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Bulgaria – investment climate and business opportunities
Seoul
March 2013
Page 2
Bulgaria at a glance
Location and key data
• Area: 110,910 sq km (42,823 sq mi)
• Number of inhabitants (2011): 7.4 mln
• Capital and largest City: Sofia
• Other cities: Plovdiv, Varna, Burgas, Ruse, Stara
Zagora, Pleven, Veliko Tarnovo
• Natural Resources: oil, gas, coal, iron ore, copper,
lead, zinc, antimony, chromite, gold, silver,
magnesium, nickel, pyrite, marble, limestone, salt,
arable land
• Major industries: electricity, water and gas supply;
food, beverages and tobacco; machinery and
equipment; base metals, chemical products, coke,
refined petroleum
• Currency: Lev (BGN). Fixed exchange rate with
Euro.
• EU Member since 2007, NATO Member since 2004
• Government type: parliamentary republic
• Last government elections: July 2009
Dobrudja
Sandanski
Bansko
Veliko Tarnovo
Belogradchik
Kozloduy NPP
Sofia
Bulgaria at a glance
Geography, landmarks and economic overview
Page 3
Maritza Iztok
Balchik
Varna
Sunny Beach
Sozopol
Rousse
Plovdiv
Macroeconomic indicators show consistent pre-crisis
economic growth and quick post-crisis recovery
Real GDP Growth Inflation (HICP)
Unemployment FDI Inflow
Source: Bulgarian National Bank, Eurostat
1.7%
-5.5%
6.2%6.4%6.5%6.4%6.6%
20112010
0.4%
200920082007200620052004
3.4%3.0%2.5%
12.0%
7.6%7.4%6.0%6.1%
200620052004 20112010200920082007
10.4%9.1%9.1%
10.7%12.2%
20112010
9.2%
20092008
6.3%
2007
6.9%
200620052004
EU-27Bulgaria EU-27Bulgaria
2011
1,341
2010
1,209
2009
2,437
2008
6,728
2007
9,052
2006
6,222
2005
3,152
2004
2,736
€ mln.EU-27Bulgaria
Page 4
FDI in Bulgaria comes mostly from EU countries and is
concentrated in four main sectors
Source: Bulgarian National Bank
FDI by host country, 1996-2011 (€ mln.) FDI flows by industry, 1996-2011 (€ mln.)
Telecom 2,260
Energy 2,699
Construction 2,705
Manufacturing 6,479
Trade 6,522
Finance 7,652
Real Estate 8,204
Other 2,664(10) Hungary 1,272
(9) Italy 1,279
(8) USA 1,283
(7) Russia 1,486
(6) Cyprus 2,257
(5) Germany 2,523
(4) UK 2,733
(3) Greece 3,664
(2) Austria 5,809
(1) Netherlands 6,018
Page 5
Why invest in Bulgaria?
• Political and business stability
– EU and NATO member
– Currency board
– Low budget deficit and government debt
• Low cost of doing business
– 10% corporate tax rate
– Lowest cost of labor within EU
• Access to markets
– European Union / EFTA
– Russia
– Turkey / Middle East
• Educated and skilled workforce
• Government incentives
Page 6
Government financial indicators are remarkable not only
in the region, but on a pan-European scale
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
110%
120%
130%
Lithuania
Latvia
Cyprus
Italy
-6% -5% -4% -3% -2%-11% -10%
Average budget deficit/surplus (2006-2011)
16%15%1%0%
TurkeyCroatia Norway
-1%
IcelandUnited Kingdom
Sweden
Finland
Slovakia
Slovenia
Romania
Portugal
Poland
Austria
Netherlands
Malta
Hungary
Luxembourg
France
Spain
Greece
Ireland
Estonia
Germany
DenmarkCzech Republic
Bulgaria
Belgium
Source: Eurostat
Average government debt (2006-2011)
Page 7
Source: Eurostat, The Economist, National Statistics
Budget deficit for 2012, % of GDP
Bulgarian economy maintains its excellent performance
despite global challenges
0.0%
0.0%
0.1%
-1.6%
-2.0%
-2.5%
-2.6%
-2.8%
-3.0%
-3.3%
-3.6%
-3.7%
-4.1%
-4.5%
-5.0%
-5.6%
-7.0%
-7.0%
-8.0%
-8.3%
-9.8%
-10.9%
BG
Egypt
Japan
United Kingdom
Spain
Greece
United States
India
Czech Republic
Italy
Hungary
Austria
Brazil
Turkey
China
Sweden
Switzerland
Germany
Euro Area
Denmark
Poland
Netherlands
France
Hungary
Greece
Estonia
Bulgaria
04/10
Turkey
07/10 10/10 01/11 04/1101/10 07/11 10/11
Lithuania
Ireland
Bulgaria was the only European country with increased credit rating by Moody’s in 2010 and 2011
Page 8
Bulgaria has one of the lowest business costs in Europe
Lowest corporate income tax rate in Europe
Source: Eurostat; Savills
Turkey 20%
Croatia 20%
Czech Rep 19%
Slovakia 19%
Hungary 19%
Romania 16%
Bulgaria 10%
Cost of electricity for industrial users is 70% of the EU average
Slovakia 0.123
Czech Rep 0.110
Hungary 0.104
EU average 0.092
Germany 0.090
Turkey 0.086
Romania 0.080
Bulgaria 0.064
Estonia 0.062 €/kWh,
2011
Office rents in Bulgaria are among the lowest in Europe
Page 9
724
Istanbul 339
Moscow
Athens 336
Warsaw 312
Prague 252
Budapest 240
Bucharest 234
Zagreb 191
Sofia 168€ / sq. m / year,
Q2 2011
Page 10
Educated and skilled workforce is among the main
advantages of Bulgaria
Sofia University• Established 1888
• 25,000 students
• Laboratories run by IBM, Oracle;
• Affiliate center of Harvard University
American University in Bulgaria• Liberal arts educational institution
• Among the most famous American
universities in Central and Eastern
Europe
• 63% international students
Sofia Technical University• 14,000 students
• Department of German engineering
education (joint project of Bulgarian and
German governments) and English
engineering education
Bulgaria has one of the highest proportions of students abroad from all European countries
Czech Republic 2.1%
Romania 2.2%
EU-27 average 2.8%
Germany 3.1%
Austria 4.7%
Greece 5.8%
Bulgaria 8.3%
Slovakia 10.2%
Ireland 14.2%
Iceland 17.8%
Students in another EU
/ EEA country, % of all
Source: InvestBulgaria, Eurostat
Bulgaria is only 3 hours flight from all major destinations
in Europe, Russia and the Mediterranean region
Strategic geographic location Major transport corridors passing through Bulgaria
Page 11
The government supports specific industries under the
Investment Promotion Act (IPA)
• Investments must be related to the following sectors:
– Manufacturing
– Research & development
– Education
– Healthcare
– High-tech services
– Warehousing and logistics
• Minimum investment amounts must exceed €10m
– €3.5 in regions with high unemployment and €2m for
investment projects in high-tech services
• Benefits for certified investors include:
– Shortened administrative procedures
– Preferential acquisition of state or municipal land
– Financial support for professional training / education
– Infrastructure subsidies
– Labor cost subsidies
– Individual administrative services
Page 12
• Services:
– Transport and Logistics
– Information technologies
– Outsourcing of business processes
– Health and tourism related to healthy
lifestyle
• Industry:
– Transport equipment and machine
building
– Electronics and Electrical engineering
– Chemical industry
– Food and Agriculture
• Resources:
– Mining
– Oil
Attractive FDI sectors
Page 13
Leading global investors have chosen Bulgaria as an
FDI destination
IT development Back office
operations
Chemical and metal
Industry
Engineering Food
Page 14
InvestBulgaria Agency
Sofia 1000, 31 Aksakov Str.
Phone: (+359 2) 985 5500
Fax: (+359 2) 980 1320
E-mail: [email protected]
Web: www.investbg.government.bg