bulgaria – prospective location for foreign direct investments elena pishtovkoleva, director...
TRANSCRIPT
BULGARIA – PROSPECTIVE LOCATION FOR BULGARIA – PROSPECTIVE LOCATION FOR FOREIGN DIRECT INVESTMENTS FOREIGN DIRECT INVESTMENTS
Elena PISHTOVKOLEVA, Director Investment PolicyElena PISHTOVKOLEVA, Director Investment PolicyMinistry of Economy and EnergyMinistry of Economy and Energy
27-2827-28 November November 20020077
CONTENTSCONTENTS
FDI StatisticsFDI Statistics Investment Competitiveness of BulgariaInvestment Competitiveness of Bulgaria Prospective SectorsProspective Sectors IncentivesIncentives Industrial ZonesIndustrial Zones
High and constantly rising economic growth Bulgaria is among CEE leaders Industry – main growth engine
Real GDP Growth
5.4
4.14.5
6.66.2 6.1 6.1
6.5
3.9
2.62.62.82.9
1.7
2.42.0
1.2 1.3
6.2
5.0
1.0
3.0
5.0
7.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
%
ЕU-25 BulgariaSource: NSI, EUROSTAT
MACROECONOMIC TRENDS
Source: Мinistry of Finance
Since 2000 the credit rating of Bulgaria has been raised over 25 times.
Agency Data
Foreign currency Local currency
Long-term
Short-term Outlook
Long-term
Short-term Outlook
Japan Credit
Rating Agency27.06.2007 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
CREDIT RATINGS
MACROECONOMIC TRENDS
Source: Bank Austria Creditanstalt
FDI, Share in GDP (% )
11.5
4.7
3.0
6.6
3.8
8.2
4.5
6.3 5.7
3.0
11.0
5.0
3.0
4.94.1
4.74.9
4.2 3.4
2.0
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
BG CZ HU LV PL RO UKR CRO SL TR
2006 Е
2007 F
FOREIGN DIRECT INVESTMENT
FOREIGN DIRECT INVESTMENTFOREIGN DIRECT INVESTMENT
FDI, EUR mln.
137.3570.2 605.1
866.01 103.3
903.4 980.0
1 850.5
2 735.93 103.3
4 364.0
0500
1 0001 5002 0002 5003 0003 5004 0004 500
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Source: BNB
1999 2000 2001 2002 2003 2004 2005 2006 2007*
Greenfield+Expansion Privatization
Source: BNB, IBA
88666611 000033
903903998080
1 8561 856
22 736736 3 3 103103
44 364364 3 3 807*807*
* 1.-9.2007
Record inflow of non-privatization investments in 2005-2007
FOREIGN DIRECT INVESTMENT
Source: BNB
FOREIGN DIRECT INVESTMENT IN BULGARIABY COUNTRIES, %, EUR mln.
1996 – 2006
16.5% (2849)
9.8% (1694)9.2% (1588)
7.6% (1317)
5.3% (912) 5.2% (890)5.0% (856)
4.4% (757)4.2% (723) 4.1% (710)
0
2
4
6
8
10
12
14
16
18
АUSTRIA NETHERLANDS GRECE GREAT BRITAIN ITALY GERMANY BENELUX CYPRUS USA HUNGARY
FOREIGN DIRECT INVESTMENTS IN BULGARIABY INDUSTRY, %
1998 – 2006
FOREIGN DIRECT INVESTMENTS IN BULGARIABY INDUSTRY, %
1998 – 2006
24%
19%
17%
15%
8%7%
10%
Manufacturing
Wholesale, retail trade and repair
Real estate, renting andbusiness activities
Financial intermediation
Electricity, gas and watersupply
Transport, storage andcommunication
Other
FOREIGN DIRECT INVESTMENTS in 2007FOREIGN DIRECT INVESTMENTS in 2007
FDI Flows Geographical Breakdown
(January - September 2007)
Other42.3%
Greece6.1%
Luxembourg6.4%
Cyprus6.2%
Spain6.6%
Austria8.6%
Belgium8.5%
U.K.15.4%
Source: BNB
Foreign Direct Investment Flows by Industry (January - September 2007)
38.3%
27.4%12.8%
1.7%
9.8%
9.9%
Real estate, renting and business activ ities
Financial intermediation
Construction
Wholesale and retail trade; repair of motor v ehicles, motorcy cles and personal and household goods
Manuf acturing
OtherSource: BNB
INVESTMENT COMPETITIVENESS
2.79
2.61
2.88
2.6
2.54
2.59
2.64
2.43
2.44
2.79
3.16
0.98
1.38
0.87
0.83
0.95
1.17
0.91
1.1
0.96
1.04
1.04
1.09
1.16
1.53
1.98
1.98
1.79
2
2.05
2.2
1.79
1.56
Ukraine
Russia
Romania
Lithuania
Hungary
Poland
Latvia
Czech Republic
Estonia
Slovakia
Bulgaria
Financial Score People Score Environmental Score
A.T. Kearney’s Global Services Location Index /March 2007/:Bulgaria - 9th worldwide and 1st in Europe in terms of investment attractiveness
UNCTAD’s World Investment Report 2007: Bulgaria - 7th worldwide in terms of FDI Performance
DELO
ITTE’S
SU
RV
EY
OU
TLIN
E
Products for lower volume nichesGoods and services with average and high level of value addedIn shorter term – investments in energy, transport and infrastructureIn medium and long term – greenfield investment,
acquisitions and merges.
Most prospective sectors: mechanical engineering, electronics, ICT, BPO
THE MAIN COMPETITIVE ADVANTAGES OF BULGARIA
Services sector: IT, RES, transport and tourismIndustry sector: electronics, mechanical and electrical engineering and steel processingPrimary sector: mining and quarrying, petroleum products
MOST PROSPECTIVE SECTORS FOR INVESTMENT
UN
CTA
D’S
SU
RV
EY
(2007-2
008)
OU
TLIN
E
INVESTMENT COMPETITIVENESS
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
TAX POLICY
Source: Employment Agency
over 50% than average
UNEMPLOYMENT RATES - MUNICIPALITIES
over 35% than average
LAW on INVESTMENT PROMOTION
Promoted economic activitiesIn the industrial sector: manufacturing industry, energy production from renewable energy sourcesIn 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 InvestmentClass A – over 36 EUR mln.Class B – over 21 EUR mln.
Opportunities for reduction of the thresholds for:Investments in municipalities with high unemploymentHigh-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 BulgariaTrans-European transport corridors crossing Bulgaria
INDUSTRIAL ZONESINDUSTRIAL ZONES
State or Municipal Ownership Private Ownership
Vocational schools and technical universities in BulgariaVocational schools and technical universities in Bulgaria
• Technical universities • Vocational upper secondary schools with Machine building and Heavy metal industry related programs• Vocational Electrical Engineering upper secondary schools• Vocational Electronics upper secondary schools
635
637322
1671
6677- Number of university graduates, 2005
247
Source: IBASource: IBA
Graduation from universities IT and engineering programs in BulgariaGraduation from universities IT and engineering programs in Bulgaria BA+MA, 2005 BA+MA, 2005
Graduation from universities IT and engineering programs in BulgariaGraduation from universities IT and engineering programs in Bulgaria BA+MA, 2005 BA+MA, 2005
1218
966
833
779
559
513
479
343
987
Informatics
Comminication techniques andtechnologies
Computer systems & technologies
Machine building
Electrical engineering
Automation
Engineering-combined programs
Electronics
Other
Total science graduates – 9000
Total IT & engineering graduates - 6677
Source: IBASource: IBA
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
Average monthly wages and salaries of the employees under labour contract by economic activities in 2007*
(BGN)(BGN)
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
FestoHyundaiSiemensKraftNestleCoca ColaHeinekenViohalcoDanoneCoatsMaser HoldingMelexis
LiebherrSocotabLinde GasSafilFererroInterbrew
American StandardABBEffebiesseHambergerProvimi
Planzee Tizit
Interbrew
LukoilKronospanInterbrew
AmylumActavis
Sisecam
Actavis
ActavisUmicore
TKM Fruit & Juice
Miroglio
Miroglio
VideotonHeineken
Miroglio
Atusa
SparkyBijlsma
Swedish Match
Roca
SolvayItalcementiAcid and FertilizerLinde Gas
SparkyLiftonTexaco (Orgahim)SETRousse Shipyard (German company)
Luxcraft FAF MetalCarlsberg
Knauf
EPIQ
Mayr Melnhof
Arkomat (VW)
Carlsberg
RollmannABB
Palfinger
SKF
Kuhn
Holcim
Chipita
Delta
Nicoletti
Kastamonu Entegre
Bramac
Grammer
Alfa Wood
Dewavrin
Magnetic Head Technology
Provimi
Sevlievo
Lovech
Sopot
Targovishte
Razgrad
Devnya
Varna
Bourgas
Stara Zagora
Parvomay
Kazanluk
Plovdiv
Kostenets
Sofia
BotevgradTrudovets
Nikopol
Pleven
Rousse
Cherven Bryag
Vratsa
Montana
Vidin
Gabrovo
Gabrovo
Elin Pelin
Kazichene
Radomir
Dupnitsa
Stamboliiski
Blagoevgrad
Razlog
Gotse Delchev
Petrich
Haskovo
Nova Zagora
Sliven
Kaspichan
Dolni Chiflik
Dobrich
Silistra
Shoumen
Troyan
Pirdop
Teteven
Gorno Sahrane
Schneider ElectricPerushtitsa
Source:IBASource:IBA
Korean Investment to SE EuropeKorean Investment to SE Europe
0
50
100
150
200
250
300
Cumulative Investment (Projects, USD m)
Case 5 13 2 36 0
Amount 55 264 3 165 0
Bulgaria Romania Slovenia Turkey Croatia
Source: Korea Eximbank
Automotive Industry Mechanical engineering Electronics ICT Energy Food processing
Attractive sectors for Korean investmentsin Bulgaria
Attractive sectors for Korean investmentsin Bulgaria
Why Bulgaria?
Quality of human capitalQuality of human capital Education levels among Europe top 5%Education levels among Europe top 5% 7% of workforce has engineering degrees7% of workforce has engineering degrees English studied by 70% of studentsEnglish studied by 70% of students Motivated and entrepreneurial attitudeMotivated and entrepreneurial attitude
Quality of business environmentQuality of business environment Strong institutional support for foreign Strong institutional support for foreign investors investors No restrictions to capital flowsNo restrictions to capital flows
Quality of lifeQuality of life Excellent all-season outdoor recreationExcellent all-season outdoor recreation Diverse cultural heritage and art activitiesDiverse cultural heritage and art activities World renown food and beveragesWorld renown food and beverages
Gateway to Europe and AsiaGateway to Europe and Asia
High and sustainable growth of the economy High and sustainable growth of the economy
Favourable business environmentFavourable business environment
10% corporate tax rate (lowest in EU)10% corporate tax rate (lowest in EU)
10% flat personal incomes tax rate /1.1.2008/10% flat personal incomes tax rate /1.1.2008/
Investment incentives for qualified investmentInvestment incentives for qualified investment
Among lowest operational cost in a European Among lowest operational cost in a European
market economymarket economy
Duty free agreements covering markets with 550 Duty free agreements covering markets with 550
mln. customers mln. customers
Double Taxation Avoidance Treaty with KoreaDouble Taxation Avoidance Treaty with Korea
INVESTMENT POLICY DIRECTORATEINVESTMENT POLICY DIRECTORATE
TEL: +359-2-940-7461TEL: +359-2-940-7461
FAX: +359-2-980-5109FAX: +359-2-980-5109
www.mee.government.bgwww.mee.government.bg
REPUBLIC OF BULGARIAREPUBLIC OF BULGARIAMINISTRY OF ECONOMY AND ENERGYMINISTRY OF ECONOMY AND ENERGY
REPUBLIC OF BULGARIAREPUBLIC OF BULGARIAMINISTRY OF ECONOMY AND ENERGYMINISTRY OF ECONOMY AND ENERGY