The World Bank Implementation Status & Results Report MD Second Competitiveness Enhancement Project (P144103) MD Second Competitiveness Enhancement Project (P144103) EUROPE AND CENTRAL ASIA | Moldova | Finance, Competitiveness and Innovation Global Practice | IBRD/IDA | Investment Project Financing | FY 2015 | Seq No: 10 | ARCHIVED on 11-Nov-2019 | ISR39159 | Implementing Agencies: Ministry of Finance, PIU under Ministry of Economy, Credit Line Directorate under Ministry of Finance, Ministry of Economy and Infrastructure, ODIMM, Government of Republic of Moldova Key Dates Key Project Dates Bank Approval Date: 11-Jul-2014 Effectiveness Date: 02-Oct-2014 Planned Mid Term Review Date: 17-Oct-2016 Actual Mid-Term Review Date: 17-Oct-2016 Original Closing Date: 31-Jan-2020 Revised Closing Date: 30-Jul-2021 pdoTable Project Development Objectives Project Development Objective (from Project Appraisal Document) The project's development objective is to increase the export competitiveness of Moldovan enterprises and decrease the regulatory burden they face. This PDO will be achieved through a set of measures that aim 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. Has the Project Development Objective been changed since Board Approval of the Project Objective? No Components Table Name Regulatory Reform:(Cost $6.24 M) SME Development:(Cost $8.04 M) Access to Finance:(Cost $30.00 M) Project Management:(Cost $0.72 M) Overall Ratings Name Previous Rating Current Rating Progress towards achievement of PDO Moderately Satisfactory Moderately Satisfactory Overall Implementation Progress (IP) Moderately Satisfactory Moderately Satisfactory Overall Risk Rating Substantial Substantial Implementation Status and Key Decisions Regulatory reform: One-Stop-Shop (OSS) for online issuance of permits and licenses has notable benefits for businesses, but agencies are not utilizing the system fully. This is a critical reform for the Government to undertake, with many government agencies involved. Integration of Mpay and online banking payments should be done, as well as completion of digitizing all permits. All agencies should be obliged to use the system and not to process applications on paper. 11/11/2019 Page 1 of 11 The World Bank Implementation Status & Results Report MD Second Competitiveness Enhancement Project (P144103) The ministry of Economy needs to take more proactive role and ownership over Performance indicators for government authorities with a business regulatory function as this is also part of DLIs. This activity is delayed. It is critical to establish performance indicators for inspection functions, and then to publish results of performance indicators for RIA, OSS and inspections. Maintaining inspection E-Registry is very important. The first stage of amending the RIA methodology in line with WBG recommendations was completed, the Government by the Decree nr. 23 from 18.01.2019 approved the new Methodology for Impact Assessment, which unifies RIA and ex-ante mechanisms. The Decree was published in the Official Gazette on 19.01.2019. The second stage envisages revision of the Gov. Decree # 1429 and Laws #235 & #100 to eliminate Private Sector Working Group. RIA Secretariat moved to the State Chancellery (SC). This is a notable improvement compared to previous ISR. A comprehensive program for RIA and SCM capacity building within ministries will need to be set up. RIA compliance improved. Competition council initiated review of Competition Law. Market assessment of insurance sector completed, and airline underway. Upgrade of SIRASM platform and website of Competition council to enhance transparency is also underway. SME development: ODIMM established export promotion department as well as the M&E and Internal Audit Department. ODIMM needs to focus on export readiness programs for SMEs now. Investment agency is very active and progressing in meeting project goals and PDO. MGF facility is progressing well and the first impact evaluation is in the process of being performed. For every $1 invested, $8 in new export sales are generated, which is amazing result. Access to Finance: Credit line is disbursing well. A new PFI is under consideration. ODIMM implemented Credit Guarantee software in 8 banks Overall: Although the overall progress of the project is good, elections and Government changes slowed progress in some areas and thus project implementation progress still moderately satisfactory. Risks Systematic Operations Risk-rating Tool Risk Category Rating at Approval Previous Rating Current Rating Political and Governance -- High High Macroeconomic -- Substantial Substantial Sector Strategies and Policies -- Substantial Substantial Technical Design of Project or Program -- Substantial Substantial Institutional Capacity for Implementation and Sustainability -- High High Fiduciary -- Moderate Moderate Environment and Social -- Low Low Stakeholders -- Moderate Moderate Other -- Low Low Overall -- Substantial Substantial Results PDO Indicators by Objectives / Outcomes Improve the business environment through regulatory reforms that reduce costs of doing business IN00762270 11/11/2019 Page 2 of 11 The World Bank Implementation Status & Results Report MD Second Competitiveness Enhancement Project (P144103) ►Reduction in management time spent meeting regulatory regulatory requirements (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 10.70 10.20 10.20 8.50 Date 30-Jun-2014 31-Dec-2018 31-Dec-2018 30-Jul-2021 To be measured by Annual Cost of Doing Business survey Comments: Help SMEs and exporters to get access to business development services IN00762316 ►Percentage of matching grant recipients that are engaged in a new export oriented activity (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 20.00 29.00 50.00 Date 02-Oct-2014 31-Dec-2018 30-Sep-2019 30-Jul-2021 As of 30th of September 2019, 66 enterprises of 230 receiving MGF were engaged in a new export Comments: oriented activity. Improve access to medium and long term finance for export oriented companies IN00762317 ►Acerage annual percentage increase in lending to export oriented enterprises by participating financial institutions (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 11.30 11.30 5.00 Date 02-Oct-2014 31-Dec-2018 31-Dec-2018 30-Jul-2021 13.9% data from end 2016; 33.7% data from end 2017. Since inception, we managed to meet this indicator until 2018, where increase was not 5% over previous year. But 2017 saw notable increase as Comments: compared to baseline and 2016 (basically surpassing the entire PDO target). IN00762318 ►Share of medium and long term lending by participating financial institutions under the line of credit (>24 months) as % of total disbursements (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 75.00 78.90 60.00 Date 02-Jun-2014 31-Dec-2018 30-Sep-2019 30-Jul-2021 This indicator measures percentage of total disbursement and not absolute USD amounts. the indicator accurately captures the impact on medium/long-term lending without duplication with the Intermediate indicators that tracks overall disbursement in absolute terms. Comments: As of September 30, 2019 actual cumulative amount of medium and long term lending by participating financial institutions under the line of credit (>24 months) was $18.33million, or 79%. Intermediate Results Indicators by Components 11/11/2019 Page 3 of 11 The World Bank Implementation Status & Results Report MD Second Competitiveness Enhancement Project (P144103) Access to Finance IN00762321 ►Volume of PFI funding for exporters through Line of Credit (Amount(USD), Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 20.60 23.30 29.40 Date 30-Jun-2014 31-Dec-2018 30-Sep-2019 30-Jul-2021 IN00762324 ►Portfolio at risk (NPLs) under the Line of Credit (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 0.00 0.00 5.00 Date 30-Jun-2014 31-Dec-2018 30-Sep-2019 30-Jul-2021 IN00762327 ►Number of sub-loans disbursed from the Line of Credit (cummulative) (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 123.00 130.00 83.00 Date 30-Jun-2014 31-Dec-2018 30-Sep-2019 30-Jul-2021 Regulatory Reform IN00762319 ►Cummulative number of reforms enacted according to the Action Plan to reduce regulatory barriers and remive anti- competitive elements of legislation and regulation (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target 7 cumulative actions 7 cumulative actions Value 0.00 have been 6.00 have been implemented implemented Date 02-Jun-2014 31-Dec-2018 31-Dec-2018 30-Jul-2021 7 reforms have already been implemented Comments: IN00762322 ►Percentage of laws and sub-laws affecting businesses that are assessed by the RIA Secretariat before approval by Parliament (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 35.00 70.00 72.00 75.00 Date 30-Jun-2014 31-Dec-2018 30-Sep-2019 30-Jul-2021 This indicator is showing continuous progress (35% baseline; 40% in 2016; 55% in 2017, 70% in 2018 Comments: and 72% 2019). IN00762325 ►Establish and apply perfromance indicators for Government authorities with business regulatory function (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target 11/11/2019 Page 4 of 11 The World Bank Implementation Status & Results Report MD Second Competitiveness Enhancement Project (P144103) Performance indicators established for all the Recipient’s authorities with a business regulatory function that are included in the action plan agreed on with the World Bank; RIA and OSS RIA and OSS indicators indicators established. established. Performance The performance Performance based based indicator for indicators are indicator for inspections needs to be monitored and publicly Value Don't exist inspections needs to established and reported per the action be established and monitored. Good plan agreed on with monitored. All will have progress so far on all the World Bank; and to be published in three. 2019. The targets for each performance indicator are revised and validated for 2020 and the following years, per the action plan agreed upon with the World Bank Date 30-Jun-2014 31-Dec-2018 30-Sep-2019 30-Jul-2021 RIA and OSS for permissive documents indicators established, but would need to be published in 2019; Comments: inspections performance based indicators being prepared. SME Development IN00762320 ►Adoption and implementation of a Strategy for ODIMM that promotes organizational effectiveness and reflects segmentation of delivery assistance mechanisms and enterprise needs (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Delays in implementing ODIMM strategy in terms ODIMM strategy is of establishing export implemented, Export readiness readiness and M&E budgeted, monitored department and department. this is and evaluated supporting SMEs and affecting implementation effectively in 2018, export oriented of ODIMM strategy as it 2019, 2020. ODIMM enterprises relates to providing more strategy is updated Value No strategy progressing. ODIMM is support to SMEs and and adopted by the working to implement export oriented appropriate the strategy. New and companies. ODIMM has government authority updated Strategy for adequate budget and and Government 2021-2025 is being staffing and this is allocates adequate prepared increasing each year to budget based on the allow for implementation updated strategy. of strategy. Date 30-Jun-2014 31-Dec-2018 30-Sep-2019 30-Jul-2021 Export readiness department and supporting SMEs and export oriented enterprises progressing. ODIMM Comments: is working to implement the strategy. New and updated Strategy for 2021-2025 is being prepared IN00762323 ►Increased outreach of ODIMM (Percentage, Custom) 11/11/2019 Page 5 of 11 The World Bank Implementation Status & Results Report MD Second Competitiveness Enhancement Project (P144103) Baseline Actual (Previous) Actual (Current) End Target Value 2.00 4.00 4.00 2.60 Date 31-Dec-2015 31-Dec-2018 31-Dec-2018 30-Jul-2021 This indicator is showing negative trend for three years in a row, and ODIMM outreach is decreasing (15% three years ago; 6% two years ago, and 4% last year). While the end target is already met, organizational and management changes in ODIMM as well as delays in starting to support other segments of Comments: enterprises in Moldova aside from micro ones (which was ODIMMs focus for many years) are showing negative trend. ODIMM urgently needs to set up export readiness and M&E departments and start serving other segments of companies in Moldova. IN00762326 ►Increase effectiveness of ODIMM (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 73.00 80.00 80.00 94.80 Date 31-Dec-2015 31-Dec-2018 31-Dec-2018 30-Jul-2021 And while there is an improvement in 2018 as compared to 2017, ODIMM is more-less at 2016 level where effectiveness was 81%. Organizational as well as institutional changes in ODIMM as well as Comments: delays in supporting other segments of companies in Moldova are affecting bigger improvements in effectiveness for ODIMM. IN00762328 ►Adoption and implementation of a Strategy for Investment Agency that promotes organizational effectiveness and reflects market segmentation and improved export promotion delivery assistance mechanisms (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Investment agency strategy has been adopted by the MoEi or Government. Investment Agency has been given increased budgets for 2017, 2018, 2019, Investment agency is Investment agency is 2020, 2021. This is implementing strategy. implementing strategy. important to ensure the Value No Strategy Adequate budget has Adequate budget has implementation of the been allocated for 2017, been allocated for institutional strategies 2018 and 2019 2017, 2018 and 2019 and time bound plans for the organization, as well as precondition to meet the requirement on adequate budgeting with regard to DLIs foreseen under this component. Date 02-Jun-2014 31-Dec-2018 30-Sep-2019 30-Jul-2021 IN00762329 ►Increase outreach of Investment agency (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.20 0.20 0.20 0.30 Date 31-Dec-2015 31-Dec-2018 31-Dec-2018 30-Jul-2021 11/11/2019 Page 6 of 11 The World Bank Implementation Status & Results Report MD Second Competitiveness Enhancement Project (P144103) The Government restructured MIEPO and replaced it Investment agency in 2018. Since Investment agency is basically continuing work of MIEPO, baseline is still valid. The restructuring in 2018 and constant changes in MIEPO in previous years took its toll now. Agency's Comments: outreach is continuously decreasing (from 20% three years ago, to 5% two years ago, and same result as baseline last year), while in contrast, effectiveness is notably increasing (please see effectiveness indicator) IN00762330 ►Increase effectiveness of Investment agency (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 35.00 65.00 65.00 52.50 Date 31-Dec-2015 31-Dec-2018 31-Dec-2018 30-Jul-2021 Despite decrease in outreach, effectiveness is notably increasing as agency is providing better and more focused services to those they are serving. Agency is not already meeting end project target in terms of Comments: effectiveness. IN00762331 ►Percentage of event participants reporting satisfied or very satisfied with workshops, training, seminars, conferences, study tours, etc (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 90.00 90.00 80.00 Date 01-Jul-2014 31-Dec-2018 30-Sep-2019 30-Jul-2021 IN00762332 ►Cummulative number of SMEs receiving Matching Grants (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 193.00 230.00 250.00 Date 30-Jun-2014 31-Dec-2018 30-Sep-2019 30-Jul-2021 As of September 30th, 2019 there were 259 grant applications registered, of which 241 approved (of which 11 terminated), 1 canceled, 12 rejected. Also, 5 are in the examination (companies that have been Comments: registered, but not yet approved). Total committed amount to beneficiaries constitutes the equivalent of USD 2,19 Mio*, of which USD 991 thousand (45%) have been already payed to SMEs. IN00762333 ►Cummulative number of business development services provided to SMEs (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 625.00 722.00 500.00 Date 30-Jun-2014 31-Dec-2018 30-Sep-2019 30-Jul-2021 The cumulative number of business development services under the approved BIPs, as of 30.09.2019 Comments: was 1591, of which 722 BDSs has been delivered to MGF beneficiaries. IN00762334 ►Number of MGF benefitiaries creating or improving products (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 182.00 207.00 150.00 11/11/2019 Page 7 of 11 The World Bank Implementation Status & Results Report MD Second Competitiveness Enhancement Project (P144103) Date 30-Jun-2014 31-Dec-2018 30-Sep-2019 30-Jul-2021 The MGF is on track with 207 beneficiaries with need of BDSs to create and/or improve products/services. Comments: Of these, 105 beneficiaries have fully implemented work. IN00762335 ►Number of MGF benefitiaries improving production processes (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 87.00 112.00 150.00 Date 30-Jun-2014 31-Dec-2018 30-Sep-2019 30-Jul-2021 112 beneficiaries with need of BDSs to improve production processes. Of these, 56 beneficiaries fully Comments: implemented all work. IN00762336 ►Number of MGF benefitiaries improving business management (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 145.00 173.00 150.00 Date 30-Jun-2014 31-Dec-2018 30-Sep-2019 30-Jul-2021 173 beneficiaries with need of BDSs to improve business management. Of these, 147 beneficiaries fully Comments: implemented this work. IN00762337 ►Percentage of MGF benefitiaries that are women-owned or have female CEO (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 43.00 44.00 0.00 Date 30-Jun-2014 31-Dec-2018 30-Sep-2019 30-Jul-2021 Disbursement Linked Indicators IN00762338 ►DLI 1 Establish and apply performance indicators for Government authorities with a business regulatory function (Text, Intermediate Outcome, 484,500.00, 33.33%) Baseline Actual (Previous) Actual (Current) December 2019 Government restructuring Government restructuring process resulted in some process resulted in some of the agencies involved of the agencies involved in in PBI measurement PBI measurement don't don't exist anymore. As a exist anymore. As a part part of CEP 2 of CEP 2 restructuring it restructuring it was was agreed that this DLI Value System does not exist Due Dec 2020 agreed that this DLI will will cover RIA system, cover RIA system, OSS OSS for permissive for permissive documents and Inspection documents and performance indicators, so Inspection performance combining three sub- indicators, so combining indicators for government three sub-indicators for agencies with business 11/11/2019 Page 8 of 11 The World Bank Implementation Status & Results Report MD Second Competitiveness Enhancement Project (P144103) government agencies regulatory function. there with business regulatory is a good progress on this function. there is a good DLI. Inspection progress on this DLI. DLI performance indicators to be met by Dec 2020 have yet to be met. DLI to be met by Dec 2020 Date -- 17-Apr-2019 30-Sep-2019 -- IN00762339 ►DLI 2 Cumulative number of reforms enacted according to the Action Plan to reduce regulatory barriers and remove anti- competitive elements of legislation and regulation (Text, Intermediate Outcome, 484,500.00, 66.67%) Baseline Actual (Previous) Actual (Current) December 2019 Value 0.00 7.00 7.00 6.00 Date -- 17-Apr-2019 17-Apr-2019 -- IN00762340 ►DLI 3 Adoption and implementation of a Strategy for ODIMM that promotes organizational effectiveness and reflects segmentation of delivery assistance mechanisms and enterprise needs (Text, Intermediate Outcome, 484,500.00, 66.67%) Baseline Actual (Previous) Actual (Current) December 2019 While there is adequate budget allocated to ODIMM (an increase compared to previous While there is adequate years), and ODIMM budget allocated to effectiveness and ODIMM (an increase outreach increased (albeit, compared to previous outreach is on decreasing years), and ODIMM trend, but still above effectiveness and target), ODIMM strategy in outreach increased terms of serving medium Value No Strategy (albeit, outreach is on size companies and due Dec 2020 decreasing trend, but still export readiness is slowly above target), there is progressing. Over the next delay in implementing period we will have to ODIMM strategy in terms receive from Government of serving medium size the update on the Strategy companies and export and execution, and plan readiness. for the future to assess progress. This needs to take place by mid next year to assess if DLI is met by end 2020 Date -- 17-Apr-2019 30-Sep-2019 -- IN00762341 ►DLI 4 Adoption and implementation of a Strategy for MIEPO that promotes organizational effectiveness and reflects market segmentation andimproved export promotion delivery assistance mechanisms (Text, Intermediate Outcome, 484,500.00, 66.67%) Baseline Actual (Previous) Actual (Current) December 2019 Value No Strategy The strategy is The strategy is Due dec 2020 implemented, budgeted implemented, budgeted and monitored and and monitored and evaluated effectively in evaluated effectively in 2016 and 2017. MIEPO 2016 and 2017. Budget increased effectiveness allocation for Investment 11/11/2019 Page 9 of 11 The World Bank Implementation Status & Results Report MD Second Competitiveness Enhancement Project (P144103) andefficiency. Budge Agency (successor of allocation for Investment MIEPO) notably Agency (successor of increased, and new staff MIEPO) notably hired. Effectiveness increased, and new staff increased notably, while hired. Effectiveness outreach remained the increased notably, while same. We will have to outreach remained the receive from the same. Government update on IA strategy and execution, as well as way forward to assess progress. This need s to be done by mid next year, so that we can check DLI compliance by the end of 2020 Date -- 29-Jun-2018 29-Jun-2018 -- Data on Financial Performance Disbursements (by loan) Project Loan/Credit/TF Status Currency Original Revised Cancelled Disbursed Undisbursed % Disbursed P144103 IBRD-84000 Effective USD 30.00 30.00 0.00 23.64 0.00 100% P144103 IDA-55090 Effective USD 15.00 15.00 0.00 8.34 5.12 62% Key Dates (by loan) Project Loan/Credit/TF Status Approval Date Signing Date Effectiveness Date Orig. Closing Date Rev. Closing Date P144103 IBRD-84000 Effective 11-Jul-2014 15-Jul-2014 02-Oct-2014 31-Jan-2020 30-Jul-2021 P144103 IDA-55090 Effective 11-Jul-2014 15-Jul-2014 02-Oct-2014 31-Jan-2020 30-Jul-2021 Cumulative Disbursements 11/11/2019 Page 10 of 11 The World Bank Implementation Status & Results Report MD Second Competitiveness Enhancement Project (P144103) Restructuring History Level 2 Approved on 02-Apr-2019 Related Project(s) There are no related projects. 11/11/2019 Page 11 of 11