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Bulgaria – investment climate and business opportunities
June 2013
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
0.8%1.8%
-5.5%
6.2%6.4%6.5%6.4%
20122010
0.4%
2009200820072006 20112005
2.4%3.4%3.0%2.5%
12.0%
7.6%7.4%6.0%
2006 20112005 20122010200920082007
11.4%10.4%9.1%9.1%
10.7%
6.9%
20112010
9.2%
20092008
6.3%
20072006 20122005
EU-27Bulgaria EU-27Bulgaria
2012
1,478
2010
1,151
2009
2,437
2008
6,728
2007
9,052
2006
6,222
2011
1,315
2005
3,152
€ mln.EU-27Bulgaria
FDI in Bulgaria comes mostly from EU countries and is concentrated in four main sectors
Source: Bulgarian National Bank
FDI by host country, 1996-2012 (€ mln.) FDI flows by industry, 1996-2012 (€ mln.)
Telecom 2,209
Construction 2,891
Energy 3,522
Trade 6,698
Manufacturing 6,750
Finance 7,604
Real Estate 7,990
Other 2,915(10) Italy 1,287
(9) Switzerland 1,289
(8) Hungary 1,332
(7) Russia 1,658
(6) Cyprus 2,317
(5) Germany 2,501
(4) UK 2,606
(3) Greece 3,576
(2) Austria 5,638
(1) Netherlands 6,601
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
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
„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
August 10, 2012
Standard & Poor's ratings agency raised its short-term foreign and local currency sovereign credit ratings on Bulgaria to 'A-2' from 'A-3' based on its recently adopted methodology. The agency also affirmed our 'BBB' long-term foreign and local currency sovereign credit ratings.The outlook is stable.
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%
130%
LithuaniaLatvia
Cyprus
Italy
-6% -5% -4% -3% -2%-11% -10%
Average budget deficit/surplus (2006-2011)
16%15%1%0%
TurkeyCroatia Norway
-1%
IcelandUnited Kingdom
SwedenFinland
Slovakia
Slovenia
Romania
Portugal
Poland
Austria
Netherlands
MaltaHungary
Luxembourg
France
Spain
Greece
Ireland
Estonia
Germany
DenmarkCzech Republic
Bulgaria
Belgium
Source: Eurostat
Average government debt (2006-2011)
Bulgarian economy maintains its excellent performance despite global challenges
Budget deficit for 2012, % of GDP Bulgaria was the only European country with increased credit rating by Moody’s in 2010 and 2011
-9.8%
-8.0%
-3.6%
-2.5%
0.1%
0.0%
0.0%
-1.6%
-2.0%
-2.6%
-2.8%
-3.0%
-3.3%
-3.7%
-4.1%
-4.5%
-5.0%
-5.6%
-7.0%
-7.0%
-8.3%
-10.9%
United States
Greece
Spain
Netherlands
France
Czech Republic
India
Switzerland
Sweden
China
Turkey
Brazil
Austria
Hungary
Italy
Euro Area
Denmark
Poland
United Kingdom
Japan
Egypt
Germany
BG
01/1307/1201/1207/1101/1107/1001/10
Turkey
Spain
Portugal
Lithuania
Ireland
Greece
Estonia
Cyprus
Bulgaria
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
Netherlands 9,472
Germany 9,193
Belguim 8,079
France 6,909
Greece 4,000
Poland 3,671
Czech Rep. 3,621
Slovakia 3,343
Bulgaria 1,671
Romania 1,616
Lowest cost of agricultural land in the European Union
€ / ha, 2011
Germany 0.130
Slovakia 0.127
EU average 0.124
Hungary 0.108
Czech Rep 0.103
Turkey 0.096
Romania 0.083
Estonia 0.082
Bulgaria 0.078 €/kWh, 2012
Bulgaria is only 3 hours flight from all major destinations in Europe, Russia and the Mediterranean region
Strategic geographic location Major transport corridors passing through Bulgaria
EU and EFTA
Rus
sia
and
CIS
Turkey and
Middle East
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
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 €2.5m
– €1m in regions with high unemployment and €0.5m 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
– Labor cost subsidies
– Individual administrative services
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
– €25m + 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)
• 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
Leading global investors have chosen Bulgaria as an FDI destination
IT development Back office operations
Chemical and metal Industry
Engineering Food
Page 14
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
InvestBulgaria Agency
Sofia 1000, 31 Aksakov Str.
Phone: (+359 2) 985 5500
Fax: (+359 2) 980 1320
E-mail: iba@investbg.government.bg
Web: www.investbg.government.bg