There is a lot of construction going on these days in Moldova, both at my village and in the capital - the two places I am most often found. People are remodeling the interior of their homes - bathrooms, kitchens, bedrooms - and laying new bricks along sidewalks, pounding them into sand with rubber mallets. Old frameworks that stood dormant for most of the year are now centers of activity as workers, usually the owners, lay cinder blocks, mix cement, and cut large shingles to fit on the roof.
All this I take as a good sign for the Moldovan economy, but looks can be deceiving. In conversations with people at site and other PCVs, I realized that there is basically no market for houses. In America, when you want a house you typically go to a bank to get a loan, purchase an existing house with it, and spend the next 20-30 years paying off the mortgage. Banks here don't work that way, and so usually a person must build their own and fund the entire construction independently. This means that houses, and many large apartment or office buildings, are built slowly over several years as money becomes available; it also means that purchasing an already built structure is very difficult - who would sell a building without getting all the money up front, or agreeing to some kind of multi-year payment plan? Not this guy, and probably not many Moldovans.
The result? Capital is invested in buildings for long periods of time without getting any return. If it takes 5 years and $5,000 each year to build a store, the owner must wait 5 years and stake out $25,000 of his own money before he can even sell a single juice box. That's a hefty load to bare, and is probably one (of many) reason why it is so difficult to start a small business here.
How to fix this problem? I don't know. I'm certain that the central bank would need to create some sort of freer system for money to move between banks. Establishing a mortgage market is way beyond this PCV's abilities, but I'm certain any kind of lender would make a killing in this market, provided they could establish some kind of collatoral for their investment (admittedly not an easy thing to do here).
2 comments:
Did you ever see this? Thought it was cool your blog got picked up: http://www.customersarealways.com/2006/02/a_good_customer_service_experi.html
My host brother is 28 and recently bought his first house with his wife and infant son. The house, in Ialoveni, which is in commuting distance of Chisinau, cost €24,000. The bank said that they couldn't give a loan until the house was already bought, so Sergiu and Olesea had to spend more than a month asking their friends and godparents for money. This isn't a situation that produces fast growth, especially with the ridiculously high cost of land in Chisinau and its surrounding areas.
Post a Comment