bulgaria – investment climate and business opportunities
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Bulgaria – investment climate and business opportunities. Sofia June 26, 2012. Bulgaria at a glance Location and key data. Area : 110,910 sq. km Number of inhabitants (2011): 7.4 mln Capital and largest City : Sofia - PowerPoint PPT PresentationTRANSCRIPT
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Bulgaria at a glanceLocation and key data
• Area: 110,910 sq. km
• Number of inhabitants (2011): 7.4 mln
• Capital and largest City: Sofia
• Other cities: Plovdiv, Varna, Bourgas, Ruse, Stara Zagora, Pleven, Veliko Tarnovo
• Natural Resources: oil, gas, coal, iron ore, copper, lead, zinc, antimony, chromite, gold, silver, magnesium, nickel, pyrite, marble, limestone, salt, arable land
• Major industries: electricity, water and gas supply; food, beverages and tobacco; machinery and equipment; base metals, chemical products, coke, refined petroleum
• Currency: Lev (BGN). Fixed exchange rate with Euro.
• EU Member since 2007, NATO Member since 2004
• Government type: parliamentary republic
• Last government elections: July 2009
Dobrudja
Sandanski
Bansko
Veliko Tarnovo
Belogradchik
Kozloduy NPP
Sofia
Bulgaria at a glanceGeography, landmarks and economic overview
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Maritza Iztok
Balchik
Varna
Sunny Beach
Sozopol
Rousse
Plovdiv
Macroeconomic indicators show consistent pre-crisis economic growth and quick post-crisis recovery
Real GDP Growth Inflation (HICP)
Unemployment FDI Inflow
Source: Bulgarian National Bank, Eurostat
1.7%
-5.5%
6.2%6.4%6.5%6.4%6.6%
20112010
0.2%
200920082007200620052004
3.4%3.0%2.5%
12.0%
7.6%7.4%6.0%6.1%
2004 2011201020092008200720062005
10.4%9.1%9.1%
10.7%12.2%
20112010
9.2%
20092008
6.3%
2007
6.9%
200620052004
EU-27Bulgaria EU-27Bulgaria
2010
1,779
2009
2,437
2008
6,728
2007
9,052
2006
6,222
2005
3,152
2004
2,736
€ mln.EU-27Bulgaria
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Role of Bulgaria as FDI location has grown significantly for the last 10 years
Inward FDI per country ($bn.)
Source: UNCTAD
Greece
Croatia
Bulgaria
-1
9
8
7
6
5
4
3
2
14
13
12
11
10
1Macedonia
Slovakia
Hungary
Romania
Czech Republic
201020092008200720062005200420032002200120001999
Serbia
0
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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 1,968
Energy 2,502
Construction 2,672
Manufacturing 6,475
Trade 6,489
Finance 7,516
Real Estate 8,407
Other 2,384(10) Italy 1,235
(9)USA 1,284
(8) Russia 1,316
(7) Hungary 1,365
(6) Cyprus 2,219
(5) Germany 2,683
(4) UK 2,943
(3) Greece 3,773
(2) Austria 5,203
(1) Netherlands 5,746
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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
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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
„While governments across the euro-zone periphery are on the ropes or have been felled by the economic crisis, Prime Minister Boyko Borisov's government has drawn international accolades for cutting spending while maintaining high levels of public support.”
September 10, 2011
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Government financial indicators are remarkable not only in the region, but on a pan-European scale
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
110%
120%
Malta
Average budget deficit/surplus (2005-2010)
-9% -8% -7% -6% -5% -4% -3% -2% -1%
Luxembourg
Iceland
LithuaniaLatvia
Estonia
Germany
Denmark
Czech Republic
Bulgaria
Belgium
Ireland
Greece
Spain
France
Italy
Cyprus
2% 16%1%0%
TurkeyCroatia
NorwayUnited Kingdom
Sweden
Hungary
Finland
SlovakiaSlovenia
Romania
Portugal
Poland
Austria
Netherlands
Source: Eurostat
Average government debt (2005-2010)
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Source: Eurostat, The Economist, National Statistics
1.2%
0.8%
0.2%
-1.0%
-1.4%
-1.6%
-2.6%
-2.6%
-3.7%
-3.8%
-3.9%
-4.3%
-4.8%
-5.3%
-5.4%
-5.6%
-8.2%
-8.4%
-8.6%
-8.7%
-10.0%
-10.0%
France
Poland
Spain
United Kingdom
Japan
United States
Greece
Egypt
Netherlands
Czech Republic
Italy
Euro Area
India
BG
Hungary
Switzerland
Sweden
Germany
Denmark
Austria
Turkey
China
Brazil
Budget deficit for 2011, % of GDP Expected real GDP growth, 2012
0.5%
United Kingdom 0.6%
Hungary
Bulgaria
1.1%
2.3%
Slovenia
Romania
1.0%
2.1%
Czech Republic
United States
0.7%
1.5%
0.6%
Slovakia
EU-27
Lithuania 3.4%
Macedonia 2.5%
Poland 2.5%
In 2011, Bulgarian economy maintained its excellent performance despite global challenges
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Bulgaria is the only country in Europe with a credit rating upgrade by Moody’s since the beginning of 2010
09/1107/1105/1103/1101/1109/1007/1005/1003/1001/10
Turkey
Lithuania
Ireland
Hungary
Greece
Estonia
Bulgaria
11/10
Source: Moody’s
Portugal
Latvia
Iceland
Cyprus
Aa1
A1
Baa1
Ba1
B1
Caa1
Ca
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Bulgaria has one of the lowest business costs in Europe
Lowest corporate income tax rate in Europe
Source: Eurostat; Savills
Turkey 20%
Croatia 20%
Czech Rep 19%
Slovakia 19%
Hungary 19%
Romania 16%
Bulgaria 10%
Cost of electricity for industrial users is 70% of the EU average
0.080
Bulgaria 0.064
Estonia 0.062
Slovakia 0.123
Czech Rep 0.110
Hungary 0.104
EU average 0.092
Germany 0.090
Turkey 0.086
Romania
€/kWh, 2011
11,070
10,000Germany
Spain
UK 11,400
Poland 5,000
Czech Rep. 5,000
France 5,000
Greece 4,000
Hungary 3,000
Romania 2,000
Bulgaria 1,595
Lowest cost of agricultural land in the European Union
€ / ha, 2008
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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 pass through Bulgaria
EU and EFTA
Rus
sia
and
CIS
Turkey and
Middle East
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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
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The government supports specific industries under the Investment Promotion Act (IPA)
• 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
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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)
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• 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
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Leading global investors have chosen Bulgaria as an FDI destination
IT & BPO Mechanical and Electrical
Engineering
Construction Materials
Telecom and Media
Energy Finance
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Bulgaria is a R&D, service and manufacturing hub for a number of leading multinationals
• In 2008, Lufthansa opened an aircraft repair facility at Sofia airport
• State-of-the-art hangars and equipment. Over 500 workers
• D-checks, the most extensive scheduled maintenance is carried in Bulgaria
• Johnson Controls International has one of its major IT & software development centers in Sofia since 2001
• Develops automotive software for BMW, Ford, Citroen
• Over 460 engineers work in the Sofia office
• Hewlett Packard has over 4000 people in its Bulgarian office
• In 2010 Bulgaria became one of the 6 designated delivery hubs worldwide
• Customers include 21 companies from 2011 Fortune Global 500
• Nestle acquired one of the largest confectionery factories in Bulgaria in 1994
• Over €80m invested so far in plant modernization and new equipment
• Major brands produced in Bulgaria for the entire CEE market
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Bulgaria is a R&D, service and manufacturing hub for a number of leading multinationals
• The copper smelter and refinery, owned by German company Aurubis, is the third largest in Europe
• Annual turnover exceeds €2m.• The plant was established in
1955 and purchased by Belgian group Umicore in 1997
• Montupet is a leading supplier of automotive aluminum parts
• Greenfield investment project in Ruse for €80m
• Bulgarian plant produces engine heads for Audi’s 4- and 6-cylinder engines
• Agropolychim is one of the leading manufacturers of nitrogen and phosphorus fertilizers in the region
• About 400 ths tons exported to Europe, America, Middle East and Asia in 2010
• Sisecam (Trakiya Glass) is the largest greenfield manufacturing investment in Bulgaria
• The plant produces glassware, fl at glass, household glassware, mirrors and car glass factories
• Clients include IKEA, Coca Cola, Indesit, Bosch, Audi, BMW
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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
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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