Transcript Ministry of transport and communications

Information and
Communication
Technologies in
Bulgaria
NEDELCHO NEDELCHEV
Deputy Minister
Ministry of Transport and Communications
IT Conference, 19 October 2004
SYSTEMS 2004
Bulgaria – most attractive FDI location in CEE
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Best EU accession status
Transparent rules & practices
NATO member, political stability
Low inflation - 2003 average inflation was 2.3%
Low budget deficit – 0% in 2003
No currency fluctuations – Bulgarian lev pegged to the euro
High real GDP growth
High levels of education & skills
Competitive labour, rent and construction costs
Best in CEE quality of labour / cost ratio
Gross Domestic Product (EUR bn)
20
19.4
20.4
17.6
16.5
15
15.1
13.7
11.5
12.2
10
8.9
5
0
1997
1998
1999
2000
2001
2002
2003
Source: National Statistics Institute
2004F
2005F
GDP Dynamics: 7 consecutive years of growth
6%
5.4%
5.0%
4.8%
5%
4.3%
4.1%
4.0%
5.3%
4%
3%
2.3%
2%
1%
0%
1998
1999
2000
2001
2002
2003
Source: Bulgarian National Bank
2004F
2005F
Foreign Direct Investment, USD mil
2 000
2,000
1,600
1 411
1,200
819
800
346
1 000
505
205
813
350
81
150
155
400
465
298
905
1,065
614
650
732
755
1999
2000
2001
2002
901
0
1998
Greenfield, additional FDI, Reinvestments
Privatisation
2003
Expected
Source: Bulgarian Investment Agency, Bulgarian National Bank
2004E
Doing Business in Bulgaria (1)
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Taxes and tariffs
– Corporate profit tax – down from 28% (2001) to 15% (2005)
– Industrial commodity groups, such as ICTs and components, energy
sources, raw materials, medicines and others, are treated with zero
rate of customs duties
- 0% VAT rate on exports of software
- WTO membership since 1996
– European Union Association Agreement
– EFTA agreement
– CEFTA membership
– Bilateral effective free trade agreements
– Personal taxation: top rate dropped from 38% (2001) to 24% (2005)
Doing Business in Bulgaria (2)
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Rent
Boom in the offering of real estate – from EUR 8 to 20 / sq.m
Telecom services
– 2 active GSM networks, 3-rd in progress
– 85% of households covered by the fixed network
– Digitalisation: 45% by end 2004, 80% by end of 2007
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20.5% of the population estimated to have Internet access in 2004
– Over 3,000 km of optical transmission lines
Transport links
– Daily direct flights to most European countries
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Five international transport corridors crossing Bulgaria
Telecom Market
Mobile
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First GSM operator:
Second GSM operator:
NMT operator:
Third GSM license:
Mobiltel – 2.8 mil subs
Globul – 1.2 mil subs
Mobikom – 100 K subs
BTC, part of privatization of the
incumbent, start operations in April 2005
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Forthcoming licenses:
UMTS licenses to be issued in early 2005
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Mobile market in 2003 recorded 10.9% y-o-y growth
Penetration - 50% end of 2004, expected to reach 75% in 2008
Telecom Market
Fixed telephonyon the road of liberalization
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Incumbent BTC privatized in June 2004 in a landmark for CEE private
equity deal, total effect of privatization proceeds plus investment of
over euro 1.1 billion
12 new operators of fixed voice service have been licensed (as of
August 2004)
Reference interconnect offer /RIO/ approved in June 2004
Local loop unbundling effective from Jan 2005
Telecom Market
Internet Users
2.5
24.0%
25%
20.5%
2.0
20%
17.0%
14.0%
1.5
15%
1.9
10.4%
1.6
1.0
10%
1.4
6.8%
1.1
0.5
1.0%
0.0
1997
5%
0.8
3.3%
2.0%
0.6
0.2
0.3
1998
1999
0%
2000
mln people, left scale
2001
2002
2003
2004F
2005F
% of the population, right scale
Source: ICT Development Agency
Telecom Market
Legal and Regulatory Framework
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New Telecommunications Law - fully harmonized with 2000 acquis
and partially with 2002 acquis
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Transparent regulatory system
– Significantly shortened terms and procedures for license issuing
have been introduced
– Decreased number of activities that require individual licenses
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Law on the Electronic Document and Electronic Signature
Law on the Protection of Personal Data
Convention on Cyber Crime
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Telecom market - investments
• Foreign Direct Investments in Communications, 1998 – June 2004
Others
86%
USD 6.556 mil
Communications
14%
USD 1.049 mil
Telecom market - conclusions
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Both mobile and fixed markets still have high growth potential
Large investments expected in every segment
New market entrants in mobile, fixed, satellite to fuel growth and
competition
Telecom market in Bulgaria is of interest for:
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Investors
Vendors
Service and applications’ providers
ICT Highlights
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More than 1,000 small and medium sized IT enterprises
– Traditions (35 years of experience) in this area
– Very well developed educational system in electronics,
engineering and computer sciences
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Areas of competitive advantage
– Software – computer system software, networking software and
web-design, CAD/CAM/CAE software, telecommunications and
wireless development software, application software, firmware
– Hardware – computer and systems assembling, digital and
analog printed circuits design, PCB manufacture, analog mixed
engineering
– Microelectronics – design ASIC’s, front-end and back-end
microelectronic activities
– Automation – systems for industrial automation
Wide range of specializations of the
Bulgarian ICT companies
Type of Specialization
System Integration
Testing application software
No of
companies
120
53
Service and computer equipment
173
Telecommunication services
104
CAD/CAM/CAE systems
38
Custom software
23
Graphic software and GIS
60
Management analysis information systems
32
Information systems for manufacture management and
planning
40
Databases
Operation systems
109
88
IT – Quality through Certifying of
Companies and Specialists
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Over 100 ICT companies certified under the ISO 9000
15 companies certified under the ISO 14000
In January 2004 the European Software Institute (ESI) launched a
Regional ESI Center of Excellence in Bulgaria
Bulgaria was chosen out of other Eastern European countries to lead this
project and host an ESI Center because:
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Bulgaria has remarkable specialists in software development
Bulgarian industry is ready to adopt modern certification and quality
standards to operate globally
ICT sector is a national priority and the Bulgarian government is
committed to develop the software industry
ESI Center Bulgaria (1)
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Mission:
Develop industry competitiveness on the Balkan and Eastern European
countries.
Bulgaria - center of excellence and leading technologies
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Target area:
Bulgaria and the Eastern European countries
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Target Groups
IT companies and specialists
IT-intensive companies and organizations
State institutions and departments (e-government)
Citizens – e-awareness, e-government, IT penetration
ESI Center Bulgaria (2)
How can ESI Center Bulgaria help the ICT sector to increase its
competitiveness?
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Support businesses to increase value added in their operations through
implementation of latest good practices in:
- Quality management – Capability Maturity Model Integration (CMM®I)
- Strategic management – Balanced IT Score Cards (BITS)
- Increased productivity of SW intensive development processes
Support universities in design and execution of modern practical oriented
software engineering programs
Rise awareness in the society and motivate citizens to increase their
general IT knowledge level
Investing in ICT in Bulgaria:
Case studies
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SAP, Germany – SAP Labs Bulgaria, Sofia (2000)
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EPIQ, Belgium – EPIQ Electronic Assembly, Botevgrad (1997)
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Focused on developing a leading-edge J2EE Application Server
Largest FDI in the software development sector
SAP Labs Bulgaria employs more than 250 people
Core business activities transferred to Bulgaria
1,000 employees and 8,000 sq. m production area
Electronic and module assembly, development and manufacture of
plastic injection moulds & factory automation equipment
Bulgarian Telecommunications Company (BTC)
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Investor – Advent International, USA
Price – EUR 280 mil for 65%
Investment of EUR 700 mil in the next 5 years
Reasons to invest in Bulgaria
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Cutting-edge expertise in a multitude of ICT areas
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High growth rate of Internet users, mobile phone subscribers and
Internet services suggests opportunities for future growth in the ICT
sector
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Availability of new technologies promoted by public ventures and
investments
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Integrated chain from academic research and discovery to global
market launch
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Strategic location
Investors in Bulgaria will find …
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Institutional support for major investment projects
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Robust legal framework, focused on attracting and protecting
foreign investment
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Among the lowest costs of doing business in Europe
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Low regulatory obstacles and start up costs
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Highly educated workforce
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Excellent labour quality / labour cost ratio