Transcript Invest in New Bulgaria

BULGARIA – PROSPECTIVE LOCATION FOR
FOREIGN DIRECT INVESTMENTS
Elena PISHTOVKOLEVA, Director Investment Policy
Ministry of Economy and Energy
27-28 November 2007
CONTENTS
 FDI Statistics
 Investment Competitiveness of Bulgaria
 Prospective Sectors
 Incentives
 Industrial Zones
MACROECONOMIC TRENDS
Real GDP Growth
6.6
6.2
7.0
6.1
6.1
6.2
6.5
5.4
5.0
%
3.9
4.1
4.5
5.0
3.0
2.9
2.4
2.0
1.2
1.3
2.8
2.6
2.6
1.7
1.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Source: NSI, EUROSTAT
ЕU-25 Bulgaria
 High and constantly rising economic growth
 Bulgaria is among CEE leaders
 Industry – main growth engine
MACROECONOMIC TRENDS
CREDIT RATINGS
Foreign currency
Agency
Data
Local currency
Longterm
Shortterm
Outlook
Longterm
Shortterm
Outlook
27.06.2007
BBB+
-
Stable
А-
-
Stable
Standard&
Poor’s
26.10. 2006
BBB+
A-2
Stable
BBB+
A-2
Stable
Fitch
17.08.2005
BBB
F3
Stable
BBB+
-
-
Moody’s
23.02.2007
Baa3
-
Positive
Baa3
-
Stable
Japan Credit
Rating Agency
Source: Мinistry of Finance
Since 2000 the credit rating of Bulgaria has been raised over 25 times.
FOREIGN DIRECT INVESTMENT
FDI, Share in GDP (%)
14.0
2006 Е
12.0 11.5
2007 F
11.0
10.0
8.2
8.0
6.6
6.0
4.7
5.0
4.0
4.9
3.0 3.0
3.8 4.1
4.7
4.5
4.9
6.3
5.7
4.2
3.4
2.0
3.0
2.0
0.0
BG
CZ
HU
Source: Bank Austria Creditanstalt
LV
PL
RO
UKR
CRO
SL
TR
FOREIGN DIRECT INVESTMENT
4 500
4 000
3 500
3 000
2 500
2 000
1 500
1 000
500
0
4 364.0
FDI, EUR mln.
2 735.9
3 103.3
1 850.5
570.2
605.1
1997
1998
866.0
1 103.3
903.4
980.0
2001
2002
137.3
1996
Source: BNB
1999
2000
2003
2004
2005
2006
FOREIGN DIRECT INVESTMENT
4 364
3 807*
3 103
2 736
1 856
866
1999
1 003
2000
903
2001
980
2002
Greenfield+Expansion
2003
2004
2005
2006
Privatization
Source: BNB, IBA
Record inflow of non-privatization investments in 2005-2007
2007*
* 1.-9.2007
FOREIGN DIRECT INVESTMENT IN BULGARIA
BY COUNTRIES, %, EUR mln.
1996 – 2006
18
16.5% (2849)
16
14
12
9.8% (1694)
9.2% (1588)
10
7.6% (1317)
8
5.3% (912) 5.2% (890)
5.0% (856)
4.4% (757)
6
4.2% (723) 4.1% (710)
4
2
0
АUSTRIA
NETHERLANDS
Source: BNB
GRECE
GREAT BRITAIN
ITALY
GERMANY
BENELUX
CYPRUS
USA
HUNGARY
FOREIGN DIRECT INVESTMENTS IN BULGARIA
BY INDUSTRY, %
1998 – 2006
Manufacturing
7%
Wholesale, retail trade and
repair
10%
24%
8%
Real estate, renting and
business activities
Financial intermediation
15%
19%
17%
Electricity, gas and water
supply
Transport, storage and
communication
Other
FOREIGN DIRECT INVESTMENTS in 2007
Foreign Direct Investment Flow s by Industry
(January - September 2007)
FDI Flows
Geographical Breakdown
(January - September 2007)
38.3%
Austria
8.6%
Belgium
8.5%
U.K.
15.4%
Spain
6.6%
Luxembourg
6.4%
9.8%
Cyprus
6.2%
1.7%
Greece
6.1%
9.9%
27.4%
12.8%
Real estate, renting and business activ ities
Other
42.3%
Source: BNB
Financial intermediation
Construction
Wholesale and retail trade; repair of motor v ehicles, motorcy cles and personal and household goods
Manuf acturing
Other
Source: BNB
INVESTMENT COMPETITIVENESS
 A.T. Kearney’s Global Services Location Index /March 2007/:
Bulgaria - 9th worldwide and 1st in Europe in terms of investment attractiveness
Bulgaria
Slovakia
3.16
2.79
1.04
1.04
1.56
1.79
Estonia
2.44
0.96
2.2
Czech Republic
2.43
1.1
2.05
Latvia
2.64
0.91
Poland
2.59
1.17
Hungary
2.54
0.95
1.98
Lithuania
2.6
0.83
1.98
Romania
Russia
Ukraine
Financial Score
2.88
2.61
2.79
People Score
2
0.87
1.38
0.98
1.79
1.53
1.16
1.09
Environmental Score
 UNCTAD’s World Investment Report 2007:
Bulgaria - 7th worldwide in terms of FDI Performance
INVESTMENT COMPETITIVENESS
MOST PROSPECTIVE SECTORS FOR INVESTMENT
Services
sector: IT, RES, transport and tourism
Industry sector: electronics, mechanical and electrical engineering and steel processing
Primary sector: mining and quarrying, petroleum products
THE MAIN COMPETITIVE ADVANTAGES OF BULGARIA
Products for lower volume niches
Goods and services with average and high level of value added
In shorter term – investments in energy, transport and infrastructure
In medium and long term – greenfield investment,
acquisitions and merges.

Most prospective sectors: mechanical engineering, electronics, ICT, BPO
TAX POLICY

Corporate Tax Rate – 10% as of 1.1.2007
0% corporate tax rate in 138 municipalities with high unemployment
rate

10%
flat tax rate on personal incomes as of 1.1.2008
Reduction of the social security burden by 6 percentage points as of 2006
and allocation of over USD 384 mln. for use by the business

Increased
depreciation rate to 50% for purchasing new production and
technology equipment, machinery, software and hardware
UNEMPLOYMENT RATES - MUNICIPALITIES
over 50% than average
over 35% than average
Source: Employment Agency
LAW on INVESTMENT PROMOTION
Promoted economic activities
In the industrial sector: manufacturing industry, energy
production from renewable energy sources
In the sector of services: high tech activities in the field of
computer technologies; research and development activities, as well
as in the field of education and humanitarian health services
Classes of Investment
Class A – over 36 EUR mln.
Class B – over 21 EUR mln.
Opportunities for reduction of the thresholds for:
Investments in municipalities with high unemployment
High-tech production and services
LAW on INVESTMENT PROMOTION
Incentives
1.
Shorter terms of administrative service
2.
Individual administrative service
3.
Property rights to real estate with state or municipal ownership
4.
Financial support for construction of public infrastructure
5.
Financial support for training for acquiring professional
qualification
Trans-European transport corridors crossing Bulgaria
INDUSTRIAL ZONES
State or Municipal Ownership
Private Ownership
Vocational schools and technical universities in Bulgaria
322
637
1671
635
247
• Technical universities
6677
• Vocational upper secondary schools with Machine building and Heavy metal industry related programs
• Vocational Electrical Engineering upper secondary schools
• Vocational Electronics upper secondary schools
Source: IBA
- Number of university
graduates, 2005
Graduation from universities IT and engineering programs in Bulgaria
BA+MA, 2005
Other
Electronics
Engineering-combined programs
987
343
479
Automation
Electrical engineering
Machine building
Computer systems & technologies
Comminication techniques and
technologies
Informatics
Total science graduates – 9000
Total IT & engineering graduates - 6677
Source: IBA
513
559
779
833
966
1218
Average monthly wages and salaries of the employees
under labour contract by economic activities in 2007*
(BGN)
Economic activity
I quarter
II quarter
Total
384
406
Agriculture, hunting, forestry and fishing
273
289
Mining and quarrying
670
708
Manufacturing
358
379
Electricity, gas and water supply
666
721
Construction
333
355
Trade, repair of motor vehicles and personal and
household goods
309
315
Hotels and restaurants
259
281
Transport, storage and communication
481
511
Financial intermediation
897
947
Real estate, renting and business activities
363
368
Public administration; compulsory social security
512
550
Education
374
418
Health and social work
409
443
Other community, social and personal service
activities
326
336
Source:NSI
* - Preliminary Data
Protection of Intellectual Property Rights
the Case of Bulgaria
2007 SPECIAL 301 REPORT
OFFICE OF THE UNITED STATES TRADE
REPRESENTATIVE
„Bulgaria has been removed from the Watch List due to
improvements in IPR enforcement efforts and passage of
IPR legislation in response to heightened engagement
with the United States.”
Map of top foreign manufacturers in Bulgaria
Sparky
Lifton
Texaco (Orgahim)
SET
Rousse Shipyard (German company)
Vidin
Bramac
Silistra
Knauf
Rousse
Mayr Melnhof
Amylum
Actavis
Nikopol
Montana
Luxcraft
Holcim
Palfinger
Vratsa
Cherven
Bryag
EPIQ
Sparky
Bijlsma
Shoumen
Targovishte
Sisecam
Teteven
Trudovets
Grammer
Umicore
Miroglio
Pirdop
Actavis
Dolni Chiflik
Sopot
Gabrovo
Kastamonu
Entegre
Gabrovo
Miroglio
Gorno Sahrane
Kazanluk
SKF
Arkomat (VW)
Miroglio
Nova Zagora
Swedish Match
Stara Zagora
Videoton
Heineken
Kostenets
TKM Fruit & Juice
Dupnitsa
Actavis
Stamboliiski
Carlsberg
Razlog
Magnetic Head Technology
Gotse Delchev
Petrich
Source:IBA
Plovdiv
Perushtitsa
Dewavrin
Parvomay
Schneider Electric
Blagoevgrad
Rollmann
Varna
Planzee Tizit
Sevlievo
Devnya
Delta
Alfa Wood
Kazichene
Kuhn
Roca
Troyan
Elin Pelin
Chipita
Kaspichan
Nicoletti
Botevgrad
Sofia
FAF Metal
Carlsberg
American Standard
ABB
Effebiesse
Hamberger
Provimi
Pleven
Lovech
ABB
Dobrich
Solvay
Italcementi
Acid and Fertilizer
Linde Gas
Razgrad
Atusa
Festo
Hyundai
Siemens
Kraft
Nestle
Coca Cola
Heineken
Viohalco
Danone
Coats
Maser Holding
Melexis
Radomir
Provimi
Liebherr
Socotab
Linde Gas
Safil
Fererro
Interbrew
Haskovo
Interbrew
Sliven
Bourgas
Lukoil
Kronospan
Interbrew
Korean Investment to SE Europe
Cumulative Investment (Projects, USD m)
300
250
200
150
100
50
0
Bulgaria
Romania
Slovenia
Turkey
Croatia
Case
5
13
2
36
0
Amount
55
264
3
165
0
Source: Korea Eximbank
Attractive sectors for Korean investments
in Bulgaria
 Automotive Industry
 Mechanical engineering
 Electronics
 ICT
 Energy
 Food processing
Why Bulgaria?
Quality of human capital
 Education levels among Europe top 5%
 7% of workforce has engineering degrees
 English studied by 70% of students
 Motivated and entrepreneurial attitude
Quality of business environment
 Strong institutional support for foreign
investors
 No restrictions to capital flows

Gateway to Europe and Asia
High
and sustainable growth of the economy

Favourable business environment

10% corporate tax rate (lowest in EU)

10% flat personal incomes tax rate /1.1.2008/

Investment incentives for qualified investment
 Among
lowest operational cost in a European
market economy
Quality of life
 Excellent all-season outdoor recreation
 Diverse cultural heritage and art activities
 World renown food and beverages

Duty free agreements covering markets with 550
mln. customers
Double
Taxation Avoidance Treaty with Korea
REPUBLIC OF BULGARIA
MINISTRY OF ECONOMY AND ENERGY
INVESTMENT POLICY DIRECTORATE
TEL: +359-2-940-7461
FAX: +359-2-980-5109
www.mee.government.bg