Advertisers

(1) VictoriaBank

(2)Moldtelecom

(3) Chisinau

(4) UniBank

(5) TUTUN-CTC

(6)MoldingCoBank

(7) Codru Hotel

(8) Moldova Agroindbank

A Special International Report Prepared by The Washington Times Advertising Department Written by: Daniel R. Zim Project Director: Kevin M. Baerson For more information, call The Washington Times International Advertising Department at (202) 636-3035 (202) 635-0103 fax e-mail: natlad@wt.infi.net Copyright © 1999 News World Communications, Inc.

Moldovan tobacco courts investors

As one of the Moldova's largest cash crops, the tobacco industry could be the most coveted state asset up for sale. As the industry modernizes, American tobacco companies have their eyes on Moldova as an attractive potential market and supplier. In earlier times, Moldovan tobacco growers supplied one third of all tobacco consumed in the former Soviet Union. With eight fermentation factories, Tutun-CTC, the state tobacco enterprise, has a capacity to produce 140,000 tons of tobacco per year. To keep pace in an increasingly competitive industry, Tutun-CTC has initiated a modernization plan includes bringing in some of the most advanced technology.

Modernized facilities will enable the company to produce a high quality product that can compete in world markets. The installation of new technology is expected to increase production from 9.1 billion cigarettes per year to 15 billion. Tutun-CTC is estimated to be worth $35-65 million by the consulting firm Arthur Anderson & Co. "Potential foreign investors who have visited our plants have agreed that our company is the most advanced technologically in the former Soviet Union," says Mircea Ciubara General Director of Tutun-CTC. New U.S. technology has enabled the company to process Virginia blend and Burley blend, the latter of which comes from Kentucky and Tennessee. Excellent soil and an ideal climate have enabled these blends of tobacco to be grown locally, making Moldovan tobacco closer in style and quality to American cigarettes. Tutun-CTC which produces leading brands of cigarettes, Tempe and MT, has won international quality awards. The company's high production capacity makes it attractive to foreign companies that already have invested in Romania and the CIS because they are a reliable source of raw materials.

Battle Against Imitations
Tutun-CTC is forced to compete in a market saturated by cheap, bootleg versions of Marlboros, Camels and other famous American brands. According to Prime Minister Ion Sturza ten billion cigarettes are smuggled through the separatist region of Transnistria every year. The smuggled cigarettes avoid federal taxes and severely undercut Tutun-CTC's profits. They also degrade consumer's perceived quality of these brands. Although, in the past, it has proved a difficult problem for government officials to control, the newly confirmed Prime Minister promises new initiatives to combat cigarette smuggling from Transnistria. "We plead for stricter regulations," says Ciubara. "Our company plays by the rules and pays federal taxes. Those who smuggle illegal cigarettes are unfairly competing in our market. The government loses a lot of revenue because of these operations." The industry may take steps to control the problem as well. Phillip Morris, which is concerned about its own integrity of its brand name cigarettes, has discussed three possible areas of cooperation with Tutun-CTC to undermine the black market. Phillip Morris could revive a version of Marlboro that was produced in Moldova and sold in Russia.

It could create a new high quality brand of cigarette jointly produced by the two companies, or Phillip Morris could grow its own tobacco in Moldova and sell cigarettes under Tutun-CTC's brands. Tutun-CTC plans to auction 60 percent of its company. Of the remainder 20 percent will be retained by the state, and the other 20 percent will be offered to employees. RJ Reynolds, Phillip Morris and British-American Tobacco are among the companies invited to make offers.

Table of Contents

(1) Moldova: a 'model of democracy'

(2) Moldovan President promotes stable, open economy

(3) Moldova- at-a-Glance

(4) Entrepreneur Prime Minister hopes to build prosperous Moldova
Economic globalization is Ion Sturza's recipe for success

(5) Moldova - a country in bloom

(6) Chisinau: Sacramento's sister city to the East

(7) Investment opportunities abound
Moldova goes out of its way to attract foreign investment

(8) Moldova's telecom giant seeks privatization

(9) Agricultural sector modernizes

(10) Moldovan tobacco courts investors

(11) Banks: bulwark for tomorrow

(12) How Moldova's banks withstood the Russian crisis

(13) Women leaders in Moldova

(14) A small country with many delights

(15) Why invest in Moldova?

(16) Wine is king