BULGARIAN ECONOMIC TOP NEWS DIGEST
WEEKLY REPORT ( 1 – 8 FEBRUARY 2008 )
Sections/headline briefs:
MACROECONOMY:
· Japan to lend $370 M for construction, development of new container terminals at Varna, Bourgas ports
· Bulgaria's 2007 budget surplus of 3.8% of GDP
· Moody's says Bulgaria is more vulnerable to external shocks
· Some prices up 81% on year earlier, State Commission says
· Oil and gas pipes pump up steel prices
· Distributors shun biofuel requirements
· Monopoly on gas distribution stipulated in the law
· Nabucco gas pipeline likely to be ready by 2013
· Delays on the Nabucco gas pipeline continue
· NPP Kozloduy seeks a network equipment supplier
· Business blasts new Commercial Register
· Bulgaria expects more Chinese tourists in 2008
· Japan to help Bulgaria become more attractive for Japanese tourists
· European Consumer Protection Center opens in Sofia
· All Bulgarian labour contracts will have to be rewritten
· Bulgaria says considers importing 50,000 T of wheat from Ukraine
· EU funds creates niche market for Bulgarian banks
· Wine producers to receive �18M
· Bulgarian youth believe in the illusion of western paradise on earth
· Bulgaria imports foreigners for construction of big infrastructure projects
INVESTMENTS:
· Change of policy on FDI
· Office, commercial space to attract most investments in 2008
· �240 M investments in Bulgaria's Schengen entrance
· Eko Bulgaria to invest USD113 million in 50 new filling stations
· Delta Holding to invest �120M in new chain
· Spanish investor wants to build bioenergy complex in Pleven region
· Aladin to open business centre in Pleven
· Bluehouse Equity Fund III to invest � 300M in region
· Bulgarian TV, internet provider Eurocom plans �17.3 M investments in 2008
· Aitos emerging as new industrial zone in Burgas area
· Malls and casinos to mushroom along Serb border
· Citygas to invest BGN 178 M in gas networks over 5 years BGN 300M to be invested in Solvay-Sodi
· BGN 300M to be invested in Solvay-Sodi
· New business center to be built in Plovdiv
COMPANIES:
· Only 16% of Bulgarian companies use innovations
· Stanishev stops the sale of Bulgargas
· Burgas-Alexandroupolis IPC was registered in the Netherlands
· Foreign creditors take hold of Kremikovtsi
· Merrill Lynch to advise steel mill Kremikovtsi on development plans
· Bulgarian companies to build hospitals and schools in Sochi
· Spanish low-cost carrier scraps Sofia-Barcelona flight plans
· Bulgarian Boliarka Beer to please US citizens
ANALYSIS:
· Bulgaria – A world leader for property investment
· External debt approximates the state`s GDP
Articles:
MACROECONOMY:
Japan to lend $370 M for construction, development of new container terminals at Varna, Bourgas ports
Japan's Ambassador in Sofia Tsuneharu Takeda conferred with Bulgaria's Transport Minister Peter Moutafchiev here on Monday to express the Japanese Government's intention to extend a loan of some 37,000 million yen (370 million US dollars) for a new Official Development Assistance (ODA) project for construction and development of new container terminals at the ports of Varna and Bourgas, the Japanese Embassy said in a press release.The new terminals and adjoining facilities and equipment of the two large international ports will help handle the growing number of containers and achieve a higher logistical effectiveness. Considering that the Black Sea is an eastern gateway of the EU to Central Asia and the Middle East, the two ports are expected to cope with an increasing cargo container traffic in the near future, the press release said. The Government of Japan has supported Bulgaria's efforts to build stable democracy and a market-oriented economy through sustained economic development in various forms, such as loans, grants, technical cooperation etc. to a total value exceeding 840 million dollars. For this cause, the Government of Japan has officially extended loans of some 400 million dollars under the previous five projects, and the assistance under this new project will be nearly equivalent to the total amount of the loans under the five previous projects, the Embassy specified. Moutafchiev expressed to Takeda the hope that the success of this project will turn into yet another symbol of the traditional ties of friendship between Japan and Bulgaria. The Transport Ministry Press Centre confirmed that Moutafchiev has approved the Japanese proposal to extend the loan, BTA reports.
Bulgaria's 2007 budget surplus of 3.8% of GDP
The resources reallocated by the Bulgarian government through the budget last year reached 44% of the GDP forecast for 2007, according to data released by the finance ministry. Budget revenues are reported at just over 24 bln levs while outlays topped 21.4 bln levs, indicating the incumbents failed to deliver on their promise for a reallocation rate of no more than 40%. The reallocation rate for 2006 was 40.7% of GDP. EU allocations in 2007 were flat year-on-year, suggesting that the budget revenue overperformance is due to domestic sources. Foreign experts commented that the figures represent an excessive intervention in the economy on the part of the government. The budget surplus is also toying with record levels: some 3.8% of GDP or 2.11 bln levs have been allocated to the fiscal reserve. The surplus was nearing 3.96 bln levs by the end of November 2007 before the government decided to spend 1.4 bln levs on infrastructure and municipal projects and on measures stemming from the country's EU membership. The surplus has been generated mainly due to better-than-forecast budget revenues which rose 20% in 2007, said the finance ministry. 2007 tax revenues totaled 13.9 bln levs, beating the government same-year estimate by 9.5% and the full-year figure for 2006 by 19.5%. VAT revenues increased 13.3% year-on-year to 6.6 bln levs in 2007. The figures suggest that the rate of tax collection is improving, a good argument in favor of further tax and social security cuts, said Lachezar Bogdanov from consulting group Industry Watch. The pay-off from the corporate tax and social security cuts was an increase in revenues from these sources which led to the budget overperformance, said Georgi Angelov, an Open Society senior economist. The aim of the surplus is to offset the risks created by the rising c/a deficit, said finance minister Plamen Oresharski. The c/a gap is projected to widen to over 20% of GDP. The global credit crunch is enhancing the risk for a country like Bulgaria, said the official. And in that case the country may decide to further tighten its fiscal policy if need be. The 2008 budget surplus is projected at 3% of GDP.
Moody's says Bulgaria is more vulnerable to external shocks
Bulgaria's record current-account deficit and high lending growth have increased its `vulnerability to destabilizing external shocks'' in the past year, Moody's Investors Service said. The vulnerability has increased to ``medium,'' from ``low'' in February 2007 as the Balkan nation's current-account deficit is expected to exceed 20 percent of gross domestic product, becoming one of the widest in the world, Bloomberg reports. Moreover, credit growth reached 60 percent last year, the ratings service says in a report today. The report comes five days after Fitch Ratings lowered its credit rating outlook to negative from stable for Bulgaria, Estonia, Latvia and Romania. Moody's hasn't yet changed its positive outlook for Bulgaria since February 2007. Moody's has rated Bulgaria Baa3, the company's lowest investment grade rating, since March 1, 2006, putting it level with Croatia and Armenia. Bulgaria's ample foreign-exchange reserves, estimated at $16.5 billion, a budget surplus of 3.9 percent of GDP and foreign investment at 17.9 percent of GDP have helped compensate for the growing external imbalances in the past year, Moody's said. Bulgaria's low public-debt-to-GDP ratio of 19 percent helps tighten fiscal policy, Moody's said. ``The global liquidity crisis that began in July 2007 could also have an indirect effect on Bulgaria in 2008,'' the report said, international banks with subsidiaries in Bulgaria ``may reduce lending for liquidity reasons or due to increased risk aversion.'' Bulgaria's banks, assessed by Moody's as ``relatively robust'' are 80 percent foreign owned and 100 percent private. Moody's also warned that Bulgaria's economic growth will probably slow this year, after forecasting 6 percent growth for 2007, as global liquidity crunch erodes foreign investment in the Balkan nation. Bulgaria's $31.5 billion economy slowed to 4.5 percent in the third quarter after 6.6 percent in previous three months of 2007. Bulgaria's currency board system based on a lev/euro peg ``further heightens concerns as it constrains policy flexibility in times of stress.'' The currency board limits the central bank's ability to control inflation. Bulgaria's inflation rate was the second highest in the European Union in 2007 at 12.5 percent.
Some prices up 81% on year earlier, State Commission says
Cooking oil and lemons appreciated most this January and were up 81 per cent on a year earlier. Flour and bananas went up by about 50 per cent, according to the State Commission on Commodity Exchanges and Wholesale Markets, which analyzed January food prices, BTA reports. Most food prices went up by about 25 to 35 per cent. The price rise for sugar, frankfurter sausages, potatoes and oranges was smaller this January than a year earlier. The January increase in fruit and vegetable prices is part of the seasonal markup. In previous years these prices peaked at the end of winter and in early spring. Apple prices rose most in January, 17 per cent on month, followed by tomatoes and cucumbers 13-14 per cent, and tangerines, lemons and bananas between 6 and 10 per cent. Oranges and potatoes went down from December. Lentils went up 5 per cent, beans, cooking oil, rice and flour prices rose 2-3 per cent. Milk products rose by a mere 1 per cent from December. Chicken prices went slightly down, while sugar and eggs leveled off. The comparison with year-earlier prices showed that except for tomatoes and cucumbers, the prices of all other foods included in the analysis were higher in 2008.
Oil and gas pipes pump up steel prices
Prices of steel are expected to continue soaring steadily all over the world markets due to the recent boom in energy projects across Europe, according to market analysts. Construction works on four huge and important pipelines are about to commence in parallel on the Old Continent: the Russian South Stream, its EU rival Nabucco, the Russian-Bulgarian Bourgas-Alexandroupolis, as well as the Bourgas-Vlore pipeline. Bulgaria happens to be in the centre of all four of them, as they will stretch through its territory. To build a total of 6,200 km of pipelines for oil and gas distribution and transit will require millions of tons of steel, according to estimates, and most of the steel mills on the Balkans do not have sufficient production capacity to meet this demand. The unclear destiny of Kremikovtsi Steelworks will further complicate the situation. Energy specialists are sure that long-distance import would not be cost-effective and only boost the costs and slowdown implementation. Thus, it might as well turn out that Ukraine, having enormous ore deposits, will benefit the most. And this perhaps explains oligarch Kostyantyn Zhevago's eagerness to lay hands on Kremikovtsi.
Distributors shun biofuel requirements
The petrol and diesel, sold in Bulgaria as of 2008, have to contain 5% biofuel under the renewable energy sources and biofuels act, adopted in 2007. A check up shows that only three petrol filling stations of the Lukoil chain meet the new requirements. All other petrol filling station chains act as they are unaware of the new requirements or have an excuse for not complying with them. The legislative side of the matter is yet to be settled, according to Radu Caprau, director of OMV for Bulgaria. The requirement for the content of biofuel in the petrol and diesel sold in Bulgaria ranges between 2 and 5% in different statutory acts, according to Eco Bulgaria. one of the main concerns of Bulgarian fuel distributors is the fact that Bulgaria does not have a licensed laboratory, which should check up on the quality of the fuels. Another explanation is the fact that in order for biofuel to be mixed with the other fuels, petrol and diesel should be produced under special technologies as well. Fuel distributors also explain the ill-will towards biofuels with the fact that they would hike the price of the end product considerably. Fuel distributors are reluctant to abide by the law as the new requirements will bite off 5% of their market, Dimitar Zamfirov, chairman of the National Biofuels Association in Bulgaria (NBAB), said. The quality of the biofuels may also be checked at a laboratory of SGS, which has a contract with NBAB, Zamfirov added. The poor state control may also allow distributors to take advantage of the zero excise duty on biofuels without actually selling this type of fuels, according to Zamfirov.
Monopoly on gas distribution stipulated in the law
"Bulgaria will never ever enjoy a liberalized gas market," was the sad prognosis an energy expert expressed some years ago. Right now, nearly a year after the blue fuel market in Bulgaria opened, his words do come true. For one reason: Overgas Inc. Like a giant energy octopus, the Bulgarian-Russian company managed to seize with its arms the pipelines in Bulgaria. Overgas hold the gas deliveries from Russia to the Bulgarian consumers, being the middleman of the energy titan Gazexport and the state-owned gas supplier Bulgargaz Holding.Overgas managed to take control over a major part of the low-pressure pipelines, thus laying hands on the household, public and business sector gas supply network in a number of cities, energy experts explained. As The Stardart recently wrote, Overgas' monopoly on gas supply is threefold. First of all, they control the access of foreign pipelines to Bulgaria; secondly, their network is already spreading over the most of Bulgaria's territory; and last, but not least, they are at full liberty to set their monopoly prices as high as they like. It is undisputable that the use of natural gas is 2.9 times cheaper than diesel fuel, 2.1 times cheaper than propane-butane and twice cheaper than electricity - a fact Overgas would never miss the chance to remind of.Meanwhile Overgaz keeps on tightening its gas knot around Bulgaria. Firstly it occupied the monopoly position on the territory of the gas-distribution network of the country by building 90% of all gas-distribution pipes in Bulgaria, as Overgaz themselves say. Now the company is trying to keep longer their leading positions.Overgaz has feathered its nest nicely. Under the Energy Act, if a company in Bulgaria is licensed to provide gas in a certain region, no other gas provider can pretend for the same territory. So, it is one gas company, if issued a permission, that dictates the rules for a certain region. For most of the regions in Bulgaria this is Overgaz. One thing for sure, the steel rod Overgaz has stuck in the wheels of still stumbling gas market in Bulgaria is killing it. This situation damages the country, because the market lacks competition. This situation is unhealthful for the European Union because Bulgaria, as EU member has to diversify its natural gas supply, which currently is mostly linked to Russia, via Overgaz. And last but not least, the consumer interests are harmed because people have to pay for more expensive gas and are deprived of the opportunity to choose the service of which company to use.
Nabucco gas pipeline likely to be ready by 2013
The Nabucco gas pipeline project may be completed by 2013, Petar Dimitrov, minister of economy and energy, said in Vienna. Dimitrov was on a visit to Austria to sign a memorandum for the accession of Germany's RWE as a sixth parter in the project. The objective of this document is to garner political support for the speeding up of the implementation of the project. The project was initially slated for completion by 2011. The selection of a six partner in the project was delayed and the term was subsequently extended. The pipeline will convey Caspian natural gas through Turkey and the Balkans to Central and Western Europe. The completion of the Nabucco project will spark competition with the South Stream pipeline, which will help avoid a gas price monopoly, Dimitrov said. These are not rival projects and Bulgaria's participation in both of them is good for the country, Dimitrov underscored. Bulgaria insists on the accession of Gas de France as a seventh partner in the project at a later stage. A move, which would secure more funding for the project, Dimitrov added. A total of five companies were included in the consortium Nabucco Gas Pipeline International Company. These are Turkey's Botas, Bulgaria's Bulgargaz, Romania's Transgas, Hungary's MOL and Austria's OMV. Talks on the funding of the project will be launched in 2008. The first commercial contracts for the transit of gas through the pipeline are also expected to be signed during the year, Christian Dolezal, a spokesperson for the project, said. Traders will be offered 50% of the capacity of the pipeline. The remaining 50% will be used to serve the needs of the six countries that are holding stakes in the project. Bulgaria will receive 1 billion cu. m of natural gas annually, OMV data show. Turkey will get between 5 and 10 billion cu m of gas annually. Romania and Hungary will have to settle with 2 billion cu. m each. The necessity of the Nabucco pipeline is obvious as the natural gas deficit in Europe is expected to reach 660 billion cu. m in 2030, Dolezal said.
Delays on the Nabucco gas pipeline continue
Doubts are rising as to whether the European Nabucco gas pipeline will ever be built, after a two-year delay and mounting support from several countries for a rival project, South Stream, which would not include Romania, Ziarul Financiar reports. Talks concerning the construction of the Nabucco gas pipeline, which would provide Romania with a supply of natural gas from other countries besides Russia and fetch revenues from taxes levied for the pipeline through Romanian territory, have been continuing for seven years, whilst the initial plan has experienced a two-year setback. Bulgaria and Hungary have announced they have the financial capability to support both the Nabucco and the South Stream projects. The latter is a gas line that is promoted by Russia. The countries involved in the Nabucco project claim that it is not an alternative, but complementary. European officials say Nabucco is the more advanced project, yet no suppliers have been selected and the necessary funding, 5 billion euros, is dependant on this factor. Romania has declared its support for French Gaz de France to become the seventh partner of Nabucco. Traian Basescu stated after the meeting held with his French counterpart, Nicolas Sarkozy, early this week, that the two had agreed that the French state-owned Gaz de France should become a partner in Nabucco, and in return receive support from Romania. To bring a new member on board, however, requires the vote of all the countries involved, and the vote hardest to get, under the circumstances, would be Turkey's. Officials in Ankara are very hard to persuade especially after France passed an act condemning the denial of Turkey's genocide against the Armenians in WWI. Moreover, the current French president spoke against Turkey's EU membership in his electoral campaign. "The decision to accept the seventh partner will be made by all six members together." This was the answer of Saltuk Duzyol, the representative of BOTAS (Turkey) when asked if he preferred a partnership with Gazprom instead of Gaz de France. Nabucco currently has six members, after Germany's RWE joined the partnership two days ago. The signing of the document by the already existing five members - OMV (Austria), MOL (Hungary), Transgaz (Romania), Bulgargaz (Bulgaria) and BOTAS (Turkey) came shortly after Bulgaria and Serbia struck a deal with Russia concerning the South Stream project. "Bulgaria will have enough resources to participate in both projects, but we have to admit South Stream is still just an idea," stated Dimitar Gogov, Bulgargaz representative. At the same time, Martin Bartenstein, Austrian economy and labour minister, stated that Nabucco was the most advanced project in terms of planning and government agreements. However, the supplier has still not been decided for this project, although around 70% of the foreign funding required hinges upon it. The potential supply sources include Egypt, Azerbaijan, Kazakhstan, Turkmenistan, Iran and Russia, which stated that the Nabucco project did not stand any chance without its participation.
NPP Kozloduy seeks a network equipment supplier
NPP Kozloduy announced a public tender for the supply of network equipment for its information system, informs technews.bg.The enterprise will choose the supplier according to a contract procedure under the Law for public tenders. The components included in the supply will substitute the current obsolescent network equipment. The new equipment should secure faster actions and higher reliability and security of the existing information system. The submission deadline for the offers is March 10.The prognosis value of the public tender is not announced, but the guarantee of 345 EUR supposes a small auction.
Business blasts new Commercial Register
The Bulgarian business insisted on the establishment of a unified electronic Commercial Register, that would speed up the registry procedure for companies and increase transparency. The register has been operating for over a month now but the business has been a witness only to punitive actions against the Bulgarian companies so far, according to a stand of the Bulgarian Industrial Chamber (BIA) sent on Monday to justice minister, Miglena Tacheva and Emil Stankov, chairman of the Registry Agency. The companies are being burdened with undeserved sanctions and unlawful fees by certain lawcourts and notaries due to the poor organisation of the work process at the Registry Agency and the problems surrounding the new system, according to the BIA. A company may currently be denied a registration even due to insignificant documentation lapses. Thus, company owners are forced to pay certain fees repeatedly after each denial for registration, the BIA said. The employees of the Registry Agency are unable to process the re-registration applications in time. As a result, the companies are failing to make the obligatory terms and are forced to pay sanctions ranging between BGN 500 and BGN 1,000, according to the BIA.
Bulgaria expects more Chinese tourists in 2008
This year for the first time Bulgaria is officially announced as a tourist destination in China and our country can expect much more Chinese tourists in the summer of 2008, The State Agency of Tourism (SAT) director Anelia Krushkova announced.According to Krushkova, Chinese tourists are interested mainly in gambling and Bulgaria has 4,216 officially registered casinos and gamble houses.This year the summer season in Bulgaria will start earlier and this is a tendency, which will be followed in the future.The amount of tourists, who have visited Bulgaria during 2007, is 5,147 million.An agreement in the Tourism area will be also signed with Korea in a month.
Japan to help Bulgaria become more attractive for Japanese tourists
Bulgarian page on the European Tourism Commission site (http://www.visiteurope.com/) is already translated into Japanese language. This gives big source of information about Bulgaria to every Japanese citizen, decided to learn more or to visit our country.By invitation of Ministry of Foreign Affairs of Japan, Bulgarian State Agency of Tourism (SAT) Chairman Anelia Krushkuva and Vice-chairman Stela Baltova will visit Tokyo between 4 and 8 February.They will attend a Seminar for encouragement of tourism in Southern Eastern European countries, on which are also invited all of the other countries of the region national tourist administrations directors. The seminar will present the Southern Eastern European countries communicational strategies to attract Japanese tourists, The Japanese institutions' recommendations in this area; tendencies of traveling of Japanese tourists and tasks and measures to take for increasing of Japanese tourists' interest in Southern Eastern Europe, presented by Japanese experts, who have worked in the region.Bulgaria will be presented as welcoming tourist destination with rich culture-historical inheritance, biological diversity and saved natural ecosystem, many monasteries and monuments protected by UNESCO, the country of roses, crafts, with opportunities of spa - tourism, golf - tourism and very welcoming people.Part of Bulgarian face in Japan is the sumo player Kaloyan Mahlyanov - Kotooshu.
European Consumer Protection Center opens in Sofia
Bulgarians and other EU citizens can file complaints about unsatisfactory goods and services at the new European Consumer Center in Sofia, which officially opened doors on Monday. The center was opened by Bulgaria's Economy Minister Petar Dimitrov, and by the European Consumer Protection Commissioner Meglena Kuneva. Kuneva explained that the Sofia center was part of the European network of consumer protection centers located in all EU member states as well as in Norway and Iceland. "The activity of consumer centers significantly increases the out-of-court solving of any disputes between clients and businesses", Kuneva stressed adding that the Sofia center would get 70% of its funding from the European Commission.The European Commissioner also pointed out that foreign tourists would be able to file complaints at the newly opened center, and that this would increase their confidence in Bulgarian goods and services. The staff of the Sofia Consumer Center consists of four persons but in the words of the center director Mihaela Marinova, it might be increased depending on the number of complaints. She said unsatisfied customers could make their complaints in person, by phone, or by email. The Economy Minister Petar Dimitrov expressed his hope that the Sofia center would be visited primarily by people seeking information and professional advice rather than by those who would need to make complaints.
All Bulgarian labour contracts will have to be rewritten
Bulgarian employers will have to rewrite all labour contracts because of changes in the classification of economic activities, which went into force on January 1 2008, Raiko Buchvarov of the National Statistical Institute (NSI) said on February 4.The new list includes four new economic sectors and other sectors had been reclassified, grouped in different ways from before or extended, Dnevnik daily said.The classification is used to establish minimum salaries and minimum social security thresholds. NSI said that in 2008, the old classification, which dates from 2003, would still be valid. For negotiations between labour and trade unions over salaries for 2009 the new list would have to be used, NSI said.This year would be a transition year in which the classification had to be adopted by all Bulgarian institutions. The computers systems at the National Social Security Institute (NSSI) and the National Revenue Agency (NRA) still had to be adapted.The new and updated classification follows European regulations and changes that occurred in the economy over the past several years. It even included some professions which not yet existed, NSI experts claimed.The changed would lead to better economic analyses, NSI said.New professions on the list included management of fund, investment funds and reinsurance.The new classification section on agriculture included for the first time separately professions like producer of spices, tobacco, sugar-cane and rice. The classification had been enriched with professions like citrus and tropical fruit producers, Dnevnik said.The ideas was not to create a closed system for the economy, but to give it the possibility to grow, Dnevnik quoted Vucharov as saying.On the website of the NSI current classification codes could be converted to those in the new system, NSI said.
Bulgaria says considers importing 50,000 T of wheat from Ukraine
Bulgaria is considering imports of 50,000 tonnes of bread wheat from Ukraine to meet domestic demand, the Bulgarian farm ministry said on Wednesday. Bulgarian Agriculture Minister Nihat Kabil will hold talks about the possible imports and their price with Ukrainian officials during his visit to Ukraine at the beginning of February, the ministry said in a statement. Bulgaria has already secured imports of 200,000 tonnes of maize from Ukraine, the ministry said earlier. The country harvested 2.4 million tonnes of wheat last year, some 25% lower than in 2006, as unfavourable weather conditions - a winter with no snow followed by an unusually dry spring and a summer heatwave, accompanied by raging fires - damaged grain crops in most of Southeast Europe. The country expects total wheat demand for the marketing year 2007/2008, ending June 2008, to reach 2.511 million tonnes. It had some 150,000-155,000 tonnes in stock at beginning of the year.
EU funds creates niche market for Bulgarian banks
Bulgarian banks are embracing a new market segment aimed at facilitating the domestic absorption of EU funding. In the last 10 days alone, no less than four banks announced they will be marketing new products or services related to the spending of EU cash made available under the operational program Development of the Competitiveness of the Bulgarian Economy '07-'13. Postbank, SG Expressbank, MKB Unionbank and International Asset Bank have signed the relevant agreement with the economy ministry. UniCredit Bulbank, DSK Bank, UBB, Raiffeisenbank (Bulgaria) EAD, First Investment Bank and Economic and Investment Bank are also active on this segment.
Wine producers to receive �18M
Bulgaria is to receive about EUR 18 mln in 2008 under the EU programme for restructuring and conversion of vineyards, Agriculture Minister Nihat Kabil declared Wednesday. Applications can be filed with the central headquarters of Payment Agency till February 19th. Projects for the relocation of the vineyards, their expansion and diversification of the sorts will be funded. The subsidy is 75% the value of the project. “The subsidy will be allotted to productive vines”, Minister Kabil said. In other words - 2 403 hectares. “We already have 65 projects approved by the Executive Agency on Vine and Wine. Their applications will be sent immediately”, State Agriculture Fund CEO Dimitar Tadarakov said. He explained that the documentation will be considered till March 20th and a contract for the approved projects will be signed. Wine producers will receive their subsidies May 15th – June 25th. “The funds might not be appropriated, because the deadline is too short”, Branimir Botev, chairman of Bulgarian Association of Spirit Drinks Producers, Importers and Merchants, said. If this happens the Agriculture Fund will prolong the deadline, Klasa Daily reads.
Bulgarian youth believe in the illusion of western paradise on earth
According to 38% of the young Bulgarians emigration is good decision for material issues. The inquiry was leaded among young people under 35 years-old and taken by ‘Mediana' agency, reported from Darik radio.Almost 50% of the inquired would leave immediately abroad, if they have the chance.Round 21% of the Bulgarian youngsters look at the European countries as places without poor and miserable people.Anxious is the fact that almost 90% of the people don't see anything wrong to work abroad without a contract. This leads to the question are they entering the traffic of people or are they becoming victims of it.According the director of ‘Mediana' agency Kolio Kolev the natural basis of this adjustment is the illusion of Western paradise on earth.20% of the youngsters believe that the only necessary thing is to move into a western country.
Bulgaria imports foreigners for construction of big infrastructure projects
Bulgaria plans to import workers from abroad for the construction of the oil pipelines and Belene NPP because of the lack of qualified workers in the country, informs Reuters, cited by BNR. The agency quotes the minister of labor and social policy Emilia Maslarova.We speak about tens of thousands of people mainly in construction, energy and tourism, claims Maslarova.Reuters points out that Bulgaria has already started receiving a small number of workers mainly in the construction of roads, hotels and big trade centers. These workers are predominantly from Turkey and Macedonia.
We are anyway importing people, but now the big infrastructure projects come with big investment, which can make us speed up the process, claims Maslarova.According to the labor minister, the possibilities for hiring unemployed people from Bulgaria are exhausted very fast and the remaining people lack education or skills.Workers are mainly going to be sought from neighboring countries, which are not EU members. However, Bulgaria will also seek workers from some Asian countries. Data shows that Ukrainians, Moldovians, Serbs, Macedonians and Turks are already interested in finding job in Bulgaria. According to Maslarova workforce can also be hired from Viet Nam, India and Egypt.
INVESTMENTS:
Change of policy on FDI
InvestBulgaria Agency, Bulgaria’s state-run investment promotion company, has been sounding the trumpets of jubilation over soaring foreign direct investment (FDI) volumes. Yet this came as there were many alerts by experts over concerns Bulgaria was yet to ascend international investment attractiveness rankings, heavy speculative capital inflows and little spending on industry. Indeed, in the past three years Bulgaria has been racking up stellar FDI in absolute terms. In 2004, the volume of investments, two billion euro, accounted for a quarter of total FDI volumes for the period 1992-2004 ($10.145 billion). Since then, the volume of investments in absolute terms has tested each previous high with double-digit year-on-year growth. The year 2007 was no different. In mid-January this year, InvestBulgaria Agency announced the volume of FDI in 2007 rose by 20 per cent on the year to 5.2-5.3 billion euro, according to preliminary data. What was more, Bulgaria had attracted a fifth of total investments in the South-East European region. A breakdown of FDI by sectors and a review in terms of the capacity of attracted funds to boost GDP, however, saw that the situation had changed little since 2004. Then, when the country attracted smaller volumes, investments had a more pronounced focus on industry and manufacturing. Now investments into industry, a cornerstone of the Bulgarian economy, have come down to a trickle and its share in GDP structure has stagnated at 30 per cent since 2004. The current optimistic statements for FDI upturn are wound back to reality by international cross-comparison.
From a bird’s-eye view
A pan-European survey on the appeal of countries to venture and private equity investors, issued in the middle of January, saw Bulgaria among the poorest performers. The survey, carried out by Navarra (Spain) University and Strategic Capital Management, measured a country’s attractiveness in terms of investment opportunities, market size, growth forecasts, the capital market, tax conditions and local business sentiment. With 100 points as the benchmark, Bulgaria ranked third to last with 79 points, Romania and Greece holding the bottom two places (with 77 and 69 points, respectively). Hungary, the Baltic states and Poland were the top performers in Central and Eastern Europe (CEE). The average score of the entire Central and East European region being 85 points. The drawbacks of Bulgaria, in particular, were the immature capital markets and small liquidity. This all came alongside the slower development of entrepreneurial activities and the high social security contributions, among others. Bulgaria also ranks low Europe-wide in terms of investments into information and communication technologies (ICT), as well as in research and development (R&D). Eurostat statistics showed Bulgaria spending a mere 0.50 per cent of GDP on R&D, which was a short call from the EU target of three per cent for CEE. In this regard, Bulgaria shared the fate of other countries in the region, whose average spending was below one per cent of GDP. Spending on ICT had also been low-key in the past few years. With investments being at 0.8 per cent of GDP in 2005 and one per cent in 2006, Bulgaria spent half what Sweden and Italy did (at current prices) in 1980 showed analysis on ICT spending and investment in enterprises, prepared by the National Statistics Institute.
Structural imbalances
Experts said that despite the huge investment volumes, more than half of it had been infused into speculative capital. This type of investment brought little good to the Bulgarian economy, as it did not encourages growth in domestic output, in productivity or the creation of new jobs. This striped the FDI all-time highs of constructive import, experts said. In 2007, tourism and real estate accounted for more than 60 per cent of the foreign direct investments, with both sectors enjoying double-digit growth, according to InvestBulgaria Agency. According to Stoian Stalev, head of InvestBulgaria Agency, the trend would be sustained because the two markets offered opportunities to make fast money. “Industry can rely on a 10-per-cent return on investment whereas developers scoop 100 per cent returns,” Stalev told media. Experts also said financial services and trade, accounting for another fifth of investments, referred to inter-company transfers from foreign parent companies. Naturally, such investments led to subsequent – and larger – outflow of funds. Industry, on the other hand, which was the winner of the bulk of investments in the years before 2004, had seen its share of total FDI dwindle to a mere 804 million euro in 2007. This had crippled its ability to add growth to the Bulgarian economy. For this reason, its share of GDP since 2004 had remained at 30 per cent.
Rectifying measures
The imbalance in the FDI structure prompted InvestBulgaria agency to take measures to stem investments in the tourism, real estate and services sectors. The agency would no longer provide government support to these sectors, although investors who earned a Class A or B investment certificate would still be entitled to acquire private or municipal property without a competitive procedure or a tender. Investors, however, would be stripped of the right to acquire such real estate for free, as the Investment Promotion Act read before the latest changes. The agency also removed energy-inefficient production processes such as steel extraction, shipbuilding, coal mining and conventional oil and gas-fuelled production from the list of industries that could be given state support. Instead, InvestBulgaria would focus on industry related to and projects on renewable energy resources (to ensure Bulgaria achieved the target of 20 per cent of total energy output coming from environmentally clean energy). The measures mapped out by InvestBulgaria Agency were insufficient to push industry out of stagnation. Nor were they sufficiently aimed at the conscious employment of FDI into GDP-boosting mechanisms. Experts expressed hopes that the Bulgarian Government would shortly produce a strategy similar to that of Poland, Hungary or the Czech Republic that would boost the number of industrial heavyweights that saw Bulgaria as a preferred destination.
Office, commercial space to attract most investments in 2008
Bulgaria's real estate market underwent quite an interesting development during the first year of the country's EU membership. The prices of administrative, commercial and residential properties went up by 25-30% over the past year. The prices of properties in Sofia's Druzhba, Mladost, Lyulin and Ovcha Kupel residential districts registered the highest growth in 2007. Nearly all sectors of the real estate market underwent development in 2007, but the new residential properties registered the largest volume of sales. The eastern and southern parts of Sofia saw the strongest demand. The Bulgarian real estate market still has potential to grow. It will offer low risk and will continue to be attractive to investors. The trend of 2007 will continue in 2008, as far as the real estate prices are concerned. The investment activity, however, is expected to be even higher this year. Commercial and office properties will attract investor interest the most. The arable land market is also expected to grow. Construction works on at least three new commercial centres will commence in Sofia in 2008. At the same time the construction of residential properties will also continue to develop. The Bulgarian real estate property market will remain stable in 2008, while the prices will continue to grow gradually.
�240 M investments in Bulgaria's Schengen entrance
Bulgaria's entering in Schengen zone is pripority for all Bulgaria state institutions, because the real integration of all EU countries-members starts and ends with the integration in this zone. That was announced by Bulgarian Minister of European Affairs Gergana Grancharova during the expert discussion ‘Bulgaria's readiness to accede Schengen free-travel zone'.The expectations are Bulgaria to be ready to enter the ‘white' Schengen list in 2011.Minister of Internal Affairs Rumen Petkov declared for the securing of external borders of European Union, as such appear to be the Bulgarian borders, EU have already invested 77 million EUR in technique.
Eko Bulgaria to invest USD113 million in 50 new filling stations
Fuel retailer Eko Elda Bulgaria, part of the Greek petrochemicals company Hellenic Petroleum Group, will invest some USD113 million over the next four years in the expansion of its local network of filling stations. The company, which is renamed to Eko Bulgaria, plans to double the 50 gas stations that it operates here at the moment. The goal is to snag 10% of the Bulgaria fuel market where the company currently holds the no.5 spot with a share of 4%. Eko Bulgaria intends to add 12-15 company-managed filling stations in 2008. It will not seek franchise growth at this stage of development. The expansion of the local outlet network will be both organic and acquisitional, targeting locations in the big cities and along major expressways. The company is interested in the take-over of existing chains, be it small or big like Opet Aygaz. The Greek company is in the running to buy the Koc Holding-owned Opet gas stations in Bulgaria which were put up for sale in 2007. The new owner of the 17 Opet outlets in Bulgaria should be revealed by the end of February.
Delta Holding to invest �120M in new chain
Serbia’s leading private investment group Delta Holding, which recently acquired the local retail chain Piccadilly, plans to invest EUR 120mn in the construction of six stores under the discount Tempo trade mark. Delta plans to open a total of eight Tempo stores and expects to finish the due diligence of the two stores of the competitor HIT located in the capital city Sofia by March to host the other two Tempo stores. Delta would invest also EUR 80mn in the opening of 20 other Piccadilly stores to a total of 31 in two years to doubles sales from EUR 110mn last year. The company also plans to open 40 to 50 smaller self-service corner shops Piccadilly Express in the next four years, hypermarkets Piccadilly Extra in the bigger cities and two distribution centres. Piccadilly, which controls 15% of the market in the country, received Friday last week ISO 9001:2001 and ISO 22000:2005 quality and food safety certificates. It reported a 42% y/y increase in sales in January.
Spanish investor wants to build bioenergy complex in Pleven region
A Spanish investor has offered to build a bioenergy generation complex in Pleven region, the regional administration said on Monday. Representatives of the Spanish company Coener have stated to Regional Governor Tsvetko Tsvetkov that they intend to invest 60 million euro in the building of the plant. Some 30 million euro of the total will be own capital of Coener, and the rest is subject to negotiations with Bulgarian and international banks. Bulgarian companies will be admitted as subcontractors. A working meeting in Pleven on Wednesday will discuss concrete opportunities for the implementation of the project relating to the environmental and water-and-sewerage infrastructure.The investor intends to put the plant into operation in 2009. It will produce bioenergy from industrial crops in the territories of two municipalities.Coener Executive Director Alejandro Lopez said his company will build a biodiesel refinery, an installation for extracting crude refined oil, a storage facility and a new port terminal on the Danube River. The output will be mostly for export to Austria, Germany, Romania and Serbia, and some of it will be sold on the domestic market. According to the Regional Governor, the project will boost local industry and will benefit farmers who will be able to sell their crops under more advantageous conditions.
Aladin to open business centre in Pleven
Businessman Aladin Harfan has won a tender for the sale of Pleven-based Agroplasment & Trade. The latter specialises in trade with fertilisers, sowing seeds and plant protection products, as well as in letting own properties. The most attractive of them is a 16-storey administrative building, which the businessman plans to renovate and transform into a business centre. Agroplasment & Trade was acquired by Aladin EOOD for BGN 6.4 million. A total of companies took part in the tender procedure organised by the Privatisation Agency. The initial price of Agroplasment & Trade was set at BGN 4.3 million. The new owner of the company plans to keep its main line of business and expand it into agricultural tool and machinery sales. Aladin EOOD is among Pleven's biggest investors. The company's largest project is Mall Pleven, which is currently under construction.
Bluehouse Equity Fund III to invest � 300M in region
Bluehouse Equity Fund III, managed by Bluehouse Capital Advisors and registered in Luxembourg, is planning to invest a total of EUR 300mn in Romania, Bulgaria, Ukraine, Moldova, Serbia, Montenegro, Croatia, Bosnia and Herzegovina, Greece, and Turkey. The Fund is planning to acquire stakes in commercial real estates. EBRD is expected to provide EUR 48mn or 16% of the total investment resources of the Fund. EBRD also would propose a co-investment facility of up to EUR 15mn for equity investments. The project is expected to improve and develop the real estate markets in the region and to promote competition.
Bulgarian TV, internet provider Eurocom plans �17.3 M investments in 2008
Bulgarian TV, Internet and telecoms services provider Eurocom Cable Management Bulgaria, owned by private equity investment company Warburg Pincus, on Tuesday said it will invest 17.3 million euro ($13 million/8.9 million euro) in 2008 to improve its services. A large part of the money will be spent on raising the speed of the local area network (LAN) and cable Internet services which Eurocom provides, the company said in a statement. Warburg Pincus said last year it would invest up to 200 million euro ($293.5 million) in Eurocom within up to six years to back its expansion plans. Eurocom, which offers its services in the regions of Sofia, Plovdiv, Pleven, Karlovo, Lom and smaller areas, has been on a shopping spree lately. It said earlier this year it expected to wrap up the acquisition of five local peers by the end of January. The planned acquisitions, however, will not raise significantly Eurocom's current market share of approximately 10% on the cable TV market, the company's executive director Petyo Staikov has said.
Aitos emerging as new industrial zone in Burgas area
Several big Burgas area enterprises are relocating their production operations to an industrial zone taking shape near the city of Aitos. The Aitos municipality, some 30 km inland from Burgas, has designated some 80 ha for the zone. It is expected to welcome 50 business with a combined staff of 3,000. Advance stage relocation talks are underway with Hemus Mark, the office supplies company, textile maker Ropotamo and cable producer Elcabel. The Aitos municipal council has approved the sale of 11 ha in the zone to Elcabel. The company is seeking to buy adjacent properties because the municipal lot will not be sufficient to accommodate its production facilities. Ropotamo previously leased production facilities in Aitos. The new production base is expected to create 100 new jobs. The company already employs around 450 workers at production units in Burgas, Aitos and Ruen. Hemus Mark is looking for land in the area for a greenfield investment in a new plant after its business outgrew the existing capacity in Burgas.
Malls and casinos to mushroom along Serb border
A small Las Vegas will crop up along Bulgarian-Serb border. Designs for motels, malls and even casinos are being prepared. Businessmen are ready to pay enormous sums for the waste lands within the 50-m-long strip along the border. This land and a strip across the border, in Serbia, will be made a duty free zone. Developers woo locals with tempting offers for their hereditary acreage, municipality officials from the town of Tran told the Standart. Prices of land in Pernik region have increased by 20% in one month alone and 0.1 ha now sells for 235 levs. Future rise of about 20% is expected by the summer. Arable land sells extremely well in the region of Pernik, according to Radoslav Radoslavov, director of the local Regional Land Tenure Office.
Citygas to invest BGN 178 M in gas networks over 5 years
Citygas, the local subsidiary of Gruppo Societa Gas Rimini S.p.A., will invest 178 mln levs in gas distribution center Trakia through 2013. The target is set out in the business plan of the company submitted for approval by the Bulgarian power regulator. The document will be reviewed next week. Citygas, which invested 32 mln levs in 2007, intends to complete the deployment of gas distribution infrastructure in Plovdiv, Haskovo, Kazanlak, Dimitrovgrad, Radnevo, Galabovo, Harmanli and Simeonovgrad. Some 1,000 km of gas mains will be added over the next five years to the 150 km already installed in the region. Citygas is also interested in extending its gas network to include the cities of Karlovo, Sopot and Bania which are adjacent to its permit area. A couple of days ago, the Black Sea Technology Company said it was in talks with the local authorities in the Karlovo, Sopot and Bania and in case it receives their backing it was going to ask the regulator to include the cities in its own permit area. Under these circumstances, the power regulator will probably have to award gas distribution permits for the three cities on a competitive basis.
BGN 300M to be invested in Solvay-Sodi
Solvay-Sodi has prepared investment projects for BGN 100 million for the next three years, the executive director of the chemical plant, Denis Samson, said in Varna. The projects are yet to be approved by Solvay Group's board of directors. The amount will be invested mainly in modernisation and expansion of the capacity for soda ash production and in a new facility for dense soda ash, Samson said. The annual output capacity of the enterprise is 1.2 million tonnes of soda ash, including 800,000 tonnes of dense soda ash.
More than BGN 200 million has been invested in Solvay-Sodi since the company's privatisation in 1997, well above the BGN 110 million pledged to be invested under the privatisation contract. The additional funds have been used mainly for environmental projects and BGN 30 million, for the Deven thermal power plant.Majority owner of Solvay-Sodi with 98% of the capital is Solvay Sisecam Holding. Shareholders in the holding are Belgium's Solvay Group, the European Bank for Reconstruction and Development and Turkey's Sisecam.
New business center to be built in Plovdiv
A new business center will emerge in Plovdiv. The 10-storey building will be spread over 1,800 square meters and the investment will go beyond 6 million EUR.According to the architecture plans first three floors will be trade area and the rest will be taken by offices. The 3rd floor is previewed to be taken by a restaurant of 500 squares meters. The business park is expected to be finished in an year as to the moment the investor doesn't thinks of selling trade and office shares.
COMPANIES:
Only 16% of Bulgarian companies use innovations
Nearly BGN 100 million were invested in research and development activities in Bulgaria in 2007. This is not a small amount but it equals the innovations budget of a medium-sized company in other countries, Florian Fichtl, World Bank Country Manager for Bulgaria, said. Bulgaria can no longer rely on the cheap labour for fast economic development, according to Fichtl. Investments in new production equipment, buildings and facilities would also be insufficient without the new technologies and products, Fichtl said. Innovative companies in Bulgaria account for a mere 16% of the industrial and services companies in the country, an innovations survey for the EU in the period 2002-2004 shows. The average figure in the EU member countries stood at 40%. Each country should allocate 3% of its GDP for science and innovations, according to the Lisbon Strategy, prime minister Sergey Stanishev, said. The companies should secure more than 60% of the sum, Stanishev added. Bulgaria allocates a mere 0.26% of GDP for innovations, according to EU commissioner for consumer protection, Meglena Kuneva.
The budget of the National Innovations Fund amounts to BGN 20 million for 2008, Eli Anavi of the ministry of economy and energy, said. The average subsidy extended to innovation projects amounts to BGN 150,000 at present. A total of BGN 50 million subsidies for innovations have been extended since the establishment of the fund in 2005.
Stanishev stops the sale of Bulgargas
Bulgargas and NPP Kozloduy will be the only state-owned energy giants, Standart learnt. PM Sergey Stanishev ordered the gas holding to be removed from the government program. one of its versions dated January 31 provides for the privatization of Bulgargas. Currently the company is on the restrictive list and is not a subject to denationalization. It is of key importance for Bulgarian economy as it provides natural gas for the country and takes part in strategic projects such as Burgas-Alexandroupolis pipeline, South Stream and Nabucco. If Bulgargas becomes a private company that will deprive the state of million-euro profits coming from transit fees and dividends.
Burgas-Alexandroupolis IPC was registered in the Netherlands
International Project Company (IPC) for construction of Burgas-Alexandroupolis oil pipeline was registered in Amsterdam, the Netherlands, Bulgarian participant in the project Burgas-Alexandroupolis BG informed FOCUS News Agency. The name of the IPC is Trance Balkan Pipeline BV.
Foreign creditors take hold of Kremikovtsi
Within a few weeks, Bulgaria's Kremikovtsi steelworks will pass into the hands of several foreign funds, which hold the company's bonds."We can assume control over the steelworks in a matter of weeks, unless a pre-term payment of Mittal's loan is arranged," Angelo Moskov, director of one of the four hedge funds that hold part of Kremikovtsi's bonds, QVT, said yesterday. QVT, MARS Capital, York Capital Management LLC and Moore Capital Management LLC hold over one-third of the steelworks' bonds, which total over a hundred million euro.India's businessman Pramod Mittal acquired Kremikovtsi with a bond loan of 325 million euro, released in 2006. He has no right to start negotiations about a possible sale of the steelworks or any of its assets, because he has to pay fines for overdue payments on the bond loan, sources from QVT told The Standart. A clause in the loan contract empowers the bondholders to replace the whole management of Kremikovtsi in case of committed breaches on the part of the owner. "QVT Fund LP is firmly convinced the future of Kremikovtsi steelworks can be secured through constructive tripartite talks between the candidate-buyers, the Bulgarian Government and the bond holders," Angelo Moskov said.
Merrill Lynch to advise steel mill Kremikovtsi on development plans
India’s Global Steel Holdings Limited has hired Merrill Lynch as exclusive financial advisor to prepare strategic alternatives for the Bulgarian largest steel mill Kremikovtsi, where the Indian holding controls 71% of the shares and is facing significant insolvency problems. The deal is aimed at “securing long-term viability”, a company press release reads. Global Steel also promises to take “due and proper account of its obligations” under the EUR 325mn bond maturing in 2013. After a series of speculations for selling out the plant, Global Steel announced last week that it has hired financial and legal consultants to evaluate the plant and to propose an action plan. It was rumoured also that creditors to Kremikovtsi have reportedly imposed a sale ban on core assets of the plant set to guarantee debt service under the bond issue. In the meanwhile, the state has started investigations into a activities of the plant related to managing state strategic reserves and some of the assets, including attractive land properties, are blocked for sale.
Bulgarian companies to build hospitals and schools in Sochi
Bulgarian construction companies will repair hospitals and schools at the future Olympic town of Sochi. The invitation comes from Sochi Mayor Victor Kolodyazhny. Mayor Kolodyazhny met with Bulgarian Minister of Regional Development Assen Gagauzov, who has included construction entrepreneurs in the delegation he is leading. "We need to renovate 2,600 houses and repair all the streets and boulevards of Sochi within the next five years," Kolodyazhny said. He also asked the Bulgarians to build up part of Sochi's Olympic Village. Sochi will host the Olympic Games in 2014. To make the city suitable for the grand event, Russia will allot 80 billion rubles from its state budget. "We have heard a lot about the Bulgarian companies' high-quality implementation of construction works and we'd like to have them in the preparation of Sochi for the sports event," Kolodyazhny said. The Bulgarian companies made a presentation of their construction experience at the Olympic Games in Athens. "We are ready to begin supplying Sochi with cement and other construction materials as well as partake in the road and power-generating facilities construction," Bulgarian Building and Construction Chamber Chairperson and Glavbolgarstroy President Simeon Pashov said. Minister Gagauzov's visit is continuing and today. Its schedule includes meetings with Moscow Mayor Yury Luzhkov, and Stroytransgas President Viktor Lorenz. It transpired yesterday that representatives of the Russian concrete batching company MEKA were quite eager to learn about the concrete batching technology utilized by Bulgarian concrete producers from Cherven Bryag. They met with Pleven District Governor Tsvetko Tsvetkov and expressed their desire to build concrete batching plants in Russia similar to those in Bulgaria.
Spanish low-cost carrier scraps Sofia-Barcelona flight plans
Spanish low-cost airline Clickair has scrapped plans to introduce a regular Sofia-Barcelona flight as part of its cost-cutting push, daily El Pais reported on February 4. Clickair, partially owned by Spanish national flag carrier Iberia, has dropped a total of eight routes to trim down its flight schedule, choosing to concentrate on its more profitable flights.Although the Spanish firm has not disclosed its financial data for 2007, it has performed "significantly worse" than expected, El Pais said.Several low-cost carriers have included Bulgaria in their aggressive expansion plans in recent years, but Clickair, facing strong competition at home and looking to take over a domestic competitor, is one of the first to roll back its plans concerning Bulgaria.
Bulgarian Boliarka Beer to please US citizens
Bulgaria's brewery 'Boliarka VT' (Veliko Turnovo) launches beer export to the USA, money.bg informed. First quantities of beer will go to the gambling Mecca of Las Vegas this spring, reported Anton Nenov, executive director of 'Boliarka VT'.The state of Nevada was chosen due to the biggest Bulgarian colony in the States.The export will include almost the entire portfolio of the brewery - light, dark and special beer.The brewery works in Veliko Turnovo city (Central Bulgaria) is the biggest beer exporter in Bulgaria. Last years' export was 58,000 hectoliters ('Bolirka VT' - 33,000).About 6% of the produced pivo is for the foreign market, mainly for South Romania. The export started in April last year. Greece and Spain also import Bulgarian Boliarka beer.According to the brewery data the sold beer in 2007 is 10% more compared to the previous year. The brewery stands at 4th place in the country.The incomes from sales for 2007 were 35 million BGN (17 million EUR). Round 3 million EUR will be invested in 2008 in new equipment and repairs of storage rooms.
ANALYSIS:
Bulgaria – A world leader for property investment
Author: prweb.com
As the world's strongest property market in 2007, Bulgaria property investment has made a huge �2.36 billion increase on 2006 figures, and is successfully keeping up the momentum for 2008.Many local and international property experts predicted the year's increase to reach 25% to 30% however by September the market had actually risen by 32% with many major cities, such as Sofia, already recorded impressive growth this year.The huge property price rise has been largely attributed to a good mortgage market, high annual revenue of properties and the weak impact of the world financial crisis in Bulgaria.The Bulgarian financial market has not been impacted by US sub-prime crisis due to no cross-border banking, with consumer borrowing continuing at a steady growth rate.UK property investors, who accounted for 40% of all Bulgaria property investment in 2007, followed closely by Russia occupying 38% of the market have played a primary role in maintaining excellent market conditions, whilst further strengthening the country's financial stability and adding to the robust appeal for Bulgaria property investment Nikolin Gavrailov President of the Bulgarian Entrepreneurial Chamber in Building reported the turnover for the construction industry as �5.6 million adding, "The (previous) lack of modern apartments, retail, and administrative buildings caused the construction boom. The investment growth in tourism, production, and the need for modern infrastructure also stimulated construction. Construction sector growth is expected to be between 12% and 16% year on year until 2010."Alongside such strong growth in Bulgaria property investment, the economy has experienced sustained growth with The Economist forecasting a consistent 6.4% GDP growth year on year. Bulgarian emigrant workers are investing back into the country in particular retail and housing sectors, also boosting the Bulgarian economy. According to preliminary figures from the World Bank, remittances from Bulgarians working abroad will amount to �1.26 billion in 2007. However, the Bulgarian National Bank have stated the actual figure to be closer to �2 billion or 7% of the gross domestic product.In a bid to ensure a consistent flow of foreign direct investment (FDI), the Bulgarian government has made bold changes to the Bulgarian tax system. The new system will mean that both income and corporate tax will be charged at a very low 10%. This new flat rate applies to all workers, investors, and companies regardless of income or profit values, making Bulgaria a very tax efficient place to relocate or invest in.From July 2008, budget airline Wizz Air will be the first operator to offer cheap internal travel from the capital city to the coast of Bulgaria. The low cost airline will operate four domestic flights per week between Sofia and Varna, and will expand flight frequency to the UK, Italy, Germany Spain, and Turkey.Despite such rapid price growth, Bulgarian property investment remains very competitive and highly profitable in comparison with other European markets, giving the country a long-term profitable investment edge.
External debt approximates the state`s GDP
Author: Banker Daily
Bulgaria's gross foreign debt has grown enormous. If a year ago someone had forecast that private companies' and the State's external liabilities would equal in size Bulgaria's GDP, he would have certainly been accused of ignorance. But now that is becoming a reality. BNB's data in that respect are indicative. In end-November 2007 our country's gross foreign debt amounted to EUR26.25BN, or 91.8% of the GDP. At first glance it seems incredible that eighteen years after a moratorium on Bulgaria's external debt was declared in February 1990 when it was about USD12BN, the country's foreign liabilities more than doubled, although throughout all these years foreign creditors received from our country some USD13BN in repayment of principle and interest. Of course, it is extremely important to specify that within that entire period Bulgaria's external debt was fundamentally restructured Since the beginning of democratic changes in the country till 2001 the gross foreign debt was almost entirely that of the government. We should point out here that after signing the deal on its reduction and restructuring with the creditors from the London Club in June 1994 it went down to USD5.4BN. Apart from that Bulgaria was also indebted to the creditors from the Paris Club by some USD1BN. During the first ten years of our transition period liabilities to the IMF, the World Bank, the EBRD and other international and State creditors, amounting to another USD2BN were accrued. Thus, after the big crisis in 1996-1997 the government's foreign liabilities totalled some USD8BN. (editor's note - The BNB publishes no more data from these years.) However, it's a fact that in the beginning of 1999 the Bulgarian State's liabilities to foreign creditors were already EUR8.1BN. Almost nine years later the debt was reduced to EUR3.1BN and the liabilities to the London Club, the Paris Club and the IMF melted away. But the quicker the government's debt decreases, the faster go up the private sector's external liabilities Their headlong rise began in mid-2002 until when their total size throughout the years varied between EUR1BN and EUR2.2BN. At the end of 2002 private firms and banks owed to foreign creditors almost EUR3.5BN. Two years afterwards the amount was already EUR6.4BN, in 2006 it reached EUR15.6BN, and in end-November 2007 it exceeded EUR18.8BN. That's quite a sizable growth. There are specifics here, too. In the first place the private foreign debt is divided into credits drawn by banks and financing received by Bulgarian companies directly from abroad. Events seem to have been developing most dynamically in the banking sector. In 2002 credit institutions' foreign liabilities were symbolic - EUR416MN, most of which in the form of foreign banks' deposits in our banks. This was mainly money which each bank keeps on its correspondent accounts in other credit institutions. Since 2003 domestic banks' external debts began to increase by EUR1BN annually on average. The reason for that are the big credit lines which foreign owners extend to their Bulgarian subsidiaries. The highest rise - by almost EUR1.7BN was reported in the first eleven months of 2007 when banks' external liabilities went up from EUR3.4BN to almost EUR5.1BN. We quote all these numbers not out of love for statistics but in order to point to what extent the Bulgarian financial sector depends on foreign markets. It turns out that a quarter of the money attracted by banks are not Bulgarian. And a considerable part of that money is used to maintain the growth of crediting in our country. Therefore, the crisis abroad influences (although indirectly) the financial resource which grows more expensive, and the price of loans which local banks extend goes up. This is a fact. As far as direct corporate liabilities to foreign creditors are concerned, they can also be divided in two groups. In the first place that is the money which our commercial companies have received directly from foreign banks or from selling bonds, purchased by foreign investors. In end-November 2007 their amount was almost EUR9.1BN, increasing by EUR1.9BN within eleven months. In the second place are the so-called direct investments. These are credits allocated by foreign owners to their Bulgarian subsidiaries. They total EUR9BN, having increased by EUR3.1BN since the beginning of 2007. Although this is financing on the part of the owner to the subsidiary, it is in fact a loan to be repaid. And speaking about payment, there comes the following information which sounds really sensational. For servicing external debt throughout the first eleven months of 2007 the Bulgarian State, our banks, and private companies, transferred to foreign creditors' accounts EUR5BN-plus. Until five or six years ago such sums were absolutely unaffordable for our country. Moreover, the repaid amount increased by some EUR1.3BN vs November 2006. About EUR1BN was extended by parent companies to their Bulgarian subsidiaries for servicing loans (direct investments). We are pointing to that fact in order to avoid an eventual impression that the above-mentioned EUR9BN has remained in our country. Nothing of the kind. The money has been loaned for several years and will be paid back together with the due interest on them. It's true that the big external financing stimulates the development of our economy. It's also true that it is indicative of the increased trust of international financial markets towards our country. However, this external debt results in the export of EUR5BN from our country. Well, some experts would immediately say that as the Bulgarian economy can afford such expenses and they do not lead to a decrease of the country's foreign currency reserve, that bespeaks of its development and fair state. one may wonder when we became so powerful. And if we are in such a good shape why both firms and citizens complain of constant shortages. We cannot deny that Bulgarians are used to moan a bit more than necessary. It's also a fact that over the past year the country's foreign currency reserve rose from EUR8.7BN to EUR11.9BN. That money came mostly from foreign direct investments into our country, which according to BNB's data amounted to EUR5.1BN for the January-November 2007 period. This is money that entered the country's economy for good. Of course, a businessman can sell the enterprise acquired in Bulgaria, as Pramod Mittal, for instance, will do with Kremikovtzi, the biggest steel mill in this country. But another investor shall pay for it, so one's money is changed for another's money. And what has already entered in the form of capital can only be drawn in the form of dividend or draining of the enterprise. And the latter method is illegal. So, at present, investments from abroad cover the currency which goes out of Bulgaria for servicing mostly the external private debt. A problem will arise at the moment when these investments go down. And that may happen still this year if the interest towards Bulgarian real estates goes down due to the crisis on international markets. For 2007 it attracted BGN1.6BN in foreign investments. If that size of money does not enter the country in 2008 as well, Bulgaria's foreign reserve will begin to go down and that will be a problem indeed.
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