Component 1: Regulatory Reform (estimated total cost of US$6.24 million)
The objective of the Regulatory Reform component is to support GoM in improving the business enabling environment in Moldova, and specifically in implementing its regulatory reform strategies over the next five years. These strategies include the Roadmap for the government’s Actions to Remove Critical Barriers in the Business Environment for 2013-2014 (Business Roadmap), approved by the government in September 2013; the Regulatory Reform Strategy and its Action Plan 2013-2020, approved by the government in December 2013; and the Roadmap for Increasing competitiveness, approved by the government in January 2014.

To achieve this objective, the project will provide technical assistance for the following:
(a) Reform governance and capacity building, to improve the timely delivery of reforms and quality of the business enabling environment;
(b) Reform implementation support, to provide direct assistance for implementing priority reforms.
These activities directly address a major role that government plays facilitating in private sector development: providing a transparent, predictable, and low-cost business enabling environment.
Sub-component 1A on reform governance and capacity building aims improve the timely delivery of reforms and support improvements in the business enabling environment. MoE has the mandate to design, update, and implement the regulatory reforms strategies, but it has shown weak coordinating power to fully advance the strategies. In addition, the commitment by public authorities to ensuring a sound business enabling environment has varied greatly by authority. Therefore, the sub-component on reform governance will implement activities in the following areas. Where possible, these activities draw on existing mechanisms that are working well:
(a) Strengthen oversight of reform strategies implementation: The project will support MoE in monitoring the implementation of and updating the government’s regulatory reform strategies.
(b) Increase accountability of public authorities’ impacts on the business community: The project will help the government establish and implement a system that strengthens accountability and incentives for public authorities that regulate business activities (e.g., to reduce cost, time, and procedures, and increase transparency and predictability). It will include reporting and monitoring on performance indicators and carrying out the annual Cost of Doing Business survey.
(c) Ensure that laws and regulations do not impose unjustified costs on businesses: The project will support and improve the existing mechanisms for: (i) assessing the impact of proposed laws and regulations on the business community; (ii) reviewing and publicly discussing these through the Regulatory Impact Assessment Secretariat and the Working Group of the State Commission for Entrepreneurial Activity, respectively; and (iii) reducing the regulatory burden placed on businesses in highpriority areas identified through the project activities.
(d) Strengthen awareness: The project will contribute creating a more “businessfriendly” culture by supporting events and communication campaigns that will help public officials better understand the importance of a transparent, predictable, and low-cost business enabling environment.
Sub-component 1B on reform implementation support will assist the government in implementing reforms that could greatly benefit export competitiveness. The project has identified two areas that are considered critical and require funding: permissive documents, including licenses, permits and authorizations, and competition advocacy and implementation capacity building. The support will include:
(a) Permissive documents: Permissive documents are defined as permits, authorizations, licenses, and other documents required by Moldovan authorities for an enterprise to do business. The project will: (i) target the elimination of overlaps and duplications in the requirements for such documents, focusing on the documents whose issuance and requirements are most cumbersome for businesses and that affect enterprises in export-oriented value chains; and (ii) increase transparency and predictability in their issuance, and reduce the cost and time required to obtain them, by improving information systems and introducing one-stop shops that use electronic platforms.

(b)Competition advocacy and implementation capacity building: To enhance incentives for firms to become more productive in the domestic market and therefore boost their export competitiveness, a framework to ensure competition between firms is critical. The Competition Council has the responsibility of tackling anticompetitive market conduct and proactively advocating for fair competition in the economy, but lacks capacity and resources to conduct these tasks effectively. The project will support the Competition Council to: (i) identify barriers to competition in sectors or markets that have an impact on competitiveness; (ii) work with the MoE and other public authorities, in its advocacy role, to amend laws and regulations that create barriers to competition; and (iii) implement its competition policy with economy-wide effects through better tools and processes.
Results-Based Financing (RBF): Component 1 also includes RBF – US$1.5 million that has been set aside for compliance with Disbursement Linked Indicators (DLI) that reflect the government’s own objectives and are deemed highly relevant to the success of regulatory reform. This is one of the innovative features of this operation. It is intended to raise the profile of targets, encourage accountability, and improve results. Three times over the course of the project, the following specific DLIs will be publicly reported on, and achievement of the target
results will trigger disbursement of set amounts:
(a) Establish and apply performance indicators for government agencies that have a regulatory function related to business
(b) Number of reforms enacted to reduce regulatory barriers and remove anti-competitive elements of legislation (laws, regulations, or other legal provisions).