A m e r i c a n C h a m b e r o f C o m m e r c e i n B u l g a r i a homepage: www.amcham.bg e-mail: [email protected]Business Park Sofia, Mladost 4 Area, Building 2, Floor 6, 1715 Sofia Tel.: (359 2) 9769 565 Fax: (359 2) 9769 569 issue 7 1 july 2006 4th of July in Sofia 4th of July in Sofia Special Coverage of the Conference “U.S. - Bulgaria Joint Training Facilities: Commercial Opportunities and Business Partnerships” Analysis: Bulgaria’s Joblessness Ebbs ● Budget Gains Support Tax Reduction Plans Interviews: William Mills of the U.S. Army Corps of Engineers ● EU Affairs Minister Meglena Kuneva Events: Government's Action Plan Presented to AmCham General Assembly
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A m e r i c a n C h a m b e r o f C o m m e r c e i n B u l g a r i a
h o m e p a g e : w w w . a m c h a m . b g e - m a i l : a m c h a m @a m c h a m . b gBus in e s s Pa rk So f i a , M lados t 4 A re a , Bu i l d ing 2 , F lo o r 6 , 1 7 1 5 So f i a
Inter views: William Mills of the U.S. Army Corps of Engineers ● EU Affairs Minister Meglena Kuneva
Events: Government's Action Plan Presented to AmCham General Assembly
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A Very Special Editorial
A picture of a child surrounded by blooming flowers.Next to it - a photo capturing the partnership betweena Defense Minister and an Ambassador. What is therelation between the two you might ask? It is quiteclear - the photos document the two most importantevents in the last months for the American Chamberof Commerce in Bulgaria - the members' celebrationof Independence Day and the conference organizedby the Chamber: "U.S. - Bulgaria Joint TrainingFacilities: Commercial Opportunities and BusinessPartnerships". These two events demonstrate in aconfident way the direction where the AmericanChamber of Commerce is headed - towards strength-ening the partnership between Bulgaria and USA atall possible levels:● in the business field, our main priority;● in the field of beneficial collaboration between the
two countries as NATOmembers (the reason we did the conference);
● in the true friendly spirit of the relations betweenthe two countries, culminating in the celebrationevent of Independence Day in Sofia.
This is the reason why instead of the introductorywords or the editorial of the executive director or theeditor-in-chief, there are 5 photographs that speak ofthe important actions undertaken by the AmericanChamber of Commerce in Bulgaria. A picture is wortha thousand words. Enjoy.
The AmCham Bulgaria Magazine reaches a broad audience
of AmCham members, leading US, Bulgarian and internation-
al companies, US and Bulgarian decision-makers, all
AmChams around the world.
Subscription is free of charge. If you would like to subscribe
to AmCham Bulgaria publications, please contact the
AmCham Bulgaria office.
i s s u e 7 1j u l y 2 0 0 6
AmCham Bulgaria Magazine is a primary forum for political and economic analyses, news, viewpoints as well as for the presentation of new business oppor-
tunities. The articles in the AmCham Bulgaria Magazine express the opinions of the authors and do not necessarily reflect the position of the American
Chamber of Commerce in Bulgaria.
iF YOUR ADWERE pLACED HERE,
• WOULD BE CONVEYED TO THE LEADING US, INTERNATIONAL AND
BULGARIAN COMPANIES OPERATING WITHIN BULGARIA;
• WOULD REACH THE DESKS OF SENIOR EXECUTIVES AND DECISION-MAKERS
WHO DEMAND HIGH QUALITY PRODUCTS AND SERVICES;
• WOULD TRAVEL ACROSS THE EUROPEAN CONTINENT AS WELL AS THE
UNITED STATES, TAKING FULL ADVANTAGE OF THE INTERNATIONAL NET-WORK OF AMERICAN CHAMBERS OF COMMERCE;
• WOULD SERVE AS AN IDEAL NETWORKING OPPORTUNITY FOR POTENTIAL
FOREIGN INVESTORS AND BUSINESSMEN VISITING BULGARIA.
3M (East) AG . AA KRES EOOD . ABB Bulgaria Ltd. . AbCRO - Bulgaria . AccorServices Bulgaria . ACSIOR . ADIS Ltd. . Advance International Transport (Balkan) EAD. AES Corporation . AFA OOD . AGS Bulgaria Ltd. . AIG Bulgaria Insurance &Reinsurance Company EAD . AIG Life Bulgaria . AIMS Human Capital . ALEXANDROVGROUP CORPORATION . Allan Collautt Associates, Inc. . Allied Pickfords Bulgaria . AlterEgo Company OOD . American College of Sofia . American Construction Products JSC .American English Academy . American University in Bulgaria (AUBG) . Anglo-AmericanSchool of Sofia . Anton Preslavski, Liebert Hiross . APIS - BULGARIA Ltd. . APOLO Ltd.. Argento Human Resource Solutions . Aries Commerce . Ashtrom International AD .Association of Bulgarian Broadcasters - ABBRO . AT Engineering 2000 Ltd. . AuditingCompany Versi and Partners Ltd. . Avendi Ltd. . AVON Cosmetics Bulgaria Ltd. . BalkanNews Corporation Plc. . Balkan Star . Baxter AG . Bayer Bulgaria EOOD . BearingPoint,Inc. . BG Radio . BMG Ltd. . Bodyguard-Fire-K Ltd. . Borislav Boyanov & Co. .Braykov's Legal Office . Bristol-Myers Squibb . Brown Forman Beverages Worldwide SofiaBranch LLC . BULBANK . Bulgarian American Enterprise Fund . Bulgarian Charities AidFoundation (BCAF) . Bulgarian Post Bank . Bulgarian Telecommunications Company EAD. Business Media Group . Business Park Sofia EOOD . CA IB Bulinvest . CableTel .Car Rental Bulgaria Ltd. . Carlsberg . Cefin Bulgaria EOOD (IVECO dealer) . Center forthe Study of Democracy . Chelopech Mining EAD . Cisco Systems Bulgaria . CitibankN.A.- Sofia Branch . City University . Clockwork Ltd. . CMS Cameron McKenna EOOD. Coca-Cola Bulgaria EOOD . Coca-Cola HBC Bulgaria SA . COLLIERS International .ConsulTeam Recruitment and Selection Ltd. . Cook Communications . Corstjens WorlwideMovers Group . CPM International Ltd. . Curtis / Balkan Ltd. . DeConi M&A . DeloitteBulgaria EOOD . DHL Express Bulgaria Ltd. . Diageo Bulgaria Ltd . Diamed Ltd. .Dimitrov, Petrov & Kalaidjiev . DIMON Bulgaria . Djingov, Gouginski, Kyutchukov, & Velichkov. Dobrev, Kinkin & Lyutskanov Law Firm . Domaine Boyar AD . Dr. Emil Benatov & Partners. Dr. I.S. Greenberg Medical Center, Ellen Ruth Greenberg, Ph.D. . DynCorp International LLC. Effekten Und Finanz - Sofia AD . Electron Progress AD . Eli Lilly and Company . Elido(Lamel Ltd.) . Elmek Sport Bulgaria EOOD . Elta consult AD associated partner of CBRichard Ellis for Bulgaria . Emerson Process Management AG . Encouragement Bank AD. Engineeringservice Sofia Ltd. . Equest EAD . ERATO HOLDING PLC . Ernst & YoungBulgaria . Expo Team Ltd. . Flying Cargo Bulgaria Ltd. - Licensee of FedEx . Force DeltaLtd. . Forem Consulting Bulgaria . Forton International JSCo . General ElectricInternational . Genmark Automation Bulgaria . GiTy Bulgaria ltd. . GlaxoSmithKline .Goodyear Dunlop Tires Bulgaria . Grand Hotel Sofia . Grenville . Grey Worldwide BulgariaEOOD . Group 4 Securitas (Bulgaria) OOD . Hewlett-Packard Bulgaria Ltd. . Hilton Sofia. Honeywell EOOD . Horizon . HVB Bank Biochim AD and HEBROS Bank AD . IBMBulgaria . Ideal Standard Bulgaria . Industrial Holding Bulgaria . In Time Ltd. . Infoguard- Stefan Nedkov . ING Bank Sofia Branch . Intel Czech Tradings, Inc. . InterbrandsMarketing & Distribution Inc. OOD . Interdean . Investbank Plc. . IP Consulting Ltd. .ISI Emerging Markets (Internet Securities, Inc.) . Johnson & Johnson Doo. . JuniorAchievement Bulgaria . Kaliakra AD . Kamenitza AD . Kamor Auto Ltd. . KempinskiHotel Grand Arena Bansko . Kolbis International Transfer Corporation . KPMG Bulgaria .Kraft Foods Bulgaria . LANDMARK Properties Bulgaria . Lexim Sofia Ltd. . LindnerBulgaria OOD . Lirex BG Ltd. . Lowe Swing Communications . M & M Air Cargo ServiceBG OOD . M3 Communications Group, Inc. A Hil & Knowlton Associate . Maersk BulgariaLtd. . Magnetic Head Technologies . Maritza East III Power Company AD . Marsh EOOD. MARTERN EOOD . McDonald's Bulgaria Ltd. . Merck Sharp & Dohme IDEA Inc. .Meridian Hotels Bulgaria OOD . Microsoft Bulgaria . Miltech Ltd. . Mmd, Corporate, PublicAffairs & Public Relations Consultants . Mobiltel EAD . Monbat Plc. . Moten Sport .Moto Pfohe Ltd. . Motorola Bulgaria EAD . National DISTRIBUTORS . NATO DefenseCollege Anciens' Association . NDT Equipment Supplies LTD . Net Is Ltd. . NeterraCommunications . Neumann International AG . New Europe Corporate Advisory Ltd. .Nexcom Bulgaria EAD . Nu Image Bulgaria EOOD . Opet Aygaz Bulgaria EAD . OracleEast Central Europe Limited - Branch Bulgaria . Orbit Ltd. . Orkikem Ltd. . OSG RecordsManagement . Parsons E&C Bulgaria Limited . Pfizer H.C.P. Corporation, RepresentationOffice Bulgaria . Philip Morris International Inc. . Pioneer Semena Bulgaria EOOD .Popov Legal Office . PostPath Inc. . Pratt & Whitney . PricewaterhouseCoopers .Prima Soft Ltd. . Procter & Gamble Bulgaria . ProSoft . PSG Payroll Services Ltd. .Radisson SAS Grand Hotel . Rising Force Co., Ltd. . Rockwell/Intelpack . S&T Bulgaria. Sante International OOD . Schering - Plough Central East - Bulgaria . SEAF ManagementBulgaria EOOD . Seplex Law Offices . Sheraton Sofia Hotel Balkan . Sherita M Ltd. .Sienit Ltd. . SigmaBleyzer Investment Group LLC - Representative Office . Soravia BulgariaLtd. . Stefan Dimitrov, Norman Management Co. Ltd. . Symix Bulgaria . TechnoLogicaEOOD . TeleLink AD . Tero Halmari, European Bank for Reconstruction and Development(EBRD) . The American Research Center in Sofia . The Atlantic Club of Bulgaria . TheExecutive Centre . Tishman Management Company Ltd. . Tissue Bank Osteocenter BulgariaEAD . TM Auto Ltd. . TMF . Tumbleweed Communications EOOD . Unimasters LogisticsGroup AD . Unisys Bulgaria Branch . United Consulting Ltd. . Urban 2000 Ltd. .Vaptsarov Joint Stock Company . Vector Management Bulgaria EOOD . Videolux Holding /Technopolis . VIP Security Ltd. . VISA International Service Association . VSK KentavarLtd. . Westinghouse Energy Systems Bulgaria Branch . Wrigley Bulgaria EOOD . XeroxBulgaria Ltd. . Yavlena Ltd. . Zlati Dinev Studio in partnership with Outerbridge/Morgan .
Board of Directors of the American Chamber of Commerce in Bulgaria
President Mr. Borislav Boyanov Borislav Boyanov & Co.
Vice President Mr. Stefan Dimitrov Allied Pickfords Bulgaria
Second Vice President Mr. David Hampson Grenville Financial
Treasurer Mr. Anthony Hassiotis Bulgarian Postbank
Members Mr. Kenneth M. Lefkowitz New Europe Corporate Advisory
Mrs. Olga Borissova AUBG, Director European Programs
Mrs. Tanya Kosseva Landmark
Mr. George Randelov IBM Bulgaria
Mrs. Elitsa Tsaneva Ideal Standard Bulgaria
Mrs. Maria Vranovska Eli Lilly and Company
Ms. Evgenia Stoichkova Coca-Cola Bulgaria
Mr. Christopher Thompson Bearing Point, CLRP
Ex-Officio Member Mr. James Rigassio US Senior Commercial Officer
Executive Director: Valentin Georgiev
Contentsp a r t n e r s h i p
AmCham conference Allows Military,
Businesses, Government Reps to Mingle . . . . . . . .4
Bulgarian Companies Invited to
Jump on U.S. Military Construction Bids . . . . . . . .8
Some 400 participants, among themAmCham members, corporations fromUS and Europe, Bulgarian companies,NGO-s and law offices, registered forthe forum which turned out to be thevenue for networking and matchmaking.Among the participants were: Ernst &Young, Raytheon, Motorola, ATEngineering, Boeing, Bulbank, CocaCola, Citigroup, Marsh, Schenker,Washington Group International,Electron Progress, Force Delta, RedDevil Catering, Right Rental, LibertyFood Services, Technopolis, LockheedMartin Aeronautics Co, NorthropGrumman, Parsons Corporation, IBM,DynCorp, SOS International, General
The issue of the shared military basesin Bulgaria comes within the context ofthe bilateral strategic partnershipbetween the United States and Bulgariasigned in April 2006, AmChamPresident Borislav Boyanov said in hisopening remarks. The proposals fortransformation of the military forces
and the U.S. Command in Europe,including the establishment of a rotatingbrigade stationed in Bulgaria andRomania, address the new global risksand threats to the security as well asBulgaria's interests and the need for astronger cooperation with the UnitedStates.
"Up until now," Borislav Boyanov wenton to say, "One of the most frequentlyasked questions is how the Bulgariandefense benefits from the joint trainingfacilities with the United States. Theanswer is that what the Bulgariandefense needs is modern technology,equipment and training."
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AmCham conference AllowsMilitar y, Businesses,Government Reps to MingleExperts from the U.S. Army Contracting Command - Europe (USACCE) together with Bulgarian high military officials as well as
Bulgarian government ministers, MPs, mayors, regional governors, and U.S. diplomats helped create a clearer vision of trade and
business opportunities arising from the joint training facilities. The conference entitled 'U.S. - Bulgaria Joint Training Facilities:
Commercial Opportunities and Business Partnerships' was designed to teach contracting procedures to foreign and Bulgarian
firms interested in upcoming business opportunities in Bulgaria. AmCham worked in cooperation with the U.S. Commercial Service
in Bulgaria to organize the event.
From Left: Vesselin Bliznakov, Bulgaria's Minister of Defense, Ivailo Kalfin, Bulgaria's Minister of Foreign Affairs, Georgi Parvanov, President of Republic of Bulgaria,
Borislav Boyanov, President of AmCham Bulgaria, US Ambassador to Bulgaria John Beyrle and Zlatan Stoykov, Chief of General Staff of Bulgarian Army.
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In his address to the conference theBulgarian President Georgi Parvanovpointed that the main benefit from theshared bases will not be only in theeconomic and investment impact to thelocal economy but primarily in strength-ening the common fight against globalterrorism. He acknowledged theAmerican Chamber of Commerce roleof the mediator in completion of jointUS-Bulgarian projects for the trainingfacilities. The President mentioned theexcellent opportunities for the Bulgarianproducers, distributors and serviceproviders when learning and cooperat-ing with companies that bring new stan-dards and high quality of a new busi-ness culture. The establishment and uti-lizing of the joint training facilitiesmeans long term bilateral work, mutualtrust and respect where interests of theparties meet, Parvanov added.
U.S. bases as an area for
fair competition
U.S. Ambassador to Bulgaria JohnBeyrle reiterated in his opening remarksthat the bases are and will remain aBulgarian operation with Bulgarian com-manders, flying the Bulgarian flag. Theshared facilities at Novo Selo, Bezmer,Aytos and Graf Ignatievo, whereAmerican and Bulgarian forces willcome together, will be the most visibleand active symbol of a military partner-ship dedicated to improving our abilityto respond to the challenges of thisyoung century.
"We foresee upgrades in the range oftens of millions of dollars. Added tothis will be the improvements to roads,
railroads, and other infrastructure in theareas leading to and surrounding thebases, and local hires of Bulgarians toperform many different jobs at andaround the bases; plus the impact ofhaving several thousand American sol-diers in the country with money tospend," Beyrle said.
He further explained that the U.S. mili-tary contracting system is transparent,and invites bids from qualified biddersin different countries. The DefenseCooperation Agreement states clearlythat the United States should useBulgarian suppliers for goods and ser-
vices - if their offers are competitiveand of good value. For Bulgarian com-panies to win contracts, they will needto understand the contracting systemand the needs of the U.S. military.
That is what this conference hoped toaccomplish by introducing U.S. Armyprocedures and giving networkingopportunities to future partners, sub-contractors and suppliers, the envoy-said.
"We want to see Bulgarians win con-tracts - we want to see Bulgarians workat the bases. But to do that, Bulgarian
President Georgi Purvanov: "I am an optimist that in a transparent and open dialogue with our American
partners we will build new culture of relationship based on consensus, national interests and mutual benefit".
companies will have to be smart andcompetitive," Ambassador Beyrle said.
Promoting improved
business culture
As a business lunch speaker,Ambassador Beyrle talked about thenew Bulgarian-American partnership inbusiness and security, a new era in therelationship between the Unites Statesand Bulgaria. The new symbol as hesaid was at the joint military exerciseswhere MiGs flown by Bulgarian pilotsflew side by side with F-15s flown byAmerican pilots. Now he witnesses howAmerican and Bulgarian companiescan work side by side.
"American companies come herebecause of Bulgarian talent and exper-tise, its potential growth, and becausethey see Bulgaria as a gateway to theEuropean Market. American companiesbring not only capital, they also bringnew technologies, the best manage-ment techniques, a strong commitmentto good business ethics, and a cultureof corporate civic responsibility.American investment makes Bulgarianmore competitive in the European andglobal markets."
The Ambassador made a couple ofsuggestions for a better business cli-mate: more transparent and less capri-cious privatization process; greater con-sultation with businesses in the plan-ning of government regulations; fair andequal treatment of all foreign investors.
Addressing the audience on the sharedfacilities, Vice Prime Minister andMinister of Foreign Affairs Ivaylo Kalfinsaid it is an obligation of politicians tocreate possibilities, and the businessesshould seize them and search for more.It is already time for concrete projectsand concrete tasks to do after the bilat-eral agreement between the UnitedStates and Bulgaria has been signed.
Bulgaria's Minister of Defense VesselinBliznakov announced that the first U.S.military units are expected to start arriv-ing in Bulgaria by the end of 2007. Upuntil that time, U.S. experts will helpBulgarian companies navigate the U.S.Army contracting procedures. MinisterBliznakov said the agreement envisagesa regime of strong partnership with theUnited States and better operational
compatibility.
"In our discussions with the U.S. part-ners we agreed that locals are to becontracted for deliveries, but only incase their offers are compatible,"Bliznakov pointed out.
High technologies
introduced
The minister of defense has suggestedthat the international tenders willimprove the infrastructure of the regionand the military exercises. Bulgaria andthe United States already have a goodexperience in joint military exerciseslike the ones held in the last threeyears, Bliznakov said. The air bases inGraf Ignatievo and Aytos will remainBulgarian property, where both the U.S.military and Bulgarian Ministry ofDefense will make investments.
The training staff at the bases, trainingprocess itself and logistics are the mostimportant factors for successful jointexercises, said concurrently Col.Michael Smith of G3 Plans Division withthe U.S. Joint Chiefs of Staff, and Gen.Zlatan Stoykov, chief of the GeneralStaff of Bulgarian Army.
"Thanks to NATO and these sharedfacilities, the Bulgarian military will have
the benefit of training and workingtogether with one of the best equippedand trained military forces in the world,which is another factor contributing tothe overall security of Bulgaria and theregion" - General Stoykov concluded.
The US and Bulgarian companies tookactive participation at the conference.Networking and company presentationswere the core of the activities at theevent. Raytheon and Motorola present-ed products and technologies that wereused in last years military exercises inBulgaria. Company representativeswere at hand to demonstrate therespective hi-tech products they havecontracted to the U.S. military.Washington Group International,Schenker, Electron Progeress andTerem shared their expertise in out-sourcing of military commercial func-tions. The financial sector representedby Citibank, Marsh and Bulbank pre-sented the financial and insurance ofbusiness operations of the joint trainingfacilities, while Ernst & Young gave theforeign participants a profound consul-tation for starting business activities inBulgaria. The companies were able tomeet the mayors of the municipalitieswhere the joint training facilities arelocated and have first hand informationon the opportunities for doing businesswith local partners. ■
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Minister Bliznakov meets the US Army contracting officers Marcia Coleman, Maj. Rusty Mizelle and Maj.
Bill Campbel.
- Based on your contacts with
Bulgarian companies, do you think they
have enough expertise to be competi-
tive with European companies in build-
ing infrastructure of facilities?
- The companies that I have talked to arebeing very proactive in trying to learn ourprocesses and networking. They havebeen networking with American firms orother firms that know U.S. procedures,and I think they had really taken a goodstep forward. Bulgarian companies will beready to be involved and either get a con-tract alone or as part of a team. I don'tthink there is anything really complicatedabout what we are building. It is like a lit-tle town. You have a sewer system, otherfacilities; it is nothing like building a rock-et ship. Mostly I have talked to engineer-ing and construction type companies,maybe some environmental ones.
- Could you mention names?
- At this point I would not do that. I havebeen collecting data and I have manynames that I will put into our database, sothat once we get our solicitation ready,which basically says, "Would you like topropose?" Only then I will be able to sendit to those people.
- Has the process of solicitation start-
ed already?
- No, no, it has not. But the best step thatI think the Bulgarian contractors can dois to be early and make sure that theyare registered and are familiar with thewebsite www.FedBizOpps.gov. Anythingthat we do will be advertised there. Imean tenders, where the site would say,"We are looking for people who are inter-ested in building so and so in such andsuch place." Then you respond to us andsay, "I would like a copy of the solicita-tion," which later on is mailed to the com-
pany. From that form the respective com-pany sends us back a proposal. This ini-tial step is very important because thecompany name is put into our local data-base…
- Potential contractors?
- Right. They can also register for otherareas, not just Bulgaria and not just forjoint training facilities. If the company isinterested in doing work in Iraq orAfghanistan, they can apply. There isno limitation to where they can dowork.
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Bulgarian CompaniesInvited to Jump on U.S.Militar y Construction BidsU.S. Army pays only after the work is done, warns William Mills of the U.S.
Army Corps of EngineersBy Irina Bacheva
Mr. William Mills has been the Chief of Contracting for the Army Corps of
Engineers, Europe District, since August, 2000. As the Chief of Contracting, Mr.
Mills is responsible for planning, directing and execution of a comprehensive
acquisition program for construction and services in support of the United States
Armed Services and supporting Agencies across the European theater, parts of
the Middle East and Africa. His office obligates roughly $400 Million in contract
awards annually.
Mr. Mills served as the Chief of Contracting for the United States Army Corps
of Engineers, Charleston District, prior to his current assignment. He served as
the Chief of Services Branch and the Chief of Cost and Pricing for the United
States Army Contracting Command Korea in Seoul. Mr. Mills began his career
as Outstanding Scholar intern with the United States Air Force Space and Missle
Systems Center in Los Angeles, California, where he acted as a Contract
Specialist for the purchase of multi-million dollar satellite systems and launch
vehicles.
Mr. Mills was born in Tucson, Arizona. He graduated from the University of
Arizona with a Bachelors degree in Philosophy. He holds a Masters degree in
Journalism from the University of Southern California and a Masters degree in
Technology Management from the University of Texas at Austin.
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- On this website, will you inform about
schedules of the tenders, and other
details?
- Let us say when you will have to requestto get the solicitation. When a companycontacts us, we would send a big pack-age. Once we have the requirementsdone and we send out on this website,you request what is called solicitation,which basically is a big package thatincludes all of our requirements. We callall those clauses, which are specialrequirements of the U.S. government. Youhave to meet the requirements, the lawsand so forth of the U.S. government.
- Of the U.S. government agencies?
- Well, partially. It is basically called theFederal Acquisition Regulation. Thatincludes many clauses that have to dowith general things. It can be safety,country code laws. Then there is a bidschedule. The potential company won'tbe just asked how much does it cost tobuild the whole facility. What we'll do isbreak it down and inquire how much themobilization cost will be, which meansbringing their equipment up to the site.We do what is called 'progress payment.'We do not pay a contractor before workis completed. So the contractor has tofinance the work for up to a certainamount of time. Maybe for 30 days, or 45days.
- So between 30 days and nine months
the company could receive financing?
- Well, it depends because what we'll dois set this up. Once you finish a stage,say, mobilization, then you can submit aninvoice and we will pay you for that por-
tion. So when you have completed a cer-tain amount of work, we will pay you forthat work. Because it will be difficult forany contractor in the world to financeupfront a $40-million contract.
- What kind of percentage do you
finance or it depends on the project?
- It depends on the project and on thetime. But we can not pay you until some-thing has been done. So I can't give youthe money first and then let you startworking. You have to start working andthen once you have completed some-thing, I can pay you. That's a little bit dif-ferent from some other places becausesome other places will finance for you,they will give you the money beforehand,but the U.S. government doesn't do that.
- Are the Bulgarian companies ready to
understand these procedures quickly?
- I think they will be. The best thing theycan do is maybe even request a solicita-tion from some other project, so they seewhat it looks like.
- A similar project?
- A similar or even just anything so thatthey see what it looks like, like construc-tion project we are advertising some-where. You don't have to bid. You can justask for the solicitation in order to look atit and get some experience. So that isone possibility and I think the networkingis helping. Here I have noticed a lot ofcompanies talking with each other.
And the other thing is: we will not makeit difficult. On the contrary, linguisticallywe will ease the documentation, instead
of writing "experience," we'll use "similarjob." So all the contractor will have to dois fill in, "I built apartment buildings," orsomething like that. Then it will continuewith past performance, contacts, and per-sons I can call for references.
- At this level you want to have this
feedback from Bulgarian companies,
providing this information to them?
- We want to make contact with compa-nies. We want them to understand whatwe are going to be looking when weaward a proposal. In the selectionprocess, we look at the price and it isvery important, but we also have to bevery confident that the company can dothe job. This is a fixed price contract,which means we will agree on a priceand then I expect that product to be givento me at that price. We do not negotiateanymore. Sometimes people do notunderstand that thing. They think, "Well,we can go back and say we need moremoney." Not so in a fixed-price contract,because unless there is something thatyou could not have known about, we willnot negotiate. I mean, if you started to digdown and all of a sudden you hit theocean, something that nobody would havethought of happens, that may be a rea-son consider changing the price. But onlyin the case it is something really unex-pected.
- Can consortiums or partnerships
apply, for example a Bulgarian compa-
ny partners with a foreign company
and both of them apply for this proce-
dure?
- Yes. It is possible but there are differentways to do it. There are limited partner-
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ships, joint ventures, which would repre-sent one legal entity. One can do a sub-contract as well as a part of a teamingnetworking. The Bulgarian companies willbe competitive, on the first place becauseof the price. There is no way that anAmerican company can bring Americanwork force over here and compete pricewise with Bulgarians. So they will have towork with a Bulgarian firm to get the labor.
- You mean, the labor cost is lower?
- The labor costs will be much higher ifthey use anyone other than Bulgarians.The other is supplies. They need con-tacts, local supplies, because if you bringconstruction materials, especially sand orgravel or something like that, and youbring that from the United States, it willcost… this is crazy, you know. So theBulgarian companies will be necessary.And the other thing what we build has tomeet Bulgarian codes. The codes thatyou have: construction codes, electricalcodes, things like that. So the Americanswill need to have Bulgarian expertise inhow to meet those codes.
- There are also European companies
which are going to bid?
- Yes, they have shown interest. I knowthat there are other European firms thatmay be interested in some Americanfirms. But I have been very impressedwith the Bulgarian firms that I have talkedto.
- Construction ones?
- The construction ones, I am sure peo-ple have experience. The most importantthing people have to realize that when wegive the job, it is based on that proposal.So it has to be written well. I mean it hasto tell why you are the best person for thejob. And then you also have to be goodprice wise.
- In fact, you are starting to complete
the documents now?
- We are still developing the actualrequirements. Which is exactly what arewe going to buy. How the buildings will besituated, how many troops they will sup-port. And the biggest thing for us is themoney. The money has to be approvedthrough the U.S. Congress. Major Rusty
Mizelle, the PE construction managementchief of USAREUR, said it will not be untilthe 2008 budget that the money would beapproved. But there will be things that willbe done, which is part of the planning,part of the designing, and part of the envi-ronmental work. So there will be activitiesgoing on prior to the main construction.
- You also have Romania, which is
starting the same procedures. How are
Romanian companies meeting U.S.
standards? Are they skillful and do they
have expertise?
- Yes, there are very skilled contractorsboth in Bulgaria and Romania. And I thinkthey will be able to compete well. Butagain, I have to see the actual documen-tation before I can make that assessment.
- Thank you very much. Would like to
add something, your impressions from
our country?
- Well, first I would just say that AmChamBulgaria did an excellent job setting upthis first-class conference. And Sofia is abeautiful city, too. I hope I have a chanceto go see it. ■
Government and business officials talk about the strategic partnerships. From left: General Nikola Kolev, US Ambassador John Beyrle, AmCham President
Borislav Boyanov, Onur Kirazci, Motorola Bulgaria Country Manager and Ron Landenberg, Director, Communication Systems Operations, Motorola.
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A variety of representatives from the U.S.Army Corps of Engineers, military con-tracting specialists, insurance brokers andbankers explained to AmCham membersthe procedures and opportunities forsecuring a government contract with theU.S. military.
William Mills, chief for contracting for theEurope District of the U.S. Army Corps ofEngineers, presented the work of theCorps of Engineers before the partici-pants in the conference. The structurefully secures the design and constructionof military facilities. The Corps providesplanning, design and management of pro-jects.
"We are intermediaries between compa-nies and the U.S. government in theaward of contracts," Mills explained.
Although the Corps offers logistics aswell, Mills explained that such serviceswere not expected of them as for as theiractivity in Bulgaria is cencerned. In hiswords, the procedure of evaluation ofcandidate contractors by the specialistsof the Corps includes several stages.
Candidates first submit offers in whichthey specify a price, past performance,and persons to be contacted for recom-mendations. A key element of the offer isthe care for work safety. Probably theoption to work with subcontractors willalso be taken into consideration, Millsexplained.
The second stage is the evaluation ofproposals. The team that deals with theevaluation is split into two: one reviewsthe technical part, the other, the financialpart. The first team does not know theprice proposal, because the bid may havebeen intentionally lowered, Mills said.
He added that at the last stage, the teamssit together and determine the best offer
Exper ts Lecture AmChamMembers on Militar yContracts 101U.S. Army reps, financial specialists explain intricacies of supply procurement
and outsourcing
Col. Michael Smith, Chief, G3, US Army Europe, Randy Gordon, Program Director, Raytheon and General
Zlatan Stoykov, Chief of General Staff of Bulgarian Army in discussion of improving the military capabili-
ties through joint exercises
Minister of Defense Veselin Bliznakov pointed that the Bulgarian companies have good chances in the US
Army procurement process but only if their offers are competitive.
Col. Roger Gerber, Deputy Chief, GR2, US Army Europe, meets friends from before: Ralitza Mateeva, Unisys
Federal Government Group and Brig. General Boyko Milanov, Chief of Logistics J4, General Staff of the
Bulgarian Army
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with the best price. Companies will beneeded in Bulgaria for the construction offacilities for 1,500 to 3,000 military per-sonnel, Mills said. Additionally, contractswill be closed for environment monitoring.The third type of contracts envisaged inBulgaria will be closed for a term of upto three years and will concern theexploitation and maintenance of the facil-ities.
Mills advised that Bulgarian companiesshould register quickly, because someworks will be awarded very soon. Suchfor instance will be the preparation of anenvironment impact assessment beforethe construction of the bases begins.
Col. Roger Gerber, deputy chief for GlobalBasing and Restructure, U.S. ArmyEurope, encouraged U.S. companies toset up joint ventures with Bulgarian part-ners. "We want these contracts to reflecta partnership," Gerber said.
He presented the views of theCommand about the transformation ofthe U.S. Army in the next few years,concerning in part the construction ofshared facilities.
"Our transformation agrees with NATO's.Our aim is to create mobile combatgroups, said he and added that the train-ing of the U.S. military in Bulgaria wasconsidered an important part of the trans-formation of the European Command,"Col. Gerber said.
He also discussed the views of the U.S.Army on outsourcing of military activitieswith commercial character. In his words,the shared facilities should be led by verysmall teams, while their service should beawarded to the private sector. This iswhere we are headed to. We need yourhelp, because that will help us train bet-ter, said he, addressing the representa-tives of Bulgarian and U.S. businesses.As an example he mentioned Iraq andAfghanistan, where this practice is alreadyyielding good results.
The views of the U.S. Army were furtherelaborated on by Jeffrey Gaines, busi-ness development manager withWashington Group International (WGI).
He cited a series of projects throughoutthe world and WGI's good cooperationwith the U.S. Army Corps of Engineers:demolition of missiles in Russia; con-struction of a temporary U.S. embassy inKenya for only six months; prevention ofthe proliferation of weapons of massdestruction; repair of the electricity grid inAfghanistan; construction of bases andan international medical center in Egypt;building ammo storehouses in Cyprus.
In Bulgaria, WGI will look for contracts fordesign and construction, Gaines said.Contractors are required to conform withthe project budget; they have to be stablecompanies and present bank guarantees.
Around 400 participants, Bulgarian and US government officials, high ranking military officers, AmCham members, US and Europe corporations and Bulgarian com-
panies took part in the forum.
Ernst&Young legal advisor Anelia Dinova from Dineva&Rusev law firm and Jim Rigassio, Senior
Commercial Officer, US Embassy in Sofia explain the investment climate in Bulgaria.
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The company has to obtain a DUNS Number.
Requests to receive a number are submitted at
www.dnb.com
● In the upper right corner there is a drop menu with a list
of countries● When you press the arrow, choose Eastern Europe● You are automatically redirected to the D&B Emerging
Markets Center● In the bottom right corner there is a yellow-box link to the
registration form● A small window pops up where you have to select Bulgaria● That redirects you to the request form to be filled in with
information about yourself and your company● D&B sends you the number by email within the framework
of a week.
Obtaining a NATO CAGE Code
● The candidates for such a code are required to fill in a
form that can be downloaded from the website of the
Military Standardization, Quality and Codification
Directorate at the Ministry of Defense at www.mod.bg/bg/
docs/ZayavkaNCage.doc
● The completed document and a cover letter of request are
sent to the Head of the Directorate, Col. Dimitar Dimitrov,
at 34 Totleben Blvd, Sofia 1606.
Registration in the Central Contractor Registration
● The registration is made at www.ccr.gov
● A link in the upper left corner redirects you to the regis-
tration page
● A window pops up reminding you that a DUNS Number is
required for the registration
● Since you have obtained it already, press Continue
● You reach a page where you are asked to input your
DUNS Number
● Press Submit and follow the instructions
Steps to register in the Central Contractor Registration
"No matter which company wins the con-tract, I expect that the bigger part of theproject financing will go to the Bulgarianeconomy," Gaines said. He advisedBulgarian companies to have their ownfinancing for at least 30 or 40 days ofwork should they win a given constructionproject. Then they will have their costsrefunded on the basis of invoices.
The whole construction process will besupervised by specialists of the company.
Lyubomir Punchev, head of retail bank-ing at Bulbank, presented the ways inwhich the bank can provide financialsupport to businesses emerging in con-nection with the joint training activities.He reviewed the most common creditand bank products for small businessesand presented an offer for financing for-eign citizens willing to buy real propertyin Bulgaria.
Krassimir Stankov, general manager forBulgaria and Macedonia at Marsh, pre-sented the activities of the company,leader in the field of insurance.
Peter Sullivan, director of Public SectorGroup, CEEMEA, Citigroup, presented theopportunities for establishment of public-private partnerships for the constructionof the bases. He cited a Citigroup-con-sulted project that involved the setting upa joint venture between Britain's Carillionand U.S. Kellogg Brown and Root (KBR)for the construction of a military base inthe United Kingdom. ■
President Georgi Purvanov shares with AmCham Executive Director Valentin Georgiev that the American
Chamber of Commerce should actively facilitate the joint US-Bulgaria projects in the very strategic sector of
security.
Major General Rumen Tzokov, Deputy Chief of General Staff for Resources of the Bulgarian Army expects more
opportunities for Bulgarian military to improve its capabilities and its interoperability as a member of NATO
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Between $46 million and $62 million is the amount that theU.S. Army plans to invest in the Novo Selo training range, saidMaj. Rusty Mizelle, construction management chief with theU.S. Army in Europe, during the Am-Cham-sponsored confer-ence U.S.-Bulgaria Joint Training Facilities: CommercialOpportunities and Business Partnerships. Novo Selo is one offour bases that the United States and Bulgaria agreed in Aprilto share. The other bases are Bezmer, Graf Ignatievo, andAytos.
More than 200 Bulgarian and foreign companies took part inthe forum. All in all, the participants were around 400 amongthem: Bulgarian President Georgi Parvanov; U.S. Ambassadorto Bulgaria John Beyrle; Defense Minister Vesselin Bliznakov;Chief of General Staff of the Bulgarian Army Gen. ZlatanStoykov; officers from the U.S. Army Contracting Command -Europe (USACCE) in Wiesbaden.
The amount planned to be invested by the U.S. Armed Forceswill have to be approved by the Army Command and theCongress, Maj. Mizelle explained, and it will be included in thebudget for next year. The first major procurement contractswill be tendered next summer. Some $40 million - $50 millionwill be earmarked for construction of buildings in 2008-2009.Another $5 million - $10 million will be spent on road infra-structure. The amount to be allocated for maintenance ofbuildings and roads every year will be $600,000 - $800,000and $300,000 - $500,000 respectively. Asked to explain whyinvestments are envisaged for the training range only, Maj.Mizelle said that that would be the main facility to be used bythe U.S. Army. In his words, Bezmer will be used mainly forrotation of military units.
The first tenders are expected to be launched in September2007, after the budget is voted, said Maj. Mizelle and addedthat the investment plans would have to be approved by thegovernments of Bulgaria and the United States. TheConstruction Management Division is responsible for the plan-ning of engineering and the whole lifecycle of the bases. TheU.S. European Command has handed down an instruction tomake the best of the capabilities of potential local suppliersin the upcoming procedures for the procurement of goods andservices for the four Bulgarian-US facilities, major Mizellepointed out. The U.S. military will not come to Bulgaria withtheir families, because they will be training here. The baseswill be training facilities, he added.
The main contractor for supplies to the U.S. Army in Europeis the Contracting Command (USACCE) in Wiesbaden,Germany. Contacts between companies and the Commandare established through the so-called contracting offices,where working officers agree the concrete contracts. Thecontracting office that will be responsible for Bulgaria and
Picture of the training Range in Novo Selo, one of the four
military facilities subject of the Defense Cooperation
Agreement between Bulgaria and the United States. The
agreement was signed on April 28, 2006. It covers the
bases of Bezmer, Novo Selo, Graf Ignatievo and Aytos,
and sets forth the framework for cooperation between
Bulgarian and foreign companies and the U.S. Army in
the supply of goods and services. According to the doc-
ument, the U.S. Army can close contracts for delivery of
goods and services in Bulgaria, including construction.
During the negotiations the Bulgarian party gave permis-
sion to the Pentagon to choose from any source of pro-
curement but posed the condition that the "United States
shall utilize local Bulgarian physical persons and legal
entities as suppliers of articles and services to the extent
feasible for the performance of a contract when the bids
of such suppliers are competitive, and constitute the best
value."
US Plans to Invest up to$62 Million in Novo Selo
By Panayot Angarev
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Romania is that in Grafenwoehr, Germany, said MarciaColeman of USACCE's Procurement Management.
USACCE provides various types of services to the U.S. Army:support operations (in Afghanistan and Iraq), deployment,training, operative support, base operations and securing liv-ing standards. The Command closes different types of con-tracts: at fixed prices, for an unlimited period of time, deliver-ies on order that require proposals, Coleman said. The ser-vices USACCE provides include: general and specialized deliv-eries and services (hospital aid, fuels and lubricants, com-munications), ground maintenance (guard services), vehiclerental, engineering services.
To be admitted to the tender procedures, Bulgarian compa-nies have to register with the Central Contractor Registration.Prior to that, they have to obtain two numbers: the so-calledDUNS number and NATO CAGE (Commercial andGovernment Entity) code. The Data Universal NumberingSystem (DUNS) has been developed and is maintained byDun & Bradstreet (D&B), which started it in 1963 for creditservices purposes. It was later accepted as a standard by theEuropean Commission, the United States and the UnitedNations.
The number consists of nine digits assigned by the company.By receiving the number, the supplier company is included inD&B's database. The registration to get the number is madeonline on Dun & Bradstreet Number's website at:http://www.dnb.com or at this toll-free (when calling from theUnited States) phone number: (800) 333-0505. The maximumwaiting time for receiving the number is 48 hours via email.
NATO CAGE is a unique five-digit number. It is issued by theMilitary Standardization, Quality and Codification Directorateat the Ministry of Defense at www.mod.bg/bg/dir_vskk.html.Candidates fill in a form at www.mod.bg/bg/docs/ZayavkaNCAGE.doc and send a cover letter of request to begranted a code. The registration with the Central ContractorRegistration is made online at www.ccr.gov in English. Theregistration is free of charge and has to be renewed annual-ly. After obtaining registration, companies have to submitinformation to the Contracting Office in order to be listed aspotential suppliers.
The Wiesbaden Contracting Center often advises that thespecialized tender websites should be checked regularly:Federal Business Opportunity (FegBizOpps) at www.fedbi-zopps.gov, Acquisition Business Web Site (ASFI) at acquisi-tion.army.mil/asfi/, the Wiesbaden Contracting Center (USAC-CE) at www.usacce.army.mil/wcc/VENDOR/BidBoard, the U.S.Contracting Command at www.usacce.army.mil. Onceannounced, the tender information is sent to the supplyoffices, so that it can be viewed by suppliers. It containsinstructions, forms to be filled in, and information about thecontract itself.
The U.S. Army uses three procedures to award contracts.Purchases valued at $2,500 or less can be made with the so-called purchase card; the award of commercial servicesworth up to $100,000 requires a framework agreement follow-ing the collection of quotes by phone; contracts above that
amount - up to $5 million - are mandatorily awarded throughan open tender, which requires written bids to be submitted.
For micro-purchases the U.S. government prefers the use ofVisa payment cards. The procedure is known as Government-Wide Commercial Purchase Card Program (GPC). The cardis used much the same way as using a credit card. Accordingto Marcia Coleman, the use of the card reduces bureaucra-cy. For the purpose, the staff at the regional offices are sup-plied with such cards, so that purchases can be madepromptly. Ms Coleman pointed out that Bulgarian businessescould work with Visa cards.
The award of contracts valued up to $100,000 can be madeby phone when suppliers are entered in the Central ContractorRegistration. Telephone price quotes are obtained from sev-eral companies to find the best price that can be received bytelephone or in writing. Once announced, the price is thebasis on which negotiations are held with the Army. The con-tract is closed after the winning supplier sends written con-firmation.
The third type of procedure is used for contracts exceeding$100,000 in value. Potential suppliers are asked to reply to arequest for proposal in writing. Depending on the proposals,representatives of the contracting office can hold negotiationswith suppliers or directly award the contract to the companywith the best offer.
"The best value does not always mean the best price, that iswhy a complex evaluation of the offers is made" said WilliamMills, chief for contracting for the Europe District of the U.S.Army Corps of Engineers. Evaluating officers are not interest-ed in the price only, but also in the past performance of com-panies and they often ask for references. Offers are evaluat-ed by two independent teams on the basis of the technicalparameters and the price of proposals.
"Competition is crucial. We try to find the best we can for ourmoney. It is important how companies will guarantee the qual-ity of the services offered. Even if a company fails, it canlearn a lot. It is good for candidates to ask for a follow-upreport after the procedure is completed, so that they can findtheir mistakes and see how they can improve," USACCE'sMarcia Coleman pointed out. ■
Supplies and services needed for the Novo Selo train-
ing range:
● fire brigade● furniture● dust control● cooling and heating● snow and ice removal● solid waste recycling● food supplies● drivers and traffic controllers● vehicles● transportation distribution hub● supply support● office● tank washing unit● hazardous materials storage
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AmCham's JulyFourth: MixingMusic, Good Food,Hi-Tech Gadgets,Rope Fun andWorld Cup Drama
Whether BTC terraces or Jeep
lane, Shumensko highway or
Kamenitza avenue: all roads lead
to the great AmCham party.
Some 2,000 guests - AmCham membersand families, U.S. Embassy employees,U.S. citizens in Bulgaria, politicians,celebrities, many children - enjoyed thetraditional 12th Independence DayCommunity party celebration at theLozenetz Residence.
U.S. Ambassador to Bulgaria JohnBeyrle welcomed in crisp Bulgarian allguests and friends in attendance.
"July Fourth is not only an American hol-iday but for every nation that treasuresthe ideals of freedom, democracy andresponsibility," the U.S. envoy said. "AndBulgaria, which shares the same idealcelebrates with us."
After the ambassador's greetings,Georgi Robev Choir Society carried arousing rendition of American andBulgarian national anthems.
The AmCham Independence DayCelebration meant fun, music, specialmoments, lots' of presents, deliciousmeals, beer and coca cola, entertain-ment at all parts of Lozenetz resi-dence richly decorated with red, blueand white balloons. White summerhats and red covers of BTC, Vivatel'skey holders and phone cases, Jeepkerchiefs and Frisbees were every-where.
Late Night Messiah's
debut was a great
surprise hit of the
party.
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Who would not like to
join the company of
the BTC Promo Team?
A little rest after the party and charging the bat-
teries for the football game that is about to follow.
Ambassador Beyrle tries the Fender
guitar that will go for charity pur-
poses on the next big American
holiday: The Thanksgiving Dinner
About 2000 guests came to the AmCham
party at the Lozenets Residence in Sofia.
As usual: US Marines are the most
desirable company for a photo.
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We have Coke, We
have Fun, We have
Fountain in the Sun.
The Balkan Star Kids
Corner: Are you ready
to conquer the world?
Baby Boom at the
AmCham Party!
Maybe the next
Off-road champion.
BTC advised ahead of time all guests tobring their Wi-Fi gadgets to the venue,so everybody could use independentlyand unrestrictedly the excellent BTC Wi-Fi Hot Spot.
Kids were the happiest of all guests,with many spots to play and have fun.Jeep-sponsored Kids Corner had thebusiest time with a big line for contest
where children exercised their musclesand balance descending on a rope.
Once again the party had DavidHampson as a master of the ceremony,and once again Fender provided themusic for the party this time with theperformance of Eridan Band. A sumptu-ous barbeque contest was carried outunder the professional guidance of
Petar Bachvarov-Uti, a famousBulgarian chief, who chaired the jury.
To show off their cooking skills cameNova TV's Nicky Kanchev, the charm-ing pop singer Dessy Tenekedjieva,and Svetoslav Didkov. The bTV tandemRobin Kafaliev and Nevena Bozukovatook the first prize for best-tastingmeal. Famous actor Georgi Mamalev
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Your Excellency, would
you join "Georgi Robev"
Choir Society for the
national anthem. Casting with Chocho
Popyordanov for the
AmCham/Jack Daniel’s
never ending fun series.
The charming singer Dessy Tenekidjieva, the bTV great
tandem Robin Kafaliev and Nevena Bozukova and the
ever smiling Georgi Mamalev applaud Uti Bachvarov -
the chef that does more talking than cooking.
turned out to be the most attractivechef, too, while Tenekedjieva took theaward for the most sophisticated usageof Jack Daniel’s whiskey in the foodprocessing. Yet another celebrity, actorChocho Popyordanov, tried hard withthe preparation of his dish; however, hehad more success with the JackDaniel’s beautiful promo team than inthe kitchen.
Rising Force, exclusive distributor of thelegendary Fender guitar in Bulgaria,announced Fender's 60th anniversary
this year. The company provided awhite Stratocaster to be signed by digni-taries during the celebration, which willbe auctioned for charity at AmCham'straditional Thanksgiving dinner inNovember. They also supplied the sur-prise hit of the party, music by LateNight Messiah, a newly formed band ofAmCham members.
Fireworks and the traditional cakebrought a formal end to the party. But itdid not end for real, because the guestsstayed on to watch the third-place play-
off of the World Cup on a multimediascreen in the middle of the residence'sgarden.
The American-style traditional familyparty was generously supported byBulgarian TelecommunicationsCompany, Vivatel, Dodge, Chrysler, Jeep,Fender, Jack Daniel’s, Dundee Precious,3M, Ideal Standard, Ernst&Young,Citigroup, McDonald’s, Hilton, Coca Cola,Kamenitza, Stella Artois, Pain D'or, PopWeaver, Tuborg, Shumensko, Zagorka,Amstel Beer. ■
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Strong fiscal revenues turned the gener-al budget surplus to BGN 1.2bn (EUR0.63bn) in Jan-May or 2.7% of the pro-jected full-year GDP, according to data ofthe finance ministry. The balancewidened by 23.6% y/y in nominal termspaced by inflation tax effects, steadyeconomic growth, and relatively tightexpenditure policies. Total revenuesimproved by real 1.6% y/y in Jan-Mayfrom a drop by 0.8% y/y in Jan-Apr. Taxreceipts marked a steeper hike of 4.3%y/y in Jan-May taking off from 1.7% y/yin Jan-Apr.
Budget expenditures fell by real 0.4% y/yin Jan-May as social adjustment planslagged behind the higher than projectedinflation of 8.1% y/y in Jan-May. Theexpectations for the budget performancein the remaining months of the year areeven more favourable given that seasonalboosts from the summer resorts will keeptax revenues growing at a high rate. Highinflation will undoubtedly raise pressurefor additional social compensations at theend of the year but the government islikely to approve exceptional one-offtransfers only in case of sufficient overperformance. All in all, the fiscal indica-tors are quite optimistic and the financeministry has no problems in meeting thetargeted budget surplus of 3% of GDPthis year even if excessive socialdemands were partially met. Simpleextrapolation estimates show that the full-year budget surplus would reach 5-6% ofGDP if the budget expenditure plan isstrictly followed. However, the practicefrom the past will lure the government toapprove end-year wage and pensionbonuses as well as additional socialtransfers to healthcare and other social
activities that would cut the surplus to thetargeted 3% of GDP or slightly higher.
Government takes cautious
stance on tax reduction plans
Despite the good revenue collection inMay, the finance ministry remainsreserved to the options for cutting offtaxes next year. Top officials of thefinance ministry have stated for the pressthat the several options for tax cuts areconsidered for next year but the final pro-posal to the parliament will be decided inOctober after taking into account thebudget performance for Jan-Sep. Aspointed by finance minister PlamenOresharski, the government will mostlikely propose lower mandatory contribu-tions to the state pension fund and a fur-ther decrease in the corporate profit taxrate to 12% from 15% and/or a small cutin the low-income personal tax brackets.In case of weak fiscal performance, thetax relief could be limited to only one taxitem. It is important to note that past taxrelieves have brought positive effects onthe fiscal compliance and efficiency thatcould motivate the government and thelawmakers to proceed forward with thebold pre-election pledges seen in thepre-election programmes of all parties.The corporate profit tax for instance wasgradually reduced to 15% last year from32.5% in 2000 while the revenuesdropped only marginally to 2.5% of GDPand some of the intermediate rate cutswere accompanied by revenue hikes. Asfar as the profit tax has a low weight inthe overall budget revenues, its downwardcorrection would be a safe option for thegovernment and will at the same timelook very attractive for investors. Thepayroll tax reduction from this year pro-
vides another encouraging argument, asthe actual receipts from mandatory socialcontributions in Jan-May are reportedwell above the government estimates.
Government debt, reserve
position improves
The fiscal reserve of the governmentsurged by EUR 170mn (7.1%) in May toEUR 2.56bn at the end of the month,according to data of the finance ministry.The change in May mirrored the generalbudget surplus as well as the fluctuationsin the government deposit for the sameperiod. The central bank weekly statisticsfor June showed that the governmentdeposit added nearly EUR 100mn in theperiod June 1 until June 23 to indicatefurther expansion in the overall fiscalreserve. Compared to a year ago, the fis-cal reserve indicated a small decline of3.7% as of end-May due to significantbuybacks of Brady bonds, which werefully retired in July last year, and pre-pay-ments to international financial institu-tions. The share of public debts in theprojected full-year GDP stood at 27.5%as of end-May marking no change inrelation to a month earlier. In absoluteterms, the debt stock dropped insignifi-cantly by EUR 18mn in a month to EUR6.4bn. As compared to a year earlier, thepublic debt continued to demonstratestrong improvement on the back of regu-lar repayments and early retirement ofboth tradable securities and loans frominternational financial institutions. Thedebt ration dropped by 11pps y/y in rela-tion to GDP and 14.4% y/y in nominaleuro terms. The stock of external liabili-ties scored even a steeper fall by 19.7%y/y while domestic liabilities followed thepace of the overall economic growth. ■
Budget Gains Support Tax Reduction Plans
This article is based on extracts from ISI Emerging MarketsIntelliNews publications: Bulgaria This Week and BulgariaCountry Report. For more detailed information please contactISI Emerging Markets office in Sofia at +359 2 8160404 or [email protected]
Consolidated budget, year-to-date,
(Jan/00 - May/06)
Fiscal liquidity, EUR bn
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"For Bulgarians, poverty is a more serious threat than AIDS andnuclear weapons. The most urgent problem they have to dealwith is how to survive economically."
This was the major conclusion regarding Bulgaria in a surveyof 44 countries within the large multi-national research projectPew Global Attitudes, chaired by former U.S. Secretary ofState Madeleine Albright. Bulgarian citizens were described asthe most dissatisfied nation among the nations covered by thesurvey - some 50 percent of all Bulgarians claimed that theirlife worsened over the last five years. At the same time, thesocial and economic changes have a negative effect on theirpersonal life situations.
Unemployment in May 2006 fell below the 10-percent level, to9.59 percent, which was the lowest since 1991, reported thegovernment. According to Minister of Labor and Social AffairsEmilia Maslarova, 2006 will be the year with the highestemployment growth rate and with the highest decline in unem-ployment. There is, however, one more side to the successreported by the cabinet: traditionally, with the advance of thesummer season, employers seek to employ additional person-nel. The other factors are the lower social security burden, theenhanced interest of foreign investors and the general stabi-lization of Bulgaria's economy.
The National Statistics Institute reported in a survey of theworkforce that the economic activities of the population inten-sify and that employment has been increasing, most notably inthe first quarter of 2006. Higher employment
was attributed exclusively
to the private sector.
Average unemployment in Bulgaria for 2005 stood at 11.46percent, down from an average of 12.67 percent in 2004. It isworth noting that the average unemployment rate in the Euro-zone and in the European Union, according to Eurostat data,stood at 8.6 and 8.7 percent in 2005, respectively. For a sec-ond year in a row, Bulgaria reports a lower unemployment thanin Poland (17.7 percent), and Slovakia (15.9 percent).
Bulgaria's Employment Agency has announced that there area total of 323,791 free jobs in its registers. Some 200,000 arein the enterprise sector, which is the primary labor market andprivate employers have generated 78 percent of the jobs.
The conclusions that could be made on the basis of these sta-tistical data are that the reduced number of unemployed mightbe attributed also to the various programs launched by theministry of labor and social affairs, which however do not guar-antee a long-term employment. At the same time, the supplyof new jobs in the enterprise sector seems to be insufficient.
A report prepared by the World Bank late last year indicatesthat there are still untapped opportunities in generating jobs in
Bulgaria. Reduced costs of starting a new business, stream-lined real estate registration and a further strengthening of thecompulsory compliance with effective contracts were highlight-ed by the World bank as its major recommendations, aimed atcreating more and better new jobs in Central and EasternEuropean states.
Unlike Bulgaria, most of the states in the "old" Europe sufferfrom a "voluntary" unemployment, while their generous socialsystems provide financial support to work-age Europeanssearching for suitable job opportunities. Unemployed Britonsare even provided with cellular phones in order to be moremobile while searching for a job. In Germany, one should dosome work in order to qualify for subsidies.
The situation in the new EU member states is somewhat dif-ferent, as their social security systems are overburdened andhave a large number of unemployed dependants.
According to a report on employment in Europe released latelast year, despite the low economic growth rate employmentgrowth in the EU has almost doubled while unemployment ratehas stabilized at about 9 percent.
The European states have placed the emphasis on engagingpeople in some form of work - training, investments in skillsand qualification, personalized professional training. Major suc-cess has been achieved in the sphere of the employment ofyoung people in the Netherlands, Denmark, Ireland, Swedenand Belgium.
It becomes clear that EU member states that have invested in
Bulgaria’s Joblessness EbbsYet Bulgarians are as pessimistic as ever about their quality of life
By Mina Georgieva
Unemployed Bulgarians are signing documents for financial help in one of the
labor offices in Sofia. The local government will spend in 2006 a total of 204 mil-
lion Leva of budget funds for various programs aimed at reducing unemployment.
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proactive labor market policies experience shorter periods ofunemployment, vacant jobs are filled in more quickly, trainingcosts are higher and better focused, while salaries are mereadequate to the actual market environment. These states havealso a higher level of flexible working conditions, for instancepartial working-day employment or employment for a fixedperiod of time.
At the same time, Bulgaria's experience in combating theplague called "unemployment" abounds in
funny examples
In July last year, 434 unemployed actors earned wages byworking for the social ministry's Melpomene program, which issomething like a labor exchange for jobs in theatres. Another107 unemployed close to retirement found jobs within the"Retirement Assistance" program, which allowed them to earnsome of the retirement "points" they were missing. Actually, thisproactive program has helped 3,014 close-to-retirement-agepersons over the last several years.
A total of 1,160 unemployed were hired by the 13 poorestmunicipalities, which have been allocated subsidized jobs.Another 353 persons were involved in the program HarvestProtection 2005, aimed at unemployed and redundant formerpolicemen and military personnel. A total of 870 unemployedwere involved in the program aimed at protecting the harvest.The largest number, 878 unemployed, were hired as assistantsto people with disabilities. Thus, the state found jobs in Julylast year for a total of 105,230 persons, enrolled in variousincentive programs.
The Bulgarian government will spend in
2006 a total of 204 million Leva
of budget funds for various programs aimed at reducing unem-ployment. Together with the external financing, the totalamount will rise to 390 Leva million. The measures are
described in the National Action Plan on Employment for 2006.The major objective of the government headed by SergeiStanishev will be to boost employment from 56.2 percent to 58percent, which is equivalent to an increase of 1.8 percentagepoints in 2006 alone. At the same time unemployment isexpected to fall from 11.4 percent in 2005 to less than 11 per-cent. A total of 240,000 new jobs are to be created.
A number of measures have been planned for attaining thisobjective. For a start, 2 million Leva will be spent on teach-ing 2,500 elderly unemployed Roma to read and write.Training is scheduled to continue for five months. The pricefor the course is set at 360 Leva, but expenses rise as theparticipants are entitled to an additional 3 Leva per day. Moremoney will be allocated this year to employers as well, if theyagree to join the programs of the Ministry of Labor andSocial Affairs for providing professional training to young peo-ple. The amount allocated for training was increased to 500Leva per person, up from 450 Leva. A new bonus is intro-duced - a 30 Leva monthly supplement to the salary earnedby an unemployed who has managed to find a job withoutthe assistance of the state, which will be paid for the first 12months only.
The program titled From Social Assistance to Providing Jobswill be implemented on a limited basis. It will cover around42,000 persons and has a budget of about 99 million Leva.The total expenses made within this program for the last threeyears are estimated at 385 million Leva. The program waslaunched back in 2002 as a pilot project, aimed at providingsome income to working-age unemployed, who have to copeonly with social bonuses.
The measures initiated by employers are also a component ofsubsidized employment. There are plans to cover social insur-ance installments or the minimum working salary for creatingjobs for unemployed young people, for disabled persons, fororphans, single parents, for persons released from jail afterhaving served their sentences, for permanently unemployed
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and for other groups with limited abilities to compete on thelabor market. A total of 58 million Leva have been allocatedfor the program.
Unemployed people trying to start their own micro-businesseswill be provided with a start-up capital of up to 2,000 Leva, aswell as with training and consultancy. The subsidy allocated tounemployed enrolled in employment programs will beincreased from 150 Leva to 160 Leva, the funds for profes-sional qualification released as a credit related to the line ofbusiness and/or training management will be increased from900 Leva to 1,000 Leva, and the bonus for employing anunemployed family member without remuneration will be raisedfrom 600 Leva to 640 Leva.
New programs will be launched within the framework of theSocial Investment Fund, Beautiful Bulgaria, Training andEmployment of Teachers, and the national Program for Trainingand Professional Qualification Roma, and other projects.
The World Bank has
criticized Bulgaria for lack of substantial
progress,
because the number of the employed increased only in Sofiaand nowhere else. According to the World Bank, the highunemployment rate among young people - estimated at 25 to33 percent - is a source of serious concerns. Unemploymentamong the young people in 2004 stood at 27 percent. The per-manently unemployed, who are estimated at about 60 percentof the total number of unemployed, is another major issue.World Bank experts claim that many workers in Bulgaria, maderedundant because of structural changes, as well as manyother, have either been without a job for more than a year orare engaged in low-pay activities. ■
Bulgaria's workforce stood at 3.255 million at the end of
the first quarter of 2006, which is equivalent to 48.9 per-
cent of the total population above the age of 15, accord-
ing to data released by the national Statistics Institute.
Men dominate the workforce, and their number was set at
1.563 million, or 53.2 percent, compared to 1.377 million
women, or 46.8 percent of the total. The gander employ-
ment coefficient stood at 49 percent and 39.7 percent,
respectively, for men and women. Employment in cities is
much higher - at 49.5 percent - compared to villages -
31.6 percent.
More than half of the employed persons - 1.710 million,
are employed in the services sector. Industry employs
1.025 million, and agriculture - 204,500. The number of
unemployed at the end of the first quarter of 2006 stood
at 315,200, which is equivalent to 9.7 percent of the work-
force. The number of unemployed men stood at 164,700,
and of women - at 150,600. The gender unemployment
rates were 9.5 percent and 9.9 percent, respectively.
Unemployment in villages stood at 14.4 percent, compared
to 8.3 percent in the cities.
s t a t i s t i c s
The cabinet really seems on its way to reduce the corporatetax rate again as early as Jan. 1, 2007. These intentions areamong the most impressive items of a formal document,titled Three-year Budget Forecast for the Period from 2007 to2009, which was recently approved by the government ofPrime Minister Sergei Stanishev. The forecasts were madewith the firm conviction that next year Bulgaria will finally bidfarewell to its candidate-state status and will join theEuropean Union on Jan. 1, 2007.
The ministers approved a three-year framework without a lotof noise and even refrained from boasting of their tax inten-tions. Deputy finance minister Georgi Kadiev was the onlysenior government official, who readily commented on thebudget framework, albeit with a lot of "ifs."
He said: "We can lower the corporate tax rate, we mayreduce pension installments, and we may even lower the per-sonal income tax rates as well, he said when speaking aboutthe possible options."
Perhaps in order to leave some emergency exits open,Kadiev added, "I would not be surprised if all three optionswill be enacted, but there is a scenario, which does not fore-see any of these changes."
Kadiev's boss was even more circumspect. Finance MinisterPlamen Oresharski prefers written statements rather than
BulgariaMay TurnInto TaxHeavenThe government approved the budget
framework for the first three years of
Bulgaria's EU membership
By Yuliana Boncheva
The 26th EU member state may emerge as a tax heaven. Orat least - a step away from heaven. If the profit tax rate isreduced to 12 percent, Bulgaria will compete even with Irelandfor low effective tax rates.
The reduction of the tax burden for the business is not the onlyincentive that the budget can offer taxpayers. After the insur-ance burden was substantially reduced as of the beginning of2006 - by 6 percentage points, a new reduction is now on theagenda. Favorable changes are planned also regarding per-sonal income taxes.
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speeches. He has clearly described in details the way hesees the development of the economy and the money trendsduring the 2007-2009 period. And although Oresharski him-self described his policies as conservative, he has proposed,in the budget forecast, to reduce the rate of the taxes paidby companies to 12 percent. For comparison, five or sixyears ago the corporate tax rate in Bulgaria stood at above30 percent (see chart right).
The manager of state finances is in no hurry to advertise histax rate plans because of a simple reason - he is waiting forthe budget "harvest" at the end of the year. The impact ofthe radical changes, in effect since the beginning of the year,on the revenues to the treasury will become apparent in thefall. The National Revenue Agency was launched on Jan. 1to replace the old tax administration. The start seems so farto be successful, but a comprehensive analysis and assess-ment would require more time. The impact of the reducedsocial security installments and the introduction of familybonuses in the income tax scheme in the beginning of 2006will also have to be measured next fall, before any final deci-sion is made regarding further steps.
The Foundation
Bulgaria has been engaged in a stage-by-stage tax reformfor several years. The changes are aimed at two objectives- to simplify taxation and reduce tax rates without affectingtreasury revenue. The business community was welcomedinto 2005 by a substantial tax reduction - the corporate taxwas reduced from 19.5 percent to 15 percent, and the taxon dividends was cut from 15 percent to 7 percent. Thereduced social insurance rates by 6 percentage points, from29 percent to 23 percent, as of the beginning of this yearfollowed the same direction. The ratio between the socialinsurance installments paid by the employer and theemployee was changed from 70/30 for 2005 to 65/35 for2006. This also eased some of the burden off the busi-nesses. The introduction of the family income taxation was
also seen a step forward.
As a result of these bonuses made by the treasury, taxpay-ers should retain some 600 million Leva more than before.The generosity of the budget should be, naturally, rewarded -these 600 million Leva are a prerequisite for an increase ofinvestments, for raising competitiveness of local productionand services, for the emergence of more and more compa-nies out of the grey sector, and for a genuine increase ofincomes.
The budget forecasts for 2007-2009 clearly indicated that thegovernment does not intend to admit any serious deviationsfrom its tax policies. The conservative approach was attrib-uted mainly to the deteriorating current account performancewithin the balance of payments. The cabinet has scheduledseveral major tasks for next year. The top priority is to reducethe budget revenue loss.
The finance minister is convinced he has to refrain frommajor incentives to taxpayers, as the first year of Bulgaria'sEU membership is associated with risks and the budget rev-enue is far from being assured. As of Jan. 1, 2007, two ofBulgaria's current borders will "vanish" - this country will
Source: Ministry of Finance
Tax rate for the period 1998 - 2006
become an inner section of the common European space,which will spread into Romania to the north and into Greeceto the south. That means that revenues from VAT, customsduties, etc., will drop.
The Framework
As early as next January, Bulgaria will have to pay 620 mil-lion Leva out of its budget as membership fee. At the sametime, it is still far from sure that Bulgaria will be able to setoff this substantial amount out of the subsidies allocatedfrom the European funds. Bulgaria has a strong appetite forthe EU million, but is also suffering from bottlenecks like theabsence of quality projects and insufficiently qualified admin-istration to absorb the EU funding.
There is one more sensitive issue - even if Bulgaria managesto flood Brussels with perfectly prepared projects, it will haveto assure its own share of financing in order to obtain the EU
grants. However, here again things stumble on a lean nation-al budget with a small potential for such co-financing.
That is why the government is adamantly against any drasticmoves in the "taxes" sphere in order to assure a sustainedinflux to the treasury. Actually, the most significant change -the reduction of the corporate tax rate from 15 to 12 percentdoes not imply a serious risk, as this tax is not among themajor revenue items and besides its reduction is expected tohave serious secondary effects - it will stimulate the emer-gence economy out of the "grey" zone and will provide incen-tives to entrepreneurs and to investors in Bulgaria.
The tax framework is as follows:
1. The VAT rate will be left at its present level - 20 per-
cent.
2. The corporate tax rate will be reduced from the cur-
rent 15 percent to 12 percent.
3. The increase of the excise duties rates will continue
Bulgaria has made remarkable progress but has yet to undertake decisive steps in key political areas to become eligible for EU membership in 2007, visiting European
Regional Policy Commissioner Danuta Hubner said in Sofia. She pointed to the fact that Bulgaria could take full advantage of EU membership benefits provided that
the Bulgarian authorities managed to complete reforms and accession preparations on time. Ms. Hubner held meetings with President Georgi Parvanov, Prime Minister
Sergei Stanishev, Finance Minister Plamen Oresharski, European Affairs Minister Meglena Kuneva and other cabinet ministers related to the EU's Structural Funds.
During her Sofia visit Ms. Hubner attended also the signing of two agreements on grants through the European Commission's Solidarity Fund worth EUR 20. 35 M
for the disaster stricken regions in the 2005 f looding in Bulgaria.
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to rise towards the minimum EU levels.
4. Health insurance installments will remain at their cur-
rent level of 6 percent.
It is expected that from 2007 to 2009 the economy will havean annual growth of 6 percent. The optimism of the cabinetis based on the expected effects of the accession to the EUin 2007. The direct payments from the Euro-funds and thehigher revenue are seen as the main engines of economicgrowth. The share of investments will rise from 28.6 percentin 2006 to 31 percent in 2009. The expected average annu-al inflation for the 2007-2009 period is estimated at 3-4 per-cent, mainly because no major rises of regulated prices areexpected.
The Corporate Taxes
The budget revenue schedule for the first three years ofBulgaria's EU membership is based on:
● reduction of the corporate tax rate from 15 to 12 percent;● the emergence of a large number of companies out of the
grey zone as a result of the low tax rate; ● improved collection by the tax administration; ● the provision of tax incentives to companies, which invest
in high unemployment areas - a zero tax rate on the rein-vested profit.
The calculations made by the finance ministry indicate thatthe reduction of the corporate tax rate from 15 to 12 percentfor the period 2007-2009 will leave at the disposal of thebusinesses some additional 140 million Leva.
The revenue from company taxes (including the tax on divi-dends and the income tax) for the 2007-2009 period is esti-mated at 1.067 billion Leva for 2007, 1.230 billion Leva for2008, and at 1.333 billion Leva for 2009.
As a result of the application of the EU directives corporatetaxation, the tax regime applicable to dividends and liquida-tion shares will be changed as of Jan. 1, 2007. As a result,the tax on dividends and incomes will be reduced.
Taxation of wages,
royalties and dividends
The three-year forecast document provides the introduction,as early as next year, of a new schedule of income taxes fornatural persons. The current average rate - for monthlyincomes between 250 Leva and 600 Leva - will be eliminat-ed. Thus, there will only be two tax levels, and the rate forincomes higher than the tax-free minimum will be relativelylow - 20 percent for incomes up to 600 Leva, and 24 per-cent for incomes higher than 600 Leva. The current effectivethreshold of 180 Leva per month will be raised to 200 Levain 2007. This level will be raised again to 220 Leva for 2008and 2009. The impact of the new tax rate schedule on thetreasury is estimated at a minus 90 million Leva. This amountwill be left to the tax payers.
According to the amendments to the legislation on the tax on
The economy in figures 2004 - 2008
2004 2005 2006 2007 2008
1. Real GDP growth 5.7 5.5 5.3 5.8 6.2
2. Current account
balance
(percent of GDP)
-5.8 -11.8 -12.4 -11.8 -10.4
3. Average
annual inflation6.2 5.0 7.7 4.4 2.8
4. Unemployment 12.0 10.1 9.0 8.8 8.8
5. Gross state
foreign debt
(percent of GDP)
33% 24% 19% 17% 16%
6. Direct foreign
investments
(in million Euro)
2728 1789 2351 2709 3010
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the income of natural persons, which will come into effect onJan. 1, 2007, the rate of dividend tax is set at 7 percent -regardless of whether the company paying the dividend islocal or foreign. Currently the state collects 7 percent for div-idends paid by a Bulgarian company, and 12 percent, if thedividend is paid by a foreign company.
The scope of the income relieved of tax will be expandednext year by the income from interest on deposits in banksand mutual funds in EU member states. The interest paid bylocal banks to foreign persons will also be exempt from tax,while, currently, foreigners are obliged to pay 15 percent atthe source, in compliance with the effective CorporateIncome Tax Act.
The installment paid for voluntary pension and health insur-ance will be relieved from tax at the "input" - they reduce theamount, which is taxable. The ceiling of the tax relieve willbe set at 10 percent of the taxable base. An additional ceil-ing will be introduced - the amount of tax relief shall notexceed 1,440 Leva per year. The good news is that the pref-erences for voluntary installments will be applied to theincome from all sources, including income from rents, fromthe sale of property etc.
The elimination of the final tax on the amount withdrawn fromthe voluntary insurance funds is another positive change.Currently, these amounts are subject to a 12 percent tax.
Excise duties race
Companies and households in Bulgaria will have to preparetheir budgets for the most unpleasant changes that willinevitably make life more expensive over the next three years- the rising excise duties. Sofia has assumed to Brussels thecommitment, for the sake of fair competition, to graduallyincrease the excise duties rates to the minimum Europeanlevels. According to the schedule agreed with the EU, theexcise duties on liquid fuels will rise as follows:
2007 г.
● unleaded gasoline - an increase from 530 Leva to 585Leva per 1,000 liters;
● gas oil and kerosene - from 430 Leva to 485 Leva per1,000 liters;
For the first time this year, Bulgaria will have to include elec-tricity, coal and coke in the list of excise commodities andservices. This has to be done for the simple reason thatthese items are subject to excise duties in the EU. Initially,the rates will not be frighteningly high: ● electricity used for industrial purposes - 0.001 Leva per 1
kWh;● coal and coke for industrial purposes - 0.30 Leva per 1 GJ; ● coal and coke for household purposes - 0.15 Leva per 1
GJ.● new increase of the excise duties is scheduled for 2008:● unleaded gasoline - an increase from 585 Leva to 635
Leva per 1,000 liters;● gas oil and kerosene - from 485 Leva to 535 Leva per
1000 liters;● electricity used for industrial purposes - an increase from
0.001 Leva to 0.0012 Leva per 1 kWh;● coal and coke for industrial purposes - from 0.30 Leva to
0.40 Leva per 1 GJ;● coal and coke for household heating - from 0.15 Leva to
0.20 Leva per 1 GJ.
A new increase of the excise duties is scheduled
also for 2009:
● unleaded gasoline - 660 Leva per 1,000 liters;● gas oil and kerosene - 565 Leva per 1,000 liters;● electricity used for industrial purposes - 0.0014 Leva per 1
kWh;● coal and coke for industrial purposes - 0.50 Leva per 1 GJ;● coal and coke for household heating - 0.25 Leva per 1 GJ.
The excise duties on cigarettes, beer and alcoholic bever-ages will not be increased in 2007. The excise duties onthese commodities were already drastically increased at thebeginning of this year. The government intentionally raisedsharply the excise duties rates quite a long time in advanceof the initial schedule, agreed for reaching the European lev-els. Thus, the inflation wave due to the appreciation of ciga-rettes and alcohol subsided earlier. At the same time, thesteep appreciation of gasoline, diesel oil and coal is still tocome.
Most of the figures quoted in the budget forecast for 2007-2009 still have to be supported by the relevant legislation.The cabinet has already submitted or is preparing for sub-mission, and the parliament will have to approve, most of thefundamental tax-related legislation, which define the future ofboth the taxpayers and the treasury.
In that respect, next fall will be quite a hot one for Bulgaria.The peak of tension will come with the final report of theEuropean Commission, which will specify the date ofBulgaria's accession to the EU. For the time being, the com-bat against organized crime and corruption remain the hottestzones. Any potential problems in the future could hardly beassociated to macro-economic performance.
Bulgaria is already a stable and predictable state, which iscapable of drafting its financial road map for the next threeyears. As the budget forecasts imply, the only source ofmacro-economic concern would be associated to the highcurrent account deficit - in the immediate future, the outgo-ing flows of foreign currency used for the import of productsand services will outpace the incoming flows generated byexports. As far as the other performance indicators are con-cerned, Bulgaria has reached such a level of stability that itis already eligible for Euro-zone membership. In terms ofbudget deficit Bulgaria "beats" Germany and Italy, as for sev-eral years already it ends the fiscal year with a surplus in thetreasury. And although it is forced to raise excise duties oncigarettes, whiskeys and gasoline, in order to matchEuropean levels, Sofia reports lower inflation rates thanAthens and Madrid.
Maybe these reasons, despite the critical remarks and claimsfor concern, Bulgaria believes that the next Christmas will bethe last it will celebrate as a EU candidate, and that on Jan.1, 2007 it will celebrate as a member of the EU family. ■
The British "Economist" magazineexpects the Bulgarian government tomanage to complete the requiredchanges in order to assure the country'saccession to the European Union in2007. This forecast was released duringan international forum in Athens orga-nized by the magazine, held under thelogo "Greece, Bulgaria and Romania:Business and Investments -StrengtheningRelations at the Threshold of EuropeanAccession". The magazine predicts alsothat the tripartite coalition will not be ableto live through its full mandate, theBulgarian National Radio reported.
The "Economist" expects that Bulgaria'sGDP growth rate this year will be higherthan targeted and will reach 4.6 per-cent, but also that the inflation will behigher. These two indicators will beinfluenced by higher incomes and high-er consumption, as well as by the one-time increase in the prices of foodstuffs,and of some of the taxes and fees. Themagazine warned that, although it is nothighly probable, Bulgaria's accession tothe EU might be postponed for 2008.
The survival of the currency boardarrangement in Bulgaria, and Bulgaria's
accession to the euro-zone in 2010 areboth under question as well, expertsclaim. These forecasts were linked tothe growing current account deficit.Besides, the current EUR/BGNexchange rate is moving away from itsreal value. Bulgaria's currency willappreciate by 6.2 percent in 2006, andwith another 3.7 percent in 2007. Thiswill come as a result of the "weak" eurothroughout last year and of the per-spective for a further depreciation of theUS dollar in 2006-2007.
In the political section of the report,
the "Economist Intelligence
Unit" predicts the
emergence of risks for the
survival of the cabinet
formed by the ruling tri-partite coalitionbetween the Bulgarian Socialist Party(BSP), the National Movement Simeon II(NMS) and the Movement for Rights andFreedoms (MRF). The early parliamen-tary elections would be the best opportu-nity for Sofia's "popular and independent"mayor Boiko Borissov to achieve hisexpected intention to enter into nationalpolitics via his Citizens for EuropeanDevelopment of Bulgaria (or GERB,according to its Bulgarian acronym)".
The participants in the forum wereaddressed by a video-conference linkfrom Brussels by European EnlargementCommissioner Olie Rehn. He stressedthat the accession of Bulgaria andRomania will be a success both for thetwo states and for the European Union.
Olie Rehn highlighted the majoradvancements made by the two statesover the last several years and stressedthat the reforms in the judiciary and thecombat against corruption must persistas this is the way to attract foreigninvestors to the region. The EuropeanCommissioner added that a lot of effortshave been made to have
Bulgaria and Romania
on the final stretch
to membership,
that major legislative reforms have beenmade and that the two states are per-forming like stable partners with a lot ofperspective.
Bulgaria and Romania are moving in theright direction, but they still have prob-lems to resolve, said the head ofDepartment "Enlargement" at the
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Bulgarian prime minister Sergei Stanishev during
his speech at the Athens summit, organized by The
Economist.
The "Economist Intelligence Unit":
Currency Board inBulgaria is Under Threat
Bulgaria's government formally supported the two oil pipeline projects passing
through Bulgaria's territory - Bourgas - Alexandropoulis and Bourgas - Vljore,
Bulgaria's Minister of Regional Development Assen Gagauzov said during the
Athens forum. Regardless of which of the two projects will be commissioned first,
the market development logic implies that the second project will also be com-
pleted some time later. That is why the cabinet issued letters expressing the
Government's support to both projects, Gagauzov said. The cabinet will assist
in the establishment of a universal entry and unified technical infrastructure in
the Bay of Bourgas in order to meet the requirements of both pipelines, the min-
ister added. The current assessment of all interested parties and companies
reveal that the Bourgas - Alexandropoulis project is economically feasible and
its implementation must start immediately, in order to have the pipeline commis-
sioned by 2010. Bulgaria's strategy for the development of the national infra-
structure by 2015 includes the construction of more than 700 km of highways
and the modernization of thousands of sections along the trans-European trans-
port corridors, Minister Gagauzov said. The program provides for the construc-
tion of the Trakia, Lyulin, Maritsa, Struma, Hemus and Cherno More highways
over the next several years
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European Commission, Timo Suma.With the accession of the two countries,a specific situation will emerge withinthe European Union - there will be onlywinners in this race, Rehn and Sumasaid.
Bulgaria's Minister of European Affairs,Meglena Kuneva, and her Romaniancounterpart, Anca Daniela Boagiu, tookpart in the discussion on "Bulgaria andRomania in the European Union - at thethreshold of European accession: prior-ities in the sphere of security and for-eign policy".
In her address, Minister Kuneva saidthat Bulgaria is eager to join the EU."The words "yes" and "no" are reallyshort, but they come as a result of along and serious work. My country iscapable of assuming its obligations",Kuneva said.
The Minister of European Affairsstressed that the accession to theCommunity will emerge as an incentivefor Bulgaria to become more competi-tive and more flexible. Bulgaria will openits markets for new capitals and know-
how, which will improve living standards.Meglena Kuneva reminded that Bulgariahas demonstrated a sustainable eco-nomic growth over the last severalyears, while unemployment decreasedby one third.
Bulgaria's GDP growth rate for the firstsix months of 2006 may rise to 6.5 per-cent, and the annual GDP growth rate isexpected at 6 percent, Bulgaria'sFinance Minister Plamen Oresharskisaid. He was adamant that unemploy-ment will continue to go down. May2006 unemployment was a record low at9.6 percent, the Finance Minister said.He highlighted the international oilprices and the foreign investments asthe major factor for the increase of thecurrent account deficit. According tohim, foreign investors are not participat-ing any more in privatization, and investtheir money in "green-field" projects andbuy mainly imported machines andequipment. These developments openthe current account gap, Oresharskisaid.
He said that the value-added tax will notbe reduced under 20 percent. It is how-
ever very probable that a decision willbe taken later this year to reduce theprofit tax from the current 15 percent to12 percent. According to Oresharski, therise of inflation in 2006 is attributedmainly to the higher excise duties, intro-duced earlier this year. ■
The specialized economics and
finance publication, the "Economist",
announced that the demographic
crisis is a major problem for
Bulgaria. Demographic trends are a
source of concern and have a direct
impact on the funds allocated to
pensions. "The pension fund may
collapse", warned Jochan Hawi,
member of the economic informa-
tion gathering unit of the magazine,
at a news conference held in
Athens. The average monthly
income will rise to 50 percent of the
EU average not earlier than 20
years from now, economic experts
claim. However, the expectations are
that the annual inflation in Bulgaria
will start to decrease by 2008.
f o r e c a s t s
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a m c h a m i n t e r v i e w
- Mrs. Kuneva, what will be, accord-
ing to you, the major achievement in
the implementation of the Action Plan
from now until the September report
of the European Commission?
- The implementation of any item onthe Action Plan will be important.Actually we started to work on theAction Plan a long time before the MayMonitoring Report was published, andmost of the measures constitute anintegral part of the annual Action Plan.The allocation of the most importantmeasures to the operative plan that hasto be completed by September wouldallow us to highlight the policies thatwould merit a positive assessment.
I am talking about "policy types."Corruption, for instance, is a majorissue. But nobody is pressing us tohave it done with within two months.Streamlining public registers is anotherimportant issue - we must have regis-ters not only of the property, but also acommercial register, a register of thepublic procurement contracts etc. Itmust be made clear that the public andthe state have the relevant mechanismsat their disposal to reveal possible cor-ruption attempts. If we speak aboutorganized crime and coordination ofefforts, it must be unambiguous thatthe prosecutor, as the master of thecriminal procedures, is capable of suchcoordination and that the Ministry ofthe Interior has the required potential toassure the disclosure. The Action Plandemonstrates the firm commitment ofthe ruling coalition to implement irre-versible reforms. The fact that theAction Plan was supported by the par-liament, including by parliamentariansoutside the ruling majority, was a devel-opment of an enormous importance.
For me, the disclosure of the property
owned by high-ranking civil servantswas also a very important development.Now everybody has access to theinternet sites, containing informationabout the property statements deposit-ed by the members of the cabinet andby the deputy ministers; some of thetop magistrates have also revealed theirproperties and I hope that the rest willdo the same.
I would add that we interpret the ActionPlan as an effort to pass a "confidencevote" for Bulgaria, as a predictable anda reliable partner, by the Europeaninstitutions and the European citizens.
- What are the primary legislative
amendments related to the Action
Plan? Will there be a fourth amend-
ment to the constitution, as implied
by the ongoing public debate?
- In all instances, these are the legisla-tive amendments, related to the mostproblematic spheres as identified in theEU's monitoring report. When talkingabout corruptions at the top tiers, aboutorganized crime and money laundering,we have to account for the existinglinks between these phenomena. Thatis why the government has decided toapproach these issues in a compre-hensive and unified manner. The acton the public access to data related tothe property status of persons at highposts stipulates that the NationalRevenue Agency is obliged to checkthe correctness of the data as submit-ted by the respective person. The
Meglena Kuneva:
Bulgaria Must Have Its Eurocommissioner on Jan. 1 , 2007
By Marina Tsvetkova
Meglena Kuneva was born in 1957. She
was awarded PhD in Law in 1984 and
specialized in a number of universities
abroad: International Relations and
Environmental Law at Georgetown
University, Washington, USA, 1995 and
1999-2000; Human Rights at Human
Rights Institute, Turku, Finnland, 1993;
Environmental Law at Oxford, UK, 1996.
As a senior legal advisor at the
Bulgarian Council of Ministers, 1990-
2001, she participated in the drafting of
a series of Bulgarian laws in
Environment, Access to Information, etc.
Mrs. Kuneva was elected Member of
Parliament in the 39th National
Assembly, in June 2001, and appointed Deputy Minister and Bulgaria's Chief
Negotiator with the EU at the Ministry of Foreign Affairs, August 2001.
She was appointed Minister of European Affairs and Bulgaria's Chief Negotiator
with the EU and a special representative of the Bulgarian government at the
Convention for the Future of Europe, May 2002.
Fluent in English, French and Russian. Married, with one son.
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amendments to the law on the financ-ing of political parties aim at theremoval of the so-called donations inkind. A bill on lobbying is currentlybeing debated. Amendments weremade in the effective money launderinglegislation, so that the authorized insti-tutions would be granted easier accessto proprietary bank information in caseof suspected money launderingattempts. These amendments are alsoaimed at eliminating potential sourcesfor financing of terrorism.
The reform of the judiciary systemcontinues to be in the focus of allefforts. The new bill on the judiciarywill stipulate both the independenceand the accountability of the judiciarysystem. The new law will also containprovisions related to the assessment ofthe professional qualification of magis-trates. We expect that by September atthe latest the National Assembly willapprove also the new Civil ProceduresCode.
As far as the constitution is con-cerned, I think that things are gradual-ly coming into focus. There was seriesof very fruitful meetings betweenBulgarian parliamentary deputies andEuropean experts. All MP-s demon-strate an exceptionally high level ofgoodwill, as it is up to them to initiatethe best final solution. For me person-ally the best-case scenario would beto proceed with constitutional amend-ments after a broad consensusbetween incumbents and oppositionsis reached.
- You have said many times that
institutions must think and act in a
mature way as far as European inte-
gration is concerned…
- What I meant is that we have to tuneour thinking and understanding to thewavelength of modern Europe. When Iinsist on transparency I mean a specif-ic way of thinking. Transparency willreduce the void between the authoritiesand the voters; it will reduce the con-frontation between "them" and "us" andbring public support to state-level deci-sions. Transparency provides the linkswithin the society; it guarantees thedialogue and the motivation. Actually,the fact that European integrationchanges all candidate countries irre-versibly is the characteristic highlightedmost often by analysts.
European integration provides a newdefinition of effective governance - notby the natural concept of "power" butas the commitment of the ruling powerto abide the existing rules. Abiding thelaw, on an international level, currentlycreates a unique link between domes-tic and international policies. I havealready had the opportunity to expressmy conviction that Bulgaria must sup-port the transparency initiative,launched by European CommissionerSiim Kallas, which is currently a subjectof debates within the European Union.
- Are you optimistic that Bulgaria's
accession to the EU on Jan. 1, 2007,
will match the expectations of
Bulgarians? Will Bulgaria be ready to
absorb the initial impact of the mem-
bership?
- Let me reply with the magnificent def-inition of optimism given by Churchill:
"The optimist sees an opportunity inany difficulty, while the pessimist looksfor difficulties in any opportunity." Inthat aspect, I would say I am an opti-mist; still, membership will affect indi-viduals in a different way. The fact that73 percent of all Bulgarians expect theEuropean Union discipline the politi-cians is a direct evidence of the trustof the people in the effects of the EUmembership.
As far as the state as a whole and itspreparedness for membership are con-cerned, I would give an example withthe direct foreign investments - theyrose during the first five months of2006 by 50 percent compared to thesame period of last year. This is alsoan expression of trust. According toexperts, Sofia alone is targeted forinvestments, estimated at one billionEuro. According to IMF estimates,Bulgaria's economy has the potential togenerate an average annual growth of6 percent. Bulgaria's credit rating wasupgraded eight times over the last fiveyears. That means that we alreadyspeak about the system of Bulgaria'sEuropean membership coordinates asan environment of opportunities - fornew capital influx, for new ideas, andnew efficient practices.
- What about your personal plans?
Your name is mentioned as the
Bulgarian Eurocommissioner, and
even as president…
- I have work to do and I have to do itin the best possible way. There is onedefinite thing I work for - to have aBulgarian Eurocommissioner as of Jan.1, 2007. ■
EU Affairs Minister Meglena Kuneva addressed theAmCham General Assembly on June 20, presenting for thefirst time in public the main points of Bulgarian govern-ment's so-called Action Plan, particularly measures againstcorruption and organized crime, money laundering and judi-cial system reform.
Around 100 guests attended the event, among them sixU.S. representatives of the Marshall Memorial FellowshipProgram, AmCham members, guests and media.
"The plan was submitted to the EU member states, to theEU Commission and the Bulgarian government is open toany kind of explanations and whatever questions the busi-nesses might have," Kuneva said. The minister assured thatthe plan follows the already existing government strategyon EU accession, but putting "before the brackets" themost important of Bulgarian obligations, which would be theeasiest way to reach the EU Commission. Kuneva stressedthe limited time left to address all the shortcomings.
She reiterated that the most important topic now is the oneof transparency and high-level corruption. In ministerKuneva's words, these crimes should be chased in themost resolute ways.
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Minister Kuneva PresentsGovernment's Action Plan toAmCham General Assembly
"The measures envisaged in the
Action Plan are designed to address
issues of serious concern in the last
Monitoring Report of the European
Commission, such as organised
crime, money laundering and high
level corruption. The latest are close-
ly related and hardly to exist sepa-
rately…
The main approach of the Bulgarian
government was to elaborate a com-
plex of measures in order to tackle
systematically the problematic areas
bearing in mind their inter-connection.
Following the famous American school
of thought in public management, all
the responsible authorities were taken
on board. All the measures the gov-
ernment has come up with are broad-
ly discussed with the experts of the
European Commission…
When it comes to corruption, it is wor-
thy to note that the corruption is a
crime. And the crime is to be dealt with
by the respective authorities, namely
police, prosecution and finally the
court. Obviously that is true, but so far
has not made substantial progress in
the matter. The Bulgarian government
went further and decided to elaborate
new pieces of legislation dealing with
matters closely related to transparency
and accountability. Such measures will
play as a deterrent for corruption, or in
other words - effective instruments for
prevention…
We already have drafts on Laws on
amendments to following pieces of leg-
islation:
The Law on Public Possession of
Persons Holding the Highest State
Posts. The scope of amendments inter
alia includes an introduction of an
obligation of the National Revenue
Agency to verify the authenticity of dec-
larations, filed with the National Agency
of Audit and a free access to the dec-
larations published on the Internet
based register.
The Law on Political Parties - the
amendments to this law aim at improv-
ing the transparency and accountability
of the political parties' financing.
Both mentioned laws are related to the
accountability and transparency of per-
sons holding the highest public offices
and a public revelation of financial
sources of the political parties.
A draft Law on Lobbying is under
Excerpts: EU Affairs Minister at AmCham
Continues at page 38
"We need an active Attorney General's Office and activeinvestigators. This is more or less oriented towards theexecutive branch," she said.
Minister Kuneva addressed several other issues during theQ&A session. Olga Borissova of AUBG asked how ministerKuneva is going to communicate not only to the European
Commission but also internally, about the achievementsand results of the Action Plan. Her second question wasabout the so-called yellow area, which outlines the con-cerns EU has with the accession process.
Minister Kuneva said it is really important to put the tough-est problems in focus, and the government has made some
AmCham leadership and members, among them Anthony Hassiotis, CEO, Bulgarian Postbank, /left/ and Borislav Boyanov, /right/, listen to the presentation of
minister Kuneva.
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preparation and it is to be passed to
the National Assembly. Other two
pieces of legislation, namely the Low
on Credit Institutions and Law on
Money Laundering aim at strengthen-
ing the investigation of the organised
crime by broadening the circle of
authorised institutions entitled to have
an access to the bank secret when
there are doubts as to organized crim-
inal activities or money laundering.
These amendments are designed also
to eliminate the sources of financing
the terrorism.
Results against corruption depend
mainly on the quality and effective
enforcement of the relevant criminal
legislation. In recent years a great
number of amendments have been
made to the Criminal Law and
Procedure that helped considerably
update and align it with the standards
of the European Union. These amend-
ments led to an almost complete har-
monization of the national legislation
with international anti-corruption instru-
ments. The Criminal Code amend-
ments, for example, introduced criminal
liability for a larger number of corrup-
tion-related practices such as trade in
influence, bribery of a foreign official
etc.
The new Criminal Procedure Code in
effect as of April 2006 provides for
implementation of new techniques for
collecting evidence in criminal pro-
ceedings such as investigation by an
agent under cover, controlled supply
and confidential deal.
The unsatisfactory results in detecting
and punishing corruption, however,
demonstrate that simply harmonizing
the laws with international legal instru-
ments is not enough to effectively
counter corruption. Therefore, the gov-
ernment will focus in the next months
on the measures related to the evalu-
ation of the implementation of the new
Criminal Procedure Code and identifi-
cation of the areas of concern…
We all know that democracy breathes
through the judiciary branch.
Therefore, the reform in the judiciary is
in our focus. Our efforts are concen-
trated now on the removal of the ambi-
guities in the constitution regarding the
respect of judicial independence and
the adoption of a new Law on
Judiciary. Criteria for evaluation of the
quality of the magistrates will be imple-
mented in the new Law on Judiciary.
Another important feature of the new
Law on Judiciary which I would like to
highlight here, without going into
details, is the review of the general
principle for competitive examination.
Continues from page 37
progress already. For instance, the Ministry of Transporthas finished harmonizing nine out of 12 regulations for themotor vehicles. According to the minister, one of the prob-lems is lack skills in the administration to communicateachievements with the audience.
Laurence Marshland, general manager of ChelopechMining addressed the issues regarding the high level cor-ruption and lack of transparency in the government. Hesaid that his company had received first-class investor cer-tificate and the Chelopech projects had been approved bythe Council of Ministers, but was still waiting for the per-mit of the Ministry of the Environment. Marshland askedhow serious international capital will be attracted toBulgaria given the amount of red tape. The minister for-warded the answer to the Ministry of the Environment inthis specific case and pointed out that the Inspectoratewithin the Council of Ministers could remedy the situation.
Kenneth Lefkowitz, chair of AmCham's PA committee,raised the issue of ongoing negotiations on the treaty foravoidance of double taxation with the U.S. government, aswell as the adopted changes in some Bulgarian laws. Heproposed to the minister to coordinate the already existingchanges with the ones the Ministry of Finance is preparingin some other related laws on crediting.
Chris Thompson of Bearing Point asked about lobbyingregulations and whether they would take an Anglo-Saxonor traditional European format. He suggested thatAmCham's PA committee make recommendations to thegovernment and participate in the dialogue with the gov-ernment on lobbying and judicial reform. The ministeranswered that after the last EU monitoring report it is morethan desirable that the business associations participate inthis dialogue. ■
Olga Borissova, Director European Programs AUBG and AmCham board mem-
ber, asked on how minister Kuneva is going to communicate not only to the
European Commission but also internally, about the achievements and results of
the Action Plan.
Kenneth Lefkowitz , NECA Manager and Chair of AmCham PA Committee,
raised the issue of ongoing negotiations on the Double Tax Treaty with US and
the adopted changes in some Bulgarian laws as bank law, laws on social and
tax insurance.
The aim of the review is to make this
principle applicable only for entry into
Judicial system. The new law will also
address the issue of the career path of
the magistrates and implementation of
unified criteria for evaluation. To this
end, new body with competence of
monitoring and evaluation will be
established.
Integrity of the judiciary is closely
related to the management of court
cases. Therefore our aim is to make
sure that Judiciary is equipped with a
set of rules that guarantee that random
distribution of court cases is in place
and functions properly. To this end
until June 30 we will have the analysis
and evaluation of the current system,
on the base of which the government
will introduce changes addressing the
existing shortcomings.
The draft of the new Civil Procedures
Code is ready and we expect the
Parliament to adopt it latest by
September. The Code will be accom-
panied by set of criteria for evaluation
and monitoring of its implementation
and an education plan that will make it
easier for the implementing bodies to
get acquainted with it in due time.
Until the end of June the government
will adopt the education plan which will
guarantee better implementation of the
new Administrative Procedure Code. It
will be accompanied with set of crite-
ria for evaluation of its implementation.
Transparency is becoming a major
theme in the European policy. A great
deal of attention now is paid to the
transparency in distribution and absorp-
tion of the funds of the European
union, especially Structural and
Cohesion Funds. For the period 2007-
2013 the total of the Structural funds of
the European Union will amount at 864
billion Euro. This is an enormous sum
and its efficient absorption requires full
transparency. The absolute transparen-
cy is the accent of the Action Plan
because the way of spending the funds
of the European Union can be seen
also a great project of the civil society.
In Europe money has always been a
byword for a merited result of a hard
work.
Therefore, political will and the promises
are not enough. We will focus our efforts
in undertaking efficient measures to
guarantee proper management of the
major instruments for social cohesion
and regional development of the EU.
The Action Plan can have different
names and can be interpreted in so
many different ways. I choose to name
it as the Agenda of Bulgarian adminis-
tration written in European language. No
more, no less." ■
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A delegation of six American fellows from the U.S. MarshallMemorial Fellowship program visited Sofia June 16-21, 2006. Thedelegation met with representatives of state institutions, NGOs,business associations and media. The ultimate aim was to gath-er more information about Bulgarian political, economic andsocial life.
Marshall Memorial Fellowship (MMF) program provides a uniqueopportunity for young policy and opinion leaders from the UnitedStates to gain in-depth understanding of societies, institutions,and peoples across the Atlantic. Among the topics concerned infellows' personal appointments and group discussions wereBulgaria's foreign policy, the preparation for EU accession, sus-tainable economic development, candidacy for the 2014 WinterOlympics, issues of the judicial system and minority rights. Duringtheir stay, fellows met high level officials, journalists, experts,members of parliament and Bulgarian Marshall fellows. The del-egation was headed by Carrie Horn, an associate with the lawfirm of Kleinfeld Kaplan & Becker, where she practices law relat-ed to product liability, insurance coverage, and food and drugissues.
She said that Sofia was the fourth city the fellows are visiting,since the program started in Bratislava, moving on throughHamburg and Madrid. In each city the delegation met with politi-cians and made individual appointments. Horn was impressed ofthe openness of all of the government officials and representa-tives she had met in Europe. "Bulgaria has a lot in common withSlovakia in dealing with transition issues and issues of EU inte-gration but Bratislava may be a few years farther in its progres-sion. In Bulgaria there is a nice realism and understanding ofwhere the country is and where it is going to be. We met withthe Foreign minister Ivaylo Kalfin, with representatives of politicalparties in the parliament. The theme of EU integration was ourcommon subject during the meetings," Carrie Horn said.
She is consulting US and foreign companies on legal issues andalso providing information on the countries where she has beenduring the study visit. Kleinfeld Kaplan & Becker representatspharmaceutical manufacturers and medical device companiesregulated by a broad range of health and safety regulatory agen-cies at the federal and state levels. Horn acts as counsel on probono family matters in DC Superior Court, and volunteersthrough Habitat for Humanity, as well as raises money and sup-pors local organizations through athletic competition in runningand cycling events. "My plans are to speak about my experienceand about the similarities and differences of the countries wherewe were during this trip. The shared information might be usefulfor potential investors in Bulgaria and in the region. GMF collectsdata of publications and articles of former fellows. We gettogether often as alumni in different cities across the world andcontinues to network and talk to each other and engage in thistrans-continental relationship," Horn said.
In addition to Horn, the delegation represented a diverse groupof professionals: Robert Ashe, intergovernmental affairs managerfor the City of Atlanta; Alyssa Ayres, deputy director of the Centerfor Advanced Study of India at the Univeristy of Pennsylvania;
Terrance Carroll, state representative in Colorado; Todd Lloyd,vice president for education with Ohio Grantmakers Forum; KimMorreale, partner at Stricklin Morreale.
Founded in 1972 through a gift from Germany as a permanentmemorial to Marshall Plan Assistance, the German MarshallFund (GMF) is dedicated to promoting greater cooperation andunderstanding between the United States and Europe. After theBerlin Wall fell in 1989, GMF rapidly expanded its work in Centraland Eastern Europe and played an instrumental role during the1990s in assisting with the transition to democracy in this region.Today, as an independent U.S. public policy and grantmakinginstitution, GMF continue to foster cooperation between theUnited States and Europe on the most pressing transatlanticissues, both inside and outside Europe's changing borders. GMFalso continues to strengthen democratic institutions in the spiritof the Marshall Plan.
The Marshall Memorial Fellowship was created by the GermanMarshall Fund in 1982 to introduce a new generation ofEuropean leaders to America's institutions, politics, and people.In 1999, GMF launched a companion program to expose futureU.S. leaders to a changing and expanding Europe. The MMFprogram attracts the best and the brightest from all sectors,including politics, media, business, and nongovernmental organi-zations. Fellows come from across the United States and from20 European countries (Albania, Bosnia and Herzegovina,Bulgaria, Croatia, the Czech Republic, Denmark, Germany,Greece, France, Hungary, Italy, Macedonia, the Netherlands,Poland, Portugal, Romania, Serbia, Montenegro - includingKosovo - the Slovak Republic, Spain, and Turkey). GMF workswith partners in more than 60 cities on both sides of the Atlanticto make the MMF program possible.
The Bulgarian component of the MMF program was launched in1998. Every year four Bulgarian fellows travel to the UnitedStates. During an extensive three-to-four weeks program, theyexplore a range of domestic and international policy issuesthrough briefings, site visits, cultural activities and personalappointment with local counterparts. Currently, the MMF alumniare more than 1,500 all over Europe and the United States. Thirtyfive of them are Bulgarians. ■
Marshall Fellows Visit Bulgaria
The US delegation was headed by Carie Horn, an associate with the law firm
Kaplan&Becker.
By Irina Bacheva
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The American Research Center in Sofia
(ARCS) is a non-profit organization dedicated tofacilitating academic research in Bulgaria forNorth American scholars. ARCS will foster col-laboration between North American scholars
and those in Southeast European countries (Albania, Bulgaria,Macedonia, Romania, Serbia, and Montenegro). The intellec-tual community thus realized should become a significantresource for objective discussion of longstanding ethnic andnational problems in the region.
Specific goals of ARCS will include research in the humanitiesand social sciences from prehistory through the modern age.Classes in the modern Balkan languages will complement lin-guistic research. ARCS will provide fellowships and organizeconferences, colloquia and tours of significant archaeologicaland historical sites.
ARCS will also maintain close communication with otherAmerican Overseas Research Centers, such as the AmericanSchool of Classical Studies at Athens and the AmericanResearch Institute in Turkey. This should enable scholars tobetter avail themselves of the possibilities for comparativestudy in Southeast Europe, the Mediterranean and the NearEast.
Contact:
Prof. Kevin Clinton, DirectorAmerican Research Center in Sofia
Carlsberg is one of the leading brewing com-panies in the world. It produces 9 billion litersbeer per year, equal to 65 million 0,33ml bot-
tles every day. Carlsberg sells beer in 150 countries worldwideand there are nearly 30 000 employees of the company, locat-ed in 45 countries. The history of "Carlsberg Bulgaria" datesback to the remote 1882, when in the town of Shumen wasset the beginning of one of the oldest breweries in Bulgaria -"Shumensko pivo". A lot of time had to pass before 2002, when"Shumensko pivo" became a part of the big Carlsberg family.In Sep 2004 the two breweries MERGED under the commonname of Carlsberg Bulgaria. Carlsberg is a strong leadingplayer in the beer market of the country and is the fastestgrowing brewery in Bulgaria. The product portfolio of the com-pany offers a variety of first-class beers: "Shumensko", theoldest of a kind in the country "Shumensko red", "Pirinsko", aswell as the international brands of the Carlsberg company -"Tuborg" and "Carlsberg". "Tuborg" IS locally produced fromMay, 2004, at the Shumen brewery. "Carlsberg" is only onimport.
Last 2205 year, the company made serious investments in"Pirinsko" brewery, located in the town of Blagoevgrad. Thebrewery went thorough full reconstruction and modernization.Together with the investments in the other brewery - in
Shumen - Carlsberg Bulgaria demonstrated its leading positionas investor N 1 among the brewing branch of the country.
Nowadays, there are 500 employees at Carlsberg Bulgaria.This number includes:
Employees at the two breweries in Shumen and Blagoevgrad;
Trade force all over the country;
The team in Sofia located office - Departments of Marketing,HR, Purchasing, Finance.
Industrial Holding Bulgaria /IHB/ is one of thelargest Bulgarian industrial groups. IHB is a publiclimited company managing investment portfolio ofcompanies from several industries.
IHB group includes companies in the field of mar-itime business - shipbuilding, ship repair, port activ-ities, ship operation; river cruises; machine building- metal cutting machines /universal and CNC lath-
es, band saws, electrical machines /asynchronous and syn-chronous electric motors, electric generators/ and foundryproduction; furniture production; industrial project manage-ment.
IHB is listed on Bulgarian Stock Exchange - Sofia. IHB is lead-ing A segment of the stock exchange and BG 40 - index ofthe most liquid traded companies on the BSE-Sofia.
As at June 2006, IHB has over 63 500 natural and 100 legalpersons, possessing respectively 39 % and 61 % from the vot-ing shares. Foreign investors own 47 % from the voting shares.
Our vision: IHB is the biggest industrial holding in Bulgaria. IHBcontinuously supports its subsidiaries to become best per-formers in their business activities and encourages its employ-ees to improve their individual skills. Due to its prosperous sub-sidiaries, IHB generates high shareholder value. It is thereforeattractive for investors and reflects the sound image of a solidand sustainable company.
Bank Austria Creditanstalt (BA-CA), a member of the UniCreditGroup, completed the sale of its Croatian banking subsidiaryHVB Splitska Banka to the French banking group SocieteGenerale. The price of the transaction was reported to bearound one billion Euro. The sale of the bank was necessarydue to merger control requirements of the Croatian law.Investment banks CA IB and Credit Suisse acted as advisers toBA-CA in the sale process.
Splitska Banka has total assets of 3.2 billion Euro, 112 branch-es and 1,112 employees. In 2005, the bank served more than460,000 corporate and retail customers.
After the sale of Splitska Banka, BA-CA will assume the respon-sibility for UniCredit's subsidiary in Croatia, Zagrebacka Banka.With total assets of 8.9 billion Euro and a market share of 24 per-cent, Zagrebacka Banka is the number one bank in Croatia. ■
Bank Austria Sells Croatian Subsidiary
The usage of Visa cards among
Bulgarians grew over twofold in a year,
the company reported, as Bulgarians
seem to rely increasingly on their Visa
cards for faster and safer payments. The
total amount of expenditures put on Visa
cards exceeded $255 million between
March 2005 and March 2006 - an
increase of 130 percent, compared to
the same period in 2004-2005. The total
number of transactions reached 3.7 mil-
lion, up 153 percent.
The increases in the value and frequen-
cy of purchases made at retail outlets
with Visa cards continued at a remark-
able pace, too. Bulgarians spent over
$56.2 million with 588,546 Visa card
transactions during March 2005 - March
2006.
Catalin Cretu, vice president for Romania
and Bulgaria of Visa International, said:
"These figures show that the number of
transactions at merchant outlets
increased significantly which means that
Bulgarians are increasingly using their
Visa cards for their daily purchases.
Merchants have obviously benefited
from placing POS in their sales outlets,
as an increased number of customers
are using them to make purchases with
their cards. The Visa brand provides
safety and efficiency for merchants in
handling their daily cash flow thereby
contributing to business profitability."
At end of March 2006, there were
653,866 Visa cards in Bulgaria, an
increase of 88 percent compared with
the same period the year before. The
number of Visa Electron cards continues
to register a steady increase 82 percent
compared to the same period last year,
with 561,282 Visa Electron cards in cir-
culation in Bulgaria. The second most
popular Visa card brand on the market,
the Visa Classic, marked a more signifi-
cant increase of 133 percent in compar-
ison with last year, exceeding a total of
85,000 cards in circulation. ■
Visa Card Usage Grows Dramatically
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Despite the summer weather's whimsthat delayed the start of the AmChamTennis Tournament by a few days, thecompetition came out with 12 teamsdoing their best at the Gloria PalaceClub.
Gloria Palace Club and CitigroupBulgaria became the team finalists, withGloria Palace team coming on top in ahead-to-head battle on June 15.Citigroup Bulgaria team of LyubomirMarinov, Grigori Ananiev, Dimitar Dimitrovand Tsvetan Lazhanski placed second.
Some proven AmCham tennis players,such as the team of Balkan Star (PhilipKitoff, Nikolay Iliev, Villy Zahariev), andCitigroup Bulgaria, BNT and GloriaPalace, reached the semi-finals.
For the first time in AmCham tourna-ments, the all-journalists teams ofBulgarian National TV and CapitalWeekly participated in the race. AssenGrigorov and Evgeni Mandadjiev (BNT)proved they are keen players who hard-ly miss a weekend to improve their rack-et prowess. BNT won against
Kamburov&Partners at the quarterfinal,but was stopped by the players of GloriaPalace.
AmCham members who demonstratedtheir skills were in the teams of 3M,Cefin, Carrental, Motorola Bulgaria andVSK Kentavar. Two lawyers' offices par-ticipated in the race for the first time:Georgiev, Todorov&Co andKamburov&Partners.
The AmCham team is grateful to allsponsors who made the race possible,
AmCham TennisTournament Turns Five
Assen Grigorov from BNT in action. For the first time in AmCham tournament
journalist teams of Bulgarian National TV and the one of Capital Weekly also
participated in the race.
Philip Kitoff during the game. The semifinals were reached by proven
AmCham tennis players: team of Balkan Star: Philip Kitoff, Nickolay Iliev,
Villy Zahariev
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mostly Thorn Spring and Sport ShopsChain SLS. Awards were provided byRadisson SAS Grand Hotel, GrandHotel Sofia and Sport Shops ChainSLS.
All lady players - Tzvetelina Nikolova,Kamburov&Partners, EleonoraGuncheva, Capital Weekly, VSKKentavar's team Mariana Pecheyanand Irina Yordanova - received specialprizes at the tournament's conclusion.
AmCham team is grateful to all spon-sors who made the race possible,mostly Thorn Spring and Sport ShopsChain SLS. Awards were provided byRadisson SAS Grand Hotel, GrandHotel Sofia and Sport Shops ChainSLS. ■
The teams of Gloria Palace Club and Citigroup Bulgaria were the finalists. In the race Gloria Palace team
appeared to be the best player.
Dimitar Dimitrov and Lyubomir Marinov, Citigroup Bulgaria team, placed second. Krassimir Dimitrov, 3M in action.
Tennis has become an addiction not only for AmCham members but also for keen tennis players that joined the
AmCham tournament
Tsvetelina Nikolova, Kamburov&Partners, a law
office that participated for the first time in the race.
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Hilton International, the world's bestknown hotel brand, launched in earlyJune its first global summer sale cam-paign targeting leisure travelers acrossEurope, Africa, Middle East and Asia-Pacific.
The campaign aims to boost leisureoccupancy at Hilton hotels betweenJuly 1 and Sep. 3, 2006. Reaching abroad leisure market, the Hilton sum-mer sale will be promoted through mul-tiple channels in key global sourcemarkets and will focus on online mar-keting, email marketing, national mediaadvertising, partner promotions, andpan-European direct mail and in-hotelpromotions.
Hilton Launches Global Summer SaleCampaign
Tony Orme, director for leisure prod-ucts and promotions with HiltonInternational, said; "It is the first time aconsistent global proposition to ourcustomers as part of a fully integratedcampaign for Summer Leisure Breakshas been introduced. We identified theopportunity to develop one campaignthat provides cost efficiencies and asimplified offer by reviewing ourdemand calendars and need periods indifferent markets."
Online activity is central to the cam-paign incorporating dedicated pageson central- and local-market websites,search engine optimization and ban-ner advertising. Partner marketing willalso be optimized and includes activi-ty via Hilton HHonors partner market-ing channels and with Sixt inGermany; Air France in WesternEurope; Alitalia and Europcar acrossthe Mediterranean; HSBC in EasternEurope and American Express in theNordic region.
Booking under the summer sale cam-paign is available Sep. 1, 2006 at over150 destinations and 200 hotels. Athree-day advance booking is required.For more information, visit:
