Viorel MIRON Tourism relations between Republic of Moldova and European Union This research was accomplished in the framework of the European Union Republic of Moldova Action Plan: document for public audience (stage II). The research was conducted by EXPERT-GRUP together with the Association for Participatory Democracy ADEPT, with financial support from Soros Foundation - Moldova. Note: All statement and conclusions in this paper are the exclusive property of the author and do not necessarily reflect opinion of the Soros Foundation, EXPERT-GRUP or ADEPT. Chisinau 2007
Summary Introduction... 3 1. Tourism relations before and after January 1, 2007... 5 1.1. Interests, values, roles and obligations of Republic of Moldova concerning tourism relations with EU countries...5 1.2. National tourism agencies on the EU market...7 1.3. Discrimination on the tourism market...11 1.4. Disparities, constraints, existing conflicts on the EU tourism market and their cause...12 1.5. The impact of the existing problems...14 2. Policy variants: 5 steps for improving the situation... 16 2.1 Government policies in the field of tourism...16 2.2 Possible types of tourism policies with EU countries...22 2.3 Intervention measures...22 Conclusions and Recommendations... 27 2
Introduction The goal of the Tourism relations between Republic of Moldova and European Union countries paper is to evaluate the commercial exchange on the regional tourism market, establish key tourism flows managed by the Moldovan companies and their European partners, determine the disparities and formulate proposals for improving these relations. The European Union Republic of Moldova Action Plan (EUMAC) examines tourism as a constituent in the dialogue for promoting the industrial and associative policy of Republic of Moldova to the EU initiatives for stimulating competitiveness (for example: exchange with information, participating in networks, researches and trainings). This fact matches with the general interests of the state, determined by the need to develop the tourism sector so that it becomes a competitive industry capable to contribute to diversifying national economy. The key priorities of the EUMAC include providing support to the state institutions to conduct structural reforms; consolidate economic growth powered by the private sector; improve the investment climate etc. According to the plan, developing a market economy can be accomplished by: implementing required measures for improving the convergence of the identified sectors (including tourism) and ensuring coordination between involved administrative authorities; decrease to minimum the number of authorizations; creating a favorable business climate for the enterprises; increase transparency for the applied regulation measures; building the capacity for conducting market analysis based on good practices of the EU country members; revising entirely the national legislation to identify and eliminate obstacles in order to deliver improved services; implementing corresponding measures, which are based on regional priorities etc. For over a decade, tourism companies from Republic of Moldova have been doing usual transactions with the 27 EU countries, and with the country associated to EU Turkey. These transactions represent two thirds from the total flow of international tourists in our country. With some of these countries (Romania, Bulgaria, Latvia and Turkey) Moldova has bilateral agreements which govern the tourism activity. In the meantime, during the last EU expansion, and as Moldova became the eastern neighbor country, it was unveiled that national tourism system and commercial relations with these EU partner countries remain weak. Mainly this is due to EU standards and protectionist policies applied in these countries. These are factors which national tourism sector was not prepared for. Therefore, the main problems discussed in this study are the following: Moldova appears to have little experience on the EU tourism market, mainly: a) because of some inconsistent approaches when promoting tourism interests; b) by assuming vague responsibilities against EU countries in the matter of tourism; c) because after 1.01.2007 Moldovan tourists had to look for other destinations outside of EU and local companies were not respecting the contracts established with EU partners. Lack of a regional competitive ambition of the national tourism, which results in: a) losing competitive advantage; b) source for potential tourist for countries from the region; c) lack of national tourism projects; d) low investments in tourism industry; e) losing market positions, even for local tourism and respectively existing gap between the in bounding and out bounding tourism. Moldova remains unknown for Europeans with: a) values and advantages which are not promoted; b) destinations appreciated by a small number of foreign tourists; c) few motivated European tourists decide to spend their vacation in RM, while three quarters of those willing to spend their vacation in RM usually come from the four neighboring countries. Moldovan tourist are restricted on the EU market, especially after 1.01.2007 when it was suggested to limit the access for Moldovan tourists to some EU destinations, which can be interpreted as a discriminating attitude in regards to Moldovan tourists. 3
The need to accelerate reforms in the tourism sector, generated by: a) the 2007 external shock; b) policies for restructuring the sector which create new obstacles; c) weak organization and existing territorial inequality; d) underdevelopment of the tourist zones, in the framework of their small number and disregard to national legislation in this area. This paper contains an introduction, two chapters, conclusions and recommendations. The first chapter includes information on key problems the national tourism is facing: Interests and responsibilities of Republic of Moldova in tourism with regard to partners from the EU countries; Difficulties national tourism agencies face when dealing on the EU market; Discrimination on the tourism market; Inequalities, disparities and existing constraints on the EU tourism market and the reason they exist today. The second chapter studies state policies applied in tourism. It also examines potential variants for tourism policies for improving these relations with EU countries. In the end, several conclusions and recommendations are proposed for improving the situation in the national tourism as the flow of tourists from EU countries continues to grow. 4
1. Tourism relations before and after January 1, 2007 The tourism relations between Republic of Moldova and European Union last for over two decades, since Moldovan citizens discovered different tourism destinations than the traditional ones from the former USSR. This became possible with the opening of the western borders; start up of several tourism companies and commercial transportation; intense flows of information; and later real employment opportunities on the western markets. Starting with 1992, the state formulates the first tourism policies and appoints a governing body to coordinate this sector. In 2001, Republic of Moldova becomes a full member of the World Tourism Organization. However, between 1992 and 1999 the state played the role of an observer of the tourism phenomenon. Only after adopting the law on tourism and establishing the National Tourism Agency (1999), this activity started to be coordinated and encouraged. The long absence on the tourism market caused several problems which worsened with time causing massive emigration and travel restrictions for Moldovan citizens to the EU. The events of 2007, when Romania and Bulgaria joined the EU, marked a turn around point for the Moldovan tourism. 1.1. Interests, values, roles and obligations of Republic of Moldova concerning tourism relations with EU countries Strategies applied when no alternatives are left. As EU expanded to the borders of Republic of Moldova, it was noticed that two thirds of the number of international visitors (served by the national agencies) are tourists coming from the western countries, while the number of CIS tourist coming to Moldova is dramatically decreasing. In exchange tourists coming from EU, spend on average 500-800 Euro/person, and respectively demand high quality services. They are affected by the reduced quality and capacity of the Moldovan tourism as well as inability to meet their demands. The European Union Republic of Moldova Action Plan (EUMAC) examines tourism as a constituent of the dialogue for promoting the industrial and associative policy of Republic of Moldova to the EU initiatives for stimulating competitiveness (for example: exchange of information, participating in networks, researches and trainings). This fact matches with the general interests of the state to develop the tourism sector so that it becomes a competitive industry and capable to contribute to diversifying national economy. Inconsistent approach when promoting tourism interests. In the main strategic documents (National Plan for Economic Growth and Poverty Reduction Strategy, National Plan Satul moldovenesc, Strategy for Sustainable Tourism Development) tourism is described as a factor for stimulating the social and economic life. It is considered to be a sector of national economy which can create social and economic benefits and accelerate other sectors in the rural areas. But none of these narrowed meanings were included in the EUMAC for 2006-2007, even though Moldova abolished unilaterally the visa regime for EU citizens (tourists). Moreover tourism was not included in the National Development Plan of Republic of Moldova, in spite of the fact that European assistance programs include this sector on the list of priority funds (Good Neighborhood Program, ENPI CBC Ro-Ua-Md). With the exception of Romania, there are no bodies in EU to promote Republic of Moldova as a new neighbor for EU and new regional tourism destination. The few exhibitions which our country takes part in are expensive and do not have that capacity to motivate tourists to visit Moldova. The reduced promotional funds (including promotion abroad) and information about tourism destinations (circa 615 thousands lei or 78% from the Tourism Promotion and Development budget for 2006) cannot draw tourists attention for national destinations. Or, with a greater cooperation with EU countries, the national tourism requires: 5
Dynamic development and support, for improving branch management, creating regional tourism, attracting investment for exploring tourism resources, implementing quality systems; To diversify the national economy, for creating new working places, social and economic benefits outside from agricultural activities; Active involvement of the local entrepreneurs for exploring economic benefits of the national property; Increase the number of tourists and decrease illegal migration. Values and competitive advantage on the regional level. Republic of Moldova has several competitive advantages which can contribute to developing the tourism industry: a) cheap labor force; b) cheap land cost; c) valuable tourism resources on the national and regional level; d) possibility to establish a national tourism zone system for attracting strategic investments; e) tourism supply has a great potential for diversification and capacity in terms of service growth; f) in spite of some legislative and bureaucratic obstacles, there is an institutional support from the central authorities; g) strong option for attracting and exploring tourism investments; h) promoting a clear strategy concerning service quality and a system for classifying accommodation and dining facilities for tourists; i) hospitable multilingual population (Russian, French, English). Source of travelers to countries from the region to the detriment of the local and in-coming tourism. Moldovan tourists, represent a significant market segments for Romania, Ukraine, Bulgaria and Turkey. However the number of tourists coming from these countries to Moldova is 5 times less the number Moldova travelers. The main reason is the price versus quality ratio. It helps the tourists to make their decision when selecting a destination. Another factor is the supply which is concentrated in Chisinau and no options for entertainment tourism outside of it. In the meantime, having a 0,5 % share in the national GDP, Moldovan tourism cannot play a significant role in the region, without considerable efforts to specialize on some narrow segments. This objective can be accomplished by implementing the stipulations of the bilateral agreements with EU in the matter of tourism. Vague responsibilities for EU countries concerning tourism. According to the EUMAC the state did not assume any specific responsibilities concerning the development of the tourism, except from the stipulation according to which the state will adjust tourism to the industrial and associative policy of Moldova to the EU initiatives for stimulating competitiveness. This fact reduces state obligations when respecting the clauses from the bilateral agreement on tourism, culture and trade with EU countries which means: providing mutual access for tourists to national attractions, promoting partnership, exchange with information and experience, participating in common programs for developing tourism, encouraging investments and labor training etc. In the meantime, according to the bilateral agreements with some EU countries (Romania, Bulgaria) or associated to EU (Turkey), Republic of Moldova will not explore several opportunities, which directly results from this agreement: 1. Creating necessary conditions which could help concluding agreements between companies and tourism organization, with special attention to the following issues: Projecting and building new tourism attractions, renovating the existent ones; Creating a modern hotel infrastructure; Develop tourism services, including transportation services. 2. Collaborate by: Creating mixed tourism enterprises; Establishing cooperation with tourism companies; Exchange with specialists, study groups, delegates and tourism experts; Planning common exhibitions, congresses, conferences, press conferences, round tables and seminars; 6
Implementing joint cultural programs; Providing consulting support to hotels and restaurants; train the staff working in this field etc. 3. Create joint working groups for: Examining the problems related to implementing the agreements; Elaborating solutions which should contribute to the growth of tourism between countries; Indicating additional ways to collaborate in the tourism sector; Examining the problems which appeared when implementing the agreements and elaborate recommendations for eliminating obstacles. 1.2. National tourism agencies on the EU market Traditional partnership relations with EU companies. The great majority of the national tourism agencies cooperate usually with partners from EU countries, especially from traditional countries such as: Romania, Bulgaria, Germany, Czech Republic, Cyprus, France, Hungary, Poland and other countries. The number of tourists arriving to Moldova 30000 25000 20000 15000 TOTAL Total EU Total CIS 10000 5000 0 2001 2002 2003 2004 2005 2006 In the framework of tourism agencies, during 1997-2006 the industry can be characterized by the following: A double increase of the number of travelers who used the services of the tourism agencies; Increase of sales from EU vacation offers by two thirds; The CIS territory covered by Moldovan tourists (the majority of offers are sold for Ukraine) decreased by one third; Fluctuating number of foreign tourists who use the services of Moldovan agencies; Constantly high number of business visits (circa 60% from the total number of visits), but with a 2-3 day duration stay in the country; Rising number of internal travelers by 1,5 times in the past 5 years; A significant number of agencies abandoned the market. 7
The number of tourists arriving to Moldova, by country of origin Hungary 2005 2006 Slovenia Romania Czech Republic Poland Netherlands Great Britain Lithuania Italy Greece Germany France Bulgaria Austria 0 1000 2000 3000 4000 5000 6000 7000 Moldova remains to be a destination which is appreciated by a small number of foreign tourists. Countries where tourist come from to Moldova remain to be Russia, Turkey, Romania, Ukraine and recently new countries such as Germany, Italy, Bulgaria. However national agencies serve annually less than 4 thousands of tourists, who come from these countries. This is due to a great number of casual tourist visits (respectively these visits are not monitored by national statistics), and weak national tourism supply. The number of tourists arriving to Moldova from traditional countries 4000 3500 3000 2500 2000 1500 1000 500 0 Russia Ukraine Bulgaria Germany Italy Romania Turkey 2001 2002 2003 2004 2005 2006 Three quarters of European tourists come from four countries. There are few EU countries where tourists come to Moldova in a relatively big and stable number: Romania, Bulgaria, Germany and Italy. The number of tourists coming from other countries is quite sporadic and inconsistent. This is caused by the small number of transactions Moldovan companies handle with big European tourism companies, inconsistent offers and a weak promotion of the national tourism destinations on the national and regional markets. 8
Countries of origin of the EU tourists, 2006 Slovenia 1% Hungary 2% Austria 2% Bulgaria 5% France 4% Germany 11% Greece 3% Romania 45% Czech Republic 2% Poland 4% Italy 11% Lithuania 2% 3% Great Britain 5% Netherlands European tourists visit Moldova for other purpose than vacation. The country lost the capacity to host guests from the ex-ussr (circa 2 million people were coming to Moldova by 1989) and has not created necessary facilities for European visitors with the opening of the borders. Moreover, the capital (where tourists can be accommodated with comfort) is the main attraction area for visitors who come on business purpose (60% from the total number of visits). Also European tourists work closely with tourism agencies when they intend to make a business trip to Moldova. However some European tourists start considering Moldova for vacation purpose, as tourism facilities have been renovated or built in the picturesque places of the country. Purpose of visit to RM TOTAL Total EU Total CIS 2001 2002 2003 2004 2005 2006 other purpose(s) therapy business,professional recreation,vacation other purpose(s) therapy business,professional recreation,vacation other purpose(s) therapy business,professional recreation,vacation other purpose(s) therapy business,professional recreation,vacation other purpose(s) therapy business,professional recreation,vacation other purpose(s) therapy business,professional recreation,vacation 0 5000 10000 15000 20000 25000 30000 European tourism destinations draw Moldovan tourists attention. This dynamics became visible after the immediate expansion of EU, adjustment of prices with the ones in CIS (Ukraine, Russia) and more attention given by tourism agencies to Moldovan clients. 9
70000 60000 The structure of deprtures of Moldovan tourist, by destinations TOTAL Total EU Total CIS 50000 40000 30000 20000 10000 0 2001 2002 2003 2004 2005 2006 4/5 of the Moldovan tourists visit 4 countries. Romania, Bulgaria (both members of UE), Ukraine and Turkey (EU associated country) are the 4 preferred vacation countries for Moldovan tourists. These countries are attractive because of the geographic proximity, competitive vacation packages and active promotion of these destinations in Moldova. In this regard, companies originating from these countries tend to open their offices in Chisinau, and therefore have the possibility to establish direct contacts with customers from Moldova. Poland, Hungary, Slovakia and Greece become popular destinations for Moldovan tourists mainly due to their vacation packages which are heavily promoted by specialized companies. Countries preferred by Moldovan tourist, persons 2005 2006 Turkey Hungary Slovakia Romania Poland Italy Greece Germany France Cyprus Bulgaria Ukraine 0 5000 10000 15000 20000 25000 30000 EU attracts a growing number of Moldovan tourists leaving on vacation. Beaches and mountain resorts are the most popular destinations for Moldovan tourists. This tendency will keep rising, mainly because Moldova is deprived from these recreation resources. Being relatively cheap, these packages usually meet the expectations of Moldovan tourists and leave them satisfied. Despite of the visa barriers, it is forecasted that tourists prefer EU when going on vacation. 10
2001 2002 2003 2004 2005 2006 other purpose(s) shop-tur therapy business,professional Recreation,vacation other purpose(s) shop-tur therapy business,professional Recreation,vacation other purpose(s) shop-tur therapy business,professional Recreation,vacation other purpose(s) shop-tur therapy business,professional Recreation,vacation other purpose(s) shop-tur therapy business,professional Recreation,vacation other purpose(s) shop-tur therapy business,professional Recreation,vacation Moldovan tourists travel purpose TOTAL Total EU Total CIS countries 0 20000 40000 60000 80000 100000 120000 However it has to be mentioned that the official statistical data reflects partially the situation on the national tourism market. A better collaboration is required between authorities responsible for keeping track of this statistical data from the neighbor countries and EU. The out coming to incoming tourists ratio reveals the low competitiveness of national tourism packages as a well as reduced capacity of the tourism industry to absorb tourists coming on their own account or people coming for business purpose or casual travels. 1.3. Discrimination on the tourism market Restricting the access for Moldovan tourists to EU destinations. On January 1, 2007, when Romania joined EU, Moldovan tourists wintnessed a new curtain over the Prut, expressed in the new visa regime. Even though in some cases it can be issued for free, the applicant has to follow several steps, sometimes disturbing, to obtain the entry permit. Even though the European countries, after the joy from the 90s and granting easier access for Moldovan citizens to the vacation places, have set border crossing procedures restrictions for Moldovan travelers, the isolation impact was felt only in 2007. Though it is early to make conclusions on this matter, it can be stated that as the Romanian Consulate in Chisinau, in the summer of 2007, was working at its maximum capacity, it could issue only 1 thousand visas per month for tourists, students, pupils and transit travelers to other EU countries etc. Tourism agencies in Moldova forwarded several protests, requiring measures for facilitating the access (example: creating a green channel, priority lists) for Moldovan tourists traveling in groups on vacation to Romania or other traditional countries. These measures did not bring expected results. Today, Moldovan tourists are required to have visa, personal contract with a company which stipulates all services covered upon arriving to the destination, tourist voucher for border control, money deposit (in Euro) to cover the cost of each vacation day, insurance. Even though Republic of Moldova made concessions for tourists coming from EU, as they do not require visa or may enter the country without having an agreement with a tourism agency, Moldovan citizens are further discriminated when they decide to leave on vacation to Europe. In spite of these difficulties, people consider that this is a short term problem and in the near future they will be able to enter EU with fewer obstacles. 11
The external shock will bring positive changes in the national tourism. When no alternatives are left, the following positive changes can impact the development of the national tourism: Consolidating tourism as a competitive industry and rehabilitating important tourism destinations; Restructuring internal and in-coming tourism; Exploring new tourism markets for Moldovan travelers; Elaborating a strategy for training the staff from this sector; Taking measures for promoting tourism (Wine Festival, specialized exhibitions, elaborating and distributing advertising materials); Developing national tourism attraction zones (using legislation, institutional measures for managing tourism resources, developing national tourism routes) for attracting strategic investments; Preserving a clear destination for certain tourism attractions (vineyards, ethnographic sights, recreational zones, spa resorts); Decreasing state control (licensing, including staff; elaborating dining/accommodation facilities classification; annual reporting, transaction control); Creating strategic alliances on the tourism market to better promote the interests of the branch. 1.4. Disparities, constraints, existing conflicts on the EU tourism market and their cause The current problems between Moldova and some EU countries in the matter of tourism have several causes: New vacation places in the west were discovered 17 years ago. When traveling abroad became possible, a significant number of people using that time visa regime, which was quite permissible, found new alternatives to the downgrading ex-ussr vacation places (Ukraine, Russia). After 4-5 years, the flow of travelers started to concentrate on specific destinations (coastlines, mountains) or earlier known routes (ancient cities, monasteries). In the early 90s over a thousand tourism companies were operated simultaneously in the country. They were fighting for every client wishing to travel to Europe, not necessarily having a vacation purpose. The partnership with tourism companies from target countries had a temporary effect and did not last in time. As Moldovan agencies were not concerned with building a strong image, this raised suspicion about potential future collaboration. Policies for restructuring the sector which create new obstacles. As a response to the inquiry of the European countries to establish a control over the migration of Moldovan citizens, national authorities established a filter system to control market access of tourism agencies (or monitor instruments): requirement to undergo another registration and licensing procedure for tourism companies (only 1/5 survived afterwards), requiring every employee in this sector to obtain a license, monitoring the transactions through a voucher system (by tearing them off at the customs control, in the country of destination and at the national tourism regulating body), establishing an on-line tourism log (each client could check the legal status of the partner company) etc. Of course these measures were necessary at the initial stage to bring order in this sector and set up a certain control. In this period, Moldova regains the member status of the World Tourism Organization (2001) and establishes different relations (collaboration agreements in trade, tourism and culture) with partners from the current EU member states. As a consequence Moldovan companies decided to sign partnership agreements with agencies from the countries of interest for Moldova, while other EU agencies opened their offices in Chisinau. Starting with 2004, the national tourism regulating body reduces dramatically the number of its employees, which makes impossible to monitor efficiently the sector. 12
Disproportion in number of tourist. There are 4/5 of Moldovan tourists who travel to EU, compared to the number of tourists who arrive from these countries. Even though these numbers changed over the past 5 years, the share remained unchanged because: Tourism companies prefer to work with local clients rather than European ones, who despite of higher payments, are more demanding; Companies prefer to promote foreign vacation places on the local market, rather than promote Moldova abroad; In EU Republic of Moldova is viewed as a destination which does not have anything to surprise with; Breakdown of the national tourism destinations system etc. Table 1. The number of visitors in 2006, by purpose of visit, persons Total Recreation, vacation Business, professional Therapy Other purpose(s) Arrivals Departu res Arrival s Departu res Arrivals Departu res Arrivals Departu res Arriv als Depart ures Total UE 6926 33649 2333 30897 4400 595 57 1314 136 842 Total incomingoutgoing 40575 33230 4995 1371 978 share, % 17,1 82,9 7,0 93,0 88,1 11,9 4,2 95,8 13,9 86,1 Austria 147 60 72 58 75 2 Belgium 81 5 19 5 61 1 Bulgaria 295 18639 87 18122 166 20 486 42 11 Cyprus 49 147 20 144 26 3 3 Denmark 233 1 201 1 32 Estonia 15 1 1 1 14 Finland 25 31 3 31 22 France 266 307 61 250 203 8 2 49 Germany 673 153 327 53 336 97 10 3 Greece 215 671 112 670 102 1 1 Ireland 27 3 15 12 3 Italy 663 123 150 74 455 42 31 27 7 Latvia 69 8 16 8 53 Lithuania 110 47 63 Luxembourg 3 20 1 2 20 Malta 1 1 Great Britain 291 26 96 16 194 10 1 Netherlands 199 66 14 66 185 Poland 262 1560 79 804 157 166 2 26 588 Portugal 47 42 28 29 19 12 Czech Republic 126 96 55 76 54 20 17 Romania 2787 9186 840 8073 1916 190 13 826 18 97 Slovakia 59 246 8 187 51 14 45 Slovenia 35 7 7 35 Spain 64 81 31 81 32 1 Sweden 50 6 3 1 47 5 Hungary 135 2163 47 2139 88 2 22 Countries associated to EU, incomingoutgoing 15489 14927 208 21 333 Turkey 1687 13802 1503 13424 149 59 17 4 18 315 Share, % 10,9 89,1 10,1 89,9 71,6 28,4 81,0 19,0 5,4 94,6 13
Source: National Bureau of Statistics. Territorial disequilibrium of the tourism system and the negligence of the hosts. Generally Republic of Moldova remains attractive for business tourism. However this tourism is mainly concentrated in Chisinau, where some prices for basic tourist services are excessively high. This distorts the tourism market and makes the country overall unattractive. In this context, the partnership relations between Moldovan and EU companies are lack attractive offers for new segments of tourists coming from these countries. As Moldovan people have a negligent attitude towards the growing interest of the foreign citizens for travels abroad, many of these tourists return home without having learned anything new about the state they have visited. The national tourism industry is facing 3 major national problems: Poor management of the tourism sector; Tourism zones are underdeveloped and their supply remains very limited; Legislation governing the tourism sector is not efficient. Today there are several problems which require immediate implications concerning tourism relations between Moldovan and EU companies. In 2007 the following obstacles were revealed for the above mentioned partnerships: Significant decrease of Moldovan tourists traveling to EU. This is the consequence of the visa regime applied when Romania joined EU. It was the target country for 30% of Moldovan travelers leaving on vacation, as well as a transit country to other important vacation places (Bulgaria, Turkey, Italy, Balkan states). In the meantime as the number of Moldovan tourists traveling to Europe decreased there wasn t any increase in number of EU tourists coming to Moldova. As a result national tourism agencies incurred losses. Therefore, some experts forecast the number of Moldova tourists who will leave on vacation to EU to decrease by 50%. Choosing destinations other than EU. Having these constraints for visiting Romania or other EU places, travelers consider other countries which are more open. Examples of these countries are Ukraine and Turkey. Unfortunately not all tourism agencies from Moldova have reliable contracts with companies that can serve the growing the number of tourists and preserve competitive prices. This is another pressure on national resorts, which are not prepared to offer corresponding quality or demanded comfort. In these conditions national tourism is becoming less attractive for local tourists. Losing clients. Usually tourism agencies develop and maintain a network of loyal clients. With time this network can collapse for different reasons, making clients to approach competing agencies. Regaining clients trust may require time and additional costs. Breaching contract terms with EU partners. The tourism market is very dynamic and depends on several external conditions. For this reason, Moldovan companies risk to quit the partnership with EU agencies if contract terms are not fulfilled. In this case EU companies prefer to change the partner to a company from a more stable country. If these ties do not function efficiently, they will fade away with time and will require additional costs and efforts to establish new partnership grounds. Losing competitive advantages. National tourism companies had a single chance to work without any obstacles (for tourists) on the tourism markets from Romania and CIS countries. This could have offered major advantages for tourism agencies when mediating some important transactions. Today, when these advantages are no longer possible, some companies will have to either limit their activity or quit their business. 1.5. The impact of the existing problems The problems that were mentioned above have several negative consequences such as: 14
Lack of major national tourism projects; Disproportion of the national tourism supply, including inside the country; Small investments in tourism; Losing clients; Losing competitive advantages; Terminating agreements; The image of insecure partners. It has to be mentioned that due to insufficient monitor of the process, speculations on visa issuing at the Romanian Consulate, it becomes difficult to estimate the costs of travel restrictions for Moldovan tourists to the EU markets. In the summer 2007, the number of tourists leaving to EU was two times small than in the previous period. 1.6. National Tourism SWOT Analysis Strengths Sustainable partnerships with companies from target countries; Reduced labor cost; Reduced cost for land; Significant market segments lack competitive offers; Existing tourism resources which have national and regional value; Promoting a clear service quality strategy and classifying the dining and accommodation facilities for tourists according to international standards; Establishing a system for developing national tourism zones; Free visa entry regime for EU citizens; Despite some legislative and bureaucratic obstacles there is a strong institutional support from central public authorities; Strong intentions for attracting investments in tourism; Elaborating national strategy concerning tourism; Developing a register of economic agents and employees operating in tourism for customer protection; Existing initiatives for promoting national tourism attractions abroad; Availability of the fund for supporting the tourism industry; Hospitable population speaking several international languages. Weaknesses Vacation offers are not sufficiently spread throughout the country; Tourism has a 0,5% share in the national GDP; Limited capacities of the national tourism governing bodies; Restricting the travel area for Moldovan citizens starting with 2007; Several tourism agencies abandoned the market; Lack of competitive national tourism offers on the international markets; Weak capacity of the tourism industry to absorb big numbers of tourists coming on their own account, business tourists, casual visitors; Over 90% of accommodations are made in Chisinau; Delegating some tourism responsibilities to regional departments of culture, which do not have corresponding staff and clear methodology for contributing to the entrepreneurial growth; Tourism industry remains excessively regulated; Legislation governing the national tourism is not efficient; There are no successful examples of national patrimony facilities which are profitable on the tourism market; Several opportunities have not been explored yet after the EU expansion. Opportunities Member status of the WTO; Tourism sector is monitored by EUMAC; Collaboration agreements with EU countries The tendency to consolidate tourism in Republic of Moldova by making systemic efforts to diversify regional economies; Willingness of foreign investors to allocate funds for tourism. Risks The negative stereotype concerning national tourism agencies is still alive; Tourism dynamics can easily plummet for political, economic, social, health etc. reasons; High costs for building infrastructure for attractive national destinations; National tourism industry has a seasonal fluctuation. 15
2. Policy variants: 5 steps for improving the situation 2.1 Government policies in tourism Intentions to consolidate the national tourism. The Government has taken the responsibility to organize the national tourism system in order to decrease the tremendous flows of migrants to the EU, as well as offered solutions for diversifying of the local economy. The National Tourism Agency (initially the National Tourism Agency, then the Tourism Department, which now part of the Ministry of Culture and Tourism) has been created in 1999, and is responsible for consolidating the sector. This agency has proposed many legislative changes for reorganizing the tourism sector, so that at present the national legislative framework in the field of tourism is one of the most advanced among other CIS countries. Many cooperation agreements in the field of tourism have been signed with countries that are highly popular among national economic agents. The legislation that regulates the field of tourism 1. The law on tourism activity in Moldova/ 352 XVI from 11.24.2006 2. The Conception of tourism development in the Republic of Moldova / Government Decision Nr. 912 from 10.08.1997 3. The National Strategy on Sustainable Development of Tourism in the Republic of Moldova for 2003-2015/ Government Decision Nr. 1065 from 09.02.2003 4. Criteria for granting the tourism license/ NTA Disposition 05.28.2001 5. Directions on approval and implementation of the tourism functions; Criteria for granting the tourism patent, and the Regulation for granting the tourism patents/ NTA Disposition Nr. 51 from 11.01.2001 6. Methodological norms and criteria for accommodation and dining institutions classification / Government Decision nr. 643 from 05.27.2003 7. Regulation on the implementation of the tourist voucher/ DDT Disposition from 04.01.2002 8. The special fund for tourism promotion and development / Government Decision nr. 705 from 07.23.2001 9. The law on abolishing the visa regime for the citizens of the European Union, the United States of America, Canada, Switzerland, and Japan / nr. 151 from 06.05.2006 In general, the tourism legislation corresponds to all requirements from this field, and establishes the legal principles, the socio-economic aspects of the tourist activity, as well as the quality standards for accommodation and dining facilities (staff training). After Moldova has become a full-fledged member of the World Tourism Organization (10.11.2001), the country received professional support when elaborating and implementing corresponding legislation which corresponds to EU standards applied in member countries. At the same time, due to an inadequate reorganization of the national tourism governing body, after 2004, the government has considerably reduced its capacity to coordinate development progress of the national tourism. As a result, main actors from the tourism industry (national tourism authority, the owners of tourist attractions and the travel agencies) faced several regulation measures. The Government has assumed the responsibility to develop the tourism industry. In this regard, the Government of the Republic of Moldova is responsible for: o elaborating the state tourism policy, approving strategies and state programs in this field; o ensuring a sustainable development of the tourism industry;
o determining administrative measures for managing the state property in the field of tourism; o creating favorable conditions for the continuous training and improvement of the personnel in the tourism industry, inclusively by creating specialized institutions to provide trainings and education in the field; o ensuring the rational utilization of tourism resources and promoting the conservation and protection measures of the environment according to the legislation on environment; o contributing to the development of the tourism industry by attracting direct investments for the construction of the general and tourist infrastructure; o ensuring security for tourists, and protection of their legitimate rights and interests; o creating a special Commission at the level of Ministries (mainly formed by the specialists from the Ministry of Culture and Tourism, and the Ministry of Environment and Natural Resources) for elaborating solutions to the problems of capitalizing the tourism resources; o promoting international tourism collaboration by signing and implementing international treaties; o creating favorable conditions for issuing visas for foreign visitors; o supplying the border custom services with tourism facilities. The national authority of tourism coordinates sector development. In the Republic of Moldova tourism is regulated by the Ministry of Culture and Tourism, a specialized authority of the public administration. The governmental authority has the following objectives concerning tourism: a) an integral, balanced, and sustainable development of the internal and international tourism b) promoting the Republic of Moldova as a tourism destination on the international level c) integrating the policy of tourism development in the national development policy; d) including the national tourism heritage in the international tourist circulation; e) protecting the tourists rights; f) creating and implementing the state regulatory systems in tourism; g) creating a favorable investment environment for attracting local and foreign investments in the field of tourism, etc. To implement state policies concerning tourism, MCT: a) prepares and presents for the Governmental approval the strategy and the national programs in the field of tourism, and bears responsibility, within its competencies, for their implementation; b) coordinates the measures for implementing the strategy and the state policy in the field of tourism with the central and local public administrative authorities, and with public associations working in the field of tourism. c) prepares and presents for the Governmental approval the economic mechanisms of stimulating the development of tourism and bears responsibility for their implementation; d) makes analyses and forecasts regarding the development of tourism in the country, provides information concerning this field; e) regulates the internal tourist activity by adopting normative acts according to the international standards. f) organizes and oversees the tourist activity in the national tourist areas; g) organizes and develops promotional activities for the image of Republic of Moldova s both inside the country and abroad; h) represents the state s interests in the field of tourism in the international and regional organizations; i) coordinates the implementation of the technical assistance programs, as well as the European integration programs in the field of tourism; 17
j) oversees the tourist heritage, ensures its capitalization and protection; k) informs the Department responsible for urban planning about the tourist areas and stations, as well as about the constructions in the field of tourism; l) examines the consumer claims concerning tourist services, controls the quality of the tourist services; m) prepares and presents for the Governmental approval methodological norms and criteria for classifying the accommodation facilities for tourists, as well as the classification of economic agents that work in the field of tourism, performs the classification of the respective institutions and oversees the implementation of the classification criteria; n) prepares methodological norms for setting up the tourist itineraries, approves and registers tourist itineraries according to the current laws; o) cooperates with different associations and non-governmental organizations from the field of tourism; p) offers methodological and informational assistance in the field of tourism to economic agents and public associations that work in this area, as well as to local public administrative authorities; q) organizes and supervises the editorial and advertising activity in the field of tourism; r) organizes professional development trainings for staff working in tourism, coordinates the activity of the National Center for Personnel Training in the Field of Tourism, that is subordinated to the Ministry of Culture and Tourism; s) prepares and approves the classified list of functions in the field of tourism for which patents apply, the criteria and the conditions of granting tourist patents, grants patents to the personnel in the field of tourism; t) prepares the model of the contract of tourist services and the model of tourist voucher and presents them for the Governmental approval; u) administers the special Fund for promoting and developing tourism; v) oversees the tourist flows; w) upkeeps the Register of tourism etc. The owners of the tourist resources are responsible for the local development of tourism. The local public authorities, in joint effort with the Ministry of Culture and Tourism, create the regional tourist services and have the following competencies: keep track of the main tourist resources; confirm the tourist itineraries according to the tourism development programs; contribute to the restoration, protection and conservation of the tourist resources by regulating the man s impact and conforming to the current norms; prepare and propose suggestions of developing tourism according to development programs; create favorable conditions for economic agents; grant tourist licenses to the economic agents based on their application; establish and administer the extra-budgetary funds for promoting and developing tourism; contribute to the protection and conservation of tourist resources by respecting the current norms; supply the authorized territories with the necessary tourist indicators; train the local population about the tourism activity; settle the boundaries and authorize the recreation areas; conduct activities on territorial tourism planning; contribute to the development of different tourism forms in the territory; 18
It is worth mentioning that due to a lack of specialists or skills such services are offered only in Călăraşi and Orhei. The decision to delegate responsibilities in the matter of regional tourism development to the cultural departments of the regional Councils failed due to lack of expertise and a clear methodology for implementing these objectives. The travel agencies do their best to serve foreign tourists. They provide their own services or the services of their commercial partners, organize promotional campaigns, and provide plenty information and high quality services to foreign tourists. In order to do this, they are obliged to: obtain a license; hire only workers holding patent; contract exclusively the services of the classified units; sign and follow the contract for every tourist in part; issue vouchers to their tourists; respect the laws on protecting the natural heritage and objects of infrastructure; provide on a regular basis statistical information etc. It is worth mentioning that the travel agencies that are located in Moldova, also including the foreign branches, are treated have strict control compared to their counterparts from the European Union (for example, in the European Union not all the personnel is required to have a patent, and regarding the contracts it is sufficient to have it signed with legally established companies, not necessarily with classified ones). However, the legislation stipulates, although somewhere vague, special rights: methodological and informational support from the tourism authority, association in professional NGOs, legal facilities, state support during the promotional campaigns. Nevertheless, these measures are not sufficient for the national travel agencies to compete for the EU market. Little financial resources for promoting the Moldovan tourism. The special Fund is one of the tools for promoting and developing tourism in the Republic of Moldova. It provides financing for different programs and activities that are part of the annual programs for tourism development, such as: a) promotional and informational tourism activities; b) restoration, arrangement, and protection activities of the tourist objects and of the tourist infrastructure; c) researches of the tourist market, gathering information in the field of tourism; d) programs concerning the protection and conservation of the environment and of the cultural and historical units; e) training and informational activities in the field of tourism; f) investment projects in tourism etc. The Fund comprises the following sources: a) state budget allowances, according to the tourism development programs; b) 50 percent of the fees from patents; c) financial resources from the classification of tourist units; d) donations, sponsorships, and grants; e) incomes from editorial and advertising activity, tourist lotteries; f) deductions from the incomes of the National Training Center of the Personnel from the Tourism Industry; g) other sources stipulated by the legislation. Table 2. The Structure of the special Fund for promoting and developing tourism. Categories 2005 2006 I. Total income 76,3 610,5 1. Deductions up to 50% from issuing tourist patents 42,3 99,0 2. Financial resources from the classification of the accommodation and dining facilities. 12,0 48,3 3. Donations, sponsorships, and grants. 10,0 390,2 4. Deductions from the incomes of the National Training Center of the Personnel from - 10,0 19