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Moldova Expands Ad Effort As Plan Gets Under Way

By Natalia A. Feduschak
March 1994

Chisinau, Moldova

It may not be the No. 1 show on Moldovan television, but "The Owners Club" — Part of the Government's expanded effort to convince its skeptical citizens to embrace free
enterprise — is growing in popularity.

The recently launched TV program focuses on the success stories of those who have become the owners of private property in this former Soviet republic. But the real hope is that some of that success will rub off on the nation's privatization program, which is just now getting under way.

"We're trying to create a positive image" of privatization and a market economy, says Kimberly Getto, project director for PBN Co., a San Francisco-based public relations firm. Working in conjunction with Moldova's privatization department, PBN has "put together a broad education campaign" to explain the benefits of the move to a free market.

The campaign, which is also getting help from the U.S. Agency for International Development and the Price Waterhouse consulting firm, included newspaper supplements and advertisements as well as radio and TV programs that explain how privatization works and how citizens can use their privatization bonds. Earlier this month, the campaign introduced "The Owners Club", a weekly 10-minute program, that so far has focused on only a handful of individuals, who have been able to privatize under a government pilot program.

Admittedly, it may take more than a slick Western-style ad campaign to sell the Moldovans on private enterprise. Sandwiched between Ukraine and Romania, Moldova's economy is still reeling from the breakup of the Soviet empire. With a population of only about 4.2 million, Moldova's inflation soared last year and it saw a nearly 40% drop in productivity in some industries. Amid these concerns, most people still prefer an economy in which the state provides them with a job and a place to live.

"Any campaign must clearly spell out the benefits of private enterprises," and flaunt a few success stories, says Andrei Cucu, chairman of the State Privatization Fund.

Moisey Broukhis, general director of the Victoria grocery store here, appeared as one of the first guests on "The Owners Club" and is keen to boast the merits of free enterprise. He explains that his small collective recently privatized the store with the help of private shareholders who put their money in investment funds.

"Our store was the worst. There was never any food here and it was bankrupt when we took over," says Mr. Broukhis. But shortly after being privatized, the store's shelves — in sharp contrast with other stores here - began to fill up not only with local products, but cheese and meat imported from the Netherlands and Germany. Mr. Broukhis says the Victoria is beginning to make a small profit.

The Moldovan program differs from those of its neighbors. Moldovan privatization bonds, which are issued at one's place of employment, can't be bought or sold like those in Russia, says Mr. Cucu. Moldova, he says, wanted to make sure that people didn't just sell their certificates without first getting a chance to become owners. (Investors can work together in groups by putting their bonds in investment funds, which also provide a vehicle for foreign investors to get indirectly involved in the program.)

In addition, unlike in Russia and Ukraine where there is only one value on coupons, the value of certificates in Moldova is based on the number of years a person has worked. This policy has acted as an impetus to many older people, generally opposed to privatization, says Margarite Fernandez of Price Waterhouse.

Under this first phase of the privatization plan, Moldova plans to auction off one-third of its state-owned enterprises, or 1,530 firms. About 10% are smaller businesses, like cafes and restaurants, while the remainder are medium- and large-scale companies. The government will allow employees of targeted firms to purchase up to 20% of the nominal value of their workplace, before the business is put up for bid.

At the Victoria, private ownership is already changing attitudes. On a recent evening, truckload of bread arrived just before closing. Instead of rudely turning a line of people away — the practice in most stores here — the Victoria stayed open until the last customer served.