How MITP is Driving Innovation-Led Growth in Moldova

In July, Moldova Innovation Technology Park (MITP) hosted its biannual Sum IT Up event to report on the status and progress of the tech industry. MITP – an innovative e-Park that provides its residents with a 7% flat tax rate - has been working closely with its residents to carry out the strategic plan for 2021-2025, while also adapting to the shifting economic and political context driven by the war in Ukraine.

Today, MITP represents approximately 80% of Moldova’s tech industry and is the critical driver for domestic IT sector growth, offering a competitive cost and tax advantage, and attracting foreign tech investors. MITP was developed through a joint effort of the Moldovan Government and private sector, with assistance from USAID and Sweden, and is considered a regional success story, receiving the Best Tech Ecosystem award from the International Telecommunication Unit (ITU).

MITP reported on 2018-2021, showing the industry's continued expansion.

MITP now has 1130 residents, 3.5 more than registered in its launch year. 192 of the residents are companies with foreign investments from 38 countries, including the U.S., Romania, Germany, Italy, the UK, and the Netherlands.

MITP’s residents generated 6.9 Billion MDL ($345M) in 2021 – a 37% increase over 2020. Projections for 2022 are optimistic, despite resident firms' economic challenges, with estimates for resident turnover in 2022 between 7.6 and 9.5 Billion MDL.

Since MITP’s creation, the IT industry’s share of GDP has increased. Thus, the IT industry's share of the country's GDP was 2.5% in 2017 and increased to 4.0% in 2021. . The value of exports amounts to 5.8 billion MDL, a 47% increase over the previous year.

MITP’s resident companies employ over 15,000 people, whose average monthly salary (36,000 MDL / 1,850 USD) has increased 29% since 2020.

MITP acknowledges the need to develop study programs that reflect current industry needs. As the country is experiencing a talent shortage, the Park supports initiatives aimed at diversifying the curriculum of universities. The lack of varied educational programs has become a global challenge, as other countries also struggle with tech talent shortages. Currently the employee turnover reaches 30 percent per year.

Not only is the country struggling with brain drain, as the population migrates for better opportunities, but it also has to contend with foreign companies employing skilled specialists remotely, having more attractive compensation schemes, and the freedom of “work from anywhere” opportunities.

As such, Moldova Innovation Technology Park has put together a strategy to attract foreign business by adapting to the current offer and demands on the employment market. The IT Visa program facilitates a faster and simplified process for tech professionals to relocate to Moldova, while the time it takes to open a company in Moldova takes a maximum of 72 hours.

In order to boost the current experience and theoretical knowledge, MITP has partnered with USAID and Sweden to develop educational programs that support re-skilling and up-skilling. An ongoing flagship program led by MITP is the UC Berkeley Executive Education Product Management Studio Course, launched in July 2022, and held for the first group of 46 Moldovan tech CEOs and startups. This course is an opportunity for Moldova’s digital sector to develop high-value-added products.

The event concluded with speakers’ presentations, acknowledging that the IT industry’s growth is only sustainable with a highly skilled workforce and new graduates entering the field. FTA university partnerships and workforce expert Michelle Iliev spoke about FTA’s tech education initiatives, including developing three new bachelor’s programs in new media, animation, and game design, set to be launched in the next academic year. Aleksander Lukichev, Head of Unreal Engine Global Education CIS, spoke about the importance of education – industry linkages in the rapidly changing and growing area of game design. Finally, Dumitru Ciorbă, Dean of the Technical University of Moldova, spoke about the University’s cooperation with the IT sector, and the evolving state of IT education. This focus on education gave MITP residents in attendance a new perspective on Moldova’s education system and spurred additional connections between industry and academia.

Moldova’s tech-innovation industry has shown steady growth over the last several years. To continue that growth, incentives like the Law on IT Parks need to remain a certainty; firms need to increase the value of their products and services, and highly skilled IT professionals need to keep entering the industry. FTA’s work with MITP and other industry stakeholders contributes to these ecosystem elements to ensure Moldova remains an essential producer of IT goods and services.

Speaking on the key priorities for MITP, Natalia Dontu, Administrator of Moldova Innovation Technology Park commented that MITP vision is to transform Moldova into a top regional destination for high-value-added technology products and services.

"MITP is committed to driving growth in the Moldovan tech industry by encompassing the industry’s strategic vision and empowering cooperation between all key tech ecosystem players.

Top priorities:
1. Clear activity directions based on the full functional identity
2. Diversified portfolio of activities and funding opportunities
3. Increase the awareness of society regarding the Park’s impact

Strategic direction and plans for the near term:

1. Community & Networks - Enhance the competitive potential of the IT community through cooperation and communication. The strategic approach of the Park may include the development of the concept of "Soft Infrastructure" - the preparation of competitive entrepreneurial capacities through the:
• development of a performing entrepreneurial community capable of resilience and capitalizing on opportunities;
• by facilitating the exchange of knowledge, experience, technology, and lessons learned;
• by training current, practical skills;
• by developing a communication platform, support, and promotion of resident entrepreneurship and the IT Industry.
2. Digital Innovation - Boost the development of the digital innovation ecosystem stimulating the generation of digital innovations capable of being absorbed in the economic circuit (national and external). Systemic innovation and experimentation are essential for creating points of competitive advantage;
3. International Promotion - Increase international visibility of Moldova IT Park, its residents, and the country as an IT destination. This will include:
- an international PR campaign and the development of an IT investment guide that contains high-quality industry analysis.
- country booths and facilitate B2B connections for Moldovan firms
- invite potential foreign investors and business CEOs to explore business opportunities in Moldova.

4. Leveraging consulting & support mechanisms into MITP entrepreneurial IT community
Increase entrepreneurship performance of Moldova IT Park residents by implementing the Learning center concept but also a series of consistent activities to focus on the values of the resident IT community – through the exchange of experience, lessons learned, knowledge, etc. An example is Legal and tax consultative support through webinars and periodic newsletters with the latest updates of the relevant regulatory framework.

5. Legal Framework - Facilitate the improvement of regulatory and development framework relevant to the IT industry. Permanent mapping of the needs to improve the relevant legal framework, contribution to the improvement of the normative framework, and the effective management of relations between the resident IT community and institutional stakeholders (Business2Government) will ensure a safe, transparent, professional framework for the residents of the park in the development of their performances.

6. Good Governance - Increase Moldova IT sector competitiveness at the regional level through MITP good governance

This objective means the development of the technical structure and content of the MITP Platform but also its integration with the One Stop Shop and Marketplace concept, which can ultimately maximize the value of the platform to support the efficient and sustainable development of the IT Industry.

7. Attracting and Retaining IT Talent

Increase awareness among Moldova’s talented IT workforce about the opportunities for working in Moldova, as well as lead international recruiting efforts to seek out talented members of the diaspora and region to return to Moldova to work in IT sector. All the opportunities are published on one platform: https://jobs.moldovaitpark.md/#/. This activity will also facilitate policy advocacy work to improve the conditions for working in the sector, for both local companies and international companies," she added.