Invest in Bulgaria - Your Gateway to EU_14.12

8/3/2019 Invest in Bulgaria - Your Gateway to EU_14.12

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InvestBulgaria AgencyInvestBulgaria Agencywww.investbg.government.bgwww.investbg.government.bg

BulgariaBulgaria your gateway to EUyour gateway to EU

Bulgaria-Korea business forum,

14. December 2010, Sofia

Dimitar NikolovDimitar Nikolov

Marketing DirectorMarketing Director


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Strategic location Why Bulgaria

Macroeconomic Indicators

FDI Inflow

Korean Investments in Bulgaria

Highly Skilled Labor Force Comparison between Bulgaria and

Europe

Business Sectors of Highest

Potential for Investors

Investment Promotion Act

Investment Incentives in Bulgaria

InvestBulgaria Agency

Structure of the Presentation


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Pan-European Transport Corridors

9

4

7

10

8


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Bulgaria strategically located as a bridge

between Europe and Asia

Strategic geographic location Major transport corridors passing

through Bulgaria


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EU membership and NATO membership

Currency board

EUs most favourable taxes:

10% corporate income tax rate

0% in high-unemployment areas

10% flat tax rate on personal income

Europes most competitive operational costs

Well-educated and highly-skilled labour force

45,000 Bulgarian students in Europe Government financial support for priority investment

projects

Linking Europe and Asia

Excellent climate, natural scenery, food and hospitality

Why Bulgaria


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4,5 5,0

6,6 6,2 6,3 6,2

-4,9

6.0

2002 2003 2004 2005 2006 2007 2008

4,0

6,5 6,5

12,5

7,8

3,9*

0,6

2004 2005 2006 2007 2008 2009 2010

12,210,7

9,1

6,9 6,3

9,1 9

2004 2005 2006 2007 2008 2009 2010

Greenfield+Expansion

866 1 103 903 9801 851

2 7363 152

6 222

9 052

3 282*

6 686*

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

GDP Growth, %

2009

Inflation, %

Unemployment, % FDI inflow, EUR Mio.

Bulgaria at a glance

Source: Bulgarian National Bank

* October 2010

* Preliminary Data* October 2010 * Preliminary Data* October 2010


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Greece 115%

Euro area 79%

Hungary 78%

Germany 73%

UK 68%

Czech Republic 35%

Romania 24%

Bulgaria 15%

Estonia 7%

Bulgarian government debt is 3rd lowest in Europe Budget surplus / deficit has consistently

outperformed regional and European averages

-8%

-7%

-6%

-5%

-4%

-3%

-2%

-1%

0%

1%

2%

3%

2005 2006 2007 2008 2009

Bulgaria

Euro Area

CEE average

Source: Eurostat

Remarkable government financial indicators on

regional and even on a pan-European scale


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Agency Date

Foreign currency Local currency

Long-

term

Short-

termOutlook

Long-

term

Short-

termOutlook

Japan CreditRating Agency

22 Oct

2010

BBB - Stable BBB+ - Stable

Fitch 30 April

2009BBB- F3 Negative BBB - Stable

Standard&

Poors 1 Dec2009BBB A-3 Stable BBB A-3 Stable

Moodys 31

August

2010

Baa3 - Positive Baa3 - Positive

Source: Ministry of Finance

Credit rating


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Source: BNB, IBA

Record FDI inflow in 2006 2008, EUR m

* Preliminary Data

Greenfield+Expansion

866 1 103 903 980

1 851

2 7363 152

6 222

9 052

3 282*

6 686

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009


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Decreasing FDI inflow in 2009-not a

Bulgarian phenomenon

Source: UNCTAD

SEE level Global level

45

55

63

41

54

52

Serbia

Bulgaria

Romania

Russia

Czech

Ukraine

FDI decrease.%

19

3

50

36

53

57USA

Japan

France

Brazil

China

India

FDI decrease,%


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5,36,6

5,8

3,0

5,0

3,0 2,5 2,5

1,0

4,84,1 3,8

2,3 2,2 2,0 1,8 1,3

19,6

3,0

9,5

1,2-1,7

BULGARIA SERBIA ROMANIA UKRAINE POLAND CZECH

REP

HUNGARY SLOVAKIA TURKEY LATVIA SLOVENIA

2008 2009

FDI to GDP, %, 2008 2009

Source: BNB, Bank Austria Creditanstalt

Bulgaria leads CEE countries in terms of

FDI to GDP indicator


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Source: BNB, IBA

Austria the Netherlands Greece Un. Kingdom Germany

16%5903.8

12%4642.7

9%3419.7

8%3036.7

7%2526.3

Cyprus USA Hungary Italy Russia

5%

1921.1

3%

1310.2

3%

1276.4

3%

1170.0

3%

1088.1

FDI stock by country,1996 2009, %, EUR m


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2390.7

1728.6

2172.0

2480.9

6319.0

6762.5

8252.7

7272.6

Other

Telecom

Electricity, gas and water

Construction

Trade

Manufacturing

Finance

Real estate

Source: BNB, IBA

22%22%

19%19%

18%18%

17%17%

7%7%

6%6%

5%5%

6%6%

FDI stock by sector, 1996 2009, %, EUR m


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Korean Investments (1996 Q3 2010) - 34.3 EUR Million;

according to the FDI Stock by countries Korea is ranked

52th

The biggest Investments in Electrical Engeneering,

Renewable Energy, Trade

Bilateral Treaty on encouragement and reciprocal

protection of investments between Bulgaria and Korea

Convention for the avoidance of double taxation

between the two countries

Korean investments in Bulgaria


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Trade between Bulgaria and Korea

(BGN m)

Source: NSI

5364

31

148 144

80

169*

84*

2007 2008 2009 2010

Export to Korea Import from Korea

* October 2010


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Hyundai Heavy Industries Co.

1997 Hyundai Heavy Industries Korea privatized Bulgarian well-

known manufacturer of Power Transformers and Tap Changers

Elprom Trafo

Manufacturer of electrical components: power transformers, tap

changers, equipment for photovoltaic power stations

80% export of the production, mainly to Russia, Romania, USA

etc.

About 650 employees

2009 the company won a project granted by European Funds for

improvement of competitiveness of large enterprises


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Almost 60,000 students graduate every year from

over 50 universities

Bulgaria has one of the highest proportions of

students abroad from all European countries

860

833

Other 12,684

Agriculture

Architecture

Law 1,553

Health 3,166

Education 3,677

Engineering 7,178

Social sciences 8,372

Business 19,480

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%

Educated and skilled workforce one of the

key advantages of Bulgaria

Source: NSI


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25022

2862

12005

8253

23764

132869

12992

681

493

4175

10124

39594

14288

262

528

4901

10307

61262

Russian

Italian

Spanish

French

German

English

Sofia

Plovdiv

Varna

Source: NationalStatistics Institute

Language education in upper secondary

general schools by city, 2008/2009


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10%

16%

19% 19% 19% 20%

Bulgaria Rom ania Hungary Slovakia Czech

Republic

Turkey

Source: IBA

* 0% for manufacturing companies in areas with high unemployment

Comparison between Bulgaria and Europe

Corporate income tax rate, 2010


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Source: CEIC, Eurostat

Comparison between Bulgaria and Europe

Average monthly wages, Q2 2010, EUR

1099

730705

327456

Bulgaria Romania Slovakia Hungary Czech

Republic


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Attractive sectorsAttractive sectors Major investors supported byMajor investors supported byInvestBulgaria AgencyInvestBulgaria Agency

Electrical engineering

Mechanical engineering

Electronics

Automotive parts manufacturing

Chemical Industry

Solvay (Belgium)

Aurubis (Germany)

Liebherr (Germany)

Lufthansa Technik (Germany)

Montupet (France)

Italcementi (Italy)

Sise Cam (Turkey)

Stomana Industry (Greece) Miroglio (Italy)

Knauf (Austria)

Ixetic (Germany)

Schneider Electric (France)

Competitive advantagesCompetitive advantages

Export oriented sectors

The lowest operational cost in EU

Highly skilled labour force

7% with engineering degree

EUR 336 total average monthly

compensation (Q4 2009)

Manufacturing


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Focus on innovations

OpportunitiesOpportunities Competitive advantagesCompetitive advantages

Electronic devices and technologies

Electrical engines, incl.

electromobiles

Waste treatment facilities

LED lights

Highly-skilled workforce available

Strong traditions in IT

development and in pharmacy

Europe's most competitive wages

Harmonized legislation with EUs

High productivity rate and strong

GVA growth

Export oriented sectors

Government measuresGovernment measures

Increasing of R&D expenses from

0,5 to 2% from GDP until 2020

Adopting an Innovation Act (inprocess)

Establishing venture capital funds

(EU Program JEREMIE - 200 Mio.)

Stimuli for R&D investment in the



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OpportunitiesOpportunities Major projects supported byMajor projects supported byInvestBulgaria AgencyInvestBulgaria Agency

Wind parks

Solar plants

New nuclear PP

Modernization and construction of

new TPPs

Biomass and Biofuel

11 wind park projects

3 solar park projects

3 projects for modernization and

construction of new TPPs

2 Biomass projects

3 Biofuel projects


Skilled labour force

Availability of natural resources

Favorable climate conditions

Harmonized legislation with the EUs

RES electricity production to

double (from 10% to 20%) by 2020

Administrative and economic

incentives for RES energy

production

Energy Sector


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ICT & BPO

OpportunitiesOpportunities Main Players in BulgariaMain Players in Bulgaria

Software development

IT support centers

F/A shared service centers

Contact centers

IT

Software AG (Germany)

Microsoft (USA)

Hewlett Packard (USA)

IBM (USA) Nemetschek (Germany)

Johnson Controls (USA)

SAP Labs Bulgaria (Germany)

CISCO (USA)

BPO 60K (UK)

Sutherland (USA)

IBM (USA)

OPI Global (USA)

Hewlett Packard (USA)

C3i (USA)


Skills availability

Strong traditions in IT development

Reliable telecom infrastructure

Europe's most competitive wages

Reasonable office prices

11-12% ICT share of the GDP for

2009


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Promotion for initial investment in the followingsectors:

From industrial sector:

Manufacturing

From the sector of services:

Computer programming, consultancy & information

services activities

Scientific R & D and activities of head offices

Education

Human health care activities

Warehousing and support activities for

transportation


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Investment classifications under the

investment promotion act, ( Million)

Region or Sector Class B Class A

General5 - 10 >10

In municipalities with unemployment rate

equal or more than the country average 2 3.5 >3.5

In high-tech activities in the manufacturingindustry for the whole country

2 3.5 >3.5

In high-tech activities in the services,

computer technologies and R&D sectors

for the whole country

1 2 >2

Investment classes A and B depending on the value, region andsector allocation of the investment


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All classes (A&B) Information services and shortened administrative

services

Preferential treatment upon acquisition of a right of

ownership and limited real rights over real estate privatestate or private municipal property

Financial support for vocational training of employees for

the needs of the investment project

A class

Individual administrative services

Infrastructure support to the borders of the investment

project site

Incentives under the Investment Promotion

Act


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All sectors of the economy, with

the exception of the restrictions

imposed by EU Regulation 800/2008

Council of Ministers approval

Conditions priority status

depending on the value, jobs created

and region allocation of the investment

Priority Investment Projects


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Criteria for classification of the priority

investment projects

Region or Sector of the investmentRegion or Sector of the investment

InvestmentInvestment

valuevalue

(Euro m)(Euro m)

JobsJobs

General 50 200

In industrial zone construction and its development

into industrial park35 100

In municipalities with unemployment rate equal or

more than the country average25 100

In high-tech activities in the manufacturing

industry for the whole country 25 100

In construction of a technological park15 50

In education, human healthcare, IT and R&D

activities, professional activities, culture 10 50


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Priority investment projects incentives

All the incentives for class A and B

Special Incentives for priority investment projects:

Institutional support

Financial grants up to 50% for R&D and high-tech

services and up to 10% for manufacturing projects

State tax exemption for changing the land zoning

Possibility for acquisition of real estate private state or private municipal

property without a tender and at a price, not lower than the tax assessment

of the property

Possibility for public-private partnership with municipalities, universities and

public companies


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10% corporate income tax;

0% for manufacturing companies in areas with high

unemployment

10% personal income tax, flat rate

Opportunity for R&D expenditure write-off

Depreciation of 2 years for computers and new manufacturing

equipment

2-year VAT exemption for imports of equipment for investment

projects over 5 million, creating at least 50 jobs

5% withholding tax on dividends and liquidation quotas (0% for EUtax residents)

Up to 1 year minimum salary and reimbursement of social/health

care security for employing young people and disadvantaged

people through the Employment Agency

Investment incentives in Bulgaria


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InvestBulgaria Agency is a Government investment promotion 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 and infrastructure, data on

unemployment, skilled labour force and level of education

Recommendation of investment project sites

Identification of potential suppliers, contract manufacturers and

joint-venture partners

Personalized administrative servicing

Liaison with central and local governments

Liaison with branch chambers and NGOs



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Sofia 1000, 31 Aksakov Str.

Phone: (+359 2) 985 5500Fax: (+359 2) 980 1320

E-mail: [email protected]

Web: www.investbg.government.bg

Documents

Invest in Bulgaria - Your Gateway to EU_14.12