bulgaria general presentation july 2011
DESCRIPTION
Bulgaria general presentation july 2011By InvestBulgariaTRANSCRIPT
Bulgaria – investment climate and business opportunities
July 2011
Page 2
Macroeconomic indicators show consistent pre-crisis economic growth and quick post-crisis recovery
Real GDP Growth Inflation
Unemployment FDI Inflow
Source: Bulgarian National Bank, Eurostat
3.4%
-5.5%
6.2%6.4%6.5%6.2%6.6%
2011 Q1
2010
0.2%
200920082007200620052004
3.0%2.5%
12.0%
7.6%7.4%6.0%6.1%
201020082007200620052004 2009
* May 2011
9.2%9.1%9.1%10.7%
12.2%
6.9%
200620052004 2007 2011
8.9%
201020092008
6.3%
EU-27Bulgaria EU-27Bulgaria
1,6392,412
6,728
9,052
6,222
3,1522,736
2004 20072005 2010200920082006
€ mln.EU-27Bulgaria
Visible signs exist that the Bulgarian economy is emerging rapidly from the crisis
4,500
4,000
3,500
3,000
0
+44%
Q4 2010
Q3 2010
Q2 2010
Q1 2010
Q4 2009
Q3 2009
Q2 2009
Q1 2009
Q4 2008
Q3 2008
Q2 2008
Q1 2008
+66%
+6%
Exports (€ mln.)
3.4%3.8%
-0.8%
6.5%6.4%6.9%
-7%
-6%
-5%
-4%
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
7%
Q3 2008
Q4 2008
4.8%
Q1 2008
-4.6%
Q1 2011
Q2 2009
Q4 2009
Q2 2010
-6.0%
Q4 2010
0.0%
Q3 2009
Q1 2010
-6.7%
Q1 2009
-0.4%
-3.3%
Q3 2010
Q2 2008
Real GDP growth (% annual basis)
Source: National Institute of Statistics, Bulgaria Page 3
Role of Bulgaria as FDI location has grown significantly for the last 10 years
2006 2007 2008 20091999 2000 2001 2002 2003 2004 2005
Czech Republic
Romania
Hungary
Bulgaria
Slovakia
Croatia
0
1,000
10,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
Inward FDI per country (€ mln.)
Page 4Source: UNCTAD
Page 5
FDI in Bulgaria comes mostly from EU countries and is concentrated in four main sectors
Source: Bulgarian National Bank
FDI by host country, 1996-2010 (€ mln.) FDI flows by industry, 1996-2010 (€ mln.)
Telecom 1,955
Energy 2,492
Construction 2,608
Trade 6,425
Manufacturing 6,552
Finance 7,422
Real Estate 8,419
Other 2,376(10) Italy 1,221
(9) Russia 1,229
(8) USA 1,337
(7) Hungary 1,362
(6) Cyprus 2,229
(5) Germany 2,646
(4) UK 2,948
(3) Greece 3,763
(2) Austria 5,183
(1) Netherlands 5,740
Page 6
Why invest in Bulgaria?
• Political and business stability– EU and NATO member
– Currency board
– Low budget deficit and government debt
• Low cost of doing business– 10% corporate tax rate
– Lowest cost of labor within EU
• Access to markets– European Union / EFTA
– Russia
– Turkey / Middle East
• Educated and skilled workforce
• Government incentives
Page 7
Bulgaria enjoys one of the most stable political and economic environments in Southeastern Europe
• Bulgaria is a member of some of the most prestigious political organizations
– European Union member since 2007
– NATO member since 2004
– WTO member since 1996
• Strong commitment to political reform and transparency has earned praise from leading media and experts worldwide
• Stable currency
– Bulgarian Lev has been pegged to the Euro since the adoption of the currency in 2002
– Currency board backed by IMF
”the culture of impunity that once plagued Bulgaria has largely gone“
May 27, 2010
“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
Government financial indicators are remarkable not only in the region, but on a pan-European scale
Page 8
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
110%
3%2%1%0%-1%-2%-3%-4%-5%-6%-7%-8%-9%
average debt (2004-2009)
average budget (2004-2009)
16%
TurkeyCroatia
Norway
Iceland
United KingdomSweden Finland
SlovakiaSlovenia
Romania
Portugal
Poland
Austria
Netherlands
MaltaHungary
Luxembourg
LithuaniaLatvia
Cyprus
Italy
France
Spain
Greece
Ireland
Estonia
Germany
DenmarkCzech Republic
Bulgaria
Belgium
Source: Eurostat
Page 9
Bulgaria has one of the lowest business costs in Europe(1) taxes and labor costs
Lowest corporate income tax rate in Central / Eastern Europe
* 0% tax rate for manufacturing companies in regions with low employment
Most competitive cost of labor in Central / Eastern Europe
Average wage, € / month March 2011
Source: Eurostat; CEIC
Turkey 20%
Czech Rep 19%
Slovakia 19%
Hungary 19%
Romania 16%
Bulgaria (*) 10%
Croatia 20%
Slovenia 1,524
Croatia 1,065
Czech Republic 956
Poland 878
Slovakia 809
Hungary 802
Romania 493
Serbia 480
Bulgaria 352
Page 10
Bulgaria has one of the lowest business costs in Europe(2) energy costs and rent
Bulgarian cost of electricity for industrial users is 67% of the European average
Source: Eurostat, CB Richard Ellis
0.142
0.122
0.106
0.098
0.095
0.081
0.064
0.059Estonia
Bulgaria
Romania
EU average
Germany
Czech Rep
Hungary
Slovakia
€/kWh, 2009
Office rents in Bulgaria are among the lowest in Europe
629
396
355
276
252
240
234
200
177
Moscow
Istanbul
Bucharest
Warsaw
Budapest
Athens
Zagreb
Prague
Sofia€ / sq. m /
year,Q1 2010
Page 11
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
EU and EFTA
Rus
sia
and
CIS
Turkey and
Middle East
The role of the European Union as a trade partner for Bulgaria has been growing consistently
11%
6% 6% 7%
16%
21%18%
15%
56% 60% 64%
44%
Other
Asia
Balkans
EU-27
2009
14%
2005
16%
2000
17%
1995
29%
Share of EU-27 exports has grown by 50 percentage points since 1995
1994 1996 1998 2000 2002 2004 2006 2008 2010
€ mln
9,000
6,000
5,000
4,000
3,000
8,000
2,000
10,000
1,000
0
7,000
... in absolute terms EU-27 exports have grown approximately 5 times
Page 12
Page 13
Educated and skilled workforce is among the main advantages of Bulgaria
Almost 60,000 students graduate every year from over 50 universities
Source: National Institute of Statistics, Bulgaria
860
833
12,684Other
19,480Business
8,372Social sciences
7,178Engineering
3,677Education
3,166Health
1,553Law
Architecture
Agriculture
Bulgaria has one of the highest proportions of students abroad from all European countries
2.1%
2.2%
2.8%
3.1%
4.7%
5.8%
8.3%
17.8%Iceland
14.2%Ireland
10.2%Slovakia
Bulgaria
Greece
Austria
Germany
EU-27 average
Romania
Czech RepublicStudents in another EU / EEA country, % of all
The government supports specific industries under the Investment Promotion Act (IPA)
Page 14
• Investments must be related to the following sectors:
– Manufacturing
– Research & development
– Education
– Healthcare
– High-tech services
– Warehousing and logistics
• Minimum investment amounts must exceed €10m
– €3.5 in regions with high unemployment and €2m for
investment projects in high-tech services
• Benefits for certified investors include:
– Shortened administrative procedures
– Preferential acquisition of state or municipal land
– Financial support for professional training / education
– Infrastructure subsidies
– Individual administrative services
Biggest investors are supported through a priority investment scheme
• Priority projects can be related to all sectors of the
economy, which do not contradict regulation 800/2008
of the European Commission
– 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
– €25 + 100 working places for certain manufacturing
projects
– €10m + 50 working places for high-tech services and R&D
• Priority projects receive all benefits for certified
investors, as well as the following:
– Lowest possible costs for the acquisition of government
and municipal land + waived taxes for land status changes
– Working group for project support is assigned by the
Council of Ministers
– Financial grant scheme for up to 10% of the investment
project cost (50% for R&D)
Page 15
Page 16
• Services:– Transport and Logistics
– Information technologies
– Outsourcing of business processes
– Health and tourism related to healthy
lifestyle
• Industry:– Transport equipment and machine
building
– Electronics and Electrical engineering
– Chemical industry
– Food and Agriculture
• Resources:– Mining
– Oil
– Alternative energy
Attractive FDI sectors
Leading global investors have chosen Bulgaria as an FDI destination
IT & BPO Mechanical and Electrical
Engineering
Construction Materials
Telecom and Media
Energy Finance
Page 17
InvestBulgaria Agency is a Government investment promotion arm, part of the Ministry of Economy, Energy and Tourism
IBA services:
• Macroeconomic data on Bulgaria
• Legal advice
• Data on operational costs
• Regional information: industrial zones and infrastructure, data on unemployment, skilled labour force and level of education
• Recommendation of investment project sites
• Identification of potential suppliers, contract manufacturers and joint-venture partners
• Personalized administrative servicing
• Liaison with central and local governments
• Liaison with branch chambers and NGOs
InvestBulgaria Agency
Page 18
InvestBulgaria Agency
Sofia 1000, 31 Aksakov Str.
Phone: (+359 2) 985 5500
Fax: (+359 2) 980 1320
E-mail: [email protected]
Web: www.investbg.government.bg