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8/4/2019 Bulgaria the Right EU Location
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Bulgaria investment climate and business
opportunities
February 2011
8/4/2019 Bulgaria the Right EU Location
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Page 2
Macroeconomic indicators show consistent growth inthe years leading up to the global financial crisis
4.5% 5.0%6.6% 6.2% 6.3% 6.2% 6.0%
-4.9%
2002 2003 2004 2005 2006 2007 2008 2009
Real GDP Growth
4.0%
7.0% 6.5%
12.5%
7.8%
0.6%
4.5%
2004 2005 2006 2007 2008 2009
Inflation
12.2%
10.7%9.1%
6.9% 6.3%
9.1% 9.2%
Unemployment
2004 2005 2006 2007 2008 2009
9801 851
2 7363 152
6 222
9 052
6 686
3 382
FDI Inflow
2002 2003 2004 2005 2006 2007 2008 2009
mln.
Source: Bulgarian National Bank
2010
2010
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Page 3
Consistent strong performance, compared to the CentralEuropean region and EU-27
-6%
-4%
-2%
0%
2%
4%
6%
8%
2005 2006 2007 2008 2009 2010 2011
Bulgaria
EU-27
GDP growth has outperformed the EU average and isforecasted to speed up again after the crisis
Source: Eurostat; Moodys
Bulgaria and Estonia are the only two countries in EU-27 with net positive rating action by Moodys since 2009
Upgrade or outlook raise
Rating / outlook downgrade
2 rating / outlook downgrades
3+ rating / outlook downgrades
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Role of Bulgaria as FDI location has grown significantlyfor the last 10 years
2006 2007 2008 20091999 2000 2001 2002 2003 2004 2005
Czech Republic
Romania
Hungary
Bulgaria
Slovakia
Croatia
0
1,000
10,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
Inward FDI per country ( mln.)
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Page 5
FDI in Bulgaria comes mostly from EU countries and isconcentrated in four main sectors
Source: Bulgarian National Bank
FDI by host country, 1996-2009 ( mln.) FDI flows by industry, 1996-2009 ( mln.)
Telecom 1,729
Energy 2,172
Construction 2,481
Trade 6,319
Manufacturing 6,958
Finance 7,273
Real Estate 8,253
Other 2,902(10) Russia 1,088
(9) Italy 1,170
(8) Hungary 1,276
(7) USA 1,310
(6) Cyprus 1,921
(5) Germany 2,526
(4) UK 3,037
(3) Greece 3,420
(2) Netherlands 4,643
(1) Austria 5,904
8/4/2019 Bulgaria the Right EU Location
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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
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8/4/2019 Bulgaria the Right EU Location
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Government financial indicators are remarkable not onlyin the region, but on a pan-European scale
Budget surplus / deficit has consistentlyoutperformed regional and European averages
Source: Eurostat
-8%
-7%
-6%
-5%
-4%
-3%
-2%
-1%
0%
1%
2%
3%
2005 2006 2007 2008 2009
Bulgaria
Euro Area
CEE average
Bulgarian government debt is 3rd lowest in Europe
7%Estonia
68%UK
78%Hungary
24%Romania
115%
79%
Greece
Euro area
73%Germany
35%Czech Republic
Bulgaria 15%
Government
debt, % of GDP
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Page 9
Bulgaria has one of the lowest business costs in Europe(1) taxes and labor costs
Lowest corporate income tax rate in Central /Eastern Europe
* 0% tax rate for manufacturing companies in regions with low employment
Most competitive cost of labor in Central /Eastern Europe
Average wage, / month Q2 2010
Source: Eurostat; CEIC
10%Bulgaria (*)
16%Romania
19%Hungary
19%
Turkey 20%
20%
Czech Rep 20%
Slovakia
Croatia
730
730
705
456
451
327
1,099
1,483
Bulgaria
Serbia
Romania
Slovakia
Hungary
Croatia
Czech Rep
Slovenia
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Page 10
Bulgaria has one of the lowest business costs in Europe(2) energy costs and rent
Bulgarian cost of electricity for industrialusers is 67% of the European average
Source: Eurostat, CB Richard Ellis
0.142
0.122
0.106
0.098
0.095
0.081
0.064
0.059Estonia
Bulgaria
Romania
EU average
Germany
Czech Rep
Hungary
Slovakia
/kWh, 2009
Office rents in Bulgaria are among the lowestin Europe
629
396
355
276
252
240
234
200
177
Moscow
Istanbul
Bucharest
Warsaw
Budapest
Athens
Zagreb
Prague
Sofia / sq. m / year,Q1 2010
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Page 11
Bulgaria is only 3 hours flight from all major destinationsin Europe, Russia and the Mediterranean region
Strategic geographic location Major transport corridors passingthrough Bulgaria
EUandEFTA
Russia
and
CIS
Turkeyand
MiddleEast
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The role of the European Union as a trade partner forBulgaria has been growing consistently
11%
6% 6% 7%
16%
21%18%
15%
56%60%
64%
44%
Other
Asia
Balkans
EU-27
2009
14%
2005
16%
2000
17%
1995
29%
Share of EU-27 exports has grown by 50percentage points since 1995
1994 1996 1998 2000 2002 2004 2006 2008 2010
mln
9,000
6,000
5,000
4,000
3,000
8,000
2,000
10,000
1,000
0
7,000
... in absolute terms EU-27 exports havegrown approximately 5 times
Page 12
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Page 13
Educated and skilled workforce is among the mainadvantages of Bulgaria
Almost 60,000 students graduate every year fromover 50 universities
Source: National Institute of Statistics, Bulgaria
860
833
12,684Other
19,480Business
8,372Social sciences
7,178Engineering
3,677Education
3,166Health
1,553Law
Architecture
Agriculture
Bulgaria has one of the highest proportions ofstudents abroad from all European countries
2.1%
2.2%
2.8%
3.1%
4.7%
5.8%
8.3%
17.8%Iceland
14.2%Ireland
10.2%Slovakia
Bulgaria
Greece
Austria
Germany
EU-27 average
Romania
Czech Republic
Students in another EU
/ EEA country, % of all
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The government supports specific industries under theInvestment Promotion Act (IPA)
Page 14
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
Individual administrative services
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Biggest investors are supported through a priorityinvestment scheme
Priority projects can be related to all sectors of the
economy, which do not contradict regulation 800/2008
of the European Commission
Subsidies not allowed in mining, primary agriculture
production, and shipbuilding
Priority projects should exceed 50m and create at least
200 new working places for a 3-year period
25 + 100 working places for certain manufacturing projects 10m + 50 working places for high-tech services and R&D
Priority projects receive all benefits for certified
investors, as well as the following:
Lowest possible costs for the acquisition of government and
municipal land + waived taxes for land status changes
Working group for project support is assigned by the
Council of Ministers
Financial grant scheme for up to 10% of the investment
project cost (50% for R&D)
Page 15
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Page 16
Attractive FDI destinations
Services:
Information technology
Public Sector
Transport and tourism
Industry:
Electronic and electrical equipment
Machine building
Metal processing
Resources:
Mining
Oil
Alternative energy
Source: Deloitte Consulting; United Nations (UNCTAD)
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Page 17
Major foreign investors in Bulgaria
Information Technology & Business Process Outsourcing
SAP Labs (Germany) the Company has been operating for more than 7
years on the Bulgarian market and employs more than 470 software
developers
HewlettPackard, IBM, Sony, Microsoft, Coca Cola, and other companies
have set up service support and call centers in Bulgaria
Mechanical and Electrical Engineering
Liebherr (Germany) the Company has invested more than 80 mln in its
Bulgarian production facilities near Plovdiv
Schneider Electric (France) Schneider has set up a greenfield plant in Maritsa
Industrial zone (near Plovdiv) for production of electric distribution products ABB (Switzerland) the Company has been operating for more than 10 years in
Bulgaria and has invested recently 25 mln in a greenfield manufacturing plant
for low voltage equipment
Montupet (France) the European leader in the manufacture of cylinder heads
for engines set up a a greenfield plant in Ruse industrial zone, ~ 80 mln
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Page 18
Major foreign investors in Bulgaria
Construction Materials
Holcim (Switzerland) the leading cement producer has invested 70
mln in Bulgaria Sisecam (Turkey) the Turkish glass producer has invested more than
380 mln in 4 production facilities in Bulgaria
Saint-Gobain (France) the company has started building a 100 mln
greenfield plasterboard factory in Gabrovo
Italcementi (Italy) Italcementi has started an 250 mln modernization
project of its cement-producing factory in Bulgaria
Telecom and media
AIG Global Investment (USA) the Group has acquired 65% of the Bulgarian
Telephone Company for 1.08 bn
Telekom Austria acquired the largest mobile operator, Mtel, for 1.2 bn
MTG (Sweden) acquired the second most popular TV channel, Nova TV, for
620 mln
CME acquired three television channels for 110 mln
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Major foreign investors in Bulgaria
Energy
CEZ (Czech Republic) the company has invested more than 150 mln
in the energy distribution network and 200 mln in acquiring energy
generating units in Bulgaria
E.ON (Germany) the company has invested more than 80 mln in the
energy distribution network in Bulgaria
EVN (Austria) the company has invested more than 220 mln in the
energy distribution network in Bulgaria
Enel (Italy) the company has invested 700 mln in HPP Maritsa-Iztok 3
AES (USA) the company has undertaken HPP Maritsa-Iztok 1 project,
worth 1.3 bn
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InvestBulgaria Agency is a Government investmentpromotion arm, part of the Ministry of Economy,Energy and Tourism
IBA services:
Macroeconomic data on Bulgaria
Legal advice
Data on operational costs
Regional information: industrial zones andinfrastructure, data on unemployment, skilled labourforce and level of education
Recommendation of investment project sites
Identification of potential suppliers, contractmanufacturers and joint-venture partners
Personalized administrative servicing
Liaison with central and local governments
Liaison with branch chambers and NGOs
InvestBulgaria Agency
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InvestBulgaria Agency
Sofia 1000, 31 Aksakov Str.Phone: (+359 2) 985 5500
Fax: (+359 2) 980 1320
E-mail: [email protected]: www.investbg.government.bg