CHISINAU, Moldova -- One of the last former Soviet republics to jump on the bandwagon of privatization, Moldova is doing its best to learn from others' experience.


By distributing non-tradeable bonds and prohibiting dubious advertisements, the Moldovan government is trying to avoid pyramid schemes and the abuses that beset Russian privatization.


Businesses have been sold both for bonds and cash during the first stage of privatization, which is to end Nov. 15, when the cash auction stage will begin.


Privatization has been successful, both local people and observers say. Since September 1993, when privatization began, almost 2.5 million Moldovans have become property owners and 80 percent of industries have been freed from state control.


Like most former Soviet republics, Moldova, a predominantly agricultural country nestled between Romania and Ukraine is going through a difficult process of economic reforms. After three years of post-Soviet drift, it adopted a tight fiscal policy last year and has begun receiving adjustment loans from the International Monetary Fund.


Moldova's privatization program differs from Russia's, where every citizen was given the same number of vouchers either to sell or to invest. In Moldova, "patrimonial bonds" -- the equivalent of vouchers -- have been distributed to workers at their place of employment based on the length of time on the job.


In theory, the Moldovan bonds cannot be sold for cash. In practice, however, they fetch an average of about 350 lei ($70) on the street.


"The Moldovan government is very serious in what it is doing in terms of privatization," said a Chisinau-based Western expert who asked not to be named. "Unlike in Russia, the Moldovan constitution puts private property on the same level with public property."


Employees of state enterprises set for privatization were able to exchange bonds at par value for up to 20 percent of the shares of their businesses.


In addition to that, Moldovans received the right to become full owners of their houses and apartments for a nominal bond price. By September, more than 153,000 homes -- two-thirds of all state-owned housing -- had been privatized, according to official statistics.


Lidia Florea, a 35-year old secretary, who invested her 250 bonds in two different funds, said she does not expect to become rich overnight. "I perfectly understand that I may never receive anything, but I still hope to get something, probably after 10 years."


Victor Damianu, 45, is one of 2 million Moldovans who has not yet decided what to do with his bonds.


While Damianu privatized his apartment and a summer villa, he did not decide how to use the 700 bonds his family received from the state. "We have a lot of bonds and will certainly buy some shares. But I need some more time to decide where to invest," he said.


Choosing an investment or a trust fund is a serious challenge for many Moldovans. "To avoid pyramid-type scams, the Moldovan legislation prohibits an investment fund from ever promising dividends to their customers," said Vasily Kirtoka, chairman of the Daac-Hermes investment fund. "We don't promise anything. We can only try to explain to people that they won't lose their money if they leave their bonds with us."


Alexander Panov is one of those in charge of selling off state firms. So far his agency has raised 50 million lei through selling 480 small-, medium- and large-sized enterprises, almost one-third of the 1,500 businesses slated for privatization.


"Most of the businesses are sold completely for bonds and cash to the public," Panov said. "However, about 5 percent of the enterprises will remain 30 to 60 percent within state hands."


These enterprises -- as in Russia -- are so-called "strategic" firms, in the telecommunications, energy and defense spheres.


According to Moldovan legislation, foreign companies have the same rights as local ones in privatization. "Foreigners are allowed to buy up to 100 percent of shares in any enterprise on the auctions or though investment funds," said Sergei Kostrikov, economic and legislative manager with Price Waterhouse in Chisinau.


The Moldovan government plans to sell two-thirds of its stock of the country's businesses, some 1,500 in all, by the end of 1996. By September, almost 80 percent of industrial enterprises and 30 percent of agricultural enterprises had been turned into joint-stock companies, Panov said.


But land, which accounts for 43 percent of the country's economy and employs 700,000 people, will not begin to be privatized until after the year 2000, economics minister Valeriu Bobutac said.


"We have divided up state property, including land among people living in the countryside," Bobutac said. "But it's not yet their property, we have only leased the land to them."


Kirtoka of the Daac-Hermes fund -- which has invested 100 million lei in different ventures -- anticipated challenges in the coming second stage. "When shares start to circulate freely on the market, many people will try to make money on buying and selling," said Kirtoka. "The majority will lose money, and only the professionals will stay."