불가리아 경제뉴스 (13 – 20 JULY 2007)

BULGARIAN ECONOMIC TOP NEWS DIGEST

WEEKLY REPORT (13 – 20 JULY 2007)

 

 

 

Sections/headline briefs:

 

 

MACROECONOMY:

 

 

·        General Motors Seeks Place for Automobile Plant in Central Europe

·        Volkswagen daughter company to produce car parts in Bulgaria

·        Bulgaria proposes eco fund for Greece-bound oil pipeline

·        Russia, Bulgaria and Greece delay decision on HQ for  Burgas-Alexandroupolis

·        Ferry Boat Saves Bulgaria's Export to Russia

·        More Russian companies interested in production  in Bulgaria

·        Varna containerised cargo terminal project to kick off end-'07

·        NEK to pick bank to lead, arrange Belene project financing

·        Bulgaria has lowest food prices in EU

·        Exports to non-EU countries total BGN 3.62bn end-May

·        Current account gap widens to EUR 2.59bn

·        More restrictions for Bulgarian banks

·        OLAF: Romania 4 years ahead of Bulgaria

·        Bulgarian regulator pressures mobile carriers on new roaming tariffs

·        Nearly BGN 4.5m has been spent on equipment and software for the unfinished reform

·        Bulgarians like EU, dissatisfied with life

·        About 6% of Bulgarians do business

·        Bulgaria earns 500 EUR from every tourist

·        Bulgaria aims to join Eurozone by 2010

·        The World Bank to help Bulgaria absorb EU funds

·        Bulgarian Business Lobby in the EP

·        Bulgaria free zone VAT remains intact

·        Per Capita beer consumption in first half of 2007 reported at 69 l

·        Bulgaria and China have started a tourism partnership

 

 

INVESTMENTS:

 

 

·        Net FDI drop 11.1% y/y to EUR 1.5bn in Jan-May

·        Stock market investments gain popularity

·        EQUEST plans further investment in Bulgaria

·        Investors in Elana mutual funds up 82%

·        Over 4 million invested in Bansko ski runs

·        Bulgarian company Risk Engineering will invest in a large-scale 500 mln EUR project

·        Investors in KD Equity Bulgaria gain 66% in 12mo

·        Bulgarian university invests in mutual fund

·        City of Mezdra to invest in new sports complex

·        Bulgaria REITs invest mainly in arable land

·        Plenty of foreign investments for renewable energy resources expected

·        Enel mulls RES investments in Bulgaria

·        Solar Hold to invest EUR 250mn in solar plants

 

 

 

COMPANIES:

 

 

·        Companies' profits jump 17% in 2006

·        Bulgaria's National Revenue Agency to audit 300 co's

·        Sofia medical equipment company sold for 18 mln levs

·        Bulgaria property co FairPlay to build new hotel in Sofia

·        Dairy maker Meggle debuts new products in Bulgaria

·        Bulgarian co Litex Commerce buys 25% in Sofia bus station

·        Raiffeisen named best bank in CEE

·        EU inquiry deadline for AIG buy of Bulgaria's BTC extended to Jul 31

·        Raiffeisen lends EUR 44 M for Bulgarian Mall

·        Bulgarian Posts' privatisation put off

·        Balkan region's biggest wholesale market up for sale

·        FIBank's H1 profit jumps 62% Y/Y, tops BGN 19m

·        Pirelli, UniCredit launch Joint Real Estate Co. in Bulgaria

·        German company invited to sign on to Nabucco gas transit project

 

 

 

 

 

 

 

Articles:

 

 

MACROECONOMY:

 

General Motors Seeks Place for Automobile Plant in Central Europe

According to information of France Press agency, the American automobile giant General Motors is considering the possibility to open a new automobile plant in Central Europe.The statement has been made by Zoltan Kaszas, GM public relations manager for Central Europe.He has confirmed the information, that seven countries are explored as potential candidates: Bulgaria, Czech republic, Hungary, Poland, Russia, Slovakia and Slovenia. “We want to go there, where people buy cars, where there is good and qualified labor force and where we can have a supply network”, the regional manager Chris Lacley has added.In the last years, many companies opened automobile plants in Eastern Europe. Currently the South Korean Hyundai is building a plant in the eastern part of the Czech republic. on the other side of the border with Slovakia, Kia recently started its production.
The biggest producer in Central Europe is the Czech Skoda Auto, which is part of the Volkswagen Group.

 

Volkswagen daughter company to produce car parts in Bulgaria

 

A subsidiary of Germany’s Volkswagen wants to invest in Bulgaria’s Karlovo municipality.The company, the name of which has not been announced, wanted to establish an motor vehicle parts plant in the municipality, investor.bg said. Karlovo mayor Emil Kabaivanov said that the plant would produce parts for Volkswagen, Skoda and Seat.The investor wanted to use the building of a former military bearings plant in the village of Bogdan. The plant is currently being used by Swedish company SKF. According to Kabaivanov, the two companies have discussed the idea and the outcome is to be announced soon.If the two companies come to an agreement, the parts plant could be opened in six to eight months. There will be close to 1000 job opportunities for wheelwrights.

 

Bulgaria proposes eco fund for Greece-bound oil pipeline

The International Project Company (IPC) that will design and build the Burgas-Alexandroupolis oil pipeline should set up a fund to redress possible environmental damage from the operation of the facility.The proposal was stabled by Technoexportstroy and Bulgargaz, the companies representing Bulgaria in the pipeline project, at last week's meeting of the future IPC shareholders.The contributions to the proposed eco fund will be proportionate to the stake of each shareholder. This means the bulk of the resource will have to be remitted by Russia which has a 51% stake in the yet-to-be-incorporated IPC while Sofia and Athens each control 24.5.%.The Bulgarian side has also proposed to describe in detail the environment protection responsibilities of each shareholder in the statute of the IPC.The Bulgarian companies, the Russian representative to the meeting, Truboprovodnii Consortium Burgas-Alexandroupolis, and the Greek representative, Helpe S.A.-Thraki S.A., also discussed three possible seats for the IPC: Cyprus, Luxembourg and the Netherlands. Sofia had previously ruled out Cyprus.The decision on the company headquarters and statutes is expected to be taken after August 23.In related news, Russian newspaper Komesant reported that Chevron of the U.S. and Kazakhstan's Kazmunaigaz are eyeing a stake in the Burgas-Alexandroupolis project.Bulgarian regional development minister Asen Gagauzov has sent a letter to Russian energy minister Viktor Hristenko, saying that the likely entry into the project by Chevron and Kazmunaigaz could be discussed after the IPC is incorporated and on the condition that Transneft, the designated operator of the pipeline, is unable to guarantee the necessary transit volumes.

Russia, Bulgaria and Greece delay decision on HQ for  Burgas-Alexandroupolis

The location of the headquarters of the International Project Company (IPC), which will run the Bourgas-Alexandroupolis project, will be decided in September, Deputy Regional Development and Public Works Minister Kalin Rogachev said.Disputes among Bulgaria, Russia and Greece are the main reason for the delay. In mid-July, reports said that a decision on which country the IPC would be registered in “was only days away.”The company is expected to be registered by the end of 2007, according to Bulgarian news agency BTA.Bulgaria and Greece insist that a majority vote is necessary for the decision, while Russia, which will control 51 per cent of the pipeline, is hesitating. Bulgarian and Greek firms will hold equal stakes of 24.5 per cent each.The construction of the 280km oil pipeline, which will connect Bulgaria’s Bourgas to Greece’s Alexandroupolis, is expected to start in the first quarter of 2008 and to be completed by 2010. 

Ferry Boat Saves Bulgaria's Export to Russia

A new ferry boat line will facilitate the trade relations between Russia and Bulgaria. Sofia and Moscow hold intensive negotiations over the construction of a Black Sea link between the two countries," Bulgaria's PM, Sergei Stanishev informed at a discussion organized by the University for National and World Economy (UNWE). The chairman of the Russia's Chamber of Commerce and Industry and former Russia's PM Yevgeny Primakov took part in the discussion.A ferry boat will connect Bulgaria's biggest Black Sea port of Varna with the Russian port of Kavkaz, which is located exactly at the entrance of the Azov Sea at the border with Ukraine. Presently the Bulgarian commodities for Russia go through Ukraine. The Bulgarian companies have big problems with the Ukrainian authorities, which stop and delay the deliveries. The worst affected are the wine producers who are among the biggest exporters for Russia's market.
"Despite the fact that Bulgaria's export for Russia registers a growth of 35% for 2006, Bulgaria's trade balance with Russia is still negative," stated PM Stanishev and appealed to the companies to construct logistic centers near Moscow and the big Russian cities.
Mr. Primakov advised Bulgaria's authorities to improve the infrastructure of the Bulgarian  resorts."The Bulgarian and Russian resorts are better than Turkey's, but they are more expensive, which makes them less attractive to holidaymakers," Yevgeny Primakov said.Bulgaria's PM pointed out that Russian investments in real estates and high technologies in Bulgaria were growing and offered Bulgaria's aid for the renewal of the agreement for strategic partnership between EU and Russia, which expires at the end of 2007.

 

 

 

More Russian companies interested in production  in Bulgaria

An increasing number of Russian companies were interested in investment in production in Bulgaria, Prime Minister Sergei Stanishev said during a round-table discussion on the future of the trade and economic relations between Russia and Bulgaria.The possibility to sell products in the EU market was the reason for the Russian companies’ interest, he said, as quoted by Bulgarian National Radio (BNR).Russian investment in Bulgaria was $300 million.Stanishev highlighted the South Stream gas pipeline to be built by Bulgaria, Russia, Italy and Greece. Bulgaria could become an energy centre on the Balkans by taking part in the project, he said.Russia’s former prime minister Yevgeni Primakov said that Russia was the second biggest trade partner of Bulgaria, after Germany. Trade relations between Russia and Bulgaria could improve further, he said.

Varna containerised cargo terminal project to kick off end-'07

The project for the relocation of the containerised cargo terminal of Bulgarian Black Sea port Varna will begin towards the end of 2007, said Borislav Gutsanov, chairman of the municipal council.The current terminal site will be remodelled into an amusement zone with a yacht marina to the tune of some 500 mln euro.The assessment of the environmental impact of the terminal project should be completed within 45 days as a necessary step towards the launch of the undertaking.The cost of the new facility is seen at 100 mln euro. It should be handed over 36 months after the start of construction. Although the investment will not be recouped for a decade, the attendant benefits for the Varna economy will be significant, said Varna harbor executive director Danail Papazov. The negotiations to secure financing for the project will get underway in September.

NEK to pick bank to lead, arrange Belene project financing

Bulgaria's national power grid operator NEK has announced on its website the launch of a negotiated procedure to award a public procurement contract for a lead structuring and arranging Bank for the Belene nuclear power plant (NPP) project.The notice was published on July 6, 2007 on the web page of the Official Gazette.NEK seeks to appoint an international bank or a selected group of international banks to lead and collaborate with other advisors (including NEK’s existing advisors) in the forthcoming finance structuring and finance arranging process.NEK envisages two phases: advisory and structuring phase (Phase 1) and arranging/financing Phase (Phase 2).The majority of the activities to be performed during Phase 1 are aimed at defining and negotiating the most relevant financing structure for the Project. Phase one will conclude upon delivery of the key deliverables. Phase 2 is an execution phase mandate, which will conclude at financial closure and shall start immediately following the delivery of the key deliverables detailed in Phase 1.The negotiated procedure with publication of a notice will be conducted in two stages.The first stage is the submission of requests to participate in the procedure and examination of the submitted requests. The time limit for submission of requests to participate is September 24, 2007. The candidates that meet the requirements announced in the contract documents will be invited to submit initial tenders.Stage two is the submission of initial tenders and conduct of the negotiations NEK shall dispatch simultaneously to all candidates that have signed the confidentiality agreement written invitations, a negotiation conduct procedure and an information memorandum. The tenders will be ranked based on a total final evaluation.The construction of the Belene NPP, estimated at around 4 bln euro, has been commissioned to Russia's AtomStroyExport.The final agreement for implementation of the project is expected to be signed before the end of 2007.

Bulgaria has lowest food prices in EU

Food and beverage prices in Bulgaria were nearly twice lower compared to the average price levels in the European Union in 2006, Eurostat data show. The average food and beverage prices in Lithuania amounted to 64% of the average prices in the EU, while in Poland and Slovakia the figure stood at 67%. Denmark and Ireland were among the most expensive countries in Europe as regards to food and drinks.The most expensive bread in Europe was sold in Denmark and Finland in 2006, while the cheapest could be found in Bulgaria and Slovakia. Bulgaria also had the lowest meat and alcohol prices, according to Eurostat's data. The prices of alcoholic beverages in Bulgaria were 31% cheaper compared to EU's average.The prices of tobacco product in Great Britain exceeded nearly twice the average for Europe in 2006. Tobacco prices were also high in Ireland, France, Germany and Sweden during the year.The price of consumer basket goods in the most expensive European countries were twice as high as the prices in the cheapest countries, the European Commission said.

Exports to non-EU countries total BGN 3.62bn end-May

Bulgarian producers exported BGN 3.62 billion worth of goods to non-EU countries in the first five months of the year, the National Statistical Institute said. Imports for the same period amounted to BGN 5.9 billion. But trade turnover with the EU was twice as large.Turkey was the biggest trade partner with Bulgarian exports amounting to BGN 1.135 billion, up by 8.7% year on year. Exports to Serbia rose by more than 30%, year on year, to BGN 409.6 million. Bulgarian sales in Russia jump by more than 120% to BGN 233 million, while Russian imports decreased slightly to BGN 2.1 billion. Imports from Turkey were also on the rise, exceeding BGN 1.1 billion. Strong growth was registered in Asian imports. The sales of Chinese goods in Bulgaria rose by 60% to BGN 408 million. Despite the small volumes, imports from India and Vietnam went up by more than 100%.

Current account gap widens to EUR 2.59bn

 

Bulgaria's current account gap widened to EUR 2.59 billion or 9.7% of GDP as at the end of may 2007, data of the Bulgarian National Bank show. The current account gap stood at 7% of DGP a year earlier. The widening of the current account deficit may be put down mainly to the country's foreign trade gap, which totalled EUR 2.66 billion for the first five months of 2007, an increase of EUR 800 million compared to the year-ago period. Exports in the period January-May 2007 marked a 6.6-percent year on year increase, while imports grew by 17.4%. Foreign direct investments (FDI) in Bulgaria decreased to EUR 1.53 billion or 5.7% of GDP for the first five months of 2007. The figure amounted to 6.8% of GDP for the corresponding period in 2006. FDI covered 60% of the deficit in the first five months of 2007, compared to 96.8% a year earlier. Bulgaria's current account deficit is forecast to improve in the summer as a result of the expected revenues from foreign tourists visiting the country's Black Sea resorts.

 

 

 

 

More restrictions for Bulgarian banks

 

The Bulgarian National Bank (BNB) is considering raising the minimum required reserves from 8% to 12 or 15%. In the middle of May BNB governor Ivan Iskrov warned that if credit growth remained strong, the central bank would introduce new restrictive measures. BNB's plans have surprised all specialists in the banking sector. According to Pari daily's sources, the BNB will come up with a decision on Thursday at the earliest.
The banking system will be deprived of between BGN 1.5 and 2.6 billion if the measures are implemented. Specialists say that this is the most severe punishment the supervisor can impose, because the minimum required reserves generate only losses to banks. The deposits are held with the BNB and do not bear interest but only depreciate with inflation every year. Added to that is the revenue banks lose from not operating with the money.
Bankers are unanimous that the measure will only contain the credit boom in the short term but there will be no effect in the long run. Alternative measures should be considered, because raising the minimum reserves will cause more damage than good, Georgi Angelov, senior economist at Open Society Institute, said. Increasing the minimum required reserves is certainly no conspiracy, the CEO of UniCredit Bulbank, Levon Hampartsumyan, said. Obviously the BNB is seeing the first signs of economy overheating. That is probably connected with certain processes in the Baltic states, he added.

OLAF: Romania Four Years Ahead of Bulgaria

The head of the European Union's Anti-Fraud Office (OLAF) criticized Bulgaria and praised neighbouring Romania for their preparedness to make proper use of the bloc's funds in an interview in the Dnevnik newspaper Monday.The Bulgarian authorities have to realise that "the problems will not disappear if they have been ignored long enough," OLAF Director General Franz-Hermann Bruner told the newspaper."We hope for improvements as soon as possible," he added.Romania, which joined the EU together with Bulgaria on January 1, is "four years ahead" in its preparedness to efficiently manage European money and prevent fraud, Bruner said."The Romanians began to prepare long before Bulgaria and made the proper distribution of European funds their priority even before their accession," he added.Bulgaria still has trouble with ensuring clear and transparent public tender procedures, while "the system creates the impression that it works for certain people by leaving loopholes that can be used by those who know the procedures," he said.OLAF is currently investigating 12 cases of fraud with money from the EU pre-accession funds as the country still has not started to make use of the over 11 billion euros made available to it in the first years after accession.In February, police arrested five Bulgarians, two Germans, and two Swiss for syphoning off some 7.8 million euros from the SAPARD programme for rural development.

 

Bulgarian regulator pressures mobile carriers on new roaming tariffs

Bulgaria's telecom regulator has instructed the local wireless carrier to submit their new roaming tariffs by July 23. New regulations on roaming charges - the cost of making or receiving a call while abroad, became law in all 27 EU member states on June 30.The July 23 deadline applies for the notification to the Communications Regulation Commission of the carriers' plans to advertise the cheaper tariffs to their customers.The carriers will have to provide information to the regulator on their existing roaming agreements with non-native telecom companies until September 30.The customers will have a two-month period to opt out or into the new tariffs. The new tariffs will apply by default unless the customers has chosen otherwise.Under the new EU regulations, the maximum retail charge (excluding VAT) for regulated roaming calls is capped at 0.49 euro per minute for calls made and 0.24 euro per minute for calls received.

Nearly BGN 4.5m has been spent on equipment and software for the unfinished reform

 

Тhe launch of Bulgaria's commercial register has been put off for the fourth time. Rough calculations show that the project has turned into a financial black hole, consuming millions of taxpayers' money and yielding no results. In the best case, businesses will have no register for another six months. A look at the tender procedures announced in the judicial system in 2004-7 reveals that nearly BGN 4.5 million has been spent on equipment and software for the project so far. The amount does not include various small public contracts awarded by the Registry Agency and capital expenses.
As much as EUR 900,000 (nearly BGN 1.8 million) was paid to Greece's Intracom in 2004 to build the register. In 2005 Lirex BG won a tender for delivery of 50 computers and specialised equipment to the Registry Agency for BGN 68,456. Another BGN 2,104,803 was allocated in 2006 for the needs of the future register. The amount included BGN 616,490 for equipment from Telelink and BGN 733,313 from Stemo. After Intracom's unsuccessful attempt to architecture the register, a new tender was organised in late 2006, which Siemens Business Services won with a BGN 755,000 offer.
Earlier in 2007 Stemo was chosen as system integrator of the register. The service will cost BGN 89,000. The register's internet portal will be created by Ciela Soft & Publishing for BGN 143,880. The Registry Agency has also spent BGN 914,000 on repairs and furniture.It seems the register will never kick off, the chairman of the Bulgarian Chamber of Commerce and Industry (BCCI), Bozhidar Bozhinov, said. We have repeatedly offered our assistance, as we already have an operating register of more than 50,000 companies, but our proposal has been always disregarded, he added.

 

Bulgarians like EU, dissatisfied with life

 

Bulgarians have very positive perceptions of the European Union (EU), a Eurobarometer survey shows. Some 59% of the people have good opinion of the community, which is 7 points higher than the EU average. The main definitions Bulgarians use of the EU is that it is democratic (78%), modern (76%), and protective (67%). only 13% of Bulgarians think that the European organisation is inefficient.At the same time Bulgarians remain dissatisfied with their life. According to the survey, this feeling dominates the opinion of 63% of the people. Although 55% of Bulgarians believe that EU membership is 'something good', only 28% understand how the EU works. Some 32% cannot say if Bulgaria has benefited from EU membership.

 

About 6% of Bulgarians do business

 

Еntrepreneurship is a source of income for some 6% of Bulgarians, according to data of the National Statistical Institute for May 2007. Wages and salaries remain the main financial source (51.8%), followed by pensions (22.7%).The average household income in May increased by 15.7%, year on year, to BGN 587.21 (about EUR 295). Per capita income went up to BGN 231.95 from BGN 202.61 a year earlier. But expenditure also rose: by 15% to BGN 562.55 for households and to BGN 222.21 per capita.

Bulgaria earns 500 EUR from every tourist

Bulgaria’s average revenue from each tourist to visit the country in 2007 is nearly 500 euro, the Bulgarian Tourist Chamber said.World Tourism Organsiation data showed that in 2006, the average income from a tourist in Europe was 600 euro, while around the world it was 650 euro. In Bulgaria last year, the revenue from a tourist was 490 euro.The average price of a night’s lodgings in a three-star hotel at Bulgaria’s Black Sea coast was 20 to 22 euro, investor.bg said.The most popular resorts are Sunny Beach, Albena and Golden Sands.Small well-run hotels managed to attract more tourists than the big hotels built in recent years.Romanian resorts raised their prices on July 15 because of the start of the summer season. Currently, a night in a three-star hotel in Romania costs 100 euro, nearly five times more expensive than in Bulgaria.German and French tourists were expected to be the most numerous in Bulgaria in 2007, investor.bg said. Nearly 60 500 Germans and 59 200 French tourists arrived at Bourgas Airport in the first half of 2007.

Bulgaria aims to join Eurozone by 2010

 

The government programme needs to be revised and made more specific. Our main objective should be preserving the financial stability, so that Bulgaria can join the Eurozone not later than in 2010, the chairman of the parliamentary economic committee, Yordan Tsonev, told the Pari daily in an interview. This is just a tentative deadline, we can adopt the euro in 2001 or 2012, but I have never shared the view that the later the better, he added.The Eurozone gives a lot of advantages, though it is accompanied by some temporary snags, such as higher prices in the beginning and difficulties related to the economy adaptation and competitiveness. But being part of the monetary union of the large European states also means sharing the benefits of their economic processes. Inflation is lower (1.5-2.0%), the environment is predictable and stable, which is a magnet for investors. Companies' expenses decline, because there are no exchange rate differences and the country's rating improves substantially.

The World Bank To Help Bulgaria Absorb EU Funds

The World Bank (WB) will help Bulgaria to absorb 3.8 billion euros, Deutsche Welle Radio broadcast. In the beginning of August 2007, a new WB project for Bulgaria will be approved, which will assist the country in the absorption of 1.3 billion euros from the EU for regional development, as well as of 2.5 billion more for development of the rural areas for the period 2007-2013. The WB project will be US$78 million worth, US$28 million of which will be supplied by Bulgaria's state budget, and the remaining US$50 million the Bulgarian state will take as a WB loan. The World Bank is also working on the project for Bulgaria's new cadastral map, which is expected to be loaded on the Internet very soon.

Bulgarian Business Lobby in the EP

A lobby of the Bulgarian business will be established in the European Parliament, decided Bulgarian MEPs and businessmen at a meeting in the Bulgarian Industrial Association (BIA). Lobbyism is not a dirty word, this is a way to protect the interests of certain groups and there is nothing wrong about Bulgarian economy having their lobbyists in the European Parliament, the BIA Chairman Bozhidar Danev said. A working group in the European Parliament, due to the efforts of BIA and Bulgarian MEPs, has rejected a proposal related to the chemical industry that would have damaged the interests of Bulgarian and European enterprises. Bulgarian businessmen have promised expert help to the MEPs. MEPs Iliana Yotova, Kristian Vigenin, Evgeni Kirilov, Marussia Lyubcheva, Slavi Binev, Petia Stavreva, Metin Kazak and Mariela Baeva attended the meeting. They promised to assist Bulgarian business by providing information about European funds absorption.

 

Bulgaria free zone VAT remains intact

Bulgaria's finance ministry is resisting a proposal to change VAT legislation and install a zero rate for goods placed free zones although the parliamentary EU affairs committee Thursday seconded the move.The finance ministry points out that VAT exemption is still available on the territory of the free zones but only in respect to non-Community goods. one of the reasons why Community goods should not qualify for a zero rate is the fact that the free zones are not excludes from the tax territory of the country.Bulgaria operates free zones in Plovdiv, Vidin, Dragoman, Svilengrad, Ruse and Burgas.The sponsor of the legislative change argues that the free zones practically seized to function with the entry into force of the new VAT Act.The amended VAT Act tips the playing field in favor of non-Community goods placed in the free zones, prompting the export-oriented companies to walk away from the local free zones and take their business to the free zones of non-EU members, argue the authors of the legislative proposal.They further claim that the country stands to lose 1 bln euro annually from the migration of exporters.

Per Capita Beer Consumption in First Half of 2007 Reported at 69 l

 

Per capita consumption of beer in Bulgaria in the first half of 2007 was 69 l, which is by 16 per cent more than the like period a year ago, Chairman of the Union of Brewers in Bulgaria (UBB) Vladimir Ivanov told a news conference Thursday. UBB also reports growing exports of Bulgarian beer. Ivanov said that the beer made in Bulgaria is of extremely good quality, but nevertheless is sold at low prices. This year saw the launching of new Bulgarian trade mark beers and production lines, he said. As at the month of May beer in Bulgaria appreciated by seven to ten per cent compared to the like period in the previous year. The average price of a half a litre of beer in Bulgaria is 0.59 leva (roughly equal to 0.30 euros). Half a litre of lager costs 0.58 leva and imported beer costs 1.55 leva, Ivanov said. Thirty-six per cent of the beer consumed in Bulgaria is sold in eating establishments and 64 per cent, in retail trade, which is a traditional ratio for this country. A total of 120,000 t of barley, 450 t of natural malt and malt products are used annually for beer brewing in Bulgaria.The average price of barley in 2006 was 170-205 leva/t, and grew to 300-350 leva/t in 2007 due to the poor harvest. UBB said that if there is a shortage of raw materials, the industry will have to resort to imports which will affect beer prices. Brewers agreed a common advertising budget for the industry. Beer advertising spending in the first quarter of 2007 was 3 million leva, against 1.4 million for the like period in 2006. Per capita beer consumption in the Czech Republic is 158.7 l, in Romania, 70.7 l and in Serbia, 53.3 l.

 

 

 

 

 

 

Bulgaria and China have started a tourism partnership

At a meeting with journalists last week, State Agency for Tourism chairperson Anelia Krushkova spoke about her visit to Beijing and Chinese-Bulgarian tourism relations, her visit to Georgia and meeting with the Georgian Tourism Agency head, incomes from the tourism sector for the first half of 2007 and the tourism exhibitions that Bulgaria will attend in the coming months.Bulgaria and China have started a tourism partnership. So far, the process has reached the stage of clarifying which authorised tourism agencies will represent both countries in these relations. Both Bulgaria and China presented a list, with the names of the companies in Latin script, to the European Commission (EC) on July 15. Krushkova said it will be pleasure for SAT to welcome Chinese tourists but there will be strictly defined rules regarding tourists from China. A common consulate office will be set up to provide visas to holidaymakers. Krushkova outlined the difficulties SAT will face while presenting Bulgaria as a tourist destination in China. The main challenges, according to her, are presenting Bulgaria as a destination of religious interest because Chinese tourists were not specifically interested in Christian churches. The other difficulty was to provide the Chinese visitors with food they recognise because they were used only to their national cuisine. Chinese tourists liked to be able to visit many destinations on their, sometimes, short trips and therefore Krushkova said SAT will try to provide trips combining visits to Bulgaria, Greece and Turkey, for instance. Chinese tourists also enjoyed being able to take many photographs on their travels and to combine this with the opportunity to do some inexpensive shopping. They also liked to play roulette, which should be taken into consideration when welcoming them in Bulgaria as well. The chairperson of the Chinese tourism agency, whom Krushkova met, was impressed by the golf, ski and gambling opportunities in Bulgaria. She said that the official announcement of the start of the Chinese-Bulgarian tourism relations will be in September or October 2007, when the head of the Chinese tourism agency will visit Bulgaria. Furthermore, Bulgaria will host the 58th General Assembly of the World Association of Tourist Agencies (WATA). It will take place in Sofia in November 2007. More than 50 leading tourist agencies from about 40 countries will be present at the assembly, with the theme this year being “The challenges before WATA through the widening spectrum of services offered to tourists”.

 

 

INVESTMENTS:

 

Net FDI drop 11.1% y/y to EUR 1.5bn in Jan-May

 

Net FDI dropped by 11.1% y/y to EUR 1.5bn in Jan-May and covered 57.3% of the CA gap as compared to 95.2% a year ago. The ratio, however, slightly improved on a monthly basis as it stood at 55.7% in April. For the 12-month period ending in April, non-debt financing of the CA gap is declining at a steeper rate as compared to a month ago and reached 78.8% in May. FDI inflows reached 5.7% of GDP for the period until May. The ministry of finance expects FDI inflows to reach 15% of the forecasted GDP this year.

 

Stock market investments gain popularity

 

Individual and corporate players on BSE-Sofia have increased their investments in shares. Because most of us are not really into the everyday life of the local equity market, Bulgarians usually prefer to pour their money into investment schemes. Back in the close of March, there have been 35 mutual funds and 11 investment entities, managing BGN 435.29 million, FSC (Financial Supervision Commission) officials say. The assets that these collective investment schemes run have more than doubled on annual basis. Here we should add the business of 45 REITs showing a triple growth in assets, the latter standing at BGN 741.15 million (March 31st). The market value of companies on BSE-Sofia runs up to BGN 18.238 billion, posting twofold increase in the past year.

 

EQUEST plans further investment in Bulgaria

Investment fund Equest Balkan Properties plans to raise more funds for further investment in Bulgaria and Romania, as well as to carry out the fund’s current projects in the countries, Equest representative for Romania George Teleman said.Equest wanted to raise 50 million euro for investments in Romania. As Bulgaria is the fund’s priority, the sum to be invested in the country would be even larger, Teleman told investor.bg.The money will be invested mainly in business developments, including offices, commercial parks, logistic centres and parking places, but not in residential property.Investor.bg was not able to get comment from the Equest office in Bulgaria .Equest owns the City Center Sofia mall, electrical appliances hypermarket chain Technomarket, as well as numerous properties in Bulgaria.Equest fund Equest Investments Balkans recently acquired 33.5 per cent of Rila Samokov 2004, the company that is to carry out the Super Borovets project.

Investors in Elana mutual funds up 82%

 

Investments in the Elana Balanced Euro Fund and Elana Balanced $ Fund have increased by 75% since the beginning of 2007. Investors in Elana Fund Management's balanced risk profile funds have also grown by 108% in 2007 compared to the corresponding period of 2006.The number of investors in all collective investments schemes of the management company have grown by 82% in 2007 compared to the corresponding period of 2006.The assets management by Elana Fund Management amounted to BGN 24.61 million as at the end of June 2007. The funds provided a 4.16-percent return for June. The share of bonds in the portfolio of Elana's funds has increased in June, while the share of bank deposits has gone down.

Over 4 Million Invested in Bansko Ski Runs

Four million levs will be invested in the ski-runs of Bansko, Bulgaria's largest winter resort. This is by a million more than the money for land reclamation spent in 2006. Concessionaires from Ulen hired for a consultant the leading expert in the sphere, Paul Matthews. His company has designed over 140 ski resorts in the world, some of them being the host cities of the Olympic Games in 2010 and 2014 - Vancouver-Whistler and Sochi. Austrian Kurt Koch, former president of the downhill World Cup for women also consults Bansko. The reclamation programmes are coordinated by experts from Bulgaria's Ministry of Environment and Waters and Pirin National Park.

Bulgarian company Risk Engineering will invest in a large-scale 500 mln EUR project

Bulgarian engineering company Risk Engineering said it will invest in a large-scale 500 mln euro project for the construction of hothouses and co-generation facilities that will provide the necessary heating energy. The seven-year project will be deployed on 56 ha of land in Parvomai, Rakovski, Krumovo, Mezdra and other cities.DG Parvomai, 51%-owned by Risk Engineering with Dutch Green House holding a 35% stake, has already made some land purchases for the purposes of the project.The hothouse output will be marketed abroad after it is certified by the agrarian institute in Amsterdam, said Risk Engineering manager and owner Bogomil Manchev.The company executive said the project will apply for a First Class Investor certificate from InvestBulgaria Agency, the local investment promotion authority.Longer-term plans include the construction or acquisition of a cannery, said Manchev.The project financing will be provided by Corporate Bank and ING Bank.During the initial stage of the project, 42 mln euro will be invested in a co-generation module with a 15-20MWh capacity in Parvomai where the area of the planned hothouses is 12 ha. Work on the Parvomai power facility should get underway this fall.

Investors in KD Equity Bulgaria gain 66% in 12mo

 

Тhe return provided by KD Equity Bulgaria fund for the past 12 months has reached 66.14%, KD Investments said. Since the beginning of 2007 alone investors have gained 31.94%.The total assets managed by KD Investments' funds amount to BGN 12.3 million. The assets of the high-yield KD Equity Bulgaria have jumped by 313% this year to BGN 4.239 million. KD Pelikan's assets stand at BGN 6.861 million, KD Bonds Bulgaria's, at BGN 1.198 million.Earlier in July the company decided to increase KD Equity Bulgaria's investments abroad. As a result, currently 15% of the fund's portfolio is invested in stocks traded on the exchanges of Paris, Zagreb and Frankfurt, up from 6% at the end of 2006.

 

Bulgarian university invests in mutual fund

The New Bulgarian University (NBU) has become the first local higher education establishment to take a chance on the capital market.The bulletin of the Central Depository shows the NBU has paid 2.34 mln levs to acquire an interest of over 5% in the Raiffeisen (Bulgaria) Balanced Fund.The investment was sourced from the university's 2006 profit of 3 mln levs and from donations.Over 80% of the university's revenues come from tuition fees which topped 17.7 mln levs last year.The university did not elaborate on its investment policy but informed sources said that the entry of the mutual fund market aims to ensure a higher rate of return and is part of the NBU's strategy for better management of its financial resources.

City of Mezdra to invest in new sports complex

 

Mezdra, a city in North-western Bulgaria, will invest 2.5 mln levs in a new multi-sport facility that should welcome its first athletes by end-'08. The complex will comprise facilities for a total of 16 sports including 60 m track, handball pitch and gym. The project will be implemented on a 1.1 ha municipal site that will include 0.7-0.8 ha of indoor facilities. The design phase of the project has been completed with the start of construction imminent.

Bulgaria REITs invest mainly in arable land

The combined assets of the local special purpose vehicles have increased by 35% to 741.1 mln levs in Q1 over end-2006, shows data released by the Bulgarian financial regulator. The number of licensed SPVs is up to 51, including seven companies that securitise debt receivables. The Financial Supervision Commission Wednesday granted permits to two new SPVs, Globex Estate Fund and City Development. A significant share of the sector assets are invested in arable land, 168.1 mln levs or 26% of the asset total. Another 30% or so are invested in land, buildings and plant.

Plenty of Foreign Investments for Renewable Energy Resources Expected

Very soon Bulgaria should expect boom of foreign investments for renewable energy resources on the amount of 400 - 500 million EUR. The interest increased after the State Agency for energy and water regulation showed initiatives in producing electricity by photo - optical panels and biomass, said in front of Darik the chairman of Association of Producers of Ecological Energy (APEE) Velizar Kiriakov. In the moment there are few Bulgarian companies, which works seriously on the production of electricity by wood waste and straw.

 

Enel mulls RES investments in Bulgaria

 

Italy's Enel is launching a EUR 4 billion four-year programme for development of renewable energy sources (RES), a company official said. The implementation of the programme will allow reducing carbon dioxide emissions by 4 million tonnes. Nearly EUR 1.7 billion of the investment will be directed to countries other than Italy and Bulgaria is one of the options considered. In Bulgaria, Enel is interested in building several wind parks, each with a capacity of 35-40 mW.

Solar Hold to invest EUR 250mn in solar plants

 

The Sofia-based company Solar Hold is planning to invest a total of EUR 250mn in the construction of ten solar power plants with capacity of 5MW each near the southern town of Svilengrad , Dnevnik Daily reads. The first plant would be operational by March next year and the last in 2010. Each of the plants is expected to generate revenues of EUR 4mn annually. Solar Hold has sent an investment proposal to the municipality of Svilengrad , which will be discussed by the end of this month.

 

 

 

 

 

 

 

 

 

 

 

 

 

COMPANIES:

 

 

Companies' profits jump 17% in 2006

 

The profits of companies in Bulgaria increased by some 17% in 2006, year on year, the finance ministry's report on the budget execution reads. That was nearly twice as much as the average growth of 9.4% registered for the preceding six years. The jump is explained with the low corporate tax, which encouraged the official economy and investments.
The low taxes, the overall economic revival and the good work of the revenue administrations resulted in overperformance of the consolidated budget. Direct taxes increased the most in comparison with the targeted figures. The revenue from excise duties was BGN 84.2 million lower than planned.

 

Bulgaria's National Revenue Agency to audit 300 co's

 

Over 300 Bulgarian companies will be audited by the National Revenue Agency (NRA) as part of an investigation into discrepancies between the data on intra-EU supplies submitted by them and information provided by the tax administrations of other community members, Dnevnik wrote.The difference between the supplies to Bulgaria reported by Italian companies and the purchases declared by Bulgarian buyers exceeds 100 mln levs. The discrepancy between the data submitted by Bulgarian and Greek companies is some 80 mln levs. If the check detects any attempt at fraud or tax evasion, the respective company will undergo a tax audit, said the NRA. Bulgaria adopted the VIES VAT number validation system on January 1, 2007 when the country joined the EU.

 

Sofia medical equipment co sold for 18 mln levs

Sofia-based In Group has won a public auction for Medical Equipment EAD, a manufacturer of dental and medical equipment. The buyer will pay 70% of the 18.3 mln lev deal price in cash while the remainder could be settled with any lawful means of payment. Medical Equipment EAD, which owns assets in Sofia, Etropole, Ihtiman and Sandanski, posted revenues of 1.6 mln levs and a profit of 13,000 levs for ’06.

Bulgaria property co FairPlay to build new hotel in Sofia

FairPlay International, the investment, development and construction company, said it will build a new city hotel near the Kempinski Hotel Zografski in Sofia, Dnevnik wrote. The Hill Hotel, part of the FPI Hotels and Resorts chain, should welcome its first guests in September. The 48-room hotel will apply for a four-star category rating. It will boast a business center, Hill Tower, which will be housed in a separate building. In addition to conference facilities, Hill Tower will also offer office premises, parking lot and storage facilities.

Dairy maker Meggle debuts new products in Bulgaria

German dairy company Meggle said it will launch two new products on the Bulgarian market. Wellfit is a line of yogurt drinks with cranberry and tropical fruit flavors. The second new product, Fruity, is a fruit-based yogurt that will be available in a 150 g plastic container or as a beverage in a 330 g bottle. Meggle ships to Bulgaria from its production units in Germany, Croatia and Slovakia. The company last year pulled the plug on its production operations in Bulgaria, dissolving its 50/50 partnership with the local MJ Pack in a Sofia factory.

Bulgarian co Litex Commerce buys 25% in Sofia bus station

Local company Litex Commerce, controlled by businessman Grisha Ganchev, has paid 4.5 mln levs to acquire the municipality-owned 25% stake in the company operating the Central Bus Station in Sofia, said the Sofia Municipal Privatisation Agency (SMPA).A string of failed sale procedures brought sharply down the price of the municipal interest from the 7.9 mln levs it was asking.Ganchev now controls 62.5% of the Central Bus Station operator with the residual equity held by coach operator Etap-Adress.The fully air-conditioned bus station has a footprint of 15,667 sq m and a built-up area of 7,843 sq m, including a 1,500 sq m arrivals/departures hall and 57 ticket offices.According to the SMPA, the court-registered capital of the bus station operator is 1.8 mln levs. The company recorded revenues of over 3.6 mln levs with expenses at 2.5 mln levs in 2006. Accounting profit is reported at 945,000 levs.

Raiffeisen named best bank in CEE

 

Raiffeisen Zentralbank Austria was named the best bank in Central and Eastern Europe (CEE) by the international financial magazine Euromoney, Raiffeisenbank Bulgaria said. The subsidiaries of the bank in Albania, Bosnia and Herzegovina, Serbia and Slovakia were named best banks in their respective countries, while Raiffeisen Investment AG became the best bank in Montenegro. This is the fourth award for RZA group in the region after the awards won in 1999, 2005 and 2006.Raiffeisen's selection was justified by Euromoney's editorial staff with its expansion in all business segments and its leading position in the CIS countries.

 

Raiffeisen Lends EUR 44 M for Bulgarian Mall

 

The Bulgarian arm of Austrian banking group Reiffeisen said on Tuesday it would extend a EUR 44 M loan for the construction of a mall in Bulgaria's second largest city, Plovdiv.
Galeria Plovdiv will be one of the biggest constructions of its kind in Bulgaria, with its 45 000 square meters of area for lease, and the first one in the city.The loan will have a seven-year maturity, the bank said.The mall will have nearly 200 stores, restaurants, coffee shops and a cinema, and would be built in the eastern part of the city, in its Trakiya district.The project's developers are local construction company Sienit Holding, Italy's Ferretti International and investment fund European Convergence Development Capital, managed by Charlemagne Capital.

 

EU inquiry deadline for AIG buy of Bulgaria's BTC extended to Jul 31

The European Commission deadline for its inquiry into U.S. fund manager AIG Global Investment Group's proposed 1.08 bln euro acquisition of a 65% stake in Bulgarian Telecommunications Co (BTC), Bulgaria's only fixed-line telephone operator, has been extended to July 31, news agency AFX reported on Monday, July 16. The original deadline was July 17. The commission extends inquiries by ten working days in cases where a national competition authority has asked for jurisdiction, or where the companies have offered remedies to competition concerns raised during the investigation, said AFX. In early May, BTC said AIG's private equity arm was expected to acquire a further 25% of the Bulgarian company.Another U.S. company, Advent International acquired BTC for 230 mln euro in 2004 when the company was put up for privatisation, BTC said. It recently came under the control of Novator, which is controlled by Icelandic billionaire Thor Bjorgolfsson.BTC also owns vivatel, Bulgaria's third largest mobile phone operator. BTC posted sales of 516 mln euro in 2006 and pretax profit of 76 mln.

Bulgarian Posts' privatisation put off

 

Bulgarian Posts will not be offered for privatisation until 2013, despite the European regulations, the company's executive director, Entsislav Harmandjiev, told the Pari daily.
Two options were discussed in Brussels for the state-owned posts remaining in some European countries. The first was creating a special compensation fund to provide financing to the companies. The second one, which was backed up by the new members, was extending the term for privatisation. The European Commission approved the second option and put off the full liberalisation of postal services.Meanwhile on Tuesday Bulgarian Posts received an ISO 9001:2000 certificate for its services from Moody's International.

 

Balkan region's biggest wholesale market up for sale

Slatina Bulgarplod, the biggest wholesale market in the Balkan region, will be placed on the property market if the Sofia municipal council gives the go-ahead to the sale proposal of the municipal privatisation agency.The agency motivated the proposal with the fact that the market, valued at 75 mln levs, generates an annual dividend income of only 300,000-350,000 levs for the municipality.Slatina Bulgarplod, a member of the World Union of Wholesale Markets, operates on footprint of 45 ha near the Sofia International Airport and major road arteries leading in and out of the capital.The wholesale market, which generate an annual turnover of 2 bln levs, offers 6,000 sq m of refrigerated storage facilities, quality control laboratory, gas station and bank and customs offices. It is also accessible by rail.The sale notice will appear in the official newspaper of the EU in a bid to lure brawnier investors.The privatisation of the company, the nation's sole EU-licensed wholesale market operator, was previously impeded by the need to secure the prior consent of the farming ministry because it was modernised on an EBRD loan.Consent has been granted by both the farming ministry and the EBRD.The buyer will assume liability for the 1.3 mln euro loan and will be barred from altering the core business of the company for a period of 10 years after the sale.

FIBank's H1 profit jumps 62% Y/Y, tops BGN 19m

 

Bulgaria's First Investment Bank (FIBank) posted a BGN 19.362 million profit for the first half of 2007, up by 62.51% year on year, the bank's report shows. The net interest income went up by 53.3% to BGN 58.284 million, the income from fees and commissions rose by 32.7% to BGN 22.388 million. FIBank's total income increased by BGN 26.993 million, year on year, to BGN 85.083 million at the end of June 2007.
The credits provided to non-financial institutions and other clients totalled BGN 2.217 billion at the end of June. The deposits received from non-banks exceeded BGN 2.649 billion.

 

 

Pirelli, UniCredit Launch Joint Real Estate Co. in Bulgaria

 

The real estate arm of Italian industrial conglomerate Pirelli launched on Thursday a Bulgarian subsidiary, with banking group UniCredit taking a minority stake in the joint venture.The new company, Pirelli RE Bulgaria, will focus primarily on residential real estate, investing both in new construction and acquisitions.In addition to asset management and other services, Pirelli RE plans to work on joint projects with other big-name investors.By linking up with UniCredit Bulbank, Bulgaria's biggest lender, it hopes to draw customers by offering its services packaged with those of the bank.The two corporations are already working together in Poland, where Pirelli's joint venture with Bank Pekao manages assets of over 300 000 square meters after just one year of operation.Pirelli RE is one of the biggest real estate companies in Italy with assets in excess of EUR 14,5 B. Last year, it decided to expand its activities internationally, acquiring a German company and starting operations in Poland. It now has decided to expand to the European Union's two newest member states, Bulgaria and Romania, launching operations there within days from each other.Despite the construction boom in recent years, demand for new housing and office space remains high in Bulgaria, while profit margins are still substantially higher than in Western Europe.

 

German company invited to sign on to Nabucco gas transit project

Shareholders in the project company Nabucco Gas Pipeline International have chosen German energy company RWE to join as an equal partner in the project.The pipeline will transport natural gas from Iran and Azerbaijan through Turkey, Bulgaria, Romania, Hungary, and Austria to Central Europe. Turkey’s Botas, Bulgaria’s Bulgargaz, Romania’s Transgas, Hungary’s MOL and Austria’s OMV hold equal shares of 20 per cent each in the company.RWE ranked second in the list of companies wanting to join the 4.5 billion euro worth project. only Gaz de France was ahead of REW, Dnevnik daily said.The Turkish government suspended negotiations with Gaz de France after political disagreements with France.Nabucco International announced last month that Russia’s Gazprom would be invited to join the pool of suppliers, though Russian firms will not have any ownership over the pipeline.The base transit capacity of the 3300km-long pipeline is projected at 25.5 billion cubic metres a year, and maximum capacity at 31 billion cubic metres.Construction is projected for 2008. The first gas supplies are expected in 2011.

 

 

 

 

Reported by:

 

Evgeni Mitev

Research Manager,

KOTRA Sofia