BulgariaInvestment Climate in Selected Industry Sectors
Shanghai
November 2012
1,283
2,257
2,523
2,733
3,664
5,809
6,018
1,486
(8) USA
(7) Russia
(5) Germany
(6) Cyprus
(4) UK
(3) Greece
(2) Austria
(1) Netherlands
Other 2,664
Telecom 2,260
Energy 2,699
Manufacturing 6,479
Trade 6,522
Finance 7,652
Real Estate 10,901
FDI by host country, 1996-2011 (€ mln.)
FDI flows by industry, 1996-2011 (€ mln.)
FDI in Bulgaria comes mostly from EU countries and is concentrated in four main sectors, but new opportunities exist
• Services:
– Transport and Logistics
– Information technologies
– Outsourcing of business
processes
– Health and tourism related to
healthy lifestyle
• Manufacturing:
– Transport equipment and
machine building
– Electronics and Electrical
engineering
– Chemical industry
– Food and Agriculture
Economic sectors with high investment potential
Page 2
Overview of the Electrical Engineering and Electronics sector
Sector snapshot
• Sector volume production increased almost 3.5 times in 2009, compared to 2000
• The sector generates about 14% of total exports and main export partners are Germany, Italy, Spain, France and Turkey
• More than 75% of the produced electronic equipment in Bulgaria is exported
• About 30 000 University students are enrolled in related majors
• About 45 000 people employed in over 2 300 companies in the sector
23%
3%
7% 7%
8%
25%
11%
6%
6%
2%2%
Wires and cables
Electric heaters
PCBs
Panels,El.tables
Telephone devices
Integrated circuit
Transformers
Electrical apparatus
Industrial Batteries
Other
Radio and TV equipment
1890s
Siemens participated in building the telegraph
network in Bulgaria
1972
The first Bulgarian made space
equipment was launched into space
1985
The peak of the industry – manufacturing of
modern computers. Electronics comprise
25% of Bulgarian manufacturing. 130 000
people are engaged in the industry
1988
Bulgaria manufactures more than 40%
of the mainframes and personal
computers in Eastern Europe
2010 Revenues were over €1.5 bn, the
highest since 1990
Page 3
• Since 1997 Festo Bulgaria has been specializing in manufacturing of sensors and sensor applications
• Operates two manufacturing facilities in Sofia and Smolyan with more than 400 employees
• Currently expanding the production facilities in order to meet the increased demand
• Holds 35% market share of the world wire harnesses for the automotive industry
• Yazaki Bulgaria main customers are the automotive manufacturers in France and Spain
• Yazaki Bulgaria,which employs more than 3000 people, has not only an assembly department, but also an engineering division
• Global leader in power and automation technologies and electrical equipment
• ABB operates in Bulgaria through 3 companies in 5 production locations producing mainly high and medium voltage electrical equipment
• ABB companies in Bulgaria export their products in Russia, Iraq, Romania, Mexico, Brazil, Sweden, Norway, China, Germany, France.
Leading global companies in the sector operate in Bulgaria
• In 1997 Hyundai Heavy Industries took over the Bulgarian state owned Elprom-Trafo Company which has been well-known manufacturer of Power Transformers and Tap Changers.
• The company employs now more than 670 people and produces power transformers, on load and off circuit tap changers.
Page 4
Overview of the Chemical industry in Bulgaria
Sector snapshot:
• Many foreign and local companies develop successful business in the country. The total amount of their investments is over €1.5bn.
• In Bulgaria, €100 of labor cost investments generate €148 of output
• After 1990, the majority of Bulgarian enterprises were purchased by foreign investors, which led to the modernization of technical and production facilities.
• Exports of main products have risen by almost 50% in 2010. Main partners are UK, Russia, Italy, Germany and Serbia
239
305123
178
Organic Chemicals
Chemicals and Chemical Products
Paper and Paper Products
Rubber and Plastic Products
Mineral or Chemical Fertilizers
Non-Metal Mineral Products
Inorganic Products
2010
1,137
936593
273
130
2009
823
9360
56
209
43
Exports,
Mln. €
1901One of the first foreign investments in the country – a shoe polish factory in Ruse – now Orgachim
1954 The soda ash factory in Devnia was built, now the biggest facility of Solvay Group in Europe
1997 Solvay, Belgium bought 60% of the soda factory in Devnia. Today, this is Europe’s biggest soda ash factory in Europe.
1997, 1998, 2004 Holcim, Titan, Italcementi Group modernized cement factories
1980 The chemical industry enterprises generated 17.1% of total industrial output and 20.8% of country’s exports.
Page 5
• 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
• The plant for production of plaster boards and gypsum fiber board panels was established in 1993
• To date, investment totals € 85m, over 190 employees and two factories in Bulgaria
• Solvay’s biggest European factory for manufacture of soda ash with a capacity of 1.5 million tons per year
• 85% of company’s output is exported to Eastern and Western Europe, Russia, the Middle East, South America, Asia and Africa.
• 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
Leading corporations have already chosen Bulgaria as an investment location
Page 6
5%5%
35%
6%
1%2%3%
4%5%
10%
11%
13%
Others
Printing machines
Calculating devices
Automatic machines
Agriculture machines
Air-conditioning and purifying machines
Liquid pumps
Ball, roller and needle bearings
Parts for lifting machines and loaders
Armature items
Refrigerators, freezers
Engines and Parts for engines
Overview of the Mechanical Engineering and Machine Building sector
Sector snapshot• The industry generates revenues of € 1.03 bn • FDI growth in the sector is 134 % in 2010 compared to 2007.
An average annual FDI volume in the last 5 years is around EUR 65 mln.
• 11% of the university students are enrolled in related specialties
• Employs more than 50 000 people working in more than 1500 companies
• Generates about 15% of total exports and main export partners are Germany, Russia, Italy and France
1878
Arsenal (military products) was founded in 1878 in the town of Ruse as first factory meant to serve the newly created Bulgarian Army.
1957
Beginning of production of forklift trucks
in Sofia.
1969
In Plovdiv began the assembling of
Renault 8 and Renault 10.
2008
German company Lufthansa Technik
opened maintenance facility for repair and overhaul of aircrafts like Airbus A320 family and the Boeing 737 series.
2012
Start of the production in car manufacturing plant established by Litex Motors Corporation in cooperation with the Chinese Great Wall Motor Co.
Page 7
• In 2008, Lufthansa opened an aircraft repair facility at Sofia airport, the only base of the company in Eastern Europe
• State-of-the-art hangars and equipment. Over 500 workers
• D-checks, the most extensive scheduled maintenance is carried in Bulgaria
• Innovative and powerful know-how in the development and production of technical solutions for locking and latching systems.
• Delivers its products to the most auto producers in Europe
• In the process of doubling its capacities and staff in Bulgaria
• One of the world’s leading manufacturers of hydraulic and vacuum equipment for vehicles
• The factory near Plovdiv is the company’s 2nd largest
• Clients include Mercedes, BMW, Porsche, and Audi
• Greenfield project, completed in only 11 months
Bulgaria as a production hub has attracted world leaders in the sector
• 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 and for the whole series “Q” of Audi.
Page 8
Overview of the Transport & Logistics sector
Bulgaria has:• 6 Motorways, some under development• 230 railway stations with capability for loading/unloading cargo• 4 international airports• 2 major seaports on the Black Sea• 4 major river ports on the Danube• About 3 000 university students graduate from transport and
logistics related majors per year
294
198
628
1 317
1 237
1 417
1 511
441
1 659
212
332
303
268
187
550
234
416
198
587
257
303
403
493
202
538
363
597
364
668
804
Serbia
Spain
Russia
Hungary
Ukraine
Greece
Macedonia
Italy
Belgium
China
UK
Poland
133
France630
Germany
1 047
Netherlands
1 142
Turkey
1 341
Austria
1 418
Romania
3 127
USA
2 237
Import 2010, EUR mln Export 2010, EUR mln
Major trade partners 1866
The first railway track (224 km) started operation between Ruse and Varna
1991 - 1995
Major European/global sector companies entered in Bulgaria, such as DHL Willi Betz, In Time
2006
Sofia Airport, the largest passenger and cargo airport in Bulgaria, opened a Second Terminal constructed by STRABAG.
2010
Yana Intermodal Terminal opened near Sofia, at the crossroad of 3 pan-European corridors , serving the European and the Central Asian markets
Page 9
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
0.083
Bulgaria 0.068
Estonia 0.065
Slovakia 0.127
Czech Rep 0.100
Hungary 0.100
EU average* 0.092
Germany 0.089
Turkey 0.083
Romania
€/kWh, 2012
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
Page 10
* 2011
Over 50 universities enroll about 285 000 students.17% of Bulgarian students are in industry-related majors
Sofia
Plovdiv
Pleven
Ruse
Varna
Burgas
Blagoevgrad
Pernik
Silistra
Shumen
V.Tarnovo
Svishtov
Stara Zagora
Gabrovo
Universities:
Multiprofiled
Technical
Medical
Economical
Pravets
KardzhaliSmolian
Page 11
Sofia Technical University
23, 000 students
Sofia University of Chemical Technology
and Metallurgy
4,000 students
Angel Kunchev University (Ruse)
8,500 students
Varna Technical University
8,000 students
Bulgaria offers a variety of potential and existing well connected investment locations
Northwest Bulgaria
• Lowest costs of doing business
• Proximity to Central and Western Europe
• New Vidin-Kalafat bridge
Sofia region
• Availability of skilled labor
• Over 20 universities• Sofia airport
Plovdiv region
• Main industrial location for multinationals
• Well developed industrial zones
Black Sea region
• Burgas and Varna ports• Tourist locations• Availability of skilled
workforce
North Central region
• Transport links via Romania
• Industrial background
South Central region
• Proximity to Turkish border and Burgas ports
• Industrial and energy hub
Page 12
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:
– Partial reimbursement of labor costs
– Shortened administrative procedures
– Preferential acquisition of state or municipal land
– Financial support for professional training / education
– Infrastructure subsidies
– Individual administrative services
• Priority projects (exceeding € 50m and creating at least 200 new working places for a 3-year period) receive additional support.
– Financial grant scheme for up to 10% of the investment project cost for
industrial projects. 50% for R&D.
Page 13
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
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