Bulgaria – Your Investment Destination in Europe
Ministry of Economy, Energy and Tourism
Shanghai20 November 2012
Mr. Delian DobrevMinister of Economy, Energy and TourismRepublic of Bulgaria
Министерство на икономиката, енергетиката и туризма 2
Bulgaria at a glance: Location and key data
Ministry of Economy, Energy and Tourism
• Area: 110,910 sq. km
• Number of Inhabitants (2011): 7.4 mln
• Capital and Largest City: Sofia
• Other Cities: Plovdiv, Varna, Bourgas, Ruse, Stara Zagora, Pleven, Veliko Tarnovo
• Natural Resources: oil, gas, coal, iron ore, copper, lead, zinc, antimony, chromite, gold, silver, magnesium, nickel, pyrite, marble, limestone, salt, arable land
• Major Industries: electricity, water and gas supply; food, beverages and tobacco; machinery and equipment; base metals, chemical products, coke, refined petroleum
• Currency: Lev (BGN). Fixed exchange rate with Euro.
• EU Member since 2007, NATO Member since 2004
• Government Type: Parliamentary Republic
• Last Government Elections: July 2009
Министерство на икономиката, енергетиката и туризма 3
Bulgaria is a main transport and transit center and is only 3 hours flight from all major destinations in Europe, Russia and the Mediterranean region
Ministry of Economy, Energy and Tourism
EU and EFTA
Rus
sia
and
CIS
Turkey and
Middle East
Strategic geographic location Major transport corridors pass through Bulgaria
Министерство на икономиката, енергетиката и туризма 4
Why invest in Bulgaria
Ministry of Economy, Energy and Tourism
”the culture of impunity that once plagued Bulgaria has largely gone“
May 27, 2010
„While governments across the euro-zone periphery are on the ropes or have been felled by the economic crisis, Prime Minister Boyko Borisov's government has drawn international accolades for cutting spending while maintaining high levels of public support.”
September 10, 2011
• Political and business stability– EU member since 2007
– NATO member since 2004
– WTO member since 1996
– Currency board backed by IMF
– Among the lowest budget deficits and government debts in the EU
• Low cost of doing business– Favorable tax regime
– Lowest operational costs within the EU
• Access to markets– European Union / European Free Trade Association
– Russia and CIS
– Turkey / Middle East
• Educated and skilled workforce
• Government Incentives– Shortened administrative procedures
– Preferential acquisition of state or municipal land
– Financial support for professional training / education
– Infrastructure subsidies
– Individual administrative services
Министерство на икономиката, енергетиката и туризма 5 Министерство на икономиката, енергетиката и туризма 5Ministry of Economy, Energy and Tourism
• 10 % effective corporate income tax rate
• 10 % effective flat personal income tax rate
• Equipment imports for projects over € 5 M exempted from VAT
• 5% withholding tax on dividends and liquidation quotas (0% for EU tax
residents)
• 68 Double Taxation Avoidance Treaties including EU, China, Russia and USA;
66 Agreements on mutual protection and promotion of foreign investments
Labor • Skilled labour
• Lowest labour cost per hour in EU
• Employer-friendly labour laws
• Standard labor contracts with 1-month severance and 20 days vacation
Why invest in BulgariaAdvantages
• Stable and independent government policies
• Bulgaria is not subject to current Eurozone legislation
• Financial stability pact ensuring continued low taxation and stable fiscal
policy
Government policies
• 24-hour customs at the warehousing locations
• Virtual consulate (online visa approval and issue of travel documents)
• Visa-free transit to non-EU countries
Customs & visas
• Focus on development of infrastructure – 7 highways currently under construction
• 70% of allocated road, rail and industrial zone infrastructure development funds still
available
Infrastructure
Taxes
Министерство на икономиката, енергетиката и туризма 6
Source: Bulgarian National Bank
Bulgarian economy has kept on growing despite the financial and economic difficulties in Europe and worldwide
Ministry of Economy, Energy and Tourism
2000 2002 2004 2006 2008 2010 2012
22
20
2
18
14
12
10
6
4
0
16
8
Bulgarian economy has outperformed EU average for the last 10 years
In absolute terms, exports have grown about 4 times since 2000
Exports (€ bn.)
1.9%1.7%
-5.5%
6.2%6.4%6.5%6.4%6.7%
5.5%
0.5%
-7.5%
-5.0%
-2.5%
0.0%
2.5%
5.0%
7.5%
20052003 2011 20132007
0.4%
2009
Bulgaria
EU-27
Source: Eurostat
Real GDP growth (%)
Ministry of Economy, Energy and Tourism
Министерство на икономиката, енергетиката и туризма 7
Bulgaria’s exemplary financial stability has continued after the crisis
Ministry of Economy, Energy and Tourism
-8.4%
-5.6%
-3.8%
-8.6%
1.2%
0.8%
0.2%
-1.0%
-1.4%
-1.6%
-2.6%
-2.6%
-3.7%
-3.9%
-4.3%
-4.8%
-5.3%
-5.4%
-8.2%
-8.7%
-10.0%
-10.0%
Brazil
Austria
Denmark
Czech Republic
Italy
Euro Area
Netherlands
India
France
Poland
Spain
United Kingdom
Japan
United States
Greece
Egypt
BG
Hungary
Switzerland
Sweden
Germany
Turkey
China
In 2011, Bulgaria had one of the lowest budget deficits in EU
Budget deficit (% of GDP) 04/10 07/1110/10 04/1101/1107/1001/10
Turkey
Lithuania
Ireland
Hungary
Greece
Estonia
Bulgaria
10/11
Bulgaria was the only European country with increased credit rating by Moody’s in 2010 and 2011
Aa1
A1
Baa1
Ba1
B1
Caa1
Ca
Министерство на икономиката, енергетиката и туризма 8
Source: Eurostat
Government financial indicators are remarkable not only in the region, but on a pan-European scale
Ministry of Economy, Energy and Tourism
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
110%
120%
130%
-4% -3%
Average budget deficit/surplus (2006-2011)
-6% -5% -2%-11% -10% -1% 16%15%1%0%
TurkeyCroatia Norway
IcelandUnited Kingdom
SwedenFinland
Slovakia
Slovenia
Romania
Portugal
Poland
Austria
Netherlands
MaltaHungary
Luxembourg
LithuaniaLatvia
Cyprus
Italy
France
Spain
Greece
Ireland
Estonia
Germany
DenmarkCzech Republic
Bulgaria
Belgium
Average government debt (2006-2011)
Министерство на икономиката, енергетиката и туризма 9
Source: Bulgarian National Bank
The composition of FDI in Bulgaria has changed lately towards manufacturing and other sustainable sectors
Ministry of Economy, Energy and Tourism
67% 68%
53% 50%
66%
44%40%
27%
19%24%
100%
66%
33% 32%
47% 50%
34%
56%60%
73%
81%76%
34%
2011
1,851 2,736 3,152 6,222 9,052 6,728 2,437 1,151 1,746903
2005 2006
980
2007 20082003 2004 2009 20102000 2001 2002
1,103
Finance, real estate, trade
Manufacturing, energy, high
tech services, other sectors
Total FDI (€mln)
Министерство на икономиката, енергетиката и туризма 10
Investments by Chinese companies in Bulgaria
Ministry of Economy, Energy and Tourism
• Huawei and ZTE :– Huawei Bulgaria Branch opened in 2005 and has
become one of the main suppliers to Bulgaria telecom industry
– ZTE opened its office in Sofia in 2001. It operates successfully on the Bulgarian market, providing telecommunication equipment and network solutions
• Great Wall/ Litex Motors:– Litex Motors factory near Lovech is the only assembly
plant for Chinese automobiles in Europe – Production started in 2012. Maximum capacity of 50
000 cars annually– Three models covering various market segments are
being assembled in Bulgaria
• Tianjin State Farms Agribusiness Group Company – In 2011 the Chinese company rented 20 000 decares
of agricultural land in Northwestern Bulgaria– All of its agricultural production (maize, lucerne,
sunflower) is exported to China– The company is considering further expansion of its
activities in Bulgaria in the field of agriculture (wine production; animal breeding)
• In recent years many Chinese companies have invested in renewable energy
• Electronics and electrical engineering
• Machine building
• Automotive industry
• IT and BPO
• Transport & Logistics
• Agriculture and food processing industry
• Chemical industry
Chinese companies that have already chosen Bulgaria as an investment location:
Economic sectors with highest potential for attracting Chinese investments:
Министерство на икономиката, енергетиката и туризма 11
The EU and China – two of the biggest traders in the world
Ministry of Economy, Energy and Tourism
• China is the second largest economy and
biggest exporter in the world
• China has become the fastest growing
market for European exports
• China and the EU are trading more than € 1
billion euro every day
• By 2015, 90 % of world growth will be
generated outside Europe, with a third from
China alone
• At the 15th EU-China Summit held on 20
September 2012, both sides agreed to
launch negotiations on a bilateral
investment agreement as soon as possible.
Facts on EU-China cooperation
• EU-China trade has increased dramatically
in recent years
• China is now the EU’s 2nd trading partner
behind the USA and the EU is China’s
biggest trading partner (2011):
EU Imports Partners: EU Exports Partners
1. China (€ 292 bn) 1. USA (€ 261 bn)
2. Russia (€ 198 bn)) 2. China (€ 136 bn)
3. USA (€184 bn) 3. Switzerland (€ 122
bn)
• EU-China main trading goods
EU imports from China are dominated by
industrial goods: machinery and transport
equipment, and manufactured articles.
EU exports to China are also
concentrated on industrial products:
machinery and transport equipment,
manufactured goods and chemicals.
EU-China trade picture
Министерство на икономиката, енергетиката и туризма 12
China is our biggest trading partner in Asia
Ministry of Economy, Energy and Tourism
12.460.3
36.971.9 78.0
101.7157.3 136.8
250.0
404.7
137.4
279.4
467.0
708.0
961.0
832.6
1110.5
628.4653.8
942.8
0.0
200.0
400.0
600.0
800.0
1000.0
1200.0
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Export ($ mln.) Import ($ mln.)
In 2011 trade between Bulgaria and Asia totalled USD 4.7 bn, with Bulgarian exports amounting to USD 2.2 bn – up 22 % from 2010. The largest increase of Bulgarian exports was to China (62%), India (53%) and Japan (42%)
In the third quarter of 2012 China became our second largest trading partner among non-EU countries, after Turkey
Exports to China have increased nearly 33 times and imports 7 times since 2002
Министерство на икономиката, енергетиката и туризма 13
Trade in goods between Bulgaria and China (2011)
Ministry of Economy, Energy and Tourism
Exports to China were dominated by refined copper and copper ores
There is scope for expanding Bulgarian exports to China of agricultural and food products, wine,
essential oils, perfumery and cosmetics, dairy products, machinery and other commodities.
Item %
Refined copper and copper alloys 68.1
Copper waste and scrap 8.0
Copper ores and concentrates 4.2
Copper mattes; cement copper 2.3
Boards, panels, consoles and other bases for electric control and distribution of electricity
1.9
Lead ores and concentrates 1.7
Organo-sulphur compounds 1.4
Aluminium waste and scrap 1.3
Automatic regulating and controlling instruments and apparatus
1.0
Other 10.1
Imports from China were quite diverse
Item %
Semiconductor devices 10.3
Air-conditioning machines 2.9
Parts and accessories for motorcycles and bicycles
2.6
Electric water heaters and electric space heating apparatus
2.5
Telephone sets 2.4
Ball or roller bearings 2.4
Taps, cocks, valves and similar appliances for pipes, boiler shells, tanks
2.2
Flat-rolled products of iron or non-alloy steel
1.9
Toys 1.8
Other 71.0
Министерство на икономиката, енергетиката и туризма 14
Many leading multinational companies have chosen Bulgaria as a location for their production and high-tech services
Ministry of Economy, Energy and Tourism
IT & BPO Mechanical and Electrical
Engineering
Construction Materials
Telecom and Media
Energy Finance
Министерство на икономиката, енергетиката и туризма 15 Министерство на икономиката, енергетиката и туризма 15
Infrastructure projects in Bulgaria Zagora Airport: EU - China Logistics Hub
Ministry of Economy, Energy and Tourism
By 2020 EU transport hubs will not be able to handle all incoming air traffic
• Air cargo increase
– 5.8 M tonnes increase in air cargo to and from the EU
– 78% of which comes from Asia
– Available capacity will fall short by 5 M tones
• Passengers increase
– 307 M increase in passengers to and from the EU
– 26% of which comes from Asia
– Available capacity will fall short by 150 M passengers
New logistics centers will be necessary to address the new air traffic, especially between Asia and the EU
Zagora Airport
• The new Zagora Logistics Hub offers excellent location
– 3 hours by plane to all EU locations;
– 24 hours by truck to all EU locations
– Central location at the intersection of three EU transport corridors
– 3-hour drive to Turkey, Greece, Romania, Serbia, Macedonia
– Intermodal capabilities: air, rail and road transport
– Room for ten-fold expansion
– Good weather conditions
• Fast customs and visa processing for countries with EU visa regimes
• Infrastructure- Existing air, road and rail infrastructure currently
upgrade
- E-80 Highway (EU transit Corridor No 8; 1km from the airport)
- Railway (EU transit Corridors No 8 and No 10; electrified; 1km from airport)
- Land availability
Project Needs
Министерство на икономиката, енергетиката и туризма 16 Министерство на икономиката, енергетиката и туризма 16
Zagora Airport: EU - China Logistics HubWhy Zagora Airport
Ministry of Economy, Energy and Tourism
• Expand current airport to become large
international transit hub
– Area: 5 km2 current area (expansion planned)
– Cargo capacity: 250, 000 tonnes per year
– 2 runways handling Boeing 747 and Airbus 380
– Passenger capacity: 10 -20 M per year
• Combined Air/Road/Rail cargo terminal
• Large free trade industrial zones and
assembly facilities
• Specialized customs/ visa handling
• Permanent Trade Expo for Chinese manufacturers
• Zagora will serve as a major distribution hub for
the EU – China air traffic
• Distribute traffic to smaller airports in the EU, CIS,
North America and Middle East
• Fast track visa and customs service
• Provide additional landing slots for wide-body
aircraft
Zagora Logistics Hub Overview
Zagora Logistics Hub
Zagora Logistics Hub
Министерство на икономиката, енергетиката и туризма 17 Министерство на икономиката, енергетиката и туризма 17
Infrastructure projects in Bulgaria Port of Varna - General Information
Ministry of Economy, Energy and Tourism
Key part of important domestic and international logistical chains
• The biggest port complex in Bulgaria
• A convenient bridge for traffic of goods between: Europe, Russia, Ukraine, Caucasus, Central Asia, Middle and Far East
• The port can be used during the whole year
• Modern equipment and specialized terminals: Varna East; Varna West ; Varna Rail Ferry Complex
• Operating link in the logistical chain “river – rail – sea” for transit traffic to/from Central Europe routed via the Danube Port of Ruse and the Ruse – Varna Railway Line
Growth Potential
• Part of Comprehensive Trans-European Transport Network – opportunity for European funding
• Part of Pan-European Transport Corridor VIII
• Strong industrial hinterland, good rail and road access; excellent conditions for transit traffic between Europe, the Middle and Far East and TRACECA Corridor
• Easy and convenient access to the national road network
• Certified in accordance with the ISPS Code requirements
Министерство на икономиката, енергетиката и туризма 18 Министерство на икономиката, енергетиката и туризма 18Ministry of Economy, Energy and Tourism
Port of Varna Port Terminals - Technical Parameters and Future Development
Berths
Total Berth Length (m)
Open (m2) storage area
Warehouse (m2)
Equipment
Commodities
Varna West Varna EastEzerovo Thermal
Power StationPetrol
Varna Rail Ferryboat
3 062
340 000
36 000
25 Electric Portal Cranes
General Cargo, Bulk Cargo, Liquid Cargo, Ro-Ro, Containers
17 13
2 072
115 000
23 400
General Cargo, Bulk Cargo, Containers,
Passengers
18 Electric Portal Cranes, 2 Portainers
3
530
4 200
-
6 Electric Portal Cranes
coal
3
300
-
-
-
Oil products
2
400
-
-
-
Ro-Ro
• Hub port – Capacity to handle Post Panamax container ships, 6 750 TEU, L – 300 m, B – 40 m.,
H – 14.5 m.
• Construction of Grain Terminal on the North Coast of the Varna Lake – Capacity 1,85 mln. t.
• Expansion of the container terminal – Varna West – Adding capacity of 100 thousand TEU.
• Construction of terminal for liquid dangerous goods – Varna West – Capacity of 1.2 mln. t.
• Construction of passenger terminal and business center – Varna East
• Under preparation for concession: Port Terminal of Varna West, Varna Rail Ferryboat
Complex, Dangerous Goods Terminal, Ezerovo Thermal Power Station, Petrol Terminal
Plans for port development and PPP:
Министерство на икономиката, енергетиката и туризма 19 Министерство на икономиката, енергетиката и туризма 19
Infrastructure projects in Bulgaria Port of Burgas - General Information
Ministry of Economy, Energy and Tourism
Traffic and Infrastructure significance
• A connecting point between Pan-European Transport Corridor VIII and TRACECA
• The nearest largest port to Bosphorus
• Serves the big industrial centers, located in the South of the Balkan Mountain
• Services a great part of the transit flows coming from Western Balkan and Central European countries
• Trakia Motorway and the Plovdiv – Burgas Railway are the main transport links to the port
• Included in the Core Trans-European Transport Network – opportunities for European funding
• Easily accessible to the sea
• The port can be used during the whole year
• Modern equipment and specialized terminals: Burgas East; Burgas West; Burgas East 2; Bulk Cargo Terminal
• Certified in accordance to the ISPS Core requirements
Министерство на икономиката, енергетиката и туризма 20 Министерство на икономиката, енергетиката и туризма 20Ministry of Economy, Energy and Tourism
Port of Burgas Port Terminals - Technical Parameters and Future Development
Berths
Total Berth Length (m)
Open (m2) storage area
Warehouse (m2)
Equipment
Commodities
Burgas EastBurgas East Bulk Cargo Terminal
Burgas East 2 Burgas West Nessebar
1 965
50 000
35 000
-
General Cargo, Bulk Cargo
14 7
820
35 000
5 328
General Cargo, Bulk Cargo, Liquid Cargo, Ro-Ro, Containers
23 Electric Portal Cranes
3
715
42 225
-
7 Electric Portal Cranes
Bulk Cargo, Containers
5
890
191 000
11 000 + 7 000
11 Electric Portal Cranes
General Cargo, Bulk Cargo, Liquid Cargo, Ro-Ro, Containers
3
410
12 000
-
-
Passengers
Plans for port development and PPP:
• Terminal 2B – for General Cargo
• Terminal 3 – for Ro-Ro and ferryboat transportation
• Terminal 4 – for containers handling
• Construction of passenger terminal in Burgas East, as part of the SUPER BURGAS Project
• Under preparation for concession: Burgas-West Port Terminal, Nessenar Port Terminal
Министерство на икономиката, енергетиката и туризма 21 Министерство на икономиката, енергетиката и туризма 21
Infrastructure projects in Bulgaria Black See Motorway
Ministry of Economy, Energy and Tourism
The project is of both national and international importance due to its potential to significantly improve connections between Bulgaria, Albania, Macedonia, Italy and other EU countries to the west of Bulgaria
• National Significance
– Will improve route between the west and east of the country
– Links to A-1 Trakia motorway and A-2 Hemus motorway
• International Significance
– Five Pan European Corridors pass through the country: IV,
VII, VIII, IX, X
– Improvements are contained within Pan-European corridor
VIII – linking Durres, Tirana, Skopje, Sofia, Stara Zagora,
Burgas and Varna
• Economic Context
– Link to Varna and Burgas ports – key strategic gateways for
trading partners such as Ukraine, Russia and Turkey
– Burgas – home of the biggest oil refinery in SEE
– The section is currently served by road which is mostly single
carriageway and running through many towns and villages
– Close to the coast, the section links many resorts between
Varna and Burgas
– Preferred option – 94.8 km section of new lane motorway
Министерство на икономиката, енергетиката и туризма 22 Министерство на икономиката, енергетиката и туризма 22
Black See Motorway Cost Benefit Analysis, Financial and Public-Private Partnership
Ministry of Economy, Energy and Tourism
Cost Benefit Analysis
• Net Present Value: € 857.48 m
• Economic Internal Rate of Return: 21.28 %
• Economic Benefit to Cost Ratio: 4.73
• Evaluation used – multi-modal transportation model
/The Bulgarian Transport Model/:
– people movement
– movement of freight
• Total project costs - € 722.6 m
• € 474.3 m of this amount = construction costs
• The analysis shows that the project is a strong
performer in economic terms
• No sources of income have been included in the
analysis - further study needs to be performed
Project Partnership
• National Company Strategic Infrastructure Projects –
entity responsible for the project
• Preferred form for development – public-private
partnership
• Period – 35 years
• Parties – Bulgarian state and a strategic investor
• Bulgarian state does not provide any state or bank
guarantees or guarantee traffic volume
• Private partner shall bear all risks and costs
Министерство на икономиката, енергетиката и туризма 23
Potential investment locations in Bulgarian industrial zones
Ministry of Economy, Energy and Tourism
The industrial zones in Bulgaria offer attractive conditions for establishing production, warehousing, logistics and other activities at a very competitive prices
- 14 functioning zones, with active local and foreign investors - 21 zones, either with fully or mostly developed infrastructure and ready to be invested in- 27 zones under development
Министерство на икономиката, енергетиката и туризма 24
National Company Industrial Zones - Strategic partner for investors in Bulgaria
Ministry of Economy, Energy and Tourism
Main activities: Development of industrial zones in line with the
latest standards Encouragement of investments in sectors with
high added value Creation of favourable conditions for investment
National Company Industrial Zones “NCIZ” is a state-owned company specialized in: Industrial park development Management of Industrial zones and Innovation centers Provision of additional services
Total of 8 projects
4 969 500 m² total area
841 580 m² built area
225 500 m² open warehouses
Three developed industrial zones: Ruse; Vidin; Svilengrad
Five zones on early stages of development: Sofia; Burgas;
Karlovo; Pleven/ Telish; Varna West
Министерство на икономиката, енергетиката и туризма 25Ministry of Economy, Energy and Tourism
Travel & Tourism – important and growing industryFacts and figures:
• International and domestic tourism revenues form 10.5 % of GDP
• In 2011 revenues from international tourism totalled 2 852.4
million euros
• 8 712 821 foreign visitors in 2011, of which 6 328 023 tourists
• 4.6 % annual growth in international tourist arrivals in 2011
What do we offer:
• Excellent climate and environmental conditions
• Unique combination of seaside, mountains and mineral water
• Long lasting tradition in balneology and spa tourism (more than
600 mineral springs)
• Ancient history and unique cultural heritage
• Nine cultural sites in the UNESCO list
• Vivid customs and friendly people
• Bulgaria is well known for its valley of roses; Bulgarian rose oil
is one of the main ingredients used in high quality perfumes all
over the world
• Unique experiences throughout the whole year
• Affordable prices
Министерство на икономиката, енергетиката и туризма 26Ministry of Economy, Energy and Tourism
Bulgaria – emerging golf destination
• International Association of Golf Tour Operators’ award in 2012 –
“Undiscovered Golf Destination”
• 7 operational golf courses, situated near the Black see coast or in the foot of the mountains, designed by some of the biggest names in golf – Gary Player,
Paul McGinley, Ian Woosnam, Peter Harradine
– excellent leisure, treatment and wellness facilities
– VIP treat
– gourmet establishments
– shopping outlets
• Professional Golfers Association
certified instructors
• Residential property and rent
Министерство на икономиката, енергетиката и туризма 27
Ministry of Economy, Energy and TourismSofia 1052, 8 Slavyanska Str.Phone: + 3592 940 7001 Fax: +3592 987 21 90 E-mail: [email protected]: www.mee.government.bg
Ministry of Economy, Energy and Tourism
Welcome to Bulgaria!