Borislav Stefanov - Bulgaria2 - General Presentation September 2011

8/3/2019 Borislav Stefanov - Bulgaria2 - General Presentation September 2011

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Bulgaria investment climate and business

opportunities

September 2011


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Page 2

Macroeconomic indicators show consistent pre-crisiseconomic growth and quick post-crisis recovery

Real GDP Growth Inflation

Unemployment FDI Inflow

Source: Bulgarian National Bank, Eurostat

2.0%

-5.5%

6.2%6.4%6.5%6.2%6.6%

2011Q2

2010

0.2%

200920082007200620052004

3.0%2.5%

12.0%

7.6%7.4%6.0%6.1%

201020082007200620052004 2009

* August 2011

9.5%9.2%9.1%9.1%10.7%

12.2%

6.9%

200620052004 2007 2011201020092008

6.3%

EU-27Bulgaria EU-27Bulgaria

1,6392,412

6,728

9,052

6,222

3,1522,736

2004 20072005 2010200920082006

mln.EU-27Bulgaria


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Visible signs exist that the Bulgarian economy isemerging rapidly from the crisis

Exports ( mln.)

3.3%3.7%

6.6%

-9%

-8%

-7%

-6%-5%

-4%

-3%

-2%

-1%

0%

1%

2%

3%

4%

5%

6%

7%

Q2

2011

2.0%

Q1

2011

Q4

2010

Q3

2010

0.0%

Q2

2010

-0.4%

Q1

2010

-1.9%

Q4

2009

-8.9%

Q3

2009

-5.6%

Q2

2009

-4.6%

Q1

2009

-3.3%

Q4

2008

4.7%

Q3

2008

Real GDP growth (% annual basis)

Source: National Institute of Statistics, Bulgaria

5,000

4,500

4,000

3,500

3,000

0Q2

2008

Q1

2008

+28%

Q2

2011

Q1

2011

Q4

2010

Q3

2010

Q2

2010

Q1

2010

Q4

2009

Q3

2009

Q2

2009

Q1

2009

Q4

2008

Q3

2008

+83%


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Role of Bulgaria as FDI location has grown significantlyfor the last 10 years

9,000

8,000

7,000

6,000

5,000

4,000

3,000

2,000

10,000

1,000

0

Croatia

Slovakia

Bulgaria

Hungary

Romania

Czech Republic

20092008200720062005200420032002200120001999-1,000 2010

Inward FDI per country ( mln.)

Page 4Source: UNCTAD


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Page 5

FDI in Bulgaria comes mostly from EU countries and isconcentrated 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


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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 andeconomic environments in Southeastern Europe

Bulgaria is a member of some of themost prestigious political organizations

European Union member since 2007

NATO member since 2004

WTO member since 1996

Strong commitment to political reformand transparency has earned praisefrom leading media and expertsworldwide

Stable currency

Bulgarian Lev has been pegged to the Eurosince the adoption of the currency in 2002

Currency board backed by IMF

the culture of impunity that onceplagued Bulgaria has largely gone

May 27, 2010

While governments across the euro-zone periphery are on the ropes orhave been felled by the economic

crisis, Prime Minister BoykoBorisov's government has drawninternational accolades for cuttingspending while maintaining highlevels of public support.

September 10, 2011


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Government financial indicators are remarkable not onlyin the region, but on a pan-European scale

Page 8

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

Slovakia

Slovenia

Romania

Portugal

Poland

Austria

Netherlands

Source: Eurostat

Average government debt (2005-2010)


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Bulgaria is the only country in Europe with a credit ratingupgrade by Moodys since the beginning of 2010

09/1107/1105/1103/1101/1111/1009/1007/1005/1003/1001/10

Ukraine

Turkey

Portugal

Moldova

Malta

Lithuania

LatviaIceland

Ireland

Hungary

Greece

Estonia

Cyprus

Bulgaria

Source: Moodys


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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

* 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 949

Poland 878

Slovakia 802

Hungary 746

Romania 493

Serbia 480

Bulgaria 352


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Bulgaria has one of the lowest business costs in Europe(2) energy costs and rent

Bulgarian cost of electricity for industrialusers is 70% of the European average

Source: Eurostat, CB Richard Ellis

0.123

0.110

0.104

0.092

0.090

0.086

0.080

0.064

0.062

Czech Rep

Hungary

EU average

Germany

Turkey

Romania

Bulgaria

Estonia

Slovakia

/kWh, 2011

Office rents in Bulgaria are among the lowestin Europe

724

339

336

312

252

240

234

191

168

Moscow

Athens

Warsaw

Prague

Budapest

Bucharest

Zagreb

Sofia

Istanbul

/ sq. m / year,Q2 2011


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Bulgaria is only 3 hours flight from all major destinationsin Europe, Russia and the Mediterranean region

Strategic geographic location Major transport corridors passingthrough Bulgaria

EUandEFTA

Russia

and

CIS

Turkeyand

MiddleEast


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The role of the European Union as a trade partner forBulgaria 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 50percentage 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 havegrown approximately 5 times

Page 13


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Page 14

Educated and skilled workforce is among the mainadvantages of Bulgaria

Almost 60,000 students graduate every year fromover 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 ofstudents 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 Republic

Students in another EU

/ EEA country, % of all


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The government supports specific industries under theInvestment Promotion Act (IPA)

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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 priorityinvestment 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 anFDI destination

IT & BPO Mechanical andElectrical

Engineering

ConstructionMaterials

Telecom andMedia

Energy Finance

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InvestBulgaria Agency is a Government investmentpromotion 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 andinfrastructure, data on unemployment, skilled labourforce and level of education

Recommendation of investment project sites

Identification of potential suppliers, contractmanufacturers 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]: www.investbg.government.bg

Borislav Stefanov - Bulgaria2 - General Presentation September 2011

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