“MOLDOVAN LEASING MARKET DOES HAVE A POTENTIAL, BUT IT HAS TO BE MASTERED YET”07.08.2012
Infotag’s interview with Natan Garstea, President of the Association of Moldovan Leasing Companies.
Q: Mr. Garstea, the Association of leasing companies has been established in Moldova recently, and you were elected its President. What are the organization’s objectives?
A: The Association was founded by 4 leasing companies that sought to create a common platform for promoting, by joint effort, the companies’ interests so as to better comprehend the problems existing in the leasing domain. The Association is a volunteer union of its members, and any other profiled company may join it. Admission conditions are very simple: the applicant must be a legal entity working in the leasing sphere. There is yet one more condition: the applicant must have a spotless business reputation. I don’t see any obstacles to joining the Association.
Q: Which stage of development is the Moldovan leasing market standing at?
A: We are not creating the leasing market. It already exists, and is developing. Leasing has occupied its niche in the national economy. I mean the leasing of farm machines and equipment for legal entities, and the leasing of cars and other motor vehicles for individuals. The Moldovan population has already got acquainted with the services the market offers. Now it’s time of maturity to come for this market segment, a time for orderliness of its legal frame and for further development.
Q: How are you going to promote the Association’s interests in interrelations with the authorities?
A: Through dialog with all state agencies – at the legislative level as well as at the level of supervision over leasing companies’ activities.
Q: Which aspects of the leasing market need to be improved or changed?
A: The Leasing Law was adopted several years ago. Since then, quite many remarks and proposals have accumulated from behalf of market participants in the fields of law notions, financial and operational leasing, sides’ rights and duties, and other. I can assure you that in the course of discussions, we protect the interests of not companies alone. We want the market to be more attractive for all and contracts to be easy and understandable to beneficiaries. At the same time, we seek to ensure protection to all sides. We’ve got a number of proposals concerning taxation, VAT on imported goods, and some other.
Q: Currently, relevant parties are discussing the regulation of leasing market activities along with the activities of micro-financing companies. How will the Association be defending its interests in this connection?
A: Discussion about the Association’s foundation lasted 3-4 years, and the chief obstacle was apparently the fact that the interested sides could not determine a chairperson for quite long. After I had agreed to accept the post, things started moving quite fast in our Association registration work. I guess, however, it was a coincidence. The market is maturing, and we are supposed to ensure a proper regulation of the market functioning, though it was not certainly the main reason why the Association was established.
Q: Who is supposed to regulate the activities of leasing companies – the National Commission for Financial Market or the National Bank of Moldova?
A: To our mind, the leasing market activities must be regulated by a competent state organ. Which one concretely? This is for the country authorities to decide. For leasing companies, it does not particularly matter who will be their supervisor. We believe the market must of course be regulated, and if there is a regulation organ, companies thus have a judge to apply to, if need be. Presently, when leasing companies have a proposal concerning legislation improvement, they actually have no profiled agency to address to.
Q: Some bankers are maintaining that leasing companies create an unfair competition on the market, and are wondering how leasing companies can work in the absence of a legal frame regulated by the National Bank of Moldova. What do you think?
A: If a company feels suppression, it should collect facts and arguments proving unscrupulous competition. At the same time, the Moldovan legislation protects from such bad practices, and in case facts are revealed, the injured party is eligible to apply to court for compensation of damage inflicted by unfair competition. But I don’t think anybody has a reason to apply to the court. If leasing companies can offer more favorable conditions than banks, this is not the companies’ problem.
Q: Could you please name the main problems Moldovan leasing companies come across?
A: The leasing market is an integral part of the national economy, therefore this market feels all the economy’s problems. In the conditions of an economic recession, financial markets certainly feel a decline, including the leasing market.
Q: Which are the advantages of the leasing market compared with other types of financing?
A: Suppose, you want to buy a car. In such case you may take a bank credit or apply to a leasing company to obtain a car on leasing terms. To receive a credit, you have to provide guarantees, a pledge, and to prove that you are well-to-do enough to return the credit. In case with leasing companies, the car becomes your guarantee. If you can’t repay the car price plus interest, the leasing company will take away your car.
Interest rates both in banks and leasing companies vary, and depend on the terms of the capital being attracted. Usually, banks attract capital from accounts, and leasing companies – from shareholders’ assets or at the expense of credits. If they find cheaper resources, they have the possibility to have more attractive interest rates.
The regulation problem, however, is a totally different problem: banks mobilize the population’s savings, and if banks issue ill-thought, reckless credits, they will subsequently be not able to return the money to the populace – the banks’ depositors. As for leasing companies, they don’t deliver a blow on citizens because if a company issued a careless credit, this will be the company’s problem and its shareholders’ one. In this situation, maximum what regulation can do is to protect the leasing company. There is no risk for third persons here.
Q: Some experts are saying leasing in Moldova is pretty expensive a thing. Do you think so, too?
A: If leasing were not attractive, customers would not be resorting to it.
Q: What do you think is the probability that the leasing market potential will be broadening?
A: If I hadn’t believed in it, I would not be the Association President. Unlike in other countries, where leasing is widely used for obtaining household appliances and other equipment, cars etc., we are only beginning our way. The Moldovan leasing market does have a potential, but it has to be mastered yet.
Infotag: Thank you very much for your interview, Mr. Garstea.
Infotag’s dossier: The Association of Moldovan Leasing Companies was founded in 2012 by the Express Leasing, MAIB-Leasing, Raiffeisen Leasing and Total Leasing that account for approximately 70% of the Moldovan leasing market. All in all, there are 20 leasing companies working in Moldova. In 2011, the local leasing market was estimated at 60 million euros.