Invest%20in%20New%20Bulgaria

1
BULGARIA PROSPECTIVE LOCATION FOR FOREIGN
DIRECT INVESTMENTS
Elena PISHTOVKOLEVA, Director Investment
PolicyMinistry of Economy and Energy27-28
November 2007
2
CONTENTS

• FDI Statistics
• Investment Competitiveness of Bulgaria
• Prospective Sectors
• Incentives
• Industrial Zones

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MACROECONOMIC TRENDS
Source NSI, EUROSTAT

• High and constantly rising economic growth
• Bulgaria is among CEE leaders
• Industry main growth engine

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MACROECONOMIC TRENDS
CREDIT RATINGS
Agency Data Foreign currency Foreign currency Foreign currency Local currency Local currency Local currency
Agency Data Long-term Short-term Outlook Long-term Short-term Outlook
Japan Credit Rating Agency 27.06.2007 BBB - Stable ?- - Stable
Standard Poors 26.10. 2006 BBB A-2 Stable BBB A-2 Stable
Fitch 17.08.2005 BBB F3 Stable BBB - -
Moodys 23.02.2007 Baa3 - Positive Baa3 - Stable
Source ?inistry of Finance
Since 2000 the credit rating of Bulgaria has been
raised over 25 times.
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FOREIGN DIRECT INVESTMENT
Source Bank Austria Creditanstalt
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FOREIGN DIRECT INVESTMENT
Source BNB
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FOREIGN DIRECT INVESTMENT
4 364
3 807
3 103
2 736
1 856
1 003
980
903
866
1.-9.2007
Source BNB, IBA
Record inflow of non-privatization investments in
2005-2007
8
FOREIGN DIRECT INVESTMENT IN BULGARIA BY
COUNTRIES, , EUR mln. 1996 2006
Source BNB
9
FOREIGN DIRECT INVESTMENTS IN BULGARIABY
INDUSTRY, 1998 2006
10
FOREIGN DIRECT INVESTMENTS in 2007
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INVESTMENT COMPETITIVENESS

• A.T. Kearneys Global Services Location Index
  /March 2007/
• Bulgaria - 9th worldwide and 1st in Europe in
  terms of investment attractiveness

• UNCTADs World Investment Report 2007 Bulgaria
  - 7th worldwide in terms of FDI Performance

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INVESTMENT COMPETITIVENESS
MOST PROSPECTIVE SECTORS FOR INVESTMENT

• Services sector IT, RES, transport and tourism
• Industry sector electronics, mechanical and
  electrical engineering and steel processing
• Primary sector mining and quarrying,
  petroleum products

UNCTADS SURVEY (2007-2008) OUTLINE
THE MAIN COMPETITIVE ADVANTAGES OF BULGARIA

• Products for lower volume niches
• Goods and services with average and high level of
  value added
• In shorter term investments in energy,
  transport and infrastructure
• In medium and long term greenfield investment,
• acquisitions and merges.
• Most prospective sectors mechanical engineering,
  electronics, ICT, BPO

DELOITTES SURVEY OUTLINE
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TAX POLICY

• 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

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UNEMPLOYMENT RATES - MUNICIPALITIES
over 50 than average
over 35 than average

• Source Employment Agency

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• LAW on INVESTMENT PROMOTION

• Promoted economic activities
• In the industrial sector manufacturing industry,
  energy production from renewable energy sources
• In 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 Investment
• Class A over 36 EUR mln.
• Class B over 21 EUR mln.
• Opportunities for reduction of the thresholds
  for
• Investments in municipalities with high
  unemployment
• High-tech production and services

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• LAW on INVESTMENT PROMOTION

• Incentives
• Shorter terms of administrative service
• Individual administrative service
• Property rights to real estate with state or
  municipal ownership
• Financial support for construction of public
  infrastructure
• Financial support for training for acquiring
  professional qualification

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Trans-European transport corridors crossing
Bulgaria
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INDUSTRIAL ZONES
State or Municipal Ownership Private Ownership
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(No Transcript)
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Vocational schools and technical universities in
Bulgaria
Source IBA
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Graduation from universities IT and engineering
programs in Bulgaria BAMA, 2005
Total science graduates 9000 Total IT
engineering graduates - 6677
Source IBA
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• Average monthly wages and salaries of the
  employees under labour contract by economic
  activities in 2007
• 
  
  (BGN)

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
SourceNSI - Preliminary
Data
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• 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.
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SourceIBA
25
Korean Investment to SE Europe
Source Korea Eximbank
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Attractive sectors for Korean investmentsin
Bulgaria

• Automotive Industry
• Mechanical engineering
• Electronics
• ICT
• Energy
• Food processing

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• Why Bulgaria?

• Quality of human capital
• Education levels among Europe top 5
• 7 of workforce has engineering degrees
• English studied by 70 of students
• Motivated and entrepreneurial attitude
• Quality of business environment
• Strong institutional support for foreign
  investors
• No restrictions to capital flows
• Quality of life
• Excellent all-season outdoor recreation
• Diverse cultural heritage and art activities
• World renown food and beverages

• Gateway to Europe and Asia
• High and sustainable growth of the economy
• Favourable business environment
• 10 corporate tax rate (lowest in EU)
• 10 flat personal incomes tax rate /1.1.2008/
• Investment incentives for qualified investment
• Among lowest operational cost in a European
  market economy
• Duty free agreements covering markets with 550
  mln. customers
• Double Taxation Avoidance Treaty with Korea

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REPUBLIC OF BULGARIAMINISTRY OF ECONOMY AND
ENERGY

• INVESTMENT POLICY DIRECTORATE
• TEL [phone]
• FAX [phone]
• www.mee.government.bg