment

● At least five economic governance institutions capacities strengthened, as a result of improved business processes or developed e-gov services.

● At least five enhanced public digital services established/modernized and oriented towards business community

● Technical assistance provided for streamlined regulatory requirements and practices by government ministries and agencies in their dealings with investors

● Improved inter and intra-agency coordination, as a result of improved processes and management systems

● Improved fiscal transparency and procurement practices within the assisted institutions

● Improved cyber security and overall resilience of the assisted institutions

Component 2: Pursue structural reforms to improve trade and investment enabling environment

Goal: The main objective of this component is to support the GoM to streamline its regulatory practices to improve trade and the doing business environment. This component will also contribute towards implementation of Objective 4, 6, and 7 of the GoM Action Plan for 2021-2022 and its subsequent iterations.

Background: As a small and open economy, Moldova’s development potential is linked to its trade and investment integration strategy. Moldova is situated between two large markets: the European Union (EU), which absorbs over 60% of Moldova’s exports, and the Russian Federation.

Moldova and Ukraine operate joint customs posts to monitor the transit of people and commodities. The idea of Moldova/Romanian joint border control areas has been raised with Romanian authorities;

however, due to a series of factors, has never got sufficient traction to materialize.

Digitalizing national customs and transport procedures and promoting paperless cross-border trade has become a growing global trend. Many electronic solutions have been developed and used, and Moldova needs to integrate such systems to offer enhanced solutions to its business community and investors.

The previously sluggish transition of Moldovan companies to online business processes has accelerated dramatically during the COVID-19 crisis. While not all elements of the production process can be put online, digitization is certainly the new trend. E-commerce and digitization of public services is becoming an accepted priority for the Government, but also for donor programs in Moldova.

Reducing the economic distance to large regional markets and reaping the benefits of openness is key to overcoming Moldova's structural constraints and spurring export-led growth.

Increased, uninhibited trade can bolster and diversify the domestic resource base, better position the economy to weather endogenous and exogenous shocks, and strengthen the government’s capacity to mobilize domestic resources by increasing tax revenues that result from an expanding economy.

An enabling business environment is foundational to the growth of the private sector. It promotes and encourages innovation, risk-taking, and productivity growth at the firm level, and provides opportunity and incentives at the individual level, both of which contribute to sustainable development at the country level. Through fair and transparent rules, regulations, and protections, it encourages market competition and entrepreneurship, thus leading to greater productivity and economic growth. A favorable business environment draws economic activity into the formal economy, enabling greater possibilities for enterprise growth (e.g., through greater access to credit), generating more employment opportunities, and expanding the tax base, hence greater capacity for domestic resource mobilization for governments.

A healthy investment environment is also critical for developing and sustaining economic growth.

Through investments in transportation, logistics and financial infrastructure, markets become linked, and the transaction costs are reduced. An effective system of investment protections and property rights ensures investor confidence to mobilize capital toward the most promising enterprises, individuals, and ideas.

Moldova has made impressive progress in improving its Doing Business indicator ranking in recent years, moving into position 47 among 190 economies, with a 74.4 overall score. This score indicates that the regulatory gaps are slowly being minimized. As a country with geographic, political, and economic challenges, Moldova starts with a significant disadvantage in the competition for foreign investment.

Moldova needs to undertake significant investment climate reforms in order to stimulate private sector investment to achieve more sustainable growth, increase the country's competitiveness, and create more and better jobs, while starting to diversify its economy.

It is even more important, therefore, for Moldova to progress on its international commitments and demonstrate commitment to meeting its obligations under the DCFTA, the AA, and the World Trade Organization Trade Facilitation Agreements (TFA). Doing so will create the conditions for business to grow and prosper.

Illustrative activities:

1. Implement trade capacity building activities to help Moldova more effectively participate in international trade and create stable trading relationships that promote prosperity and security:

● Assess the level of implementation of the Government’s Digitization and E-commerce Roadmap and recommend activities to develop the e-commerce ecosystem in Moldova. Support streamlining the customs, logistics, tax procedures related to e-commerce.

● Provide support to implement simplified customs procedures and electronic (paperless) declarations for all customs regimes, to facilitate exports and imports.

● Assist Moldovan Customs with National Computerized Transit System (NCTS) implementation.

Moldova plans to upgrade to NCTS 5.0. This upgrade will take place in 2024. However, the activity will assist Moldova Customs Service (MCS) with preparation for the upgrade, possibly including (but not limited to) legislative and regulatory changes, and/or developing technical specifications in cooperation with the EU.

● Support GoM efforts to develop and implement joint customs control mechanisms at the border control points with Romania.

● Support the Moldovan Customs with Authorized Economic Operator (AEO) Mutual recognition Agreement (Treaty) promotion.

● Assist with the drafting of regulations for the implementation of the new Customs Code

● Provide technical assistance and capacity-building support to MoE to enhance its ability to negotiate free trade agreements.

● Provide technical assistance on trade facilitation (e.g., legal gap analysis, policy reform, international standards, etc.).

2. Support development of transportation and logistics services to improve efficiency of moving goods:

● Support development of a medium-term action plan and strategy for the transport and logistics sector, to fulfill Moldova’s commitments under the signed Association Agreement and in compliance with best international practices.

● Assess opportunity to have a governmental unit largely dedicated to logistics policy and execution of national strategies.

● Assess the feasibility and support development of the Digital Transport Corridor concept in Moldova. Facilitate and harmonize logistic information exchange to organize logistics processes and electronic transport data flow so that information is exchanged instantly between logistics chain participants (traders, freight forwarders, customs, other government agencies and consumers), optimizing the flow of goods and services and saving time and money. If feasible, support Moldova’s integration into the prospective Digital Transport Corridor between the Baltic Sea and the Black Sea.

● Support the upgrade of the customs TIR Electronic Pre-Declaration (TIR-EPD) to E-TIR. This is an integrated TIR and risk management module that will be integrated with both the current TIR- EPD system (with which it is fully compatible) and also with ASYCUDA (with which it is largely compatible, with some adjustment requirements to ensure forward compatibility when MCS upgrades to ASYCUDA 5.0 in 2023).

● Support development of the postal and courier services.

3. Support the GoM to implement structural reforms to support job creation and sustainable growth:

● Assess the level of implementation of the Association Agreement objectives that are in line with the overall scope of the project and recommend activities to streamline the process of structural adjustments of the Moldovan economy with that of the EU. The EU-Moldova Association Agreement comprises a myriad of objectives that aim to integrate the Moldovan economy with that of the EU. It sets out objectives in areas such as: sustainable development and transparency, public procurement, services, competition policy, intellectual property, etc.

● Provide support to streamline regulatory requirements and practices by government ministries and agencies in their dealings with investors. For example, standardize land lease contracts, review visa regimes to ensure foreign investors, managers, and personnel are protected in their rights to stay, exit and re-enter the country as per the visa stipulations.

● Support the GoM in developing a proactive foreign investment policy for economic diversification. Work with Moldova Investment Agency (MIA) to develop an FDI Attraction and Diversification Strategy with a strategic focus on sectors that would promote high growth and job creations, e-commerce, eco-tourism, and others. Support development of a proactive Investor

Aftercare Program.

● Assist the GoM in the removal of explicit and implicit barriers to growth for small and medium sized enterprises by focusing on a few areas such as trading across borders, dealing with construction permits, and getting credit.

● Support the GoM in assessing the myriad of tax and customs exemptions and financial incentives in Moldova and propose a transparent mechanism for the GoM to prioritize among them.

● Support the GoM efforts on VAT approximation to EU standards and practices.

● Support the GoM to review the existing privatization/SOE policy framework, including corporate governance of SOEs and provide selective privatization support

● Support GoM efforts to replace national standards with EU and international standards.

● Expand support in dealing with construction permits, including evaluation of the quality of building regulations, the strength of quality control and safety mechanisms, e-authorizations in construction; support digitization of processes.

● Provide support to the Government to develop laws, regulations, standards, and procedures on Sanitary and Phytosanitary (SPS), Trade in Goods, Competition, Transparency, Investment, Consumer Protection, etc.

Expected Results:

● Improved e-commerce environment (improvements in global indices such as UNCTAD (B2C e-commerce) etc.)

● Trade Facilitation reforms promoted

● Defined strategy for the transport and logistics sector

● Expanded and enhanced AEO program

● Improvements in the global indexes for transport and logistics services

● Transparency and efficiency of the National Postal and courier services enhanced

● Recommendations on priority activities to streamline the process of structural adjustments of the

Moldovan economy

● Construction sector’s regulatory and institutional frameworks improved

● Equipment, IT solutions, and services provided

● Select Structural reforms implemented in Taxation, Construction, Sanitary and Phytosanitary

(SPS), Trade in Goods, Competition, Transparency, Investment, Consumer Protection, etc.

Component 3: Accelerate financial sector reforms and inclusiveness

Goal: The main objectives of this component are to support development of an inclusive financial sector and supporting infrastructure to enhance efficiency, transparency, and resilience.

Background: Moldova’s financial system includes its banks; nonbank lenders; securities markets; pension and other investment funds; insurers; and market infrastructures such as central securities depository, stock exchange, payment providers, as well as its regulatory and supervisory authorities. These institutions and markets provide a framework for carrying out economic transactions and monetary policy and help channel savings into investment, thereby supporting economic growth.

The Moldovan economy remains highly vulnerable to developments in the economies of its trading partners and reliant on remittances and donor support. The financial system is dominated by the banking sector, which continued the trend of consolidation of own funds and maintained a high liquidity and profitability level.

According to the International Monetary Fund, significant progress has been achieved in reforming the financial sector in the last few years. Banks are well capitalized and remain liquid, with a sizable share of assets held in National Bank of Moldova (NBM) reserves and government bonds. Bank profitability is also healthy. The Law on Bank Activity came into force in July 2018, transposing the EU CRD IV/CRR Directive for credit institutions and modernizing the banking regulatory framework.

Nonbank financial institutions and markets are still small and underdeveloped. The capital market is small: the Moldova Stock Exchange, controlled by the banks, is illiquid. An important pillar of the economy may become the insurance sector, but it will have to go through a process of reforms similar to the one that banks have gone through.

The Central Single Depository (CSD), previously developed and supported by USAID, has significantly improved the quality of services of the capital market. Since its founding in 2018, all operations with state securities and NBM certificates are carried out through the CSD. Transactions concluded on the Moldovan Stock Exchange are settled by the CSD. The registers of banks, insurance companies, listed companies, state-owned companies, and other important companies have been sent to the CSD, where the data is safely stored.

Gaps in the authorities’ legal powers and protections leave them poorly placed to address significant shortcomings in governance of both banks and non-bank financial institutions. The non-banking sector’s governance function is planned to be transferred from the current National Commission for the Financial Markets (NCFM) to the National Bank of Moldova (NBM), starting with 2023.

A well-functioning, inclusive financial system and supporting infrastructure is critical to ensuring the availability of money. With the right enabling environment and ecosystem of market actors, digital finance — or more broadly, “FinTech” — can foster greater efficiency and transparency, resilience, and empowerment across a variety of contexts, whether in agriculture, health, education, energy, or governance. The impact of these gains can be felt by many communities: women, youth, micro, small, and medium-sized enterprises (MSMEs), rural communities, and others.

According to the NBM’s Governor Armasu, an immediate goal of the NBM is to develop financial infrastructure, payment systems to ensure the rapid movement of money, capital, and technology.

Illustrative activities:

1. Enhance financial sector governance by supporting the development of the necessary regulatory framework and capacity building of the regulators.

● Assessment and implementation assistance for the financial sector stability and soundness.

● Support effective and efficient oversight of the financial sector. Help the authorities to apply consistently CPSS-IOSCO Principles for the sector, and allocate or share responsibilities according to their mandates and competencies. Support the transfer of the supervision functions from the National Commission for the Financial Market (NCFM) to the National Bank of Moldova (NBM).

● Provide support to implement the Retail Platform for Government securities and other financial instruments, expanding opportunities for retail investors who want to invest in financial instruments and government securities in particular, offering them alternatives to bank deposits.

● Assess feasibility for insurance sector reform and provide implementation assistance.

2. Enhance financial inclusion and promote digitization in the financial sector services

● Support development of a National Financial Inclusion Strategy.

● Support creation of a conducive environment for the expansion of Digital Financial Services

(DFS). Digital channels can facilitate the scope and reach of financial services to the excluded groups, by leveraging technologies to offer low-cost and sustainable financial services.

● Drive adoption of cashless payment channels, working both with the public MPay platform but also the private ones.

● Develop a task force/working group to advise relevant parts of Government on the feasibility of tax incentives and grants to stimulate the development of Fintech and financial services related to e-commerce.

● Assess the feasibility of launching a tax rebate scheme for investors who invest in risk capital in Fintech ventures.

● Assess and propose regulatory/tax/etc. incentives to encourage angel and venture capital investors to Moldova. Development of the legal framework for the operations of the investment funds, crowdfunding, angel investors and other equity-based platforms

Expected results:

● Financial sector regulatory institutions capacity strengthened to become more transparent, resilient and efficient.

● Increased number of new Fintech firms originating from local entrepreneurial networks

● Increased rates of financial inclusion – i.e., increase in numbers of bank accounts

● Increase in non-cash payments

● Appropriate areas for insurance sector reform investigated and recommendations provided

Component 4: Enhance strategic communications around components 1-3

Goal: The main objective of this cross-cutting component is to improve the public’s understanding of, and support for, efforts to improve the institutional, business, and trade enabling environment in Moldova.

Background: Strategic communication will generate momentum from the planning through the implementation stages for trade liberalization and structural reforms. This component will: (1) improve the way information about reforms and the reform process is related to businesses and the public at large,

(2) create increased opportunities for public-private dialogue in order to increase private sector input into the reform lifecycle.

Following the identification of relevant reforms to be pursued through the project components (both existing and future), communications activities will have to be integrated into the entire process for each reform measure and use communication tools to create a critical mass of supporters for the reform proposed.

Principles of reform communication have been captured by USAID in a guide on Policy Reforms Lessons Learned, which provides a comprehensive framework for ensuring better understanding of, and buy-in to, the reform process.

Illustrative Activities

1. Strengthen public-private engagement on trade and business environment policies and administration

● Political economy analyses regarding key interest groups and role in support of implementation of reform commitments.

● Promote e-commerce and cashless economy to support financial inclusion.

● Establish an effective Public Private Dialogue (PPD) to identify critical constraints and bottlenecks, in general and in certain sectors, to formulate reform recommendations, and ensure an open channel of communication between the government and the private sector

● Communications training for public officials to better illustrate efforts and communications materials and products supporting implementation of reforms produced.

● Support development of the communication strategy for digital transformation of the public sector;

● Increase private sector knowledge of trade requirements and international market opportunities.

● Work with indigenous SME business associations to strengthen their communication capacity.

Expected results

● Strategic communication improved between GoM and the general public

● Enhanced understanding by the public of e-commerce and financial digital services

● Opportunities for public-private dialogue increased

C.4.2 IT procurements

The Contractor must develop a specific budget and develop a specific procurement plan to support the purchase of equipment, software, and/or services in order to advance Components 1-4. The Contractor should explore opportunities for procurement to be cost-shared with local entities. Paired with relevant capacity-building activities, procurement should lay the foundation for identifying, utilizing, and scaling modern software and IT solutions, and/or services that allow Moldova to tackle challenges associated with each of the components in Section C.4.

The contractor must be aware of the FAR Part 4.21 ‘Prohibition On Contracting for Certain Covered Telecommunications And Video Surveillance Services or Equipment (Section 889)’ which will be incorporated into the final contract award.

C.5 Activity Parameters and Implementation Principles

C.5.a Flexibility and Adaptive Management

The contractor must ensure technical and programmatic flexibility within and across program components to respond to different circumstances. The contractor must keep abreast of changes in the situation on the ground, such as the political situation; efforts to counter malign influences by diversifying Moldova’s economy; commitment and accountability from the current or any upcoming government, and similar.

The contractor must include such situational analyses and scenarios as part of its regular reporting and engage with USAID to make appropriate programmatic adjustments. To ensure sustained impact, the contractor must leverage adaptive management best practices, building on the tenets of inclusion, collaboration, integration, and evidence-based decision making. Through effective planning and consultation with USAID, the contractor must pivot and adapt implementation to capture windows of opportunities and address obstacles and complexities as they emerge.

MISRA must incorporate a Collaborating, Learning and Adapting (CLA) approach which is based on the understanding that development efforts yield more effective results if they are coordinated and collaborative; test promising, new approaches in a continuous and targeted search for generating improvements and efficiencies; and build on what works, while adapting to approaches that prove unsuccessful.