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i s s u e 6 5d e c e m b e r 2 0 0 5
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
Te l . : ( 3 5 9 2 ) 97 6 9 5 6 5 Fax : ( 3 5 9 2 ) 97 6 9 5 6 9
AmCham Inter views:U. S. Ambassador John Beyrle
Plamen Oresharski, Minister of Finance
Analysis:Bulgaria’s Budget 2006
The Kosovo Riddle
AmCham Events:AmCham Thanksgiving Communit y Diner
Presenting the EU Goals
AmCham Events:AmCham Thanksgiving Communit y Diner
Presenting the EU Goals
AmCham Inter views:U. S. Ambassador John Beyrle
Plamen Oresharski, Minister of Finance
Analysis:Bulgaria’s Budget 2006
The Kosovo Riddle
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Dear Members and Friends, Dear Reader,
Perhaps you have
expected to find in
this issue a profusion
of holiday cooking
advice, colorful fes-
toons, pages with
cutout reindeer,
maybe an interview
with Santa himself.
Sorry if we have dis-
appointed you in that,
but the crew of
AmCham Bulgaria
Magazine decided to cede all festive
hullabaloo to the rest of the print media,
to television programs teeming with
elves and glowing with candles, and to
the Christmas tree in front of the
Presidency.
Instead, we have remained true to the
tradition to keep you informed about the
most salient events that have con-
cerned business in Bulgaria during the
year. We are looking forward, too, by
analyzing several developments that will
take full force in the coming year, such
as Bulgaria's 2006 budget (see p. 4), or
the government's program (p. 23).
Our exclusive interviews with the U.S.
Ambassador in Sofia (p. 20) and
Bulgaria's finance minister (p. 10) are
matter-of-factly and informative. But
don't despair: your festive mood will be
stimulated by the Christmas ads in the
magazine and special promotions in
Member News section. We have to
keep the balance between work and
fun, don't we?
I believe this issue of the magazine will
be simultaneously useful and enjoyable,
as always. Thank you for your patron-
age in 2005.
Merry Christmas and a
Happy New Year!
Milen Marchev
Editor-in-chief
2005 was a year of great significance to the Chamber. As we
reached the 10-year milestone of AmCham activities in the
country, we have also started a number of new initiatives.
The EU Affairs Committee has made a clear difference in the
Chamber's life. It has come at the right time and with the right
person to lead it. AUBG's Olga Borissova deserves a round of
applause for her enthusiasm and devotion to make the commit-
tee a forum for discussion and information on all important
issues and challenges that businesses will soon face with
Bulgaria's EU membership.
The country has become a hot spot for real estate investors in 2005. The market has been
booming and capital has started to flow into this sector. Once again, the Chamber showed a
quick response in areas where more and more Chamber members are involved. We may say
that half of the new membership in 2005 in the Chamber is from the real estate and con-
struction sector. The leadership of the Real Estate Committee and its wonderful chairlady
Tanya Koseva of Landmark, must receive most of the credit for their contribution to the
Chamber's growth and responsiveness to members' needs.
We should not forget to single out another bright star on our roster - Kenny Volandes, CLRP.
Our credit goes to Kenny is for his devotion and smart approach in reviving the Toastmasters
Club of the Chamber. He has just started to manage yet another great challenge - the
AmCham Mediation Center - and we thank him for that. This new initiative opens new per-
spectives to businesses in solving complicated disputes. It will add to the services we offer
to our members.
We should be proud of our Thanksgiving charity drive. It was not only a matter of how much
money we managed to collect for good causes, but how we revived and sustained a spirit of
generosity toward those in need. One great lady - Maria Vranovska of Eli Lilly - is behind the
persistence and dedication of the Chamber's efforts. And here comes the professional
approach given by Elitza Barakov, BCAF, who inspired us to turn the good practice into more
consistent activity of the Chamber. The logical outcome was the launch of the Corporate
Social Responsibility Committee. We have always acknowledged that behind the effectiveness
of the Chamber is our great co-operation with the U.S. Embassy. Let's recognize one of our
strongest supporters, James Rigassio, U.S. senior commercial officer. Jim has been instru-
mental in most of our successful events, especially the 10th anniversary celebrations.
Last but not least, and quite in line with the upcoming season, comes the AmCham Ski
Tournament. We launched this type of event for the first time in 2005, and its big success
was borne out of the prefect organization by Moten Sport. A special thanks goes to Eli
Dimitrova and her team who made the tournament such a great fun! Members have started
to expect with eagerness the next issue of the competition - scheduled for February 2006 -
so mark it on your calendars!
Finally, while going back to the holiday spirit, let me thank all members of AmCham for their
support and dedication to our organization.
I wish you a peaceful and blessed Christmas and a very successful New Year!
Best regards,
Valentin Georgiev
Executive Director
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Publisher
American Chamber of Commerce in Bulgaria
Business Park Sofia, Mladost 4 Area
Building 2, Floor 6, Sofia 1715, Bulgaria
e-mail: [email protected]
www.amcham.bg
Editor-in-Chief
Milen Marchev
Deputy Editor-in-Chief:
Christopher Karadjov
Senior Editor:
Irina Bacheva
Layout, Design & Printing:
Milen Marchev
Writers:
Boyko Vassilev, Marina Tzvetkova,
Mina Georgieva, Panayot Angarev,
Yuliana Boncheva
Advertising
AmCham Bulgaria:
Nadejda Vakareeva, [email protected]
AmCham Bulgaria Magazine:
Milen Marchev, [email protected]
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 6 5d e c e m b e r 2 0 0 5
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.
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a m c h a m b u l g a r i a
3M (East) AG . AA KRES EOOD . ABB Bulgaria Ltd. . AbC.R.O. - Bulgaria EAD . AbroteaBulgaria AD . Accor Services Bulgaria . Acsior . ACT Soft Ltd. . Address BulgariaHolding JSCo.- A real estate company . ADIS Ltd. . Advance International Transport (Balkan)EAD . AES Corporation . AFA OOD . AGS Bulgaria Ltd. . AIG Bulgaria . AIG LifeBulgaria . AIMS Human Capital . Alexandrov Ltd. . Allan Collautt Associates, Inc. . AlliedPickfords Bulgaria . Alter Ego Company . American College of Sofia . AmericanConstruction Products JSC . American English Academy . American University in Bulgaria(AUBG) . Amylum Bulgaria EAD . Anglo-American School of Sofia . Anton Preslavski,Liebert Hiross . APIS - BULGARIA Ltd. . APOLO Ltd. . Aries Commerce . ARGENTOHuman Resource Solutions . Association of Bulgarian Broadcasters - ABBRO . ATEngineering 2000 Ltd. . AUDITING COMPANY VERSI & PARTNERS OOD . Avendi Ltd. .AVON Cosmetics Bulgaria Ltd. . Balkan News Corporation Plc. . Balkan Star . Lefkowitz& Co. . Banque Internationale pour le Commerce et le Developpement (BICD) . Baxter AG. Bayer Bulgaria . BearingPoint Inc. . BG Radio . Bodyguard-Fire-K Ltd. . BorislavBoyanov & Co. . Braykov's Legal Office . Bristol-Myers Squibb . Brown Forman BeveragesWorldwide Sofia Branch LLC . BTC-NET Ltd. . Bulbank . Bulgarian American EnterpriseFund . Bulgarian Charities Aid Foundation (BCAF) . Bulgarian Post Bank . BulgarianTelecommunications Company EAD . Business Media Group . Business Park Sofia EOOD. Business to Business . CA IB Bulinvest . CableTel . Car Rental Bulgaria Ltd. . CefinBulgaria EOOD IVECO . Chelopech Mining EAD . Center for the Study of Democracy .Cisco Systems Bulgaria . Citibank, N.A.- Sofia Branch . City University . Clockwork .CMS Cameron McKenna . Coca Cola H.B.C Bulgaria SA . Coca-Cola Bulgaria EOOD .COLLIERS International . Commercial Bank Investbank Plc. . ConsulTeam Recruitment andSelection Ltd. . Contex Drouzhba Ltd. . Corsa Logistics Ltd. . Corstjens Worlwide MoversGroup . CPM International Ltd. . Curtis / Balkan Ltd. . David Hampson, Grenville . DeConiM&A . Deloitte & Touche . DHL International (Bulgaria) Ltd. . Diageo Bulgaria Ltd .Dimitrov, Petrov and Co. . DIMON Bulgaria . Djingov, Gouginski, Kyuchukov, & Velichkov .Domaine Boyar AD . Dr. Emil Benatov & Partners . DynCorp International LLC . EffektenUnd Finanz - Bulgaria EAD . Electron Progress AD . Eli Lilly and Company . Elido (LamelLtd.) . Ellen Ruth Greenberg, Ph.D., Dr. I.S. Greenberg Medical Center . Elmek Spor Bulgaria. Elta consult AD associated partner of CB Richard Ellis for Bulgaria . Emerson ProcessManagement AG . Encouragement Bank AD . Engineeringservice Sofia Ltd. . EQUESTEAD . ERATO HOLDING PLC . Ernst & Young Bulgaria . EURO RSCG New Europe Sofia. Expo Team Ltd. . First Global Health Corporation . Flying Cargo Bulgaria Ltd. - Licenseeof FedEx . Force Delta Ltd. . Forem Consulting Bulgaria . General Electric International. Genmark Automation Bulgaria . GiTy Bulgaria . Glaxo SmithKline . Goleminov &Goleminov . Goodyear Dunlop Tires Bulgaria . Grand Hotel Sofia . Grey Worldwide Bulgaria. Group 4 Securitas (Bulgaria) Ltd. . Hayhurst Robinson . HEBROS Bank AD . Hewlett-Packard Bulgaria EOOD . Hilton Sofia . Honeywell EOOD . Horizon . IBM Bulgaria .Ideal Standard Bulgaria . In Time Ltd. . Infoguard - Stefan Nedkov . ING Bank Sofia Branch. Intel Czech Tradings Inc. . Interbrands Marketing & Distribution Inc. EOOD .Interdean.Interconex . IP Consulting Ltd. . ISI Emerging Markets (Internet Securities, Inc.) .Janssen-Cilag (division of Johnson & Johnson) . Junior Achievement Bulgaria . Kaliakra AD. Kamenitza AD . Kamor Auto Ltd. . Kempinski Hotel Grand Arena Bansko . KolbisInternational Transfer Corporation . KPMG Bulgaria . Kraft Foods Bulgaria . LANDMARK. Lexim Sofia Ltd. . Lindner Bulgaria OOD . Lirex BG Ltd. . Lowe Swing Communications. M & M Air Cargo Service BG Ltd . M3 Communications Group, Inc. A Hil & KnowltonAssociate . Maersk Bulgaria Ltd. . Magnetic Head Technologies . Management SystemsInternational . Maritza East III Power Company AD . Marsh EOOD . McDonald's BulgariaLtd. . Merck Sharp & Dohme IDEA Inc. . Meridian Hotels Bulgaria. Microsoft Bulgaria .Miltech Ltd. . MobilTel AD . Monbat PLC . Moten Sport . Moto Pfohe Ltd. . MotorolaBulgaria EAD . National DISTRIBUTORS . NATO Defense College (NDC) . NDT EquipmentSupplies LTD . Neterra Communications . Net Is Ltd. . NET IS SAT Ltd. . NeumannInternational AG . New Europe Corporate Advisory Ltd . Nexcom Bulgaria EAD . OpetAygaz Bulgaria EAD . Oracle East Central Europe Limited - Branch Bulgaria . Orbit Ltd. .ORKIKEM Ltd . OSG Records Management . Pain D'or Ltd. . Paxar Bulgaria. PfizerH.C.P. Corporation, Representation Office Bulgaria . Pioneer Semena Bulgaria EOOD .Popov Legal Office . Pratt & Whitney . PricewaterhouseCoopers . Prima Soft Ltd. .Procter & Gamble Bulgaria . ProSoft . PSG Payroll Services Ltd. . Radisson SAS GrandHotel . Rising Force Co., Ltd. . Rockwell/Intelpack . S&D Chemicals Bulgaria . S&TBulgaria . Sante International OOD . Schering - Plough Central East - Bulgaria . Sciant. SEAF Management Bulgaria EOOD . Seplex Law Offices . Sheraton Sofia Hotel Balkan. Sherita M Ltd. . Sienit Ltd. . SigmaBleyzer Investment Group LLC . Soravia Bulgaria. Stefan Dimitrov, Norman Management Co. Ltd. . TechnoLogica . TeleLink AD . TeroHalmari, EBRD . The Atlantic Club of Bulgaria . The Executive Centre . TishmanManagement Company Ltd. . Tissue Bank Osteocenter Bulgaria EAD . TM Auto Ltd. .TMF . Tumbleweed Communications EOOD . Unimasters Logistics Group AD . UnisysBulgaria Branch . Urban 3000 Ltd. . Vaptsarov AD . Vector Management Bulgaria .Via Expo Ltd. . Videolux Ltd. . Visa International . VSK Kentavar Ltd. . WestinghouseEnergy Systems Bulgaria Branch . Wrigley Bulgaria EOOD . Xerox Bulgaria Ltd. . ZlatiDinev Studio .
Board of Directors
of the American Chamber of Commerce in Bulgaria
President Mr. Kenneth M. Lefkowitz NECA/Balkan Data, Inc.
Vice President Mr. Stefan Dimitrov Allied Pickfords Bulgaria
Treasurer Mr. Anthony Hassiotis Bulgarian Postbank
Members Mrs. Olga Borissova AUBG, Director European Programs
Mr. Borislav Boyanov Borislav Boyanov & Co
Mr. David Hampson Grenville Financial
Mrs. Tanya Kosseva Landmark
Mr. George Randelov IBM Bulgaria
Mrs. Elitsa Tsaneva Ideal Standard Bulgaria
Mrs. Maria Vranovska Eli Lilly and Company
Ex-Officio Member Mr. James Rigassio US Senior Commercial Officer
Executive Director: Valentin Georgiev
Contentse c o n o m y
Budget 2006: Focus on Stability . . . . . . . . . . . . .4
By Mina Georgieva
Plamen Oresharski:
We Will Speed up Economic
Growth Rate by Prudent Financial Policies . . . . . . .10
a n a l y s i s
Energy Output Declines as Investors
Focus Efficiency Gains . . . . . . . . . . . . . . . . . . .13
a m c h a m e v e n t s
AmCham Business Lunch
With H.E. John Beyrle . . . . . . . . . . . . . . . . . . .14
A d d r e s s b y U . S . A m b a s s a d o r
American Business -
Investing in Bulgaria's Future . . . . . . . . . . . . . . .14
a m c h a m i n t e r v i e w
Ambassador Beyrle: AmCham Bulgaria Plays an
Important Role as a Political Voice . . . . . . . . . . .20
p o l i t i c s
Government's 'First Hundred' . . . . . . . . . . . . . . .23
By Marina Georgieva
b a l k a n s
The Impossible Kosovo Riddle . . . . . . . . . . . . . .26
By Boyko Vassilev
a m c h a m e v e n t s
AmCham Thanksgiving Fundraising
Supports Ihtiman Hospital . . . . . . . . . . . . . . . .30
Thanksgiving at the American
College of Sofia . . . . . . . . . . . . . . . . . . . . . . .31
b u s i n e s s i n t h e c o m m u n i t y
An Introduction to CSR . . . . . . . . . . . . . . . . . .33
c o m m i t t e e r e p o r t s
AmCham Seminar Informs Local Businesses on EU
Programs . . . . . . . . . . . . . . . . . . . . . . . . . . .34
o p i n i o n
Food vouchers in Bulgaria - Year After Year "ON
HOLD" . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37
a m c h a m e v e n t s
AmCham Presents Its EU Goals at the Meeting With
U.S. Ambassador and Atanas Paparizov . . . . . . . .38
m e m b e r n e w s
Special Christmas Discounts
for EuroLine Cardholders . . . . . . . . . . . . . . . . .39
Address Group - the Real Estate Company,
Celebrated Its 12th Birthday . . . . . . . . . . . . . . .40
Ideal Standard to Move
European Office to Sevlievo . . . . . . . . . . . . . . .40
Oracle Government Industry Forum . . . . . . . . . . .42
n e w m e m b e r s . . . . . . . . . . . . . . . . . . . .43
GiTy Bulgaria
Kempinski Hotel Grand Arena Bansko
Vaptsarov AD - Pleven
Visa International
m u s i c
Country and Bluegrass Come to Sofia . . . . . . . . .44
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early all sectors of theBulgarian economy have areal need for more
resources; the problem is that this iswhat our finances allow now," financeminister Plamen Oresharski said a fewdays after presenting the first budgetof the Stanishev cabinet.
A budget of "the fruitless compromise,""the status quo," "the paradox," aKostovist, monetary, inertial, rapacious,abortive, irrational, miserly, extremelyconservative, easily executable bud-get… These were just some of the
qualifications that accompanied therelease of the spending plan for 2006by the government.
By tradition, parliamentary oppositionthreatened with a veto; the tradeunions dug up once again the scare-crow of a general strike. The businessrepresentatives were visibly grumpythat no changes to the economic envi-ronment are in the offing. Financialexperts have voiced diametricallyopposite views about Bulgaria's budgetfuture. Even BSP's coalition partnerSNM backed up the budget only con-
Budget 2006: Focus on Stabilit yParliamentary opposition, trade unions and the business disapprove of the gov-
ernment's spending plans
Sergey Stanishev,
Prime Minister of Bulgaria:
"The main priority of this budget is topreserve the financial and macroeco-nomic stability, the more so that theenvironment has not been quite favor-able for the Bulgarian economy for thepast few months. According to statisti-cal data, Bulgaria's current accountdeficit exceeds 10 percent. Probablythis trend will persist until the end ofthe year, which weakens our startingposition in the talks with theInternational Monetary Fund."
By Mina Georgieva
Minister of Finance Plamen Oresharski (right) handles Budget 2006 to the National Assembly Chairman Georgi Pirinski.
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ditionally.
The 2006 budget is not ideal, but it
could have been
much better,
ex-finance minister Milen Velchevpointed out. It is a fact that its prepa-ration started before the parliamentaryelection. Nevertheless, two months aremore than enough for the governmentto secure the necessary financing forits priority policies.
But the 2006 budget could have beenmuch worse, too. For example, byfinancing a 20-percent increase inwages and pensions, or by allowingdifferentiated VAT rates, or by settingmuch bigger tax rates for the high-income groups, Velchev said. Actually,the measures listed by the ex financeminister were part of the BSP electionpromises in the financial area. Theirfulfilment would have cost the treasurysome 14 billion Leva, which wouldhave posed a serious threat to the sta-bility of the Bulgarian financial system.
The examples given as merits of thestate's new financial constitution arethe six-percent abatement of thesocial security burden, the certain uni-formity of income tax rates, the bal-anced budget in combination with amarkedly conservative revenue projec-tion: the government will redistributenot more than 40 percent of the grossdomestic product (GDP) through thebudget.
Naturally, this fact did not remain unno-
ticed by international observers, andBulgaria's credit rating was upgradedagain just a few days after the gov-ernment announced its financial plans.
The 2006 budget, however, misses aunique opportunity to carry out much-needed structural reforms - mainly inthe healthcare, education and socialsectors - which can and must beeffected now.
Now is the time because the non-inter-est revenue is budgeted to exceed the2005 figure by nearly 2 billion Leva, orby 12.3 percent. This is due both to
the good work of the revenue adminis-tration in 2005 and to the rapid reduc-tion in government debt, hence ininterest expenditure.
Bulgaria's ex-president and leader ofthe United Democratic Forces (UtdDF)Petar Stoyanov defined the 2006 bud-get as
a budget of guaranteed
poverty,
because he said it missed the chanceto improve the quality of life inBulgaria. According to the UtdDF the
● Railway carrier BDZ has announced a raise in its rates. The toll stickers for
vehicles are also increasing in price.
● Divorce fees are rising again. Fees for partitioning of property, obtaining legal
certificates and obtaining/filing company information are also going up. The
stiff fees are the result of the desire of the Supreme Judicial Council (SJC) to
bridge the gap in the judicial system's budget for 2006. The SJC proposed a
471 million Leva budget but the cabinet approved just 277 million Leva.
● The best-selling Bulgarian cigarette brands will become by about 1 lev more
expensive in a month or so. The parliament has already approved the rapid
increase in excise duties, which will take effect in 2006, not in 2008. As a
result the price of a box of Victory will jump from 1.50 Leva to 2.75 Leva.
Moreover, the government will regulate again the ceiling prices of Bulgarian
and import cigarettes.
● The parliament has also approved higher rates on oil products. LPG, natural
gas and biodiesel for heating and household needs will be exempt from tax
from July 1, 2006. From that same date the excise rates on petrol will increase.
The duty on leaded fuels will reach 670 Leva per 1,000 liters and on unlead-
ed petrols, 530 per 1,000 liters. According to the finance ministry, the excise
duty raise will produce additional inflation of "just" 1.5 percent.
Tax realities
budget does not solve any of thepoignant problems of the Bulgarianpublic. "No matter how much moneywe inject in non-reformed sectors,there will be no result," Stoyanov said.
Financial analysts say that the 2006budget will in fact keep unchangedfrom this year the expenditure for edu-cation and social assistance as ashare of GDP, despite the fact that the
Left promised in its program to raisethe financing for education and health-care, respectively, to 5.8 percent and6.0 percent of GDP by 2009.Bulgaria's GDP is forecast at 41.3 bil-lion Leva in 2005 and 45.1 billion Levain 2006, so the money for healthcareand education would increase by 217.5million Leva and 101.6 million Levarespectively, compared to 2005.
As much as 110 million Leva is bud-geted for contingency and emergencyexpenditure to overcome the damagesfrom the floods, up from 55 millionLeva this year.
As is the usual practice the largestchunk in the 2006 budget is ear-marked for
social security assistance
and social care (15.3 percent of GDP).This actually means that one-third oftaxpayers' money will be allocated tovarious entitlement funds.
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The budget allocates 300 million Leva to flood relief next year. As much as 110
million Leva is envisaged in the reserve of the Commission for Management of
Natural Disasters and Accidents, the remainder is included in the budgets of the
separate ministries. The gross domestic product (GDP) target in 2006 stands at
46.615 billion, real GDP growth is projected at 5.5 percent, average annual infla-
tion, at 5.8 percent. The budget is based on a 1.6 Leva/dollar exchange rate and
a crude oil price of $61.4 per barrel. The government plans a balanced budget
and the treasury will redistribute up to 40 percent of GDP. The social security
burden will fall by 6 percent from a touch above 42 percent at present to 36
percent; the burden for employers will decline from the current 29 percent to 23
percent. Wages are planned to rise by 6 percent from July 1, pensions will
increase by 5 percent from January 1. For the first time the tax-exempt income
minimum will be raised from 130 Leva to 180 Leva, the minimum wage will rise
to 160 Leva. This will allow households to save between 180 and 200 million
Leva. Revenue in 2006 is planned at 18.258 billion, including 15.049 billion Leva
(33 percent) tax revenue and 3.209 billion Leva (7 percent) non-tax revenue.
Spending is envisaged to amount to 40 percent of GDP, or 18.258 billion.
Macroforecasts
Prime Minister Sergey Stanishev with other government members before the budget discussions in the Parliament.
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From Jan. 1, 2006, the social securityburden will decrease by 6 percent, ascontributions for pension will drop from29 percent to 23 percent of the wageor insurance income. The installmentswill be divided in a 65:35 ratio amongemployers and employees, comparedto 70:30 at present. The deficit thatwill open in the pension fund as aresult of the lower contributions (about600 million Leva) will amount to some1.4 billion Leva and will be fully cov-ered by the budget. The governmentexpects that the business will use thefreed resource to open new jobs,invest in production, increase wages,etc.
In addition, the minimum wage isenvisaged to rise to 160 Leva a month.The total positive effect for householdswill be about 180 million Leva left attheir disposal. Calculations show thatthis measure will affect mainly the low-income households, while some400,000 people will benefit directlyfrom the reduction in personal incometax rates.
The administration will be downsizedby 10 percent from April 1, 2006.According to preliminary calculations,some 15,000 people will be laid off. Bythe end of January all ministries haveto propose staff reduction plans to thecabinet. They have to check if thereare vacant positions and duplicating
structures that should be closed. Theproposals for downsizing will be dis-cussed by the government in Februaryand March. The salaries of theremaining employees will be raised by6 percent from July 1. This means anactual increase by some 3.3 percent,since the higher salaries will be paidfor six months, not for a year. Thus theaverage gross salary in the budgetsector will reach 459.89 Leva.
From January 1 pensions will increaseby 5 percent. The social pension nextyear will reach 63 Leva, up from 60Leva now. The pension ceiling will risefrom 420 Leva to 455 Leva, as it iscalculated as 35 percent of the maxi-mum insurance income for the preced-ing year, i.e. 1,300 Leva.
The 2006 budget does not providepossibilities for fulfilling BSP's lofty
promises for competitive
economy
and knowledge economy. "It is conser-vative, easy to execute and misses theopportunities for a considerableimprovement in the business environ-ment just a year before accession intothe EU," said a statement by theAssociation of Employers'Organizations.
The rights of the administration
increase at the expense of the law-abiding taxpayers, said BozhidarBozhinov, the chairman of theBulgarian Chamber of Commerce andIndustry. He pointed that the Taxationand Social Security Procedure Codeallows for audits to continue for up toone year, which creates conditions forracketeering and corruption.
The business community is also con-cerned by the new powers granted tothe National Revenue Agency (the insti-tution that will collect all taxes, pensionand health contributions of Bulgariancitizens from the beginning of 2006) tosearch and seize company documentswithout court judgment. Diligent taxpay-ers will continue to be punished forrogue suppliers down the VAT chain.
Business representatives criticized thegovernment saying that the budget fallsshort of the BSP promises for zero taxon reinvested profit and tax incentivesfor investment in environment and safelabor conditions. The tax credit refundterms have not been shortened again,which blocks nearly 1 billion Leva withthe tax administration. The funds thatthe small and medium business willsave from the lower social security bur-den will be eaten up by the jump inenergy prices, excise duty rates, theassessed value of property and theminimum wage increase, the businesscommunity expects. ■
Defense minister Vesselin Bliznakov said that the
ministry needed another 51 to 52 million Leva to
carry out basic modernization projects. He cited
the repair and upgrade of the Mi-17 and Mi-24
helicopters, which was subsequently awarded to
Israel's Elbit Systems with a 57.33 mln. EUR con-
tract. An advance payment also has be made for
the repair of the MiG-29 fighters by Russia's MiG
Corporation. Speaking before the parliamentary
defense committee, Bliznakov proposed that the
defense ministry should try and cover the short-
age with its own receipts from the sale of unnec-
essary equipment and real estate. Such spend-
ing, however, requires the approval of the finance
ministry or legal amendments. The defense min-
ister said that the finance ministry did not object
to the signing of an offset program as part of the
project for delivery of new helicopters by
Eurocopter.
Defense budget short of 52 million Leva
Defense Minister Vesselin Bliznakov (in the middle) talking to Minister of Education Daniel
Valchev about the new budget.
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- Mr. Oresharski, which are the major objectives and pri-
orities in the financial and tax policy of the cabinet for
2006, as well for the next several years? Would you out-
line the major objectives of the budget policy? What are
the goals of the fiscal policy and what are the targeted
results?
- The financial and tax policy of the Bulgarian governmentfor 2006 is aimed at maintaining and assuring economic sta-bility. The budget is balanced, and at the same time itmatches the challenges that this country will have to faceduring the year immediately before its accession to the EU.In view of this, the budget has several crucially importantobjectives.
First, using the budget, the cabinet must maintain and accel-erate the economic growth rate, and second, to prepare thecountry for an efficient membership. I will quote several fig-ures pertaining to the first objective: for the first time overthe last 15 years, the business is relieved of dues estimatedat 600 million to 620 million Leva by reducing the socialinsurance burden. These are free assets, which will remainat the disposal of the economic sector and which will helpboost competitiveness and investments. Besides to the busi-nesses, the 2006 budget relieves also the Bulgarian house-holds of some dues by raising the minimum taxable amountsto 180 Leva, by raising the minimum salary to 160 Leva permonth, and by introducing a three-stage income tax sched-ule with rates equal respectively to 10 percent, 20 percentand 24 percent.
These characteristics clearly describe the objectives of theBulgarian government - social commitments, European ori-entation and sustained economic stability. As far as the nextseveral years are concerned, the priorities of the govern-
Plamen Oresharski:
We Will Speed up EconomicGrowth Rate by PrudentFinancialPoliciesGovernment is concerned about the
volume of consumer credit but strictly
complies with credit control measures
agreed with the IMF, Bulgaria's finance
minister says
Plamen Oresharski was born Feb. 21, 1960. He is an
associate professor of economics; academic professor -
finance; doctor of economic sciences.
Bulgaria's 45th finance minister started his professional
career as a financial auditor; professional experience as
financial consultant; former head of the State Treasury
and Debt department at the Ministry of Finance; deputy
minister of finance between 1997 and 2001, in charge of
sovereign debt and financial system; served in senior posi-
tions at the State Savings Bank and Bulbank; specialized
in bank management in the United States, and issuance
of treasury securities in the United Kingdom.
He has written an academic thesis on investments; multi-
ple specialized publications on investments analysis and
finances; more than 100 analyses and comments for print-
ed media; economic issues. He is described by most
observers as a person with considerable analytical and
managerial capabilities. Speaks English and Russian
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ment will be identified by the coalition partners.
- Bulgaria is among the states in Europe with the lowest
profit tax rate - 15 percent. What will be the effect of this
on the level of foreign investments attracted to this coun-
try, and respectively on the country's economic growth
rate?
- It is a proven fact that the corporate tax in Bulgaria isamong the lowest in Europe; hence it would be natural toexpect that foreign investors will target Bulgaria as a priori-ty investment destination offering a favourable environment.It is logical to expect that the attraction of capitals will boosteconomic development and thus boost also economicgrowth.
- What is your assessment of Bulgaria's foreign debt
management policy? The credit rating of this country
assigned by international rating agencies was raised
many times. What are your ambitions in this aspect?
- I would not try to assess the foreign debt management pol-icy of the previous government. I did comment on this whenthe issue was topical, when I was simply a member of theacademic community.
As a finance minister I would say that this cabinet has draft-ed its foreign debt management strategy. Its major aspect, Iwould like to emphasize on that, is to refrain from deals,which are not favourable for the state. Generally speaking,there are no interest rate, exchange rate or maturity struc-ture risks. Larger payments are expected in 2007, and thenin 2013 and 2015. Debt servicing is more or less equally dis-tributed over the rest of the years within this term, and weshall try to relieve future generations of the foreign debt bur-den. Public debt has been decreasing over the last severalyears, unlike the private sector debt, which is rising steeply.Our goal is to reduce the overall debt, and since we are notin a position to influence private debt, we shall have to con-centrate on public debt.
Bulgaria's credit rating was raised sixteen times over the lastfour years. The latest, 17th , increase of the credit ratingawarded by Standart & Poor's, reflected the persistentdecrease of the debt burden, supported by a prudent fiscalpolicy, even during the tenure of the current coalition gov-ernment. The upward rating trend is boosted also by thepending accession of Bulgaria to the EU, which in its turnwill help complete structural reforms and will clear the wayfor accession to the euro zone. At the same time, this is onemore positive signal to Bulgaria's international partners andto the international financial institutions.
- Bulgaria's financial stability is a fact, which has been
highlighted by Bulgarian politicians on many occasions.
Are there any macro-economic level threats caused by
the increase of the current account deficit in the balance
of payments? How does the cabinet plan to manage with
this problem?
- Standart & Poor's stated in its analysis released with thelatest upgrade of the credit rating that the net direct foreign
investments will cover Bulgaria's whole current accountdeficit for 2005. Besides, this trend is expected to be pre-served over the next several years due to green-field invest-ments. I do hope that we shall be able to match this opti-mistic forecast. Besides, financing the current accountdeficit would be impeded if the capital flows, which do notgenerate debt, decrease. However, this is hot a highly prob-able development within the framework of a prudent macro-economic policy.
- Speaking about stability: is there any danger of an
inflation "explosion" due to an increase of the excise
duties on cigarettes, alcoholic beverages and fuels above
the 4.9-percent target inflation for 2006?
- The term "explosion" is quite extreme, according to me.It is true that harmonizing rates with those in effect in theEuro zone will boost inflation to 4.9 percent by the end of2006. However, this measure initiated by the Bulgariangovernment will exhaust the negative impact in the courseof the year and will facilitate the compliance with theinflation criteria for accession to the economic and cur-rency union.
- How would you assess the status of Bulgaria's banking
system, the credit expansion of the financial institutions
and the measures that the IMF has proposed for curbing
restricting the crediting regime?
- The currency board arrangement in Bulgaria is still ineffect, and it assures the stability of the Bulgarian lev, andhence - the stability of the banking system as a whole.Moreover, we will soon join the European Union, which willcontinue to support the stability of the banking system.
Concerning the behaviour of the banks, I would say that theCabinet is worried about the volume of the consumer cred-its, although the measures, agreed with the IMF, for control-ling crediting are fully complied with. As Jerome Kremers,the director of the Dutch group of countries at the IMF, said,the control measures have started to generate effects andno additional measures are currently planned. If, however,such measures emerge as necessary, the cabinet is readyto discuss them with the IMF and to apply them, providedthese measures would be compatible with a prudent fiscalpolicy.
- What are the measures that the cabinet intends to
implement in order to increase individual incomes, which
are still way below the average European levels?
- As I said earlier, the cabinet plans an adjustment of theminimum wages from 150 Leva to 160 Leva as of Jan. 1,2006, matched by decreasing the income tax rates. We planalso an increase of the pensions by 5 percent as of thesame date.
Let me summarize, the main objectives of the policy of theBulgarian government are European integration, macro-eco-nomic stability, consolidated and sustainable growth, andstrengthening the social commitments of the central andlocal authorities.
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- Is there a potential for a further decrease of taxes, so
that the business and the foreign investors would be pro-
vided with additional incentives?
- It is quite a normal process to continuously search foroptions for reducing taxes. There were comments on all thebudgets adopted over the last ten years that they miss theopportunity for a further and more substantial reduction oftaxes. I would like to highlight again the following fact - thereduction of the social insurance burden, which has noprecedent for the last 10 to 15 years. One could always aimfor more, but I consider these measures as fairly brave andbalanced in terms of assuming no additional risks.
- Do you thing that the idea for establishing free eco-
nomic zones in Bulgaria may be applied within the fore-
seeable future?
In view of Bulgaria's accession to the EU, the establishmentof free economic zones is a normal development, which stillhas to be analyzed and implemented. You know pretty wellthat this cabinet was formed barely 100 days ago, and it hadto deal with much more urgent tasks. That is why I think thatwe shall see the establishment of free economic zones in the near future.
You could judge, by all this, that the cabinet will spare noefforts to create a favourable business environment, provid-ing incentives to raise the competitiveness of Bulgarian busi-
nesses, and thus boost the economy in general.
- What is the potential for development of the capital and
financial markets in this country?
- The Ministry of Finance, as the institution in charge of thecabinet policy in the financial sphere, will be an active play-er in setting the priorities for the development of the capitalmarkets in Bulgaria. But this will be made not from the posi-tion of a party, imposing rules, but rather from a position ofan equal partner in the dialogue with the Bulgarian NationalBank, with the Commission for Financial Supervision, withthe Bulgarian Stock Exchange, the Central Depository, andthe Association of the Commercial Banks and the BulgarianAssociation of Licensed Brokers. Currently, the Bulgarianstock exchange is operating at a very high level, and thereare plans for cooperation with other bourses in the region inorder to match the requirements of European participant onthese markets.
- May we expect that the share of the private sector in
the gross added value of the economy, which is current-
ly about 80 percent, will increase?
The goal of the Bulgarian government will facilitate as muchas possible the business sector, and thus increase its com-petitiveness, boost labour efficiency and boost economicgrowth. However, this requires the efforts of both the cabinetand of the private sector. ■
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Energy sector shrinks 3.7% y/y in Q2 afterone-off rebound in Q1Real changes (%,y/y) The GDP breakdown by sectorsunveils that the gross value added in theenergy industry has contracted by real3.7% y/y in Q2 after a one-off rebound by3.2% y/y in Q1, according to preliminarydata of the statistical institute. As the firstquarter of the year has a higher weight,the value added in the energy sector hasstayed unchanged in the first half of theyear in relation to a year ago. The figurescover electricity, gas and heating suppliesbut do not include production and distrib-ution of oil derivatives. The state still holdsa dominant role in the said non-oil utilitieswhich can explain the weak growth figuresover the past 3 years when their overallshare in GDP has dropped to about 4%this year from nearly 6% in 2001. Thischange however shows that the economyhas become less energy intensive whichis generally a good signed of improvedcompetitiveness in a country with lowenergy resources.At the same time, manyfirms in the energy sector are reportinghigh profit rates, as significant price hikeshave pushed up sales in nominal valueterms at the expense of lower consump-tion volumes. Investment return prospectsare quite attractive in the fields of elec-tricity production and supply as well as innatural gas distribution while district heat-ing companies are somehow struggling tobreak even due to outdated technologiesand inefficient use of resources. The aver-age salaries in all energy sectors howeversignificantly exceed the economy-wideremuneration standards which leaves addi-tional opportunities for structural and cost-oriented improvements. Many state utilitiesare overstaffed and have little motivationto optimise their operations, as the scopeof liberalisation is still low. The success-fully completed privatisation of the retailpower distribution firms as well as theprogress in signing direct electricity supplycontracts with large industrial consumersis however starting to work in favour ofcorporate efficiency. The new foreign own-ers of the power retailers have already
launched restructuring and staff downsiz-ing plans aimed at raising profitability andcutting technical losses while power gen-erators seem better motivated to invest innew technologies with the option toarrange direct deals with large consumers.
Cabinet sees privatisation of long-dis-tance power, natural gas utilities only aslong-term perspective After certainprogress in the energy sector privatisationlast year and early this year, the processis going to be slowed if not fully blockedfor some time after the general electionsin June and the setup of the new centre-left government in August. The new gov-ernment has clearly stated that it is notgoing to rush the large-scale privatisationand could hardly undertake any steps forselling at least minority stakes in the long-distance electricity and natural gas distri-bution networks by the end of its four-year mandate. Moreover, only one of thethree thermo-power plants tendered atthe end of the mandate of the formergovernment is likely to be effectively soldin near terms. The privatisation agencyhas in fact signed the deal for selling 67%of the Varna-based thermo-power gener-ator to Russia's RAO UES at the price ofEUR 390mn but the document is stillpending confirmation from the superviso-ry board of the agency. The usual officialceremonies accompanying such largesales have not taken place either. Theselling procedures for the thermal plant inBobov Dol are suspended due to lowprice offers while the fate of the Rousse-based plant will be decided after a courtruling on the case and a follow-up gov-ernment decision.
EU energy monitoring is largely positivebut finds out delays in opening gas andelectricity markets The comprehensivemonitoring report of the EuropeanCommission released on October 25 con-cludes that "Bulgaria is generally meetingthe commitments and requirements aris-ing from accession negotiations in relationto security of supply, energy efficiencyand renewable energy, and nuclear ener-gy, and is expected to be in a position toimplement the acquis in these areas byaccession". The removal of price distor-tions has taken place in line with commit-ments taken in early 2005. However, theEU monitors insist on increased efforts inthe area of competitiveness, including fulllegal, real and timely opening of the elec-tricity and natural gas market. Morespecifically, the Commission notes that
the legal opening of the electricity mar-ket is delayed and the actual opening isconsiderably lagging behind. The prepa-ration of the national electricity companyfor unbundling needs to continue. In thegas distribution sector, the unbundling ofthe state monopolist Bulgargaz is set aspriority along with adopting new imple-menting legislation for market opening.The legal opening of the gas market isestimated at 82% against 6.6% for realopening. ■
Energy Output Declines as Investors FocusEfficiency Gains
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 [email protected]
National Electricity Company, EUR mn
2002 2003 2004
Revenues 1,013.3 1,041.6 1,019.8
Profit beforetaxes 93.4 10.9 13.1
Net profit 71.3 5.9 9.7
Equity 764.7 1,172.1 1,214.7
Total assets 1,008.9 1,581.9 1,620.9
Source: ISI Emerging Markets database
Bulgargaz (State natural
gas company), EUR mn
2002 2003 2004
Revenues 501.0 560.6 624.0Profit beforetaxes 63.4 63.9 83.3
Net profit 47.0 44.2 66.6
Equity 405.9 517.3 596.9
Total assets 501.0 560.6 624.0
Source: ISI Emerging Markets database
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AmCham Bulgaria hosted a lunch withU.S. Ambassador John Beyrle on Nov.28 at the Sheraton Sofia, where distin-guished government officials, represen-tatives of AmCham members and morethan 20 electronic and print mediaattended the event. The ambassadorshared his views on the dialogue thatthe American business community hasstarted on the importance of Americantrade and investment in Bulgaria.
As an observer of the businessprocesses in the country, the ambas-sador said he considered the AmChamto be an active and results-orientedorganization on three interconnectedfronts: effective advocate for theAmerican commercial community, amodel for other companies to follow,introducing new innovations and prac-tices and an organization respected byBulgarian officials as a political player.
Ambassador Beyrle highlighted the bestexamples and the most successful sto-ries of the American businesses inBulgaria. The American Standard
investment that has resulted in IdealStandard - Vidima; Microsoft commit-ment to education reform in the coun-try; Vivatel - the new mobile service ofbTC that has brought greater competi-tion in the sector; AES new investmentthat would be the largest single foreigndirest investment in the country; the realestate sector big players - General
Electric involvement in Sofia Mall aswell as Tishman International businesscenter near Sofia Airport that will makethe difference in the market; Californiabased film company NuImage with itsplans for revitalizing the Bulgarianmovie industry.
Add to these success stories the U.S.
AmCham Business LunchWith H.E. John BeyrleU.S. Ambassador highlights six conditions for better business climate in
Bulgaria
Mr. Lefkowitz, distinguished guests, and my friends from the
American Chamber of Commerce in Bulgaria, I'm very glad to
be here with you to share my views and expand on the dia-
logue that we've started on the importance of American trade
and investment in Bulgaria .
In the three months that have passed since I arrived, I've found
the AmCham here to be an activist and results-oriented orga-
nization on three interconnected fronts.
First, AmCham is an effective advocate for the American com-
mercial community, allowing businesses to express their needs
and concerns with a single, authoritative voice. Second, the
member companies of the AmCham have been a model for
other companies to follow, introducing new innovations and
practices, valuing their employees, and investing in and build-
ing strong partnerships with their communities. And third,
AmCham is respected by Bulgarian officials as a political play-
er, as evidenced by President Parvanov's invitation to the
Chamber to brief him before his visit to the United States in
October and by including Ken Lefkowitz as a member of his
delegation.
So it's no surprise that I've probably had more contact with
AmCham in these three months than with any other single
institution in Sofia. When I met with the AmCham Board over
breakfast in September, I described my mission, and the
overall objective of the United States, as doing everything in
our power to help Bulgaria achieve its goal of becoming a
modern, democratic European country, with a market econ-
omy that ensures growing prosperity for all the people of
Bulgaria. Simply put, a stable and prosperous Bulgaria will
American Business - Investing in Bulgaria's FutureAddress by U.S. Ambassador John Beyrle to the American Chamber of
Commerce in Bulgaria, Nov. 28, 2005
U.S. Ambassador John Beyrle and AmCham Bulgaria President Kenneth M. Lefkowitz at the opening of the
AmCham business lunch.
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government investment via Bulgarian-American Enterprise Fund and its finan-cial arm, the Bulgarian-American CreditBank, as well as the funding for theAmerican University in Bulgaria and onewill have the clear picture of theAmerican assistance of over $500 mil-lion since 1990.
The ambassador focused his speechon six conditions that the investorsneed to see in Bulgaria:
On top of all is the efficient and fairjudiciary where the legal system has tobe made more effective, transparent,and fair. Contracts need to be respect-ed and enforced; it is not simply enoughthat some good laws exist on paper.
As a second condition, the ambassadoroutlined that corruption needs to be putunder control. "Organized crime andcorruption poison the trust and confi-dence between the people and theirgovernments" said the ambassador."Investors - like all Bulgarians want tosee criminals and corrupt individuals putout of business and into jail".
In the third place comes the predictableand fair regulatory environment. Thebusiness persons state that the regula-tions all too often are enforced selec-tively, or not at all. "American companiesthat comply with local regulations areoften put at a competitive disadvantagebecause their competitors can ignore
the rules," said Ambassador Beyrle andadded that impartiality is what is expect-ed in the fair business game.
Fourth, the protection of intellectualproperty is another very important con-dition for the investors, in particularoptical media, and trademarked clothingand spirits.
Fifth, the ambassador put transparency.When privatizations take place, whentenders are issued, and deals are made,American businesses want to know tothat the decisions are reached fairlyand openly. They want to be certainthat government officials don't have ahidden agenda, the diplomat reiterated.
Finally, Ambassador Beyrle stressed theimportance of an agreement on avoid-ance of double taxation and said thatthe AmCham argued eloquently foryears that the United States andBulgaria need a bilateral treaty on thatissue.
In conclusion, the ambassador outlinedthe common goals of AmCham and theAmerican Embassy - helping Bulgariato become a thriving economy, withsteady growth, full employment and ris-ing incomes. "We are committed to seeBulgaria achieve its goals of joining themainstream of Europe, and strengthen-ing its friendship and partnership withthe Unites States," he said. ■
be a strong, predictable partner and ally for the United
States in confronting the many challenges we face in com-
mon, from terrorism and illegal trafficking to organized crime
and global disease. Today I'd like to talk with you about why
American business and investment are so vital to our nation-
al interest in supporting Bulgaria's success, and how
Bulgaria can help attract greater levels of U.S. trade and
investment.
Investing in Bulgaria's future - the Ideal
Standard example
I believe that American businesses in Bulgaria are some of the
best representatives America has. American businesses create
good jobs, invest capital, pay taxes, introduce new technolo-
gies, and, most important, stimulate competition. Thanks in
good part to American businesses, Bulgaria is more produc-
tive, more competitive, and more ready to enter the European
Union in 2007. And the relationships American firms have
established with Bulgarian business have reinforced the impor-
tance of strong business ethics, as well.
There are many outstanding examples of the benefits that
American businesses bring. Let me highlight a few.
The example that is always mentioned first by both U.S. and
Bulgarian government officials is the American Standard
investment, Ideal Standard-Vidima. During its 14 years in
Bulgaria, Ideal Standard management has helped revitalize an
entire region. They have created thousands of jobs, and new
hope for the future of the region. Thanks to their long-term
commitment, they've become one of the most successful, pro-
ductive and competitive companies in Bulgaria, competing
successfully all over Europe. They've invested in their work-
force and unemployment in Sevlievo is half the national aver-
age. Wages are 50 percent above the national average.
They've also been investing in their community. They helped
modernize the telecommunications system of the region, and
built a business-class hotel. They've fully renovated the
local hospital, including the construction of a new wing and
purchase of state-of-the-art MRI, mammogram and ultra-
sound equipment. They've underwritten university scholar-
AmCham members, among them Teodor Milev from Microsoft, Emil Benatov and General Electric enquired
about investment projects and perspectives in front of the US business in Bulgaria.
A d d r e s s b y U . S . A m b a s s a d o r
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ships for local students. They've helped reconstruct a sports
stadium, rebuilt the local high school and kindergarten,
established foreign language classes, and restored an his-
toric church. Ideal Standard is investing in the future of
Bulgaria. On Wednesday I'll be traveling up to Sevlievo to
see this success story with my own eyes, as Ideal Standard
opens a new distribution center.
Two weeks ago, Ideal Standard and another excellent cor-
porate citizen, Microsoft, received awards for corporate citi-
zenship from the Bulgarian Business Leaders Forum. It's
not surprising that two of the four winners were American
companies. Microsoft was recognized for providing free soft-
ware and technical support for thousands of computers that
will soon be in every school in Bulgaria. Microsoft is also
providing training for the teachers, and user support, so
every student in Bulgaria will have access to information
technology. American Standard and Microsoft are just two
examples of American companies investing in the future of
Bulgaria. Today American companies are active in the ener-
gy sector, aerospace, information technology, consumer
goods, pharmaceuticals, financial services, and many other
sectors of the Bulgarian economy.
Not long ago I participated in the launching of Vivatel, the
new mobile telephone service of BTC. Advent International's
purchase of BTC in 2004 has brought greater competition,
more service and lower rates to the consumers of voice and
data telecommunication services. American Energy Systems,
AES, will soon be granted Bulgaria's Class One investor sta-
tus in preparation for the financial closing that will launch
the largest foreign investment ever in Bulgaria. This is the
Maritza East One power plant, a greenfield project hat will
cost an estimated $1.3 billion. This will result in a more
modern, efficient and competitive energy sector, and will
contribute to Bulgaria's goal of being a major electricity
exporter for the region.
There is an investment momentum that you can clearly
sense growing here. GE Capital has purchased 50 percent
of the Mall of Sofia, an investment of $48 million. Tishman
International has announced plans to build an $84-million
business center near Sofia Airport, creating new jobs and
business opportunities.
The California-based film production company, NuImage,
which has been producing movies in Bulgaria for seven
years, won the tender to purchase Boyana Studios. The
investment plans of NuImage will dramatically revitalize the
Bulgarian movie industry, creating more jobs and opportuni-
ties for Bulgarian actors and technicians, and will make
Bulgaria the leading film production center for the region.
The U.S. government has also made a huge investment in
Bulgaria. Our new $70- million embassy is a clear state-
ment of our commitment to a strong, dynamic partnership.
The United States has provided over $100 million to help
fund Bulgaria's military modernization. And we have provid-
ed more than $500 million of development assistance since
1990. This investment of half a billion US taxpayer dollars
has created three flagship institutions that are self-sustain-
ing legacies of the American interest in a strong Bulgaria:
the Bulgarian-American Enterprise Fund; its financial arm,
the Bulgarian-American Credit Bank; and the American
University of Bulgaria.
We are also using the resources of the Overseas Private
Investment Corporation, and the U.S. Trade and Development
Agency to help Bulgaria tackle national priority projects,
such as fully meeting international standards for air safety
and security, and helping Bulgaria to establish an integrated
emergency management system.
Finally, the U.S. Export-Import Bank can finance the exports
of U.S. products and services. Eximbank is now offering
Some 90 AmCham members, guests and more than 20 media representatives were willing to hear more from the newly appointed US Ambassador John Beyrle.
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financing to municipalities without sovereign guarantees, and
will soon be announcing master guarantee agreements with
Bulgarian banks.
Bulgarian government is committed
to business
The Bulgarian government has recognized that foreign invest-
ment, and American investment in particular, is essential to the
future of Bulgaria. They know that American companies and
investors bring not only capital, but also new technologies and
new ideas. Bulgarian consumers get more choice and better
quality products. Local governments get better infrastructure
and tax dollars for social services. Most important, Bulgaria
will be better able to compete in global markets, and will be
ready to join the largest trading relationship in the world - the
one between the United States and EU.
President Parvanov understands the importance of foreign
investment. He showed his commitment to bringing more
American investment and business to Bulgaria when he
emphasized the business component of his recent visit to
Washington, Chicago and Boston. The AmCham played an
important part in letting him know what American business
needs and expects, and will continue to be a resource for the
President and his economic advisors in maintaining the
momentum created by October's visit.
Six conditions investors need
to see in Bulgaria
That's the good news, and I salute everyone in this room for
their hand in these successes. Now, the bad news. Many other
countries in this region also understand the benefits of foreign
investment. Bulgaria offers great opportunities for American
businesses, but as you know better than anyone, multi-nation-
al companies will go to the countries which offer the best cli-
mate for doing business. Investors choose countries - not
vice-versa. Bulgaria has many great advantages - time-to-mar-
ket and cost efficiency, for instance - and these are part of
the reason it has such a rapidly growing foreign direct invest-
ment market. But the U.S. share of this FDI boom is still low
- just 8.3 percent since 2000. Clearly, there is a great deal of
headroom for growth. Serious investors, however, expect to see
certain conditions in evidence before they are willing to con-
vince their boards to risk shareholder capital. Let me take a
moment to talk about six of these conditions in greater detail.
Efficient and Fair Judiciary
First, as the EU, United States, and Bulgarians themselves
have pointed out, there is the still a need for greater judicial
reform in Bulgaria. All experts agree that the legal system has
to be made more effective, transparent, and fair. For business
people this means that contracts need to be respected and
enforced; that all companies, Bulgarian, European and
American, have to be treated equally; and justice needs to be
rendered transparently, in a reasonable amount of time.
Experts from the EU and the United States and Bulgaria itself
have outlined what needs to be done, and some good laws
exist on paper. To maintain its competitive advantage in this
region, the Bulgarian government needs to follow through to
implement and enforce the rules.
Freedom from Corruption
Second, I think that all experts agree that organized crime and
corruption need to be brought under control, because they poi-
son the business environment, and erode the trust and confi-
dence between the people and their government that should
be the bedrock of a strong market democracy. Investors, just
like all Bulgarians, want to see criminals and corrupt individu-
als put out of business and into jail. Fighting crime and cor-
ruption requires strong political will, perseverance, and close
cooperation between government and business. And as long
as Bulgaria is perceived as a country that is not serious about
cleaning it up, a great deal of legitimate business and invest-
ment will simply continue to look elsewhere.
Predictable and fair regulatory environment
A third condition investors insist on is a predictable and fair
regulatory environment. When regulations are adopted without
consultation with business, the result is frequently bad, or at
least burdensome regulations, which often create backlogs for
the regulators and brings the whole system to a standstill. I
am told by business people that regulations all too often are
enforced selectively, or not at all. American companies that
comply with local regulations are often put at a competitive
disadvantage because their competitors can ignore the rules.
Business is like football - good rules are not enough. There
also need to be energetic, watchful and impartial referees.
Intellectual property protection
Fourth, both the United States and the European Union are
asking Bulgaria to do a better job protecting intellectual prop-
erty: in particular optical media, and trademarked clothing and
spirits. For a time Bulgaria was a model in this area; piracy
was brought under control, and moved off the streets.
Unfortunately, intellectual property pirates are again operating
openly here. This is not a "victimless" crime: it harms
American and Bulgarian companies alike. The image of
Bulgaria as a haven for pirates also discourages American
Rumen Ovcharov, Minister of Economy and Energy shared views with the US
Ambassador minutes before his speech.
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A d d r e s s b y U . S . A m b a s s a d o r
businesses, who want to see a greater effort from law enforce-
ment and government agencies. Bulgarian performing artists,
whose works are also stolen by pirates, should demand the
same thing.
Transparency
A fifth condition investors expect is transparency. Democracy
and free markets depend on it in the government decision-
making process. When privatizations take place, when tenders
are issued, and deals are made, American businesses want to
know to that the decisions are reached fairly and openly. They
want to be certain that government officials don't have a hid-
den agenda. They need to be sure that when they sign the
deal, that is the end, and not the beginning, of negotiations.
Government officials should not participate in decisions where
they have a financial interest. One way to help avoid this con-
flict is to require that government officials file financial disclo-
sure statements. This is a standard practice in the EU and the
United States. I am required to file such a statement every
year with the State Department. You can go on the internet
and see a record of my political contributions, as well. A sys-
tem that is free of conflicts between private and public inter-
ests, where decision making by government is transparent and
fair, will certainly increase Bulgaria's competitiveness in attract-
ing American businesses.
Treaty for avoidance of double taxation
Finally, there is an issue that you know very well - double tax-
ation. The AmCham has argued eloquently for years that the
United States and Bulgaria need a bilateral treaty to avoid dou-
ble taxation.
Having to pay taxes on the same income in two countries is a
clear disincentive to American businesses. At present, all but
one EU member countries have bilateral treaties against dou-
ble taxation. The United States and Bulgaria are already
holding talks on the this issue, but in order to conclude the
negotiations, Bulgaria needs to change current legislation to
allow government tax authorities to have greater access to tax-
related financial information. It can be done, with enough polit-
ical will.
Partnership Working for the Success
of Bulgaria
Bringing more American investment is clearly in the interest of
both Bulgaria and the United States. American investment will
make Bulgaria more competitive when it enters the EU, and
will help Bulgaria raise its standard of living and provide badly-
needed social services. A more prosperous Bulgaria will be a
more lucrative market for American products and services, a
better business partner, and a stronger ally in defending our
common interests.
The American Chamber of Commerce and the American
Embassy are working in partnership, because we have com-
mon interests and goals, too. Our goals are to help Bulgaria
achieve a thriving economy, steady growth, full employment,
and rising incomes. We all have confidence in the future of
Bulgaria, because we can clearly the progress Bulgaria has
already made in its difficult transition, and the honest recogni-
tion of the challenges that still lie ahead. We are committed to
see Bulgaria achieve its goal of joining the mainstream of
Europe, and strengthening its friendship and partnership with
the United States. I look forward to continuing our close coop-
eration to that end. ■
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- Your Excellency, during his mandate Ambassador James
Pardew often mentioned corruption and inefficient judicial
system among the major obstacles for a good business cli-
mate. After the U.S. visit of President Parvanov a certain
interest for investments in the energy sector was expressed
by U.S. companies. Do you think during your mandate
Bulgaria will improve the business climate and attract key US
investors?
- Well, we certainly hope so and we look at the level of US for-eign direct investment which comes a little over 8 percent of thetotal foreign direct investments since 2000. We certainly thinkthere is a room for growth in that. When we talk to Americaninvestors and get their sense on how they understand the situ-ation in Bulgaria, we hear over and over again concerns aboutthe level of crime, corruption and concerns about the regulato-ry environment here. We will see an increase in investments withgood will on the part of Bulgarian government, with solid imple-mentation and follow up by institutions, by government agenciesand law enforcement institutions and with continued supportfrom the United States and the EU.
- Do you think the Bulgarian visit to the United States will
have an impact on the development of the bilateral U.S.-
Bulgaria economic relations?
- President Parvanov did a very effective job in the United Statesof widening the circle of Americans in government, in Congress,in the media and think tanks who understand how far Bulgariahas come. Also who understand that Bulgaria is very honest inconfirming the challenges that still lie in front of it. PresidentParvanov did a good job of being open about the challenges,about the obstacles that still lie before Bulgaria in its transition.The openness with which he described this, impressed a lot ofthe decision makers in Washington.
- What are the concrete measures the government should
undertake for attracting more investments?
- I think the Bulgarian government needs to look in a couple ofareas in particular that would help to improve the investment cli-mate in the country. If we are talking about the economicinvolvement by the United States and Europe, we mean primar-ily companies which would like to come and invest money inBulgaria. To do that they need to see certain conditions thatexist in the country. One of those conditions is a stronger ruleof law. There needs to be an understanding on the part of theAmerican investors that the rules are clear, that they areenforced and there is a level playing field for all. This comesvery closely to the question of crime and corruption. Investorswhether they are from the United States or Europe want to seethe criminals put out of business and put into jail. We have seen
expressions of political will on the part of the Bulgarian govern-ment to do this, now we need to see the follow up.
These are all points that we as a government made very clearto our Bulgarian friends, but it is even more effective when ourvoices amplified by the American businesses which are makingthe very same arguments. When the rules of the game aretransparent, the firm that offers the best will win. Competition isgood for any country in the economic sense. It is to ensure thestrongest players win.
- At the meeting between President Bush and President
Parvanov it was declared once again the assistance of the
United States to Bulgaria's EU membership. How do you
expect Bulgaria and the United States to cooperate in regard
with Bulgaria's EU membership?
Ambassador Beyrle:
AmCham Bulgaria Plays an ImportantRole as a Political VoiceU.S. investments guarantee access to high technology and leading business
practices, says the top American diplomat in Sofia
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I think the stability and the strengthening of relations betweenallies and partners are essential. The European Union is anoth-er guarantee and assurance of Bulgaria's continued stability andits internal strengthening that is needed in the 21st century. Withregard to Bulgaria's membership in the EU, the United Statessupports it in a number of ways. Certainly it is important for usto make sure that Bulgaria's economic stability is assured. Theinvestments made by U.S. firms is a way to guarantee thatBulgaria will continue to have access to the kind of high tech-nology, to the kind of business practices that would make of ita stronger EU member. In its monitoring report the EU put somevery clear markers on areas it thinks Bulgaria needs to do bet-ter, especially regarding the rule of law and the business climate.The U.S. government and the U.S. embassy in Sofia have beenworking very closely with the Bulgarian institutions for quitesome time in order to help Bulgaria reach standard that wouldallow it to become a mainstream member of Europe.
- How do you see the role of AmCham Bulgaria in promot-
ing more U.S. investments? What the organization should do
in dialogue with the government on improving the business
environment?
- I think the AmCham has been very effective in two areas. Thefirst one has to do with the role that AmCham plays in makingthe American businesses aware of opportunities that exist inBulgaria, that there are areas, sectors of the economy which areopened for investment and in which American firms can addvalue and fairly compete. AmCham is very active in helpingAmerican investors in American businesses understand whereBulgaria is right now.
The second area is the communication AmCham has with theBulgarian government about the things Bulgaria needs to do toimprove the investment climate. Let me give one concrete exam-ple. The AmCham and I had a meeting on Nov. 25 with thechairman of EU Affairs Committee of Parliament AtanasPaparizov. We had the opportunity to describe to him in veryconcrete detail what it is that Bulgaria needs to do to come upto the standard to what the United States and Europe want tosee. The fact that AmCham was invited to brief PresidentParvanov before his visit to Washington and the fact that theAmCham President Kenneth Lefkowitz was invited to be a partof the delegation also indicates that the AmCham is playing very
important role here as a something of a political voice, makingits views known directly to decision makers and the governmentwho after all are in a position to make the necessary changes.
- You have said that a boost in the security is needed for
the countries in the Black Sea region. Do you have a feed-
back from certain U.S. companies who would like to make
partnerships with the Bulgarian ones in order to invest in
new military technologies and equipment?
- I think the U.S. government is extremely interested in partner-ing with Bulgaria to make better security for the Black Searegion and in fact there are several companies that are inter-ested in supplying equipment and training to assist in securingthis region. There are already partnerships existing between theUnited States and Bulgaria in industry that will produce the kindof equipment that could aid the Black Sea security. I am talk-ing about radars, command centers, communication equipmentand training that are targeted in Black Sea security. This is anarea that is opened for much more cooperation and the U.S.firms are opened for that in a very active way.
- Is the boost in security connected with the presence of
U.S. military bases in Bulgaria?
- We have to remember that we talk about bases in Bulgaria,we are not talking about U.S. bases. They will remain Bulgarianmilitary bases which would be open for training where U.S. andBulgarian military forces will meet. Our interest in helpingBulgaria better ensure security on the Black Sea and sort ofdiscussions we are holding about these joint military facilities onBulgarian soil are a part of general sense that Bulgaria wouldbe our strong partner in the strategic logic.
- How do you see the future exchange of information and
technologies in this regard between allies and partners?
- I think Bulgaria leads the way in some very promising tech-nologies and we have been talking to some of your leading sci-entists and industries to look at ways that we could have a moredirect cooperation. This is very much a two-way exchange ofinformation. Bulgaria is a part of NATO and this has been a dia-logue between allies for some years now. The United States ishappy to add Bulgaria to the discussion. ■
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The cabinet headed by Prime Minister Sergey Stanishev willfocus its efforts on accelerating the process of preparingBulgaria for its accession to the European Union, on achievinga high and sustainable economic growth rate and on socialcommitments aimed at solving people's problems.
The program of government was supported unanimously bythe three parties in the ruling coalition before it was submittedfor approval by the cabinet.
"We were not granted the 100 days of comfort," Prime MinisterSergey Stanishev said immediately after the cabinet approvedthe document. The incumbents assessed their first 100 days inoffice as a success, while the opposition described it as chaos.
The government's program promises modernization of thestate and the establishment of a knowledge-based economy.The cabinet pledged that Bulgaria will
have a better developed economy
in four years
and that "the citizens will be closer to the standard of living ofthe European Union."
Prime Minister Stanishev announced that the government pro-gram demonstrated the resolute intentions of the cabinet to dowhatever is necessary for the successful accession of thiscountry to the EU.
"At the end of the mandate of this government, in 2009,Bulgaria will be a changed and renewed country. It will not onlybe a formal EU member, it will be also a respected memberof the European family, with a more competitive economy,exporting more, creating more stable and higher-quality jobs, astate that will be able to guarantee the increase of incomesand the quality of life of the Bulgarian citizens," Stanishev said.
The 130-page document lists the government's goals, theterms and the persons in charge. According to the document,some 240,000 new jobs will be created by 2009, thus reduc-ing unemployment to less than 10 percent.
Economic growth rate is targeted at
6 to 8 percent annually,
and salaries will be upped every year. According to the docu-ment, the increase of salaries in real terms by 2009 will bebetween 12 and 15 percent. Almost no other figures are quot-ed in the program.
The implementation of the program will be reviewed periodi-cally. Compliance with the schedules will be monitored, andthe cabinet minister will have to report on what they have man-aged to do.
The program stressed that the government mandate - 2005 to2009 - coincides with the years immediately before and afterBulgaria's accession to the EU.
The program also contains a series of actions, which will haveto be initiated before the accession and within the initial post-accession period, adjusted by the impact of the EU financialframework for Bulgaria for 2007-2009.
The government program represents the balance and the com-bination of the commitments assumed by the incumbents tothe voters. It is based on the principles of good governance,and on inter-commitments and coordination among sectoralpolicies, sources from the cabinet offices commented. Theprinciple of unified state governance and committed policiesof the individual line ministries was specifically highlighted.
This principle is employed in order to improve coordination andachieve a higher level of synchronization of priorities within thecoalition cabinet.
The document implies that the highway between Bourgas andthe town of Karnobat will be completed in 2006, along with asection of the Trakia highway to Stara Zagora and a sectionof the Maritsa highway.
Government's 'First Hundred'The BSP-NMS-MRF coalition outlined three major goals in its government pro-
gram, adopted on the 100th day in office By Marina Georgieva
Prime Minister Sergey Stanishev with one of the key persons in the government’s
program - Minister of European Affairs Meglena Kuneva.
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Ministers claim they have revised the program to incorporatethe recommendations made by labor syndicates and employ-ers' organizations. The cabinet added at the last possiblemoment a paragraph, providing for the establishment of a spe-cialized labor court of justice and for the creation of a health-care information system. Provisions for the privatization throughthe stock exchange were also added to the program minutesbefore it was voted by the cabinet.
The major priority for the cabinet, as specified by the program,was described by Deputy Prime Minister and Foreign MinisterIvaylo Kalfin as "the accelerated increase of incomes, match-ing inflation, economic growth and labor efficiency."
The specific commitment to achieve an average income of640 Leva, however, was deleted from the final version of thedocument. According to Minister Kalfin, no specific figures onwages have been set as it is not possible to forecast inflationand labor productivity.
The program of government of the BSP-NMS-MRF cabinetintroduced a
formal poverty margin in Bulgaria,
which will be regularly adjusted in line with the EU practices.There is still no formal poverty margin in Bulgaria that couldbe used as an objective basis for setting social subsidies,social pensions, minimum salaries, and minimum insuredpensions for term of service and age, the program admitted.The Ministry of Labor and Social Policy has assumed thecommitment to introduce, jointly with the social partners, apoverty margin, which will be used as the basis for settingthe standard of living parameters. The cabinet's objective isto achieve, in the long term, the European standard of alle-viating poverty.
This objective must be attained by creating incentives forinvestment activities and for small and medium enterprises,the cabinet program states. It is expected that by the end of2006 more people will be diverted to longer-term and high-er-quality employment by paying bonuses for a period of oneyear to permanently unemployed, who manage to find jobsby themselves, and not by inclusion into temporary employ-ment programs. For this purpose, a national system of pro-fessional training for adults will be established and perma-nently unemployed will be involved in professional trainingand retraining courses. Training is planned also for youngpeople, who have found themselves outside the overall sys-tem of education.
A national program on computer literacy will be implementedwith the participation of the State Agency on InformationTechnologies and Communications. Foreign language trainingwill be initiated in parallel, promised the government. Theincumbents also plan to work on curbing the grey sector onthe sphere of employment.
In a special action plan, dedicated to the equal opportunitiesfor disabled persons for 2006-2007, the incumbents will mapthe ways to integrate these persons by disability-adjusted jobs.Steps will be initiated to enlist disabled persons in the state
administration.
The cabinet plans to trim down bureaucracy by raising qualifi-cation requirements and offering a better pay. Flexible result-oriented mechanisms for financial incentives to civil servantswill be developed, as well as payment schedules for reducedoffice hours, thus increasing the competitiveness of thesalaries in the public sector compared to the private sector.
The incumbents promised to develop the relevant economicstimuli, aimed at strengthening the role of the second and thethird pillars of supplementary end voluntary pension insurancein order to raise pensions.
Young families, who within five years of their marriage havehad at least two children, cared for at home, will be eligible forstate subsidies, and the state will take over the payment of aportion of their credits for purchasing a home. A special billwill be drafted for this purpose. The state bonus for the birthof a second child will be higher than the amount for the firstan for the third child.
The tripartite coalition promised to upgrade, before the end ofits mandate, the system of monthly child-care subsidiespayable until the completion of secondary education.
The budget will take also a portion of the kindergarten and daycare centers fees of socially disfavored families. This systemwill be introduced for all child care establishments before theend of 2006.
The government plans also a comprehensive set of measuresfor the protection of children, for the prevention of child aban-donment, for reducing the number of institutionalized childrenand of begging children by coordinating the activities of allinstitutions involved in this sphere. We shall provide assistanceto receiving families by creating opportunities for specializedtraining, the cabinet program states.
The 2005-2006 government program is
● The provision of free textbooks for socially disadvan-
taged students - by Dec. 31, 2005
● The completion of the Sofia Airport, including the run-
ways, the terminal and the approach infrastructure - by
Dec. 31, 2005
● Drafting a project for assuming by the state of a portion
of the residence credits obtained by young families - by
April 1, 2006
● Separate waste collection by 2009
● The provision of Internet to all schools - by 2007
● The development of a strategy for foreign debt man-
agement - by 2006
● The completion of 60 kilometers of new highways - by
Dec. 31, 2006
● Accelerated restructuring of the National Electricity
Company and Bulgargas - by Dec. 31, 2006
● The creation of 240,000 jobs - by 2009
The Cabinet Commitments:
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more detailed than the program of the
previous cabinet,
Industry Watch experts claim. The three most important spheresof pledged policies include provisions for a balance budget andfor restricting public spending, for the deregulation of networkindustries, for concessions on infrastructure facilities, and partialreforms in the financing of education and healthcare.
The cabinet committed itself to preserving the effective curren-cy board arrangement until Bulgaria's accession to the euro-zone. At the same time, the cabinet adopted a more liberalstance on taxes. The only clear commitment is related to pre-serving the ceiling on direct taxes. Besides, the governmentplans on a policy for the creation of 240,000 new jobs. Themajor resources for achieving these goals are the various pro-grams for active measures on the labor market. The experiencewith similar measures indicates that they, generally, have a pos-itive effect.
The program for establishing concessions on port terminals andcivil airports will be completed. The Ministry of RegionalDevelopment will concession highways and will reform water util-ities by attracting private investors.
Unlike the expert community, labor syndicates actively chal-lenged the program document of the Stanishev cabinet.
"This cabinet will collapse," the leader of the Podkrepa LaborConfederation, Konstantin Trenchev, predicted. "This is the mostunstable cabinet of all and it will collapse in case Bulgaria'saccession to the EU is postponed."
Trenchev also said he expected the accession postponementto be announced next spring. He continued: "The presidentialelections scheduled for next year will also threaten the coali-tion, as well as any assassination of a prominent personalityor even the smallest act of ethnic violence. We have no greatexpectations concerning this government, hence even thesmallest achievements will look like a success. We insist onlegislative changes to remove the right to strikes in specificsectors, otherwise the state will be tried by the Court inStrasburg. The signing of the social and economic pact mustbe reassessed, as the budget has already been drafted. Theinflation in 2006 will rise to 10 per cent, which means adecrease of 5 percent in real terms of the salaries in the bud-get sector."
Ivan Kostov, former prime minister, now leaded of one of therightist political factions, the Democrats for Strong Bulgaria, wasalso very critical of the Cabinet's program of government.
He said: "The document that was presented cannot bedescribed as a program. If we compare the text, published onthe site of the Economic and Social Council with the 10 pre-election promises made by the BSP, it will become clear thatthese ten items are much more specific and clear, easy tounderstand and in general look like a genuine program. "Theother" [document] is nothing but a verbal essay - no objectives,no figures, nothing. This document does not merit any attentionand there is no way to be analyzed by serious economic circlesin Bulgaria. It is amusing to see the reactions of the businesscommunity. The program was met by European-style language,which - translated into the language of politics means: this is nota document that merits any discussion." ■
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Kosovo: History. Kosovo: Media. Kosovo: War. Even Kosovo:Performance. I am paraphrasing titles I saw incidentally in abookshop window in Cologne in the distant 1999. "Ah, therewas work then, they constantly invited us, I hopped from onetelevision to another," sighed a German Balkanist, an acquain-tance of mine. "Now you have to have a knowledge aboutIslam. A 10-minute interview with Osama in the 1980s and thenyou retell it again and again for the rest of your life."
Yes, universities are full of specialists in forgotten wars. "Whydon't you in Bulgaria write about the conflict in Kongo?" a stu-dent from Berlin asked me. Because there is fashion in hottopics, too. Kongo, and now Kosovo, are no longer in demand.The Balkans have settled down and the global television nowis measuring the inventory of other political circles.
Kosovo has been left outside (and in part within) the Balkans,which makes the problem twice more difficult, something likea Fermi's theorem in political mathematics: a formula has tobe found for Kosovo's status. Besides, it has to be outside theglobal public opinion, which has become too weary of thetopic. If anything can get confused, it will - the conditions are
good enough.
Martti Ahtisaari, ex-president of Finland and ex-envoy forKosovo during the crisis of 1999, is touring Pristina, Tirana,Belgrade, Skopje and Podgorica collecting information. Whenhe is ready, the real negotiations on Kosovo's status will begin.The media listlessly recall how in the spring and summer of1999 the then Yugoslavia was bombed and how Albanianrefugees flooded the neighboring states. How prior to thatSerbians and Albanians failed to reach agreement and wouldnot even talk to each other in Rambouillet and how after thatthey continued to disagree, while the UN Resolution 1244established international protectorate in Kosovo, preserving thestatus quo (Kosovo as part of Serbia). And how, after theAlbanians managed to get control despite the status quo, itwas the Serbians that took flight.
Today Albanians in Kosovo make up more than 90 percent ofthe population, while Serbs are not more than 130,000 of atotal of two million. Serbia has a status it cannot control andAlbanians in Kosovo have control unsupported by status. Theformer want
The Impossible Kosovo Riddle(Or why forgotten wars are dangerous) By Boyko Vassilev
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independent Kosovo, the latter
want anything but independence
The international community wants either the one or the other:as long as it is a lasting solution. The Balkan countries wanta Kosovo that is no longer the black hole of illegal traffic andcrime. As a whole, everybody wants the impossible.
While Kosovo Albanians will be trying to negotiate "indepen-dence now," politicians in Serbia will be looking for any possi-ble alternative. Though in 1998 an institute in Belgrade pub-lished a book which enumerated 34 possibilities, the "golden"option is still elusive. The official Serbian formulation, "morethan autonomy but less than independence," does not make itclear enough what there could be between the two.
The idea of some of the democratic-minded Serbs - which isdiscreetly shared by Serbian president Boris Tadic - for some-thing like partition (where Serbia will keep control over north-ern Mitrovica, part of the Morava valley and several monas-teries) does not sound good to the international community.The soft version of the idea (promoted as far back as in 1998by the now ex-foreign minister, Vuk Draskovic, and the currentambassador to Greece, Dusan Batakovic) for cantoning or atleast giving a special status to the Serbian enclaves meets thestubborn resistance of the Albanians. Voices have even beenraised to trade Kosovo - as expensively as possible - either forRepublic of Serbia in Bosnia or for Serbia's entry into the EU,or for keeping Montenegro in the state community, or for much,much money.
But a state cannot be sold like this. Then what?
The world, too, is looking for a solution. Half a year ago thebrilliant International Commission on the Balkans, headed byItaly's ex-premier Juliano Amatto (with serious Bulgarian par-ticipation through the Center for Liberal Strategies and politicalscientist Ivan Krastev), proposed a complex formula consistingof several steps. According to it Kosovo will pass through var-ious phases and become independent only when Kosovo andSerbia join the EU. In this way it will receive sovereignty andlose it immediately within the common European context.
But even that elegant compromise was met with mistrust inBelgrade. The Serbian member of the commission and ex-for-eign minister, Goran Svilanovic, was branded as traitor, whichruined his career, while Pristina's Koha Ditore newspaper frus-trated the situation even further by publishing the report beforeits official presentation. In short,
there is no consensus on Kosovo abroad,
neither among experts, nor among politicians.
It is true that the independence idea has supporters in thepolitical and expert circles in the United States. One of itslong-standing champions for instance is Janusz Bugaiski of theCenter for Strategic and International Studies (CSIS), a colum-nist for Koha Ditore in 1998-1999, who is among the most seri-ous U.S. analysts of Southeast Europe.
It is probably the substantial expert support that gives reason
to some Serbian circles to develop powerful conspiracy theo-ries: about the omnipotent "Albanian lobby" in the UnitedStates, about former senator Joe Diogardi, and even about thesecretary of ex-presidential candidate Bob Dole. Conspiracy, ofcourse, there is not. Except in the movie, Wag The Dog, whichwas about Albania. Then what is there? What is the seriousinterest of the United States?
In the past 20 years, while the Republican administrations weredealing mainly with the Middle East, the Democrats wereoccupied with the Balkans. It was a democrat - Bill Clinton -and his associates Holbrooke and Albright who became thearchitects of the Dayton and Kuman agreements (Bosnia andKosovo, respectively), which were achieved after a mixture ofbombs and diplomacy.
Today Holbrooke believes it was a mistake that the Kosovoissue was not settled in Dayton, while Bush - though aRepublican - needs success in what he so jealously criticizedduring his first presidential campaign: nation building.
President Bush needs a solved problem, since Iraq,Afghanistan and Palestine are not a closed book. We shouldremember that Kosovo hosts U.S. troops within the frameworkof KFOR, while their Camp Bondsteel at Ferizaj/Urosevac isquite large: 955 acres or 360,000 square meters.
Albanians, especially those in Kosovo, are a dynamic factor inthe Balkans. They have the highest birth rate in Europe, eco-nomic ambitions and national upsurge; they aim for the strate-gic north-south corridor along the Morava valley and theVardar; there are Albanian masses in Montenegro (Ulcin),residual Serbia (the Presevo valley), West Macedonia, Greece.A lasting U.S. influence on Kosovo would allow the UnitedStates to go deep into Balkan politics and try to reduce thetraffic in drugs, weapons and flesh in the region.
The advantages of U.S. engagement with the Albanian causeare obvious; but
not less obvious are the disadvantages
Most countries in Southeast Europe are on their guard overAlbanians. There is already a miniwar in Macedonia and insome other places the Albanian radical groups have raised thequestion of separation, marking territories with their names: theso-called Ilirida (Macedonia), Cameria (Greece), Plav i Gusinje(Montenegro), Preseva (Presevo), Bujanovac and Medvedja(Serbia). The latter even demanded separation from Serbiaand annexation to Kosovo even before Kosovo has got its way.
What the Balkan public opinion sees in Kosovo today are thestolen cars, kidnapped girls and smuggled drugs. The Kosovomafia has a corrupting effect on the neighboring states.Therefore the U.S. policy should be very cautious: to influencethe Albanians, but check them; to keep their love, but not for-sake the love of all the rest.
What does the EU want in Kosovo? We can learn that whenwe look at the names of the Europeans occupied there: medi-ator Martti Ahtisaari of Finland, UNMIK head Soren Jessen-Petersen of Denmark, UN envoy Kai Eide of Norway. North
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Europe is the least involved in the old European enmities, andit would be good if one day Kosovo starts resembling it. ButEurope has no common idea about Kosovo's status. France, forinstance, was not happy with the independence rashlyannounced by the Albanian parliament in Kosovo. Others inthe EU will also be reserved: after all, one day Kosovo willknock on the European door. Not to mention Russia, which willcontinue to back up Belgrade.
In this complicated situation
Bulgaria has four options:
- To back up Kosovo's independence, which will give it theadvantages of realism, clarity and recognition of facts: bet-ter sooner than later.
- To resist actively Kosovo's independence, which will ensuregood relations with the other neighbors and a strategic peacesince the principle of redrawing the borders by ethos will notbe breached.
- To do neither the one, nor the other, but loudly pose condi-tions, on its own or the region's behalf, which will save it fromquarrels and allow it to demonstrate activity.
- To think of a fourth option, something supercreative andabsolutely brilliant.
Some influential people in Bulgaria want the first, others want
the second, yet others, the third, and a fourth group are hop-ing for an unorthodox solution.
In a lecture before the CSIS in Washington and in the pres-ence of the supporter of Kosovo's independence, JanuszBugaiski, President Georgi Parvanov substantiated elementsof the second and the third: the creation of new states inthe Balkans bears risks. Actually all options bear risks. It isquite clear that as concerns Kosovo, Bulgaria cannot staymute; it will have to choose among several bad options. Theother countries in the region and the EU are in a similar sit-uation.
All this is taking place outside the focus of the global media.Neither is the CNN placing much pressure, nor is The Guardianmaking profound analyses, and ARD is not overexerting itselfeither. This is bad. There is a huge risk that politicians, left rel-atively at peace in their warm offices, may think out somethingthat will restore the Balkans on the map of conflicts.
One of the things Bulgaria should demand is world publicity.When Martti Ahtisaari gathers together the countries for realnegotiations, the world media orchestra should be playing asone.
"If I have to be pessimistic," I told my German acquaintance,the Balkan analyst, "I will tell you that you are going to havework again. But let me be optimistic: may this be the last timethey will ask you for a comment from Kosovo. And then yougo and study Arabic!" ■
United Nations envoy for Kosovo status, Martti Ahtisaari (C) and his aide Albert Rohan (R) meet Kosovo governor Soren Jessen-Petersen (L) in Pristina, November
21, 2005.
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For a third year in a row, AmChamBulgaria brought out the spirit of char-ity and generosity organizing itsThanksgiving community dinner Nov. 17at the Sheraton Sofia Hotel Balkan.Some 200 guests came to the charityevent. AmCham thanks Eli Lilly andCompany for the main sponsorship ofthe event. Distinguished AmChammembers contributed with specialprizes for the fundraising this year infavor of a hospital in the town ofIhtiman, which was heavily damaged bysummer floods.
In his address the U.S. Ambassador toBulgaria John Beyrle welcomed theAmCham members, minister NikolayVassilev, business and media represen-tatives. The ambassador announcedthe additional donation of the Americangovernment at the amount of $250,000for the areas devastated by floods. The
AmCham ThanksgivingFundraising Suppor tsIhtiman Hospital
David Hempson, AmCham Board Member was master of ceremony at the AmCham Thanksgiving dinner. Among special guests at the dinner was minister of state
administration Nikolay Vassilev who was welcomed by American college "pilgrims" and the AmCham Executive Director Valentin Georgiev.
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Students from the AmericanCollege of Sofia, PresidentLouis Perske and his wife
Deana enjoyed the AmChamThanksgiving celebration at theSheraton Hotel on Nov. 17. Yet, he andhis staff also had another Thanksgivingcelebration to look forward to.
American Thanksgiving, the holidaythat brings family and friends togetherto celebrate those things in life forwhich they are grateful, serves thesame purpose at The College. In whathas now become a tradition at ACS,each year the international faculty pre-pares a lavish turkey dinner for allBulgarian colleagues and their fami-lies.
The menu, of course, included roastedturkeys (at least 15!), but also stuffing,pumpkin pie, apple pie, mashed pota-toes, gravy, green bean casserole, andother tasty treats. The internationalfaculty of approximately 20 teachersworked for two days in the school'scafeteria to prepare the sumptuousmeal for around 200 guests on Nov. 20.
The dining room was decorated withfall colors, using nature's products, andentertainment created by the interna-tional faculty was presented.
A wonderful time was had by all, asthe event brings all of the ACS staffand families together in warmth, unity,and mutual respect. ■
money is designated for equipment,supply for kindergartens, hospitals andschools. The new sum is adding to thepreviously announced U.S. help of$1.45 million granted to the Bulgariangovernment in July and September.
AmCham appreciates financial supportfrom all generous contributors and bid-ders who kindly provided their help forthe hospital. Among the contributors forthe fundraising was President GeorgiParvanov, who donated a painting fromhis personal collection, AutumnScenery from Sofia by Angel Ninov.The piece of art was put for an openbid and the winner Ivan Angelov fromGrand Hotel Sofia acquired it for 1,100Leva.
Kiril Drenski, ABB Bulgaria, KempinskiHotel, Austrian Airlines, Grand HotelSofia, Microsoft Bulgaria, Moten Sport,Sheraton Sofia Hotel Balkan, BulgarianTelecommunications Company andmany other AmCham members con-tributed with special prizes for thefundraising. Among generous donatorswho bided for their products were: IvaPetkova, S&B Industrial Minerals SA(2,000 Leva), Christopher Thompson,Bearing Point, U.S. Ambassador JohnBeyrle, Minister of State Administration
Thanksgiving at the AmericanCollege of Sofia
Silent Auction Contributions
PRIZE CONTRIBUTOR
Angel Ninov "Autumn Scenery from Sofia" Painting H.E. the President of BulgariaGeorgi Parvanov
Roundtrip ticket to Europe Austrian Airlines
3 Luxury baskets of AVON Products AVON Cosmetics Bulgaria
8 Hours of data processing and imaging services Balkan Data/Lefkowitz & Co.
9 Days review on company's community involve-ment
Bulgarian Charities AidFoundation
3 BTC ADSL 512 Unlimited Bulgarian TelecommunicationsCompany
5 Bottles Solitair - unique limited selection of wine Domaine Boyar AD
Complete set of alarm system Force Delta Ltd
One day use of Serdika Conference Hall for 25persons Grand Hotel Sofia
Dinner for two at Shades of Red Restaurant Grand Hotel Sofia
2 Dream Notes Piano Bar Voucher for two Grand Hotel Sofia
2 Buffet Dinner for two at Seasons Restaurant Hilton Sofia
Overnight stay for two including half board Kempinski Hotel Grand ArenaBansko
2 Wireless desktop keyboard and mouse Microsoft Bulgaria
2 Ski & snowboard training course Moten Sport
Original sand-cast art medal Nadya Rozeva Green
2 Dinner voucher for Flannagans Restaurant Radisson SAS Grand Hotel
A la carte dinner for four at Balkan Restaurant Sheraton Sofia Hotel Balkan
A la carte dinner for two at Balkan Restaurant Sheraton Sofia Hotel Balkan
Luxury selections of Bulgarian wines SIS Industries Ltd.
Annual subscription to Sofia Echo Sofia Echo Media Ltd.
St Valentine's Romantic Gateway for two at VelikoTarnovo Travel Store Maker
DVD Player JVC Videolux
3 Packages for prepay services Vivatel
Mr. Petyo Gerganov, Manager of Ihtiman Hospital thanked all the contributors for the financial help that will
go for the repairs of the hospital. A generous sponsorship from Eli Lilly and Company on behalf of Managing
Director Maria Vranovska (left), and the other donations and contributions, made the charity dinner possible.
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Nikolay Vassilev, George Tabakov,Bulgarian Economic Forum, AUBG, SISIndustries, 3M, Microsoft and IdealStandard Bulgaria.
The manager of the Ihtiman hospitalDr. Petyo Gerganov thanked theAmCham community for the fundraisingwhich garnered the amount of 7,100Leva.
The evening program went on in thespirit of the American tradition with aspecial program, live music with jazzsinger Vassil Petrov and the deliciousThanksgiving menu. Party-colored pil-grims from the American College andthe school choir of Anglo-AmericanSchool in Sofia added to the atmos-phere.
AmCham thanks McDonalds for thedelivery of Happy Meals to the Childrenwith Eye and Multiple DisabilitiesFoundation, to the kindergarten for inte-grated education Shareno Petle inSlatina district, to the daily centre for dis-abled children St. Mina in Sofia at thenational centre for social rehabilitationand to the rehabilitation ward in Bankyafor children with disabilities at theUniversity Pediatric Hospital, Sofia. ■
In 1621, after a hard and devastating first year in the New World, the pilgrim's fallharvest was very successful and plentiful. There was corn, fruits, vegetables, alongwith fish which was packed in salt, and meat that was smoke-cured over fires. Theyfound they had enough food to put away for the winter.
The pilgrims had beaten the odds. They built homes in the wilderness, they raisedenough crops to keep them alive during the long coming winter, and they were atpeace with their Indian neighbors. Their Governor, William Bradford, proclaimed a dayof thanksgiving that was to be shared by all the colonists and the neighboring NativeAmericans.
The custom of an annually celebrated thanksgiving, held after the harvest, continuedthrough the years. During the American Revolution (late 1770s), a day of nationalthanksgiving was suggested by the Continental Congress.
In 1817 New York State adopted Thanksgiving Day as an annual custom. By the mid-dle of the 19th century many other states also celebrated a Thanksgiving Day. In1863 President Abraham Lincoln appointed a national day of thanksgiving. Since theneach president has issued a Thanksgiving Day proclamation, usually designating thefourth Thursday of each November as the holiday.
The Story of Thanksgiving
Among generous donators who bided for their
products were: Iva Petkova (at right), S&B
Industrial Minerals SA (BGN 2,000)
The piece of art was subject for an open bid and the
winner Ivan Angelov from Grand Hotel Sofia
acquired it for BGN 1100 (bottom left).
What is in common between the mea-sures to decrease carbon dioxideemissions, road safety programs,computerization of schools, integra-tion for orphans and the contributionto university curricula? The answercomes in three magic words:Corporate Social Responsibility.
Any beginner into Corporate SocialResponsibility will at first get con-fused what it really is. Is it about com-pliance with labor laws, about busi-ness ethics, quality management,environmental safety or just anotherword for corporate philanthropy? Andall these will be correct. Let's see its
roots.
In response to the increasing powerof the citizens - voters, employeesand consumers and the need to lookfor alternative competitive advantagesin the fast-moving world of free-mar-ket in the end of the last millenniumcorporations changed dramatically theway they get involved with communi-ties. Business took steps to protecthuman and natural resources bybuilding new systems of
self-regulation
further beyond those required by the law
or encompassed by the traditional phil-anthropy. Why bother with such volun-tary actions? Well, CSR is not just asimple reaction to the public pressurefor a responsible behavior. It is a deci-sion lead by
enlightened self-interest
that short-term sacrifice of profits will
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An Introduction to CSR
Elitsa Barakova /in the middle/ is chair of the CSR Committee of the AmCham Bulgaria. "CSR is a concept whereby compa-nies integrate social and environ-mental concern in their businessoperations and in their interactionswith their stakeholder on a voluntarybasis."
The definition of the European
Commission
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lead to long term benefits for the com-munities and therefore for the businessitself. CSR is the strategy that aims tobalance the needs to make profit withthe needs of the stakeholders at large.It is a broad vision about the healthybusiness in a healthy society, a notionthat companies
can do well and do good
at the same time. In demonstration ofthe alignment of business and socialobjectives numerous standards, partner-ship initiatives and awards programmesare developed. Here we may just men-tion the United Nation's Global Compact,the Dow Jones Sustainability Index and
the FTSE4Good. We witness anunprecedented growth in initiatives thatdemonstrate the voluntary involvementof companies with human rights, socialand environmental responsibilities.
Some 2000 companies are annuallyproducing social and environmentalactivities reports. CSR activities becamemore and more sophisticated and thestrategic linking between corporate rep-utation and good causes - morethoughtfully planned and going in depthof the needs of the communities. Theincrease in professionalism has beenevidenced by the emergence of CSRexperts, agencies, advisors and dedicat-ed staff within the companies. At thepresent CSR builds on
philanthropic, marketing,
investment
and a whole range of other instrumentswhich the for-profit world is lending incommon public good.
A recent research and discussions onthe issue in Bulgaria by NGOs, businessassociations, media and academicsrevealed still many variances both inunderstanding and in priorities.
CSR in Bulgarian
for some means a revival of philanthrop-ic giving, while for many others it meansensuring safe working conditions, invest-ment in human resources - existent andfuture, and improvement of the quality ofmanagement. Few see the co-relianceand integrity. There are several chal-lenges here about CSR. The first is toclearly define the voluntary nature ofCSR, going beyond, not replacing oravoiding legal regulations. The next chal-lenge is to keep the balance between'feel-good' PR effect and the actual com-mon good; and to build trust and activepartnership between profits and not-prof-its. Last but not least it is important touse the CSR momentum to enhance thestrategic investment in communities byclimbing up the pyramid of the humanneeds and ensuring access to education,employment and self-expression. In all ofthese the commitment of management todrive CSR forward is essential. ■
More Facts and Figures in the next issues
of Business in the Community
Why should companies care abouttheir social and environmentalresponsibilities? CSR Europebelieves that companies have bothmoral and financial reasons to prac-tice CSR. The moral ones tend tobe quite clear, while the financialones are still more difficult to mea-sure. Here are 6 answers based onthe CSR Europe's Facts andFigures:
1. What do CEOs think of corporatesocial responsibility?
● 94% of company executivesbelieve the development of a CSRstrategy can deliver real businessbenefits. (Source: Ernst & Youngsurvey, 2002)
● 1 out of 3 international executivesthink that social responsibility ini-tiatives will increase sales.(Source: Hill & Knowlton'sCorporate Reputation Watch,2002)
● 71% of CEOs would sacrificeshort-term profitability inexchange for long-term share-holder value when implementing asustainability programme.(Source: PricewaterhouseCoopers annual CEO survey,2002)
● 49% of managers in Bulgariathink that social engagement andgiving contribute in a significantway to the building of the positiveimage of the company and thepopularity of its name. (Source:Alpha Research for BulgarianCharities Aid Foundation, 2005)
Some 50 companies, most of them oper-ating in Sevlievo, participated in the sem-inar "The Integration of Bulgaria into theEuropean Union: Challenges in front ofthe SMEs" organized by the AmChamBulgaria EU Affairs Committee and theFoundation Sevlievo 21st Century. Theevent took place Nov. 8 on the premisesof Ideal Standard, a company that is thesuccess story of the region.
Local businesses in Sevlievo showedgreat interest in the seminar presenta-tions. Elitza Tzaneva, the executive direc-tor of Ideal Standard, welcomed theguests. Among the participants were: ABBAvangard, Borela C AD, Borislav Boyanov& Co., Bulbank AD, City University, DZISevlievo, Energoengineering EOOD, IdealStandard - Vidima, Marsh EOOD, SevlievoMunicipality.
Topics of the discussion concentrated onSME policies in the EU accessionprocess and opportunities for financing ofprojects from pre-accession and structur-al finds. Among the speakers were: OlgaBorissova of AUBG's Elieff Center; TanyaPavlova, senior manager atPriceWaterHouseCooper; Nikolai Todorov,director, Executive Agency for encourage-ment of SMEs; Nikolai Yarmov, executivedirector of CEED; and Angel Mateev ofBulgarian Post Bank.
The SMEs in Bulgaria face challengesand opportunities prior to the membershipinto the European Union, experts saidduring the seminar. The common marketchallenges are connected with the fourmain freedoms: movement of people,capitals, goods and service delivery. Inaddition to this is the volume of up to97,000 pages of the EU legislation andcommon customs rates.
The points were made by Tanya Pavlova,senior manager,PriceWaterHouseCoopers. She presentedthe main changes on the Bulgarian mar-ket in regard with the EU membership.There will be changes in the delivery ofgoods and the accompanying documents,in addition to the changes in VAT andexcise duties. Bulgaria's SME-s will oper-ate on a common market of 500 million
AmCham SemEU Programs
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consumers and will have an access tonew technologies and know-how.
Pavlova stressed that the enterprises willhave to prepare in advance for the EUmembership. They will have to implementthe necessary changes in the accountingsystem, to stay informed on the EU regu-lations and to educate in time their staff.PriceWaterHouseCoopers can assist withpreparing of businesses for the EUaccession, including through training andadvice on related indirect tax issues.
Olga Borissova, director of European pro-grams at AUBG's Elieff Center, introducedthe horizontal programs of EU. Theseinclude the educational programs of EUfor college graduates and students
(Socrates) and professional training pro-grams (Leonardo da Vinchi, Jean Monet).Moreover, she said there is a strong cul-tural support of EU within the programCulture 2000. It is financing cultural, artprojects and publishing of books.
The relations with the media include pro-fessional training, encouraging of filmmaking projects, development of compa-nies for audio-visual production.
The sector of SMEs and their share inthe economy was presented by theBulgarian Executive Agency forStimulating of SMEs. In 2004 there were220,000 SMEs whose share in the econ-omy represents 99.1 percent. Accordingto the agency the ones with the biggest
share are involved in the trade, car andhousehold repairs industry (50.64 per-cent), processing industry (11.73 per-cent), hospitality business (9.42 per-cent), real estate (9.02 percent) andtransport services (7.59 percent). Theagency serves as an information andconsultant center and is concentrated onthe SMEs growth and better businessclimate.
A survey by Gallup International andUNDP on the SMEs in Bulgaria, Romania,Serbia and Montenegro, Hungary, Polandand Croatia shows that there is a need fora well developed and integral state policytoward the SMEs. There is a lack of sys-tematic information from institutions to theSMEs, the survey concluded. ■
inar Informs Local Businesses on
Olga Borissova, Chair AmCham EU Affairs Committee, received a symbolic stat-
uette from Mr. Hristo Yonkov, ABB Avangard.
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Whose interest would the failure of a proven European andinternational practice in Bulgaria be?
For years, Europeans use food vouchers to buy food or payfor meals at restaurants and similar establishments.Employers supply their staff with them in order to ensuregood nutrition and boost performance at work. Besides, thesystem has proven value as a way to increase loyalty ofemployees - the dream of any employer, who has good com-mon sense.
In order this social benefit to be implemented successfully,however, tax exemptions are a must. Voucher-wise, things inBulgaria are 'slightly' different, though the respective legisla-tion has been enforced for a couple of years now. In 2002,amendments to the Law on Corporate Income Tax in effectintroduced the food voucher system and the possibility thefood vouchers to be a part of the remuneration package ofBulgarian employees.
What happens in practice is that the social benefit thatemployers provide to their staff under the form of vouchersis exempted of corporate tax (17%), but is charged with per-sonal income tax and social security contribution. As a result,the system becomes unprofitable for the both sides involved- employers and employees. Is there a hope for the Bulgarianvouchers system in short future? Voucher operators will tellyou: hardly.
Mrs. Emilia Maslarova, who was the one to file proposal formodifications in the Personal Income Tax Law in year 2002in Parliament, is now the actual social minister. Unfortunately,the draft of the national budget 2006 and the proposals forchanges within it, have clearly indicated that the current gov-
ernment will not back at this stage the necessary improve-ments, needed for the food vouchers system in Bulgaria.
Meanwhile, the food voucher system has been smoothlyestablished across many countries in Central and EasternEurope, and even far before the recent EU membership ofsome of them. In Hungary for instance, some 80% of theemployees benefit from the voucher system. In the CzechRepublic it covers 28.3% of the work force and in Romania- 17.3%. In Bulgaria the ambiguity of the situation and thefoggy prospects of change may trigger an exodus from thecountry of licensed food voucher operators, who are rep-utable international companies with established know-how inthe specific area for decades. Without them the processwould be much harder to develop and to control.
One of the potentials of a working food vouchers system inBulgaria, at this stage, is that it can contribute substantiallyinto the raise of local incomes in the context of upcoming EUaccession, and this at lower cost both for employers andemployees, compared to regular salary increases.
Also, the vouchers are an instrument to boost the buyingpower and promote economic growth. From global point ofview, the state itself does benefit from vouchers in an obvi-ous way as well. One key and strategic benefit would be thata functioning voucher system has the real potential to makeBulgaria's huge grey sector to shrink in a considerable way.
Apparently however, this seems not to be an immediate pri-ority for a third Bulgarian government in a row, which again,fails to ensure the voucher system's proper functioning andpositive contribution to the development of the Bulgarianeconomy. ■
Food vouchers in Bulgaria - Year After Year "ON HOLD"
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The U.S. Ambassador to Bulgaria John Beyrle, U.S.Commercial Attache James Rigassio, AmCham BulgariaPresident Kenneth Lefkowitz, AmCham Executive DirectorValentin Georgiev and Olga Borissova, Chair of AmCham EUAffairs Committee met November 25th with Atanas Paparizov,Chair of EU Integration Committee in the Bulgarian Parliament.The meeting was arranged by the AmCham Bulgaria in regardwith the Bulgarian membership into the European Union.
According to the U.S. Ambassador when Bulgaria becomes amember of the European Union it would be a more reliablepartner of US.
"We have a number of initiatives to help Bulgaria get ready forthe realities of the EU membership. Much of this is connect-ed with making Bulgaria an attractive place for investments",Ambassador Beyrle added. Outside investment would makeBulgaria more prosperous and at this meeting the parties dis-cussed some specific ideas for certain steps to be taken tomeet the criteria of the EU.
According to him U.S. does not see any contradiction betweenBulgaria being a strong member of the European Union andhaving a strong relationship with the U.S. As far as it is thebiggest trade relationship that exists in the world today whenBulgaria becomes a member of the EU, its relationships with
the USA will become stronger. The Ambassador is convincedthat the problem with crime and corruption in Bulgaria is onethat needs to be addressed. He sees a number of initiativesalready under way that would help resolve this problem.
The management of the Chamber presented to Mr. AtanasPaparizov the goals and activities of the AmCham EU AffairsCommittee which was set up earlier in 2005. The Chamberoffers its assistance to the Bulgarian Parliament andGovernment in EU process by providing input to the legislativeframework and to the strengthening of the administrativecapacity of the government institutions.
Answering a media question, the AmCham Executive DirectorValentin Georgiev presented the objectives of the Chamber inregard with the EU accession process.
"The AmCham Bulgaria unites U.S. and multinational compa-nies with long years of operation in the EU so they can be aninvaluable source of expertise for the local Bulgarian compa-nies which will soon face the challenges of the competitive EUmarket", Mr. Georgiev added. He reiterated that the Chamberwill play an active role in providing of EU related informationfor the businesses as well as organizing seminars and work-shops for local Bulgarian companies in regard with the EUaccession process. ■
AmCham Presents Its EU Goals at theMeeting With U.S. Ambassador andAtanas Paparizov
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All EuroLine users are given up to 20% discounts, it isannounced by Postbank, exclusive issuer of the credit card inBulgaria. Till the end of January EuroLine cardholders makeuse of special offers by partners to the Bank, included in theEuroLine Christmas catalogue. EuroLine cardholders make useof 20% discount on glasses by MATT Optic.
All users of the credit card are given 5% discount at BonjourChain Stores and Stemo Stores for Original ComputerEquipment. Lapin House luxury boutique for child clothesoffers 10% price reduction and Densi, Aiko and Idealen DomFurniture Shops give from 3 to 5% discount for EuroLine card-holders. Zora Trade Chain offers from 2 to 5% discount, JarComputers - 3% discount and GloBul - 0% leasing on mobilephones, also included in the EuroLine Christmas catalogue.
Besides price reductions, every single purchase made byEuroline cardholders increases the chance to win 0% annualinterest rate with Interest-Free Year promotion. Every user whomakes purchase at a price exceeding BGN 20 automaticallyparticipates in the raffle, which is to be drawn every day till 9January.
The Bank reminds clients can apply for Euroline credit cards
only with a copy of an identity card. The financial institutionhas been an official issuer of EuroLine credit cards since theend of March this year. EuroLine is among the most popularcredit cards on the Bulgarian market. Presently, there are 200000 credit cards issued accepted at more than 4 000 mer-chant locations around the country. ■
Special Christmas Discounts for EuroLine Cardholders
Assen Yagodin, Postbank Executive Director /left/ and Anthony Hassiotis, CEO
of Postbank /right/ made public the benefits for the Euroline cardholders.
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The first distribution centre of Ideal
Standard and Vidima Ideal was
opened in the town of Sevlievo (north-
ern Bulgaria) on November 30th. Co-
investor in the project is Biomet, a
transport company. The investment
amounts to EUR 5 million, as much as
EUR 500,000 has been injected in the
IT system.
Similar centers will be built in Italy,
France and Great Britain, Ideal
Standard said. The prospects are for
moving the plants' European office to
Sevlievo, U.S. Ambassador John
Beyrle said. You really are the ideal
standard for Bulgarian-US cooperation,
he added. ■
Address Group - the real estate company, celebrated its 12thbirthday on November 11, 2005 at the new headquarters,located on Sofia's 1, Bulgaria Square. This was also the firstpublic appearance of the new Mayor of Sofia Mr. BoykoBorissov. Twelve years on the market could be judged as ashort period for any european company, but are impressivefor a private business in Bulgaria. I feel pride of yet anothersuccessful year passing and the challenges of achievingeven stronger market position in the coming 13th year ofoperations, said in his speech to the official guests Mr. HristoIliev, CEO of Address Group.
Mr. Iliev warmly welcomed more than 250 clients, partnersand friends, among them the newly elected Mayor of SofiaGeneral Boyko Borissov and the ex-Prime Minister Mr.Dimitar Popov. I strongly believe the property prices in Sofiawill continue to rise and will work hard on this, said Mr.Borissov and congratulated Mr. Iliev wishing a lot of successin the future.
The venue of the celebration was the new headquarters ofthe group on 1, Bulgaria Square. We've chosen this addressas our ambition is to be the real estate market leader inBulgaria, pointed out Mr. Hristo Iliev. The property which isused by the Address Group operations departments and partof the sales teams is on area of 2500 sq. m. which makesit the largest of its kind on the Balkans. Forton International,the only Bulgarian company specialized in commercial prop-erty consulting, part of Address Group is also located in thenew headquarters. ■
Address Group - the Real Estate Company,Celebrated Its 12th Birthday
Ideal Standard to Move European Officeto Sevlievo
Ribbon cutting by Vanyo
Alexiev (left), US Ambassador
John Beyrle and Yordan
Stoykov, Mayor of Sevlievo
municipality.
Vassil Kanev, Business Leader
Ideal Standard Eastern Europe
welcomes the guests.
Address’ new headquarters, located in National Palace of Culture.
Mayor of Sofia Mr. Boyko Borissov with other guests of the party
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Software leader Oracle, in associationwith the American Chamber ofCommerce in Bulgaria, held its annualOracle Government Industry Forum on29th November at Sheraton Sofia HotelBalkan.
Special guests at the event were theMinister of the state administration andadministrative reform Mr. NikolayVassilev, the Chairman of the StateAgency for IT & Communications Mr.Plamen Vachkov, and Mr. JamesRigassio - US Senior CommercialOfficer.
Mr. Mario Mandjukov, Oracle accountmanager - public sector, announcedthat the company's EuropeanHeadquarters has decided to establisha competency center for the financialsector and healthcare in Bulgaria.
Mr. Csongor Baross (Manager PublicSector Competency Center for EuropeEnlarged & CIS Region, Oracle) demon-strated the similarities between the newEU member states and those that are ina process of accession. Mr. Barosspointed out how the accession processis reflecting the situation in Bulgariaand indicated the key points of theinteraction between the informationtechnology and the public sector.Oracle's products have an excellent
functionality, he said, adapted to theneeds of the state administration orga-nizations and is completely tested andimplemented in other EU member
states.
The Bulgarian lecturers reviewed brieflythe benefits customers get from Oracletechnology products and solutions(Oracle Database, Oracle FusionMiddleware and Oracle Applications)providing organizations from the publicsector with reliability, security and scal-ability. An accent was put on thesmooth transition towards enterprisereleases, starting with small investmentsand ensuring effective utilization of thebudget funds.
Mr. Krum Garkov, IT Director at theNational Revenue Agency said that theAgency expects upto 10% higher statetax collection resulting from the opti-mized IT infrastructure with Oracletechnology. And Mr. Chavdar Todorov,Secretary-in-chief at the RegistryAgency, spoke about the improved com-munication between the country's courthouses. ■
The world's largest enterprise vendor demonstates good relationships with state
administration
Oracle Government Industry Forum
James Rigassio, US Commercial Counselor /right/ opens the f loor for discussions at the forum.
Among the special guests at the event was minister of state administration Nikolay Vassilev.
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2005 is a very importantyear for GiTy Bulgaria,we celebrate ten years
of successful presence on the Bulgarian telecommunicationmarket and we became an AmCham member, Lubomir Velkov,GiTy Bulgaria's CEO said. GiTy Bulgaria is based in the CzechRepublic and has a large branch network in the SlovakRepublic and Bulgaria. It was established in 1990 with basicactivity in the field of telecommunications. Over 500 peoplework in the headquarters of the company and its subsidiariessince then. Our current activities are in the area of thetelecommunication engineering and services where we intendto expand by launching more customer-oriented programs. Ourvision is to offer individual creative solution for each particularproblem. Our main goal is to design an integral structure foryour communications. Our projects are dedicated to meet yourcurrent needs, to assist in realization of your future intentionsand to contribute to your development.
Contacts:Mr. Lubomir VelkovExecutive Director
260, Botevgradsko Shausse Blvd.Sofia 1839
Tel. 945 5344Fax. 945 5344
www.gity.bg
The new Kempinski Hotel Grand Arena,Bansko is Bulgaria's first 5-star All-Season-Resort Hotel in the mountains. In its alpinedesign, the hotel offers the highest standardof hospitality nestled directly at the foot ofthe majestic Pirin Mountain. The elegant 27
luxury suites and 132 spacious guestrooms provide the con-noisseur pure comfort and cheerful atmosphere.
The diversity of first-class restaurants and bars share a widechoice of cuisine styles - gourmet thematic buffet in the ele-gant Gallery restaurant, Mediterranean cuisine in the ComePrima restaurant and wide selections of spirits and cigars inour 5 Bars and Lounges. The unique 1,200 sq.m Zales Spa &Wellness Center pampers you with Aroma Steam Bath,Hammam bath, Finish and Bio Sauna, Snow room, 12 bodyprocedure rooms, beauty saloon, Jacuzzi, heated in- & outdoorpool, solarium, gym, tennis court.
Kempinski Hotel Grand ArenaPirin 96 Str. Bansko 2770
Tel: +359 7443 8888Fax: +359 7443 8565
Vaptsarov AD - Pleven was estab-lished in 1925 and is specialized inproduction, assembly and repair ofhydropower turbines, presses, pressequipment and tailor-made equip-
ment, with two main production units:
- For omni directional press equipment, including eccentric,hydraulic and sheet-bending presses and guillotine shears formetal sheets' cutting;
- For turbines and equipment for low, medium and high hydro-electric power plants with horizontal or vertical disposition ofthe machines. Vaptsarov AD - Pleven' production is mainlyexport-oriented. Among its clients are GE (General Electric)Hydro, Va Tech Hydro, Alstom, Bulcom Press, Delteco,Remiremont and Bulgarian power authorities. It is ISO9001:2000 certified by TUV.
Contacts:Executive Director: Mr. Vladimir Popov
Web-site: www.vaptsarov-bg.comE-mail: [email protected]
Address: 6 Grivishko Shousse, Pleven 5800, BulgariaPhones: + 359 64 882 123
Fax: + 359 64 882 117
Visa has a long presence on the Bulgarianmarket - since 1993. Currently there are 21Bulgarian Visa member banks, issuing andacquiring Visa products. In Bulgaria Visa is
one of the founding members of the Bulgarian Fraud Forum,established in 2001 - an organization made up of all relevantparties to work on fraud prevention in the region. Visa card vol-ume and usage in Bulgaria has increased significantly -June2005 saw a year on year growth of 165% with a total of 457350 cards. In the same period, Visa sales value reached a totalof US$33 million; the number of merchant outlets, acceptingVisa cards also increased by 71% and reached 3,784 loca-tions. Overall the acceptance network of Visa in Bulgaria reg-istered tremendous growth, with 6,536 Visa cards acceptancelocations by the end of June 2005.
Contacts:Mr. Catalin Cretu
Regional Director Visa International Fax: +44(0)20 7225 8002E-mail: [email protected]
Visa International Service Association Romania & Bulgaria Regional Office
15 Calea Victoriei, Sector 3030023 Bucharest, Romania
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This year the program of the New Year's Festival in NDK willfeature a concert dedicated to the American folk music.Country and western, as well as bluegrass music is among themost unique American genres. Some of you may have comeacross the Bulgarian band Lilly of the West. They have trulyembraced country and bluegrass as their own music, trying toattract fans in Bulgaria.
On Jan. 3, 2006, Lilly of the West will perform in Hall 6, NDKSofia, together with a very special guest from the UnitedStates - Jesse Brock.
Mandolin player JESSE BROCK calls Bowling Green, Ky., hishome. He has been a professional musician since the age ofnine. He grew up in the revered bluegrass tradition of the fam-ily band, and is one of the music's hottest young players today.His own solo project, Kickin' Grass, was released in the sum-mer of 2002 on the Pinecastle label, and features his singingalong with inspired performances from members of the LynnMorris Band and other notable guest artists. Jesse radiatesfun and energy onstage, and adds spark, drive and eleganceto the show with every note.
Jesse Brock will play together with Lilly of the West featuring:Lilly Drumeva - vocal, guitarSvoboda Bozduganova - upright bassRossen Hristov - banjo, dobro Vladimir Mihailov - fiddle, viola
Lilly of the West story: Lilly Drumeva heads the popular band known as Lilly of theWest. Born in Bulgaria, she was raised and educated in anumber of European countries including Germany, France,Austria and the Czech Republic. She was exposed to countryand bluegrass music in Vienna in the early 1990s and uponher return to Bulgaria in 1996, formed her own group.
Her first album was released not long afterwards and person-al appearances were soon held in a number of countries:Czech Republic, Switzerland, Germany, Italy, Lithuania, Estonia,and Poland. An early carrier highlight was her appearance inthe 1998 European World of Bluegrass gathering in TheNetherlands. Significantly, she won the "best European band ofthe year" award. Later that same year, she performed at theIBMA World of Bluegrass events in Louisville, Kentucky andwas a presenter on the organization s awards show.
For several years she resided in London and organized a groupwith British bluegrass musicians Rick Townsend and RosyDavis; they released a mini-CD called Lilly And Rosy thatincluded several nice traditional tracks. Since 2003 Lilly hasbeen back in Bulgaria where she is part owner of a radio sta-tion. She continues to perform and record.
In the meantime Lilly Drumeva was elected in the Board of theEuropean Bluegrass Music Association and was inducted inThe Bluegrass Music Hall of Fame. www.lillydrumeva.net
Countr y and BluegrassCome to Sofia
Jesse Brock
Lilly Drumeva
