In the absence of real state support, most companies in the light industry will end up in an economic collapse.
In the context of the numerous petitions received by the Employers' Association of the Light Industry (APIUS) members, it was found that the apparel factories in the Republic of Moldova are facing serious budget deficiencies due to the negative effects of the epidemic with the COVID-19 that appeared in the national and global chain.
In this regard, APIUS submitted a set of proposals for examination to the central authorities of the Republic of Moldova. Since March, orders in the apparel industry have been substantially reduced by up to 35-60%, in particular the trade oriented for the markets of Romania, Italy, Spain and France.
Many factories in the light industry have delivery delays, which has substantially reduced production, and productivity has already been affected by at least 15-30%. The rents for retail are quite expensive, and in the context of the definitive cessation of production, the companies will not have the capacity to meet these costs. Even if in a month or two, some of the employers could return to work, small local businesses, startups, Moldovan designers, production businesses "Made in Moldova", will be the first among the hardest hit, perhaps until their complete liquidation, as they will become unable to pay the salaries, taxes and rents of the stores, facing for a long time a severe drop in sales, because the spring collections were manufactured in - a much smaller quantity, and delays in the supply of fabrics and accessories (especially from China and Italy) and, subsequently, the closure of the borders and the cessation of the production activity prevented the factories from fulfilling the manufacturing contracts on time.
Following these chain effects, many businesses will face cashflow problems, and the risk of redundancies, insolvencies and bankruptcies will increase significantly from
May to June of this year. In the absence of real state support, this scenario of economic and financial-banking lockdown will create cascading effects, which will affect us in the medium and long term. Undoubtedly, the number one priority in this tense period should be to reduce the spread of COVID-19 and to protect our citizens, but at the same time the Government of the Republic of Moldova should act quickly, examining the adoption of an urgent economic-fiscal action plan, contributing to the prevention of a possible economic crisis in the Republic of Moldova.
In this context, the Employers' Association of the Light Industry of the Republic of Moldova proposes to examine the adoption of a set
of compensatory measures such as:
1. Granting of state aid for wage taxes for firms in difficulty in the light industry sector by creating a special state fund, accessing the financial assistance provided by the EBRD and development partners or, using financial means from the National Reserve Fund.
2. Exemption from payment of all taxes related to the payment of employees' leave for a period of 3 months, or rescheduling the taxes related to wage payments for the quarantine period;
3. The allowance for each free day shall be a maximum of 75% of the basic salary, but not more than 75% of the average gross salary in the economy for one of the parents who has to stay home with the children during the quarantine period.
4. Deferment of the tax payment deadline, minimum 60 days from the date of declaration or rescheduling of payments and income tax;
5. Deferment of payment of bank loans for legal persons affected by the crisis within 60 days.
6. Banks should provide tools for customers affected by the dramatic drop in sales to benefit from a rescheduling of loans, and to pay off loans over a period of time. This would prevent the emergence of a new peak of insolvency, as companies will have no choice to resort to such an operation.
7. Major utility providers - water, gas and mobile telephony - must offer certain facilitating tools through which payments can be made over longer periods of time if a customer (legal entity) drops sales.
8. Businesses that manage to pay their monthly taxes and taxes on time or those economic providers that make additional hires or attract foreign investment during the economic crisis period should be stimulated, granting them significant tax reductions;
9. Companies that will not lay off staff must benefit from tax credits until they pay the state rates and taxes, which should be calculated in this period without interest and penalties.
10. Lending to companies that have been included in a list of those economic providers affected by zero interest for businesses in difficulty and guaranteed through ODIMM assessments;
11. We respectfully request the extension of the deadline for filing income statements and balance sheets until the end of April.
12. We propose the creation of an advisory commission to the Ministry of Economy and Infrastructure, the Ministry of Finance and the Economic Council to the Prime Minister, to which representatives of employers' associations, business associations and representatives of the ministries of profile to examine and demonstrate the losses. real ones brought to the national economy, which would serve as a basis for arguing the proposals in justifying economic terms, suggesting to the Government leadership additional compensatory measures regarding the economic recovery of the country in the state of emergency at national level.
13. We request the decree of "national emergency", which could be used by the domestic producer in his favor, in contractual relations with foreign companies, against which he cannot honor the obligations on time, applying the safeguard clause in the world trade system.
On behalf of the more than 120 member companies of the Employers' Association of the Light Industry of the Republic of Moldova, we express our conviction in identifying mutually advantageous solutions and the rapid overcoming, with minor repercussions, of the economic crisis situation at national and global level.