Transcript Slide 1

Bulgaria – Investment and Business
Opportunities
July 2011
Bulgaria offers the best of both worlds – a key strategic location, bridging
Europe and Asia, low corporate tax and political and economic stability and the
lowest business operational costs in the EU
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Bulgaria has a strategic geographic location. Its position on the European
continent allows investors to reach the entire market of the European Union
and the markets of central and eastern Europe, which represent a total
population of 853 million.
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With its parliamentary republican political system, the political situation in
Bulgaria is stable and the legislature, the executive and the judiciary are
independent of the parliament. As of Jan1, 2007, Bulgaria is a part of the
European Union and has harmonized its legal system in line with the EU
requirements. In April 2004, the country became member of NATO.
Foreign investment in Bulgaria has never been so dynamic and so massive.
During recent years, a significant number of international companies have
opened offices in Bulgaria - Solvay, Umocore, Italcemente Group, Liebherr,
Kraft, Nestle, American Standard, Philip Morris, Metro, Lindner, Praktiker
and SAP to name but a few.
As a result of a liberal financial policy and continuous economic growth,
Bulgaria has become very attractive to foreign investments. In addition,
local companies are also increasing their share of business in Bulgaria and
abroad.
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Macroeconomic indicators show consistent growth in the years leading up to
the global financial crisis
Real GDP Growth
Inflation
EU-27
6.6%
6.2%
6.5%
6.4%
EU-27
12.3%
6.2%
3.4%
0.2%
6.1%
7.3%
8.4%
5.0%
4.6%
2.8%
2.4%
2009
2010
-5.5%
2004
2005
2006
2007
2008
2009
2010
2011
2004
2005
2006
2007
2008
* Q1 2011
* April 2011
FDI Inflow
Unemployment
12.2%
2011
EU-27
10.7%
9.1%
9.1%
6.9%
9.2%
€ mln.
9 052
9.3%
6 686
6 222
6.3%
2 736
3 382
3 152
1 360
2004
2005
2006
2007
2008
2009
2010
2011
2004
2005
2006
2007
2008
2009
2010
* April 2011
Source: Bulgarian National Bank, Eurostat
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Despite the global ecnomic downturn , Bulgaria’s investment climate is good
and the countries economic performance indicators are positive.
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Macroeconomic and financial stability:
Real GDP growth rate - -5.0% (2009)
Inflation Rate, annual change - 0.6% (2009)
Unemployment Rate - 9.1% (2009)
No currency risk, local currency is pegged to Euro
Budget surplus for the previous 5 years (-3.9% for 2009)
Investment grade credit rating by major rating agencies
Local and International Agreements to safeguard FDIs
Government and EU funding for many industries
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Visible signs exist that the Bulgarian economy is
emerging rapidly from the crisis
Exports (€ mln.)
Real GDP growth (% annual basis)
+44%
4,500
7%
6.9%
6.4% 6.5%
6%
+6%
5%
4.8%
3.8%
4%
4,000
3.4%
3%
2%
1%
3,500
+66%
0.0%
-0.4%
-0.8%
0%
-1%
-2%
-3%
3,000
-4%
-5%
-6%
0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2008 2008 2008 2008 2009 2009 2009 2009 2010 2010 2010 2010
Source: National Institute of Statistics, Bulgaria
-3.3%
-4.6%
-6.0%
-6.7%
-7%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2008 2008 2008 2008 2009 2009 2009 2009 2010 2010 2010 2010 2011
Role of Bulgaria as FDI location has grown significantly
for the last 10 years
Inward FDI per country (€ mln.)
10,000
9,000
8,000
7,000
6,000
5,000
Romania
4,000
3,000
Croatia
Bulgaria
2,000
Czech Republic
1,000
Hungary
0
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009Slovakia
FDI in Bulgaria comes mostly from EU countries and is
concentrated in four main sectors
FDI by host country, 1996-2010 (€ mln.)
(1) Netherlands
FDI flows by industry, 1996-2010 (€ mln.)
5,740
(2) Austria
Real Estate
8,419
5,183
Finance
(3) Greece
3,763
(4) UK
2,948
(5) Germany
2,646
(6) Cyprus
(7) Hungary
7,422
2,229
Manufacturing
6,552
Trade
6,425
Construction
2,608
Energy
2,492
1,362
(8) USA
1,337
(9) Russia
1,229
(10) Italy
1,221
Source: Bulgarian National Bank
Telecom
Other
1,955
2,376
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Why invest in Bulgaria?
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Political and business stability
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EU and NATO member
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Currency board
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Low budget deficit and government debt
Low cost of doing business
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10% corporate tax rate
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Lowest cost of labor within EU
Access to markets
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European Union / EFTA
–
Russia
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Turkey / Middle East
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Educated and skilled workforce
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Government incentives
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Bulgaria enjoys one of the most stable political and
economic environments in Southeastern Europe
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Bulgaria is a member of some of the
most prestigious political organizations
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European Union member since 2007
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NATO member since 2004
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WTO member since 1996
”the culture of impunity that once
plagued Bulgaria has largely gone“
May 27, 2010
Strong commitment to political reform
and transparency has earned praise
from leading media and experts
worldwide
Stable currency
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Bulgarian Lev has been pegged to the Euro
since the adoption of the currency in 2002
Currency board backed by IMF
“The Bulgarian economy looks to be
stabilizing after weathering the recent
financial crisis better than most of its
neighbors”
“the government has earned
accolades from Western economists”
July 20, 2010
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Government financial indicators are remarkable not only
in the region, but on a pan-European scale
Bulgarian government debt is 3rd lowest in Europe
Estonia
Bulgaria
Government
debt, % of GDP
7%
Budget surplus / deficit has consistently
outperformed regional and European averages
3%
2%
15%
1%
Romania
Czech Republic
24%
0%
-1%
35%
-2%
UK
Germany
68%
-3%
Bulgaria
-4%
73%
-5%
Hungary
78%
-6%
Euro area
Greece
Source: Eurostat
79%
Euro Area
-7%
115%
-8%
2005
2006
2007
2008
CEE average
2009
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Bulgaria has one of the lowest business costs in Europe
(1) Taxes and Labor Costs
Lowest corporate income tax rate in Central /
Eastern Europe
Bulgaria (*)
Romania
Hungary
Most competitive cost of labor in Central /
Eastern Europe
Bulgaria
10%
Romania
431
Serbia
445
16%
19%
Hungary
Slovakia
Average wage,
€ / month Oct 2010
332
19%
713
Slovakia
772
806
Croatia
20%
Poland
Czech Rep
20%
Czech Republic
1,022
Turkey
20%
Croatia
1,044
Slovenia
1,488
* 0% tax rate for manufacturing companies in regions with low employment
Source: Eurostat; CEIC
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Bulgaria has one of the lowest business costs in Europe
(2) Energy costs and Prime Location Office Rent
Bulgarian cost of electricity for industrial
users is 67% of the European average
Estonia
Bulgaria
Romania
EU average
Germany
Office rents in Bulgaria are among the lowest
in Europe
€/kWh, 2009
0.059
Sofia
Zagreb
0.064
0.081
Hungary
Slovakia
Source: Eurostat, CB Richard Ellis
200
Bucharest
234
Budapest
240
Prague
252
0.095
0.098
Warsaw
Czech Rep
€ / sq. m / year,
Q1 2010
177
0.106
Istanbul
0.122
0.142
Athens
Moscow
276
355
396
629
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Bulgaria is only 3 hours flight from all major destinations
in Europe, Russia and the Mediterranean region
Strategic geographic location
Major transport corridors passing
through Bulgaria
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The role of the European Union as a trade partner for
Bulgaria has been growing consistently
Share of EU-27 exports has grown by 50
percentage points since 1995
... in absolute terms EU-27 exports have
grown approximately 5 times
10,000
9,000
EU-27
8,000
44%
56%
60%
64%
€ mln
7,000
6,000
Balkans
5,000
16%
4,000
Asia
Other
11%
21%
18%
6%
6%
7%
17%
16%
14%
29%
1995
15%
2000
2005
2009
3,000
2,000
1,000
0
1994 1996 1998 2000 2002 2004 2006 2008 2010
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An educated and skilled workforce is among the main
advantages of Bulgaria
Almost 60,000 students graduate every year from
over 50 universities
Bulgaria has one of the highest proportions of
students abroad from all European countries
Iceland
Business
17.8%
19,480
Ireland
Social sciences
14.2%
8,372
Slovakia
Engineering
10.2%
7,178
8.3%
Bulgaria
Education
3,677
5.8%
Greece
Health
Law
3,166
Austria
1,553
Architecture
833
Agriculture
860
Other
Source: National Institute of Statistics, Bulgaria
12,684
4.7%
Germany
3.1%
EU-27 average
2.8%
Romania
2.2%
Czech Republic
2.1%
Students in another EU
/ EEA country, % of all
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The government supports specific industries under the
Investment Promotion Act (IPA)
Derelli Company Ltd can help you make the most of this
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Investments must be related to the following sectors:
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Manufacturing
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Research & development
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Education
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Healthcare
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High-tech services
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Warehousing and logistics
Minimum investment amounts must exceed €10m
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€3.5 in regions with high unemployment and €2m for
investment projects in high-tech services
Benefits for certified investors include:
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Shortened administrative procedures
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Preferential acquisition of state or municipal land
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Financial support for professional training / education
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Infrastructure subsidies
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Individual administrative services
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Biggest investors are supported through a priority
investment scheme
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Priority projects can be related to all sectors of the
economy, which do not contradict regulation 800/2008 of
the European Commission
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Subsidies not allowed in mining, primary agriculture
production, and shipbuilding
Priority projects should exceed €50m and create at least
200 new working places for a 3-year period
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€25 + 100 working places for certain manufacturing projects
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€10m + 50 working places for high-tech services and R&D
Priority projects receive all benefits for certified
investors, as well as the following:
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Lowest possible costs for the acquisition of government and
municipal land + waived taxes for land status changes
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Working group for project support is assigned by the
Council of Ministers
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Financial grant scheme for up to 10% of the investment
project cost (50% for R&D)
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Attractive FDI sectors
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Services:
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Information technology
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Public Sector
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Transport and tourism
Industry:
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Electronic and electrical equipment
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Machine building
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Metal processing
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Chemical Industry
Resources:
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Mining
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Oil
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Alternative energy
Source: Deloitte Consulting; United Nations (UNCTAD)
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Leading global investors have chosen Bulgaria as an
FDI destination
IT & BPO
(Business
Process
Outsourcing)
Mechanical and
Electrical
Engineering
Construction
Materials
Telecom and
Media
Energy
Finance
Derelli Company Ltd
Our Consultancy Services:
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Macroeconomic data on Bulgaria and the Bulgarian
Security Industry – all aspects from manufacturing and
sales to guarding and identification of key business
opportunities
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Legal and Tax Advice – everything you need to know
about setting up a business here –we’ll advise you on
and undertake on your behalf
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Business Intelligence and Statistical Data
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Recommendation and evaluation of investment
projects
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Identification of potential suppliers, contract
manufacturers and joint-venture partners
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Personalized admin,tax,legal servicing and practical
assistance from local and international experts
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Liaison with central and local governments
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Liaison with branch chambers and NGOs, liaison with
the Government investment promotion Agency, part of
the Ministry of Economy, Energy and Tourism
DERELLI Company Ltd.
Sofia 1202, 21 Rodopi Str.
Phone: (+359 2) 479 56 56
Fax: (+359 2) 479 79 01
E-mail: [email protected]
www.derelli.eu