BULGARIAN ECONOMIC TOP NEWS DIGEST
WEEKLY REPORT ( 4 – 11 APRIL 2008 )
Sections/headline briefs:
MACROECONOMY:
· Economy Minister Dimitrov: Incomes grow faster than inflation
· IMF mission in Bulgaria predicts gradual drop of economic growth
· Nuclear plant Kolzloduy beats Q1 target by 6.51%
· Industry Watch: GDP growth at 6.2% in 2008
· Presidents of Bulgaria and Poland set goal of achieving � 1 B in bilateral trade next year
· Industry production raises with 5.2% in last year
· Business property deals top � 878 M in 2007
· A thousand Bulgarian farmers buy machinery with EU funds
· Bulgaria drugs cheaper than rest of EU, costs for patients higher
· Sofia city hall calls tender to extend underground
· Bulgaria to hire 20 000 construction workers from Vietnam over labor shortage
· Vietnamese corporation wants to invest in joint projects with Bulgaria
· EU grants BGN 41 M for environmental projects
· Varna municipality allocates 17.5ha for container terminal
· Business saves BGN 2B from cut in social security contributions
· Plan B ready for Gorna Arda project
· Fourth international congress on energy efficiency, RES held in Sofia
· State to provide � 31M for SME energy efficiency in 2008-2009
· Business trips to Bulgaria to increase
· New vehicle sales up 30% Y/Y in Q1
INVESTMENTS:
· U.S. company ITT plans to invest $400 М in Bulgaria
· Kuwaiti sheikh invests $100 M in Bulgaria
· Residential complex for BGN 200 M to be built in Bulgaria's capital
· BGN 42.3 M art centre to be built in Plovdiv
· Local business to build � 22 M mall in Haskovo
· BGN 30 M complex to be built in Stara Zagora
· Orchid to invest �50 M in Varna complex
· Bulgarian resort operator Zlatni Pyasatsi to invest �10 M in residential building
· Plastic pipes factory to open in Vratsa
· Eastern Europe's biggest solar park to be build in Bulgaria
COMPANIES:
· Bulgarian companies compete for $150 M
· FIBank to have 11 Offices in Albania by year-end
· Three steel producers to hold final talks for Kremikovtsi
· Bulyard to build two ships for �60M
· New factory to supply plant-based substances to Sopharma
· Bulgarian Carat Electronics to supply electric metres to CEZ
· Strike in Bulgarian plant of Italian Miroglio ends with agreement
ANALYSIS:
· The World Bank supports strengthening road safety in Bulgaria
· Rich Bulgarians get richer
· IMF report: Bulgaria with highest private credit growth in CEE
· Serbs rely on the Bulgarian business
Articles:
MACROECONOMY:
Economy Minister Dimitrov: Incomes grow faster than inflation
Income growth in Bulgaria outpaced inflation in the last two years, Economy and
Energy Minister Peter Dimitrov told Montana residents on Friday. In 2006, inflation stood at 6.5 per cent, while incomes increased by 17.6 per cent. In 2007, inflation reached 12.5 per cent, while incomes grew 23.9 per cent. Pensions also increased
considerably in the last two years. Dimitrov said wage grow was hard to define because most Bulgarians earn more than their stated incomes. Significantly, bank deposits increased from 2,860 million leva to 4,270 million leva in 2006 alone. In the last two years, deposits increased by 60 per cent, Dimitrov said. Despite income growth, living standards still fall a long way short of the EU average, Dimitrov said. Labour productivity in Bulgaria is a mere 33 per cent of the rate in the other EU countries, which is the main cause of low incomes. Dimitrov predicted that the 2008 inflation rate would be half its last year's level. This forecast may not materialize if the weather is as bad as in 2007, or if the prices of energy sources jump worldwide, BTA reported. Inflation will also be influenced by the fact that prices in Bulgaria are lower than elsewhere in the EU: prices in Bulgaria are 56 per cent of the EU average, compared with 75 per cent of the EU average in Romania and 98 per cent in Greece, Dimitrov said.
IMF mission in Bulgaria predicts gradual drop of economic growth
Bulgaria's economic growth will gradually drop down to 5.5 per cent by the end of 2008, according to a forecast of the International Monetary Fund (IMF) publicized Tuesday by IMF Mission Leader for Bulgaria Albert Jaeger. The downward trend will continue in 2009 when the economic growth is expected to go down to 4.75 per cent, which, on its part, will result in a delay of the inflationary rate growth to 7.25 per cent in 2008 and 5 per cent in 2009.The high prices of goods for broad consumption, particularly, the ones of energy were quoted by Jaeger as one of the main factors exerting an adverse effect on the economies of the EU and the region of Southeastern Europe.
Nuclear plant Kolzloduy beats Q1 target by 6.51%
The nuclear plant in Kozloduy produced 4.51mn MWh of electricity in Q1 or 6.51% above the target. The power producer supplied 4.25mn MWh to the power system operator which is 6.7% more than planned. About 70% of all supplies were for the regulated market. The capacity utilisation of the two 1,000 MW units of the plant reached 100% for the period. The power plant has closed four 440 MW generators over the last 5 years. The company, which provides between 25% and 30% of the country’s power production, considers options to lease two idle units (units 3 and 4) to an international company that could lobby before EU institutions for re-launching them. However, the status of the reactors is defined by the country’s EU accession treaty and cannot be changed without amendments ratified by all member states.
Industry Watch: GDP growth at 6.2% in 2008
Bulgarian economic think tank Industry Watch predicts that Bulgaria's gross domestic product (GDP) will grow 6.2 per cent in 2008 and 6.4 per cent in 2009.In the autumn of 2006 Industry Watch predicted 6.0 per cent GDP growth in 2007, which proved only 0.2 percentage points lower than the rate announced by the National Statistical Institute a year and a half later.The macroeconomists involved in these forecasts dismiss fears of an "overheating" of the Bulgarian economy. According to the experts, the expected faster inflation of consumer prices does not pose a risk for the country's monetary and financial stability, and there are no systemic risks for the banking system caused by the relatively rapid credit growth.Industry Watch expects that the trade deficit will continue to increase - a process which is largely due to the increase in the flow of foreign capital into the economy. Total investment (domestic and foreign) will continue to grow in real terms by 14-20 per cent. The systemic risks for the economy do not arise from the trade deficit but rather from the lack of a political will for structural reforms and improvement of the business environment and the judicial system.The fiscal surplus will be considerable in 2008, at 3.2 per cent of GDP. The government continues to collect more money than it needs by law, arguing that this is a policy against the current account deficit. This limits the chances of faster accumulation of capital in the economy, according to Industry Watch.The government will be under pressure to spend the tax revenue surplus for election campaign purposes, which will run counter to the political promise for a public expenditure ceiling of 40 per cent of GDP.
Presidents of Bulgaria and Poland set goal of achieving � 1 B in bilateral trade next year
Bulgarian President Georgi Purvanov is paying an official visit to Poland on Tuesday and Wednesday at the invitation of his counterpart Lech Kaczynski.The two presidents set the goal of achieving 1,000 million euro in bilateral commodity exchange next year. This is contained in a statement of Purvanov and Kaczynski after their one-to-one meeting. Interaction in the EU and the Union's energy policy were among the topics discussed by the two presidents. Purvanov said Bulgaria and Poland will remain active participants in the debates on EU enlargement and the energy policy. The Bulgarian President noted the support for the preservation and development of the European prospects of the Western Balkan countries and the need to update the EU neighbourhood policy towards such countries as Ukraine, Georgia and Azerbaijan. The presidents discussed the EU common energy policy and the diversification of energy sources. Purvanov briefed his Polish counterpart about agreements signed by Bulgaria on the building of the South Stream natural gas pipeline and other energy projects, and that the country is working very intensively on the Nabucco project, which is supported by the EU. According to Purvanov, his talks last month with Azerbaijan's President Ilham Aliyev will contribute to stepping up the implementation of Nabucco. The two presidents also discussed cooperation in culture. A new agreement on cooperation in culture has been prepared, Kaczynski said. Purvanov noted that Poland places first in the EU in terms of number of students studying the Bulgarian language, and that Polish is taught in a number of universities in Bulgaria. Purvanov and Kaczynski signed a joint declaration on further promotion of bilateral political, economic and cultural relations. The two presidents will work for the development of bilateral trade and investment, especially in energy, mechanical engineering, agriculture and the environment, the declaration says. The two stressed their will to continue the dialogue and cooperation in the field of security and defence at the European and Euro-Atlantic level. They stated their will for joint action to promote the European and Euro-Atlantic prospects of the countries seeking membership and to strengthen cooperation with countries in the context of the European neighbourhood policy. The declaration further says that the presidents of Bulgaria and Poland support the goals of the European energy policy and the activities aimed at diversification of the sources and the routes of transfer of energy resources. Purvanov and Kaczynski reaffirmed their support for the principle of energy solidarity enshrined in the Treaty of Lisbon. Later in the day, Purvanov attended the opening of a Bulgarian-Polish business forum. He conferred with Polish Prime Minister Donald Tusk, with the Speaker of the Sejm (the lower house of Parliament) Bronislaw Komorowski and with the Deputy Speaker of the Senate Marek Ziolkowski. Bulgaria's trade with Poland in 2007 stood at 651.4 million euro, 20.7 per cent up from 2006. Poland was the 16th major trade partner of Bulgaria last year. According to Bulgarian National Bank figures, as of December 31, 2007, direct Polish investment in the Bulgarian economy totals 55.6 million US dollars, which places Poland in 32nd position in terms of foreign investment in Bulgaria. A large portion of this investment, 41.5 million dollars, was made last year in real estate and tourism. As at December 31, 2006, there were 61 investments of Polish companies in Bulgaria. A total of 144,032 Polish tourists visited Bulgaria in 2007, which was 20.6 per cent more than in 2006. Poland ranks ninth in terms of number of tourists who visited Bulgaria in 2007.
Industry production raises with 5.2% in last year
By preliminary data the common industrial production in February 2008 compared to the same month in 2007 has increased with 5.2%. The production index is defined in big rate by the index of the recycling industry, which has increased with 9% since February 2007. The significant increase is marked in the following spheres - production of machines, equipment and household devices with 32.5%, production of electrical machines and apparatuses - 26.5%, production of rubber or plastic articles - 22.1% rise. The incomes of industry sells by preliminary data have increased with 11% in February 2008 compared to the same month in 2007. Compared to the same month of 2007 the biggest increase is in the sale of investment products - 22.6% and consumers durable products - 18.7%. The increase in sale of energy products is 8%.
Business property deals top � 878 M in 2007
The investment deals in real estate in Bulgaria amounted to EUR 878 million in 2007, up by 35% year on year, data of CB Richard Ellis's local partner, Elta Consult, show. The ranking is led by the management buy-out of Landmark fund for EUR 210 million and the sale of Varna Mall to Miller Developments for EUR 120 million.
The initially announced market volume was about EUR 1 billion but some of the deals included in the survey were later cancelled. The turnover is based on 30 large purchases of office space, shopping centres, industrial property, hotels and construction sites.
Despite the increase, the investment volume in Bulgaria is still twice or thrice smaller than in the leading markets in Central and Eastern Europe. Analysts, however, expect that Bulgaria will reach the levels there in a couple of years.
A thousand Bulgarian farmers buy machinery with EU funds
Bulgarian farmers will be allowed to apply for bigger sums from the EU structural funds. This transpired at a seminar of the grain producers in Bulgaria, organized in the town of Veliko Turnovo. The lowest sum, for which a farmer will be allowed apply under the EU program for development of the rural regions is 3,500 euro and the highest - 1.5 million euro. Most of the projects are for the purchase of farm and agricultural machinery. Minister and Agriculture and Forestry Nihat Kabil says that over 1,000 projects for the purchase of farm and agricultural equipment will be submitted at the Ministry of Agriculture. In three month's time, the applicant will be notified whether his project has been approved for financing or not. The beneficiary is to sign a contract with the Ministry of Education in fifteen days after he receives the notification of approval. Also, the beneficiary is not allowed to sell or lease out the farm and agriculture equipment purchased with EU funds for a term of five years. The projects can be implemented only with materials and technical equipment, manufactured in the EU.
Bulgaria drugs cheaper than rest of EU, costs for patients higher
Bulgarians make the biggest co-payments for drugs within the EU despite the fact that the Balkan state has the community's lowest prices, shows an Eurostat survey presented here by the Association of Research-based Pharmaceutical Manufacturers in Bulgaria. The reason for the disparity is the lack of commitment on the part of the state: Bulgaria is the only EU member state where the government covers less than half of prescription drug costs, said association chief Deyan Denev. At the same time, the government is trying to artificially reduce further drug prices, obliging the manufacturers and importers to maintain the lowest prices in comparison with eight reference markets. Faced with overregulation on such a scale, the members of the association have decided to discontinue the import of more than 220 medicaments. The Bulgarian public institutions (National Health Insurance Fund and the health care ministry) cover only 44% of drug costs which compares with 69% in Slovenia, 54% in Romania, 85% in Greece and 62% in Hungary. At the same time, Bulgaria levies the highest VAT rate on medicines, 20%. The drug pricing policy enforced by the Bulgarian government is a disservice to the manufacturers and the patients alike, said the association. That is forcing some patients to cut down on their dosages or waive treatment altogether, said Denev. The shortage of public sending is also forcing the NHIF to limit the number of patients under various programs, creating waiting lists for the treatment of hepatitis B and C, sterility and other medical conditions. VAT should be cut and the co-payment from the state should increase if Bulgarians are to have adequate access to contemporary treatment options, said Denev. Some 60 mln of the 300 mln lev NHIF budget for reimbursable drugs this year will be repocketed by the state under the VAT system. If the rate comes down by 10%, that would free 30 mln levs for the purchase of additional drugs. The association is also unhappy with the low health spending which is only 5.2% of the nation's GDP versus an EU average of 7.4%. Some 25% of these allocations are spent on drugs which breaks down to 80 levs per capita. The relevant sum in the rest of Eastern Europe is 100 euro per capita, said Denev.
Sofia city hall calls tender to extend underground
Sofia city hall-owened metro operator Metropoliten called a new tender for the construction of a new section of the metro network, Dnevnik daily reported on April 7.The previous tender for the section connecting Nadezhda junction with Cherni Vruh Boulevard was called at the turn of the year and later cancelled because no bidder offered an acceptable price.Metropoliten will finance the project with European Union structural funds under operational programme Transport.The new public procurement is divided into two lots. The first, linking Nadezhda junction to Patriarch Evtimii Boulevard, has a cost cap of 400.46 million leva, value-added tax (VAT) excluded. The second, between Patriarch Evtimii Boulevard and Cherni Vruh Boulevard, should be built for no more than 155.55 million leva, VAT excluded.The tender participation guarantee is set at one million leva for the first lot and 0.3 million leva for the second, whereas the performance bond is set at five per cent of the contract's value.Eligible candidates need to prove a minimum turnover of 200 million leva in each of the past three years. Participants also need to prove they can cover construction costs for the first six months.Tender documentation costs 18 000 leva, VAT included. The deadline to submit bids is May 27 and all offers will be reviewed later that day.
Bulgaria to hire 20 000 construction workers from Vietnam over labor shortage
Bulgaria will be short of 20 000 construction workers in 2008, and many Bulgarian construction firms are ready to hire laborers from Vietnam to fill up the shortage. The news was announced Monday by the Deputy Chair of the Bulgarian Construction Chamber Ivan Boykov before the Bulgarian private Darik Radio. It comes at a moment when the Bulgarian Minister of Labor and Social Policy Emiliya Maslarova is on an official visit to the Socialist Republic of Vietnam that began on Monday, and will last until Saturday, April 12. The Bulgarian and the Vietnamese delegations already discussed the draft of a memorandum for encouraging the cooperation in labor, social insurance, and social security between the governments of Bulgaria and Vietnam.However, it does not include the question about the hiring of Vietnamese workers by Bulgarian firms the common rules of the EU do not allow the conducting of a separate labor policy by its individual members states. Bulgarian companies do have the opportunity to hire Vietnamese workers through the legal procedure, which requires a permission by the Bulgarian State Agency for Employment, whose Executive Director Sotir Ushev is also in Hanoi as a member of the official delegation. Representatives of the Employment Agency have announced that only one work permit to a Vietnamese citizen was issued in 2007, because there was only one applicant from Vietnam who wanted to work in Bulgaria.In 2008, however, there have already been petitions for work permits for 29 Vietnamese bricklayers by the factory of Orgachim in the city of Ruse, and for 32 welders from Vietnam by the Ruse Shipyard. Some half a million Vietnamese out of the total 85 million population work abroad in 40 different countries but mainly in Japan, South Korea, Thailand, Malaysia, and the Middle East. In 2007 75 000 laborers went to work abroad. For the last 16 years, the Vietnamese workers abroad have transferred some USD 23 M to their home country. The country has a total work force of 43 million people, with 1,5 million entering the labor market each year.The visit of the Bulgarian Labor Minister Emiliya Maslarova is expected to renew the labor and social policy relations between Bulgaria and Vietnam that were terminated 18 years after the break up of the former Soviet Block.
Vietnamese corporation wants to invest in joint projects with Bulgaria
On the fourth day of its visit to Vietnam, an official Bulgarian delegation led by Labour and Social Policy Minister Emilia Maslarova met in Hanoi with the management of the Vietnamese corporation Vinaconex. The company expressed an interest in cooperation with Bulgaria in investing in joint projects and import and export of goods and services.The interest of Vinaconex is in four areas of cooperation: tourism, trade, investment and the use of labour. The company management is planning to visit Bulgaria in May.The Executive Director of the Confederation of Employers and Industrialists in Bulgaria, Evgenii Ivanov, said he sees in Vinaconex a potential future partner.Bulgarian Ambassador to Vietnam Georgi Vassilev said a foreign worker does not need government support in order to start work in Bulgaria. The condition is to have a request for personnel that is not available on the Bulgarian labour market, and a permission from the Employment Agency. Currently, only one Vietnamese works in Bulgaria.The Bulgarian Construction Chamber said they are ready to create conditions for the training of Vietnamese workers in Bulgaria.
EU grants BGN 41 M for environmental projects
Bulgarian municipalities will receive a total of BGN 41.3 million in technical aid for preparation of waste management projects under the EU environment operative programme. The ministry of environment has opened a procedure for collecting documents for the EU grant. The deadline for submitting projects is June 6, 2008.
Brussels will finance the development of expert analyses, hydrological and geological surveys, activities related to the issuing of integrated pollution prevention and control permits, and legal services. Projects eligible for technical aid include utilisation of waste through recycling, re-use and energy production from it, as well as construction of waste depots or incineration of waste. Financing will also be provided for projects aimed at reducing the accumulation of waste.
Varna municipality allocates 17.5ha for container terminal
Varna municipality has earmarked 17.5ha for a new container terminal, weekly Stroitelstvo Gradut reported on April 7. The land lot, located on the northern coast of Varna lake, will be handed over once the Government and the municipality sign a memorandum for the re-development of the entire area. It includes the re-location of Varna port to the western side of the lake, as well as the construction of a recreational zone on the current grounds of the port. The Cabinet is set to review the memorandum in mid-April, Bulgarian Transport Minister Petar Moutafchiev said, quoted by the weekly. He added that he discussed the project last week with Varna mayor Kiril Yordanov and the chair of Varna municipal council Borislav Goutsanov. Total costs are estimated at 500 million euro and the terminal would be completed in 2014, the daily said. Part of the costs will be covered by a loan from the Japan Bank for International Co-operation, which agreed to extend 226 million euro to finance the construction of container terminals in Varna and Bourgas. Parliament has to ratify the loan by June 30, after which the Cabinet can launch the tenders to pick an adviser and a concessionaire, which have to be chosen by November 2008, the daily quoted Moutafchiev as saying. Construction work is scheduled to start in August 2010, by which time the main contractor that will build the terminal has to be picked, Moutafchiev added.
Business saves BGN 2B from cut in social security contributions
The cut in social security contributions resulted in more than two billion leva in savings for Bulgarian business, the head of the National Social Security Institute Yordan Hristoskov told the parliamentary budget and financing committee, as quoted by Dnevnik daily on April 4.At the same time, the Pensions Fund, covered by the state budget, has been accruing a higher deficit. According to Hristoskov, to stem this deficit all revenues from privatisations and concessions should flow to the Pensions Fund.He argued the social security rate in Bulgaria hovered around the EU average, hence a further cut was immaterial and would burden the budget. All the more, a further cut to social security contributions was not necessary because it would hardly lead to an increase in revenues nor would narrow the share of grey economy.Hristoskov supported the idea for the state assuming a higher portion of the social security burden. on even burden allocation, at 10:10 employer/employee share-out, that would mean 400 million leva in annual profit for employers and 72 million leva in expenses for workers, he added.
Plan B ready for Gorna Arda project
Two options are being discussed for the future of Bulgaria's Gorna Arda cascade, the Pari daily learned from knowledgeable sources. one of them was suggested by the successor of Turkey's Ceylan in the project, CCG Insaat Sanayi Yatirim Ve Turizm. According to it, the share of the Turkish company could be sold at an international tender. In this case CCG may withdraw its EUR 75 million claim against Bulgaria's National Electric Company (NEK) at the arbitration court in Paris. For Bulgaria, that will be the best possible solution to the problem that started with the signing of an electricity-for-infrastructure agreement between Sofia and Ankara in 1998. Thus the investor that will win the tender will become co-shareholder in Gorna Arda Hydro Energy Company. But if the bids are too high, the winner may receive the whole concession on the cascade and Gorna Arda will have to be closed. The company, however, has already made considerable investments in the project. Interest in a possible tender has been demonstrated by Austria's Alpine Bau. But another rumoured potential investor, Italy's Enel, denied having any plans to join the project. The other option for the cascade is to carry out the project under the Kyoto Protocol. In this case the Bulgarian government will have to close an agreement with another government that has signed the protocol for joint implementation. As far as Gorna Arda is concerned, this could be Austria or Germany, insiders said. In exchange for financing the project, the partner will receive carbon credits from Bulgaria. If this scheme is chosen, Gorna Arda will have to be wholly-owned by NEK, deputy minister of economy and energy Valentin Ivanov said.
Fourth international congress on energy efficiency, RES held in Sofia
The Fourth International Congress on Energy Efficiency and Renewable Energy Sources (RES) for Southeast Europe opened in Sofia on Monday. It will be held over three days, with an international exhibition of RES technologies on the sidelines, BTA reported.
Improving energy efficiency is a tool for increasing the security of supplies, saving energy and protecting the environment, Foreign Minister Ivailo Kalfin said in a statement read out to the participants. Cooperation in the energy industry will be one of the five priority areas of the Regional Co-operation Council for South Eastern Europe, Kalfin said.
Electricity supply in the region ran into difficulties after Units Three and Four of the Kozloduy nuclear power plant were shut down at the end of 2006, Kalfin wrote in his address. He called on the EU to initiate an energy community with Southeastern Europe, which would take steps to deal with the difficulties. Bulgaria has taken active steps for a regional energy information centre to be set up in Sofia as part of the Energy Community's Secretariat, as well as for opening an office of the Energy Community's Observatory. The Operational Programme Competitiveness allocates 205 million euro for measures for energy sector development and increased energy efficiency between 2007 and 2013, Deputy Economy and Energy Minister Nina Radeva said in her address. Two grant schemes worth a total of 31 million euro will be launched in the second half of the year. In an address read out at the forum, Energy Commissioner Andris Piebalgs noted its crucial importance for the exchange of experience and better cooperation in the energy industry. The German Minister for Environment and Nuclear Safety, Sigmar Gabriel, also addressed the forum. A long-term energy strategy for the next 30 to 50 years should be drafted and approved. It should take into account Bulgaria's natural conditions, energy requirements, environmental protection and international commitments, the Union of Physicists said in a letter to BTA about the development of the energy industry. The Union singled out photovoltaic energy sources as a promising field. Coal fired power stations will continue to be most widely used in the short term, which will require strict policies regarding harmful emissions, the scientists said. Nuclear energy will be central to Bulgaria in the next 50 years, the physicists said. The Union is proposing to analyse the current condition of the energy sector and to draft a strategy. The scientists support the construction of the Belene nuclear power plant, as well as a possible addition of new units to the Kozloduy nuclear power plant. Milko Kovachev, former energy minister and current adviser at the European Bank for Reconstruction and Development (EBRD), said there is a huge potential in Southeastern Europe to increase energy efficiency and to use RES. The energy-intensiveness of the Balkan economies is at least 50 per cent higher than in the 15 older member states of the EU, and in some sectors the energy-intensiveness is even 100 per cent higher, Kovachev said. Energy efficiency in Bulgaria should increase 30 to 50 per cent so that the country's economy is competitive on the European market, he said. According to Kovachev, the EBRD has so far invested 346.8 million euro in projects in Bulgaria. The amount for the Balkans 453.4 million euro. In the framework of the EBRD's sustainable energy initiative for Southeast Europe, in the period between 2006 and 2008 the investments total 1,700 million euro.
State to provide � 31M for SME energy efficiency in 2008-2009
Deputy economy minister Nina Radeva announced that the state budget will provide a total of EUR 31mn for improving the energy efficiency of small and medium sized enterprises (SME) this and next year. The funds would finance SME projects for using solar and biothermal energy and for purchases of equipment to improve the energy efficiency of the companies. Head of the agency of energy efficiency Tasko Ermenkov said at the end of the last year that the energy efficiency of the economy is expected to increase by 1% each year until 2016, which would lower consumption by 630,000 tons of oil equivalent at the end of the period. The measures for achieving the target include transport regulations as one of the most energy-intensive branches. The country uses by 50% to 100% more energy per unit of production as compared to EU-15 average, according to former energy minister Milko Kovachev, counsellor at the EBRD at present.
Business trips to Bulgaria to increase
The number of business trips to Bulgaria will increase in the next few years, Andre Gribi, a Swiss tourism expert, said at a meeting with the management board of the Union of Investors in Tourism. In his words the interest in organised seminars and team building events in Bulgarian resorts will grow.The time of long holidays once or twice a year is now part of the past, Gribi pointed out. The modern man is dynamic and prefers going on short but frequent trips at any time of the year. Bulgarian hotel managers should take this trend into account and change their marketing strategy, the Swiss expert added. Bulgaria should invest either in three-star hotels with good location or in luxury holiday villages with golf, tennis and spa facilities, according to Gribi. In the near future, the money will be in tourism, not in real estate.
New vehicle sales up 30% Y/Y in Q1
A total of 15,224 new vehicles were sold in Bulgaria in the first quarter of 2008, up by 29.5% compared to the corresponding period of 2007, when 11,756 units were sold. The number of cars sold in the first three months of 2008 amounted to 14,157, up by 26.5% year on year, data of Union of the Importers of Automobiles in Bulgaria (UIAB) show. Opel and Toyota topped the ranking in the first quarter of the year with 1,843 and 1,537 cars sold, respectively. Opel occupied a 13.02-percent share of the market, while Toyota's share stood at 10.86%. Ford ranked third with 9.32% market share overtaking Volkswagen and Peugeot, which held 8.06 and 7.35% share of the market, respectively. Dacia sold a total of 862 cars in the past three months and held 6.09% of the market during the period. Chevrolet and Citroen occupied 5.16 and 5.14% of the market, respectively.Skoda and Renault also made it into the top ten in terms of sales with 690 and 587 units sold, respectively. Skoda held 4.87% of the market, while Renault's share amounted to 4.16%.A total of 1,067 buses and trucks were sold in the country in the first quarter of 2008, compared to 570 for the year-ago period. Iveco was the market leader in the period with a 40.77% share, followed by Mercedes and Volvo with 27.74 and 19.12% market share, respectively. Motorcycle sales rose by 31% to 78. Yamaha sold a total of 23 units and occupied over 29.49% of the market, followed by Peugeot (22 units and 28.21% market share) and Piaggio (19 units and 24.36% market share).
INVESTMENTS:
U.S. company ITT plans to invest $400 М in Bulgaria
U.S. company ITT, active in the defence and civil sectors, plans to invest $400 mln in Bulgaria, said the office of the company's local representative, Balkantel. According to preliminary information, ITT plans to build new production facilities as part of its local expansion. No further details about the investment plans of the U.S. company were immediately available. ITT is scheduled to give news conference on Friday. ITT is eyeing one of the major contracts for the modernisation of the Bulgarian armed forces: the procurement of communication and information systems for the general staff, land forces, navy and the air force, sources told Dnevnik. For the purposes of the project, the Bulgarian defence ministry will have to pick a foreign strategic partner with prior experience in the development of systems employed by the U.S. and UK defence sectors. ITT has been named as that partner. An alliance of Bulgarian companies was formed in April 2007 to work with the U.S. contractor. The tie-in comprises Balkantel, Terem, Technologica, Armitech, Sirma Group, Dasf, Bitova Elektronika, Inmak 2000, Optics, Electron Consortium and Bianor Services. The co-operation between the consortium and ITT will focus on landing the telecom equipment contract, on the one hand, and participation in direct and indirect off-set schemes. Some sources said the contract should be tendered imminently while others said the scheduling of the ITT news conference is no accidental and aims to jump-start the dormant procedure. Sources in the know also said ITT is interested in the acquisition of stakes in Bulgarian corporations. The company is reportedly in the frame to buy one or two of the eight Terem units earmarked for privatisation.
Kuwaiti sheikh invests $100 M in Bulgaria
Kuwaiti businessman Mr. Khaled Abdulmohsen Al Babtain, Chairman of the Al Babtain Group, arrived in Sofia on Monday to negotiate the construction of modern holiday and residential complexes and trade centres in Bulgaria. Yesterday, the businessman had a talk with Foreign Minister Ivailo Kalfin, during which the two outlined the deal's details.
"I'm ready to invest at least a hundred million US dollars in the Al Babtain trust in Bulgaria and at least ten percent of this sum - in the construction of hotels," the businessman told The Standart. Mr. Khaled Abdulmohsen Al Babtain said he would readily invest more money in projects in Bulgaria, provided that his current investments prove profitable. Al Babtain is mostly interest in hotel-keeping and real estates. "I like some plots in Pancharevo, Bansko, Borovets and at the seaside," he said. Khaled Abdulmohsen Al Babtain plans to make investments in the IT sector in Bulgaria.
"I am sure that IT sector has a great future and I've heard that you have some excellent specialists," he said. Kalfin and Al Babtain also discussed opportunities for the Persian Gulf investors to develop logistics and transport centers in Bulgaria. "Bulgaria is an excellent place for the realization of such projects, because of its strategic location and EU membership," the businessman explained. Most likely, the centers will be built in southeastern Bulgaria.
Residential complex for BGN 200 M to be built in Bulgaria's capital
About BGN 200 M will be invested in the construction of a new residential complex in the Bulgarian capital Sofia, called Winslow Gardens. The investors are Winslow Developments, a Sofia-based company with Bulgarian and UK shareholders, and its partner RREEF, a subsidiary of Deutsche Asset Management owned by Deutsche Bank. The Winslow Gardens complex will be located in the Manastriski Livadi ("Monastery Meadows") Quarter in the southern part of Sofia, close to the Vitosha Mountain. It will include 437 apartments, a park, spa, swimming pool, and other sports facilities. Over 60% of the apartments have already been sold.The first phase of the project, which must be completed by the middle of 2010, will be funded with a BGN 72 M from the Austrian-owned Reiffeisen Bank granted for a period of 42 months. The construction works will be performed by the Glavbolgarstroi company.
BGN 42.3 M art centre to be built in Plovdiv
The trade-union home in downtown Plovdiv will be transformed into a modern art centre. The reconstruction project will amount to BGN 42.3 million and will be carried out by Greece's biggest construction company, Aktor S.A., and its subsidiary Aktor Bulgaria. The company won a public procurement procedure in late 2007. The contract is awarded by the Plovdiv municipality. The first stage has to be completed in 30 months, i.e. by 2010. It will include renovation of the installations and construction of a 550-seat congress hall. A new building will be erected during the second stage. The company will also build a seven-level underground parking lot.
Local business to build � 22 M mall in Haskovo
The construction of the first mall in the town of Haskovo will start by the early summer of 2008. Local company Marsa will invest about EUR 22 million in the trade and entertainment centre. The mall should be completed by mid-2010.The complex will have a floorage of 20,000 sq. m divided into four ground and two underground levels. The project parameters are adapted to the scale of Haskovo and the region, Temelko Pampov, a partner in Marsa and senior project manager, said. The other investor is Plamen Paskalev, owner of publishing house Arhimed 2000. The two of them will secure funding from banks and own finances. Mall Haskovo will be built on 4,800 sq. m in an emerging trade zone on Saedinenie Blvd, just 150 m away from roads E80 and E85 that lead to the Turkish and Greek borders.
BGN 30 M complex to be built in Stara Zagora
More than BGN 30 million will be invested in the construction of a multifunctional complex on an area of 0.4 ha in Stara Zagora. The investors are Ritam 4 TB, GU-Faradey and Vito TR, co-owners of Zaharni Zavodi of Gorna Oryahovitsa.The complex will feature an underground parking lot at three levels, a trade section, offices, and housing with a total floorage of 26,612 sq. m. The multi-storey parking lot is the first of its kind in Stara Zagora and will offer 244 spaces. The project was designed by Dilyan Kamenov and Gichka Kutova of Sofia-based Design Art & Co. The complex will be near the city centre and will be completed by the end of 2010. Sale of the properties will start in mid-April.
Orchid to invest �50 M in Varna complex
Orchid Developments Group will invest almost EUR 50 million in its latest project, Orchid Gardens Varna, the company said. The ground breaking ceremony was attended by Kiril Yordanov, mayor of Varna, Borislav Gutsanov, chairperson of the local municipal council, and Orchid's chief executive Ofer Miretzki.Orchid Gardens Varna is in the most attractive area of the city, near the beach. It will be completed in about two years. A 16-storey building with a floorage of 42,443 sq. m will be erected. It will feature trade and office areas, three underground levels with parking lots, shops, atriums, restaurants, a spa centre, a leisure zone, and an indoor swimming pool.Orchid Developments Group has been on the Bulgarian market for five years and has focused on the Varna region, where it has invested more than EUR 200 million.
Bulgarian resort operator Zlatni Pyasatsi to invest �10 M in residential building
Bulgarian Black Sea resort operator Zlatni Pyasatsi will invest 10 million euro ($15.7 million) in 2008 to complete the construction of a residential building, it said on Wednesday. The building, located in the resort of Zlatni Pyasatsi on the Black Sea coast, will be completed in September, Zlatni Pyasatsi said in a statement to the Bulgarian Stock Exchange (BSE), where it is listed. Zlatni Pyasatsi will finance the project with its own funds, the statement added. Zlatni Pyasatsi expanded its net loss to 4.8 million levs ($3.9 million/2.5 million euro) last year, from1.7 million levs in 2006. It is among Bulgaria's most famous Black Sea resorts alongside Albena and Slanchev Bryag. Zlatni Pyasatsi serviced some 31,900 tourists last year, a decrease of 2.0% on the year. No shares in Zlatni Pyasatsi changed hands on Wednesday. The company's stock last traded at 9.7 levs on Monday, unchanged from the previous close.
Plastic pipes factory to open in Vratsa
Bulgarian company Chimremontstroy said it has teamed up with Italian partner Chimicom to open a plant for polyethylene and polypropylene pipes in Vratsa, North-western Bulgaria. The partnership has so far invested over 2 mln levs in the new Chimiplex plant, due to be inaugurated after Apr 10 following the successful testing phase, with a further 1 mln levs to be spent by the year-end. The facility, is located on a 0.5 ha land patch bought from chemical company Chimco, has an hourly capacity of 300 to 450 kg of pipes.
Eastern Europe's biggest solar park to be build in Bulgaria
Near Pazardjik city (Southern Bulgaria) will be build the biggest solar station in Eastern Europe. It is foreseen to be located over an area of 2,000 sq m.The mayor of Pazardjik already had entered into the municipality council suggestion for the purchase of the land, estimated to almost 480,000 BGN (240,000 EUR).The investments are on the amount of over 30 million BGN (15 million EUR).The investor is still not announced, but according to information he will work in collaboration with ‘Helium Energy' International Corporation.The solar station will be with installed capacity of 50 mW.Besides the solar park is expected also to be build a factory for the production of solar batteries.
COMPANIES:
Bulgarian companies compete for $150 M
Bulgarian companies have started a tough competition for US $150 million; two thirds of money is meant for the construction of the US military base in Novo Selo and the rest is meant to provide food supplies and Logistics for the US militaries serving in the bases in Novo Selo and Bezmer. The tender procedure is going on at full steam and the competition for the money will start in one month, The Standart was informed.
The tender for the construction of the military facilities was officially announced a few days ago on the website of the European Command of the US Army. The public procurement amounts to US $100 million. Applications for participation in the tender are submitted online by April 18. The winner will be contracted to build the shooting grounds, the barracks and a residential complex for 2,500 US militaries, as well as the infrastructure and the sewerage system of the military bases. "We've been waiting for this chance for two years now," Bulgarian businessmen, who will run for this lucrative procurement, are rubbing their hands with impatience.
FIBank to have 11 Offices in Albania by year-end
The National Bank of Albania has a issued a licence to Bojidar Todorov to occupy the position of an executive director of First Investment Bank – Albania. Bojidar Todorov has 12 years of experience in the banking sector, 7 of which in FIBank-Bulgaria. FIBank Albania obtained a full banking license in June 2007 and opened branches in the cities of Fier, Korcha and Tirane. By the end of the year the bank will open another three offices – in Tirane, Berat and Skoder. Thus, the total number of branches in Albania will grow to 11. FIBank Albania is a subsidiary of the Bulgarian First Investment Bank. It will offer products and services that have been successfully introduced in Bulgaria and have been adapted to the fit the needs of the Albanian market. The Albanian division will focus on loans to individuals and to small and medium businesses. This year the bank will also launch new products in the area of deposits, mortgage loans and credit and debit cards.
Three steel producers to hold final talks for Kremikovtsi
Economy minister Petar Dimitrov unveils after a meeting with Merrill Lynch, acting as a financial consultant to the owner of the country’s largest steel mill Kremikovtsi, that three strategic investors have retained serious interest for partnership and a contract with one of them is expected to be signed in a few weeks. The minister has mentioned of seven candidates at an earlier stage. India ’s Global Steel, which controls 71% of the steel producer, has hired Merrill Lynch as exclusive financial advisor to prepare strategic alternatives for Kremikovtsi. ArcelorMittal is one of the potential candidates to team up with Kremikovtsi. However, the deal may not be allowed by the local antitrust watchdog or the European Commission as ArcelorMittal and Global Steel are owned by different members of the India ’s Mittal family. The local steel mill is in a liquidity crisis and faces penalty actions from suppliers and bondholders. It posted a loss of BGN 35.9mn (EUR 18.4mn) last year despite alleged sales of land properties and other fixed assets aimed at improving the company’s financials. The strategic partner is expected to help Kremikovtsi to fulfil its investment programme.
Bulyard to build two ships for �60M
Bulgaria's Bulyard Shipbuilding Industry will build two new 56,000 DWT ships of the Future type, the company said. The investment in the two vessels will amount to EUR 60 million. The project will be financed through KLVK, a subsidiary of Bulyard's majority owner, Industrial Holding Bulgaria. The ships have to be delivered in May 2010 and 2011. Industrial Holding Bulgaria posted an increase in its consolidated profit for 2007 by 30% to BGN 11.86 million.
New factory to supply plant-based substances to Sopharma
A new factory for plant-based pharmaceutical substances will open in Kazanlak within days, said local drug maker Sopharma. The new capacity will be part of the production cycle of Balgarska Roza Sevtopolis, a pharmaceuticals company where Sopharma is the principal shareholder. The 1,600 sq m plant will annually process 1,500 tons of plant seeds, stalks and petals into 100 tons of active pharmaceutical substances for the Sopharma line of plant-based products like Carsil, Tribestan and Tabex. The 5 mln lev project will create 20 new jobs at Balgarska Roza Sevtopolis which already employs 280 staff.
Bulgarian Carat Electronics to supply electric metres to CEZ
Bulgarian electronics manufacturer Carat Electronics, based in the northern town of Veliko Tarnovo, has started the production of 60,000 single-phase electric metres for Czech CEZ, the owner of power distributors in western Bulgaria. Carat Electronics won a competitive procedure and was awarded a BGN1.8M ($1.4 mln/920,000 euro) contract to produce and deliver the electric metres by March 2009. The model offers high measurement accuracy, protection from external effects, and options for remote meter-reading. Carat Electronics exports its output to Romania and Serbia. The company posted 2007 sales of 5.4 mln levs ($4.3 mln/2.8 mln euro), up 50 pct year-on-year. Carat Electronics controlled over 45 pct of the electric metre market and 15 pct of the fiscal memory cash register segment in 2007.
Strike in Bulgarian plant of Italian Miroglio ends with agreement
The strike of workers in the plant of Italian textile group Miroglio in Elin Pelin, near Sofia, ended with the signing of a collective labour contract, Dnevnik daily reported on April 7, 2008. The effective strike started on March 21, 2008 after three months of fruitless talks, which kicked off in December 2007. The only thing strikers gave up was their demand for extended annual paid leave. Unionists finally agreed on proposed changes in the labour contract but got their way with additional 5.0 Bulgarian levs ($4.02/2.57 euro) to social vouchers, now 25 levs ($20.11/12.83 euro), and a one-off Easter bonus of 40 levs ($32.18/20.53 euro). The average wage hike is in the 22 to 25 pct range. The new contract takes effect retroactively, as of January 1, 2008, and applies to Miroglio plants in Elin Pelin, the eastern town of Sliven, and nearby Nova Zagora. The plants in Sliven and Nova Zagora did not participate in the strike.
ANALYSIS:
The World Bank supports strengthening road safety in Bulgaria
Publication: Focus News Agency
The World Bank supports strengthening road safety in Bulgaria trough its latest Road Infrastructure Rehabilitation Project. The Project was approved by the WB Board of Executive directors on June last year and it aims to assist the country to reduce road transport costs by improving the condition and quality of its roads network.
Bulgaria’s road network is of critical importance for trade with the European Union as well as for the integration of the country’s remote regions in the European market. However, limited funds for road rehabilitation and maintenance have led in the past to a deterioration of a large percentage of roads, which may be depriving Bulgaria from an important source of economic growth. In addition, road accidents have become an increasing issue with the growth in motorization, with Bulgaria having a traffic fatality rate twice as high as the European Union’s average, reports the World Bank Internet site. Under the Road Infrastructure Rehabilitation Project, the National Road Infrastructure Fund (NRIF) will rehabilitate selected Class I, II and III roads totaling about 450 km. The Project will also assist with enhancing the technical and managerial capacity of the NRIF by investing in equipment, technologies, and procedures which would allow for a more efficient use of the resources allocated to the road sector, including future EU grant funds. A dedicated component of the Project focuses on road safety improvements such as the development of road safety plans, the improvement of legal aspects of road safety, the introduction of new approaches for timely medical emergency services and targeted road investments. In addition, a grant from Global Road Safety Fund in the amount of US$ 75,000 is being used by the World Bank and the Government to introduce road safety international best practices in Bulgaria.A national Workshop on Road Safety Management Capacity in Bulgaria, cosponsored by the Government and the World Bank, took place on December 10, 2007 in Sofia and focused on developing an Action Plan for implementing the National Road Safety Strategy.The event was opened by H.E. Petar Mutafchiev, Minister of Transport, and Florian Fichtl, World Bank Country Manager for Bulgaria. More than 60 participants from the Government, private sector, civil society attended to the workshop and discussed the current progress in key sectors affecting road safety.At the request of the Government of Bulgaria, the World Bank conducted a detailed assessment of road safety situation in Bulgaria including the roles and responsibilities of the various public and private institutions involved. The assessment was part of the activities supported worldwide by the World Bank and the Global Road Safety Facility and was conducted in the period between September and November 2007.Bulgaria now has a serious road safety problem with over 1,000 deaths and over 10,000 injuries each year (in 2006, there were 1,043 deaths and 10,215 injuries). Bulgaria’s fatality rates are 2 to 2.5 times as high as in some Western European countries and in addition, many of those 10,000 injured may end up being disabled for life. Besides the pain and suffering of victims and the grief of families who have lost loved ones, such casualties are a significant drain to the Bulgarian economy. In addition to the scarce Police resources used at accident sites and medical and nursing resources used up in treating victims, the country loses the future productivity of those killed or disabled. Annual losses to the economy are estimated to be well over EUR 500 million per year and could well be as high as EUR 1,000 million per year. No country can afford to sustain recurring annual losses of this magnitude year after year so urgent action is required to try to reduce such losses.Bulgaria, in line with other European countries has committed itself to meeting the EU wide target of reducing its road accident casualties by 2010. Whereas other European countries are steadily reducing the numbers killed and injured on roads, Bulgarian trends currently show deaths increasing by 5 percent and injuries by 7 percent per year, and unless significant additional investment and increased efforts are made to improve road safety, Bulgaria will find it very hard to achieve its target of reducing casualties to 700 deaths and around 6,600 injuries by the end of year 2010.A part of the Action Plan that was developed during the Road Safety Workshop will be implemented and financed under the World Bank supported Road Infrastructure Rehabilitation Project which with was approved by the Board of Executive Directors of the World Bank on June 26, 2007.“We are impressed by the strong commitment of the Government and all Bulgarian society to improve road safety in the country. The World Bank continues to provide its support to Bulgaria by bringing in international knowledge and expertise that will strengthen the existing road safety systems contributing to sustainable economic growth” said Florian Fichtl, World Bank Country Manager for Bulgaria.
Rich Bulgarians get richer
Publication: Pari Daily, issue 69
The economic growth in Bulgaria in recent years has made rich Bulgarians richer. For a year only the minimum managed issued capital that ensures participation in Pari daily's ranking of the wealthiest people in Bulgaria has risen more than twice. To make it onto the list in 2007 one had to have BGN 1 million; in 2008 the 100th richest Bulgarian manages BGN 2.7 million.The winners of the top two places in the ranking remain unchanged, though. For the third year in a row Mitko Sabev, who is one of the owners of Petrol and Petrol Holding's petrol stations, retains the number one position. Petya Slavova, who is the main shareholder in Investbank and Festa Holding, is again second. She is followed by another banker, Tsvetan Vassilev, who has joined the ranking thanks to the fact that Corporate Commercial Bank, where he is majority owner, became a public company in 2007.The next three have been propelled onto the list by the capital increase of companies in which they hold shares. Fourth in the ranking is Nayden Ivanov, a shareholder (23%) in the Evropa supermarket chain, which raised its capital from BGN 50,000 to BGN 411.55 million. The chain is believed to be owned by Hristo Kovachki, the energy mogul. The fifth and the sixth in the ranking, Tencho Pashev and Ivelin Atanassov, are shareholders in Paldin Tourinvest of Georgi Gergov. The company increased its capital several times, as a result of which the share of the Plovdiv municipality fell substantially. Though occupying the tenth place, Vassil Bozhkov, who has interests in infrastructure and the gambling business, is unofficially the richest Bulgarian.
IMF report: Bulgaria with highest private credit growth in CEE
Publication: Profit.bg
Emerging markets have so far proved broadly resilient to the financial turmoil, the April 2008 Global Financial Stability Report (GFSR) of the International Monetary Fund (IMF) shows. The improved fundamentals, the abundant reserves, and strong growth have all helped to sustain flows into emerging market assets. However, as the IMF noted in the October 2007 GFSR, there are macroeconomic vulnerabilities in a number of countries that make them susceptible to deterioration in the external environment. Eastern Europe, in particular, has a cluster of countries with current account deficits financed by private debt or portfolio flows, where domestic credit has grown rapidly. Bulgaria ranks first with a 62.5-percent growth in private credit for 2007 among the countries in Central and Eastern Europe (CEE).
A global slowdown, or a sharp drop in capital flows to emerging markets, could force painful adjustment, the report shows. There are several distinct risks to emerging markets arising from the current turmoil. First, mature market banks may pare back funding to their local subsidiaries, particularly in circumstances where external imbalances are large, according to the IMF (only Latvia has a bigger current account gap than Bulgaria). Balance sheet contraction by global financial institutions may reduce funding for investments and induce financial stress within some emerging markets. Domestic banks in Eastern Europe have built up large negative net foreign positions vis-à-vis
parent banks and international lenders, as credit growth has far outpaced growth in domestic deposits, the report states. Most European parent banks have plans to sustain cross-border financing of their subsidiaries in the Baltics and southeastern Europe, while gradually slowing credit to cool the economies. A soft landing in the Baltics and southeastern Europe could be jeopardized if external financing conditions force parent banks to contract credit to the region. In response, local banks are seeking alternative sources of financing and have worked to increase local deposits. In Bulgaria and Romania, tighter credit risk controls by parent banks have not been effective in slowing aggregate credit growth, as new entrants, notably Greek and Portuguese banks, have sought to expand market share. Since Bulgaria and Romania only recently joined the European Union, they are still seen by many banks as offering attractive growth opportunities, according to the report. However, there is a danger that local banks may underestimate the deterioration in the quality of loan portfolios that often accompanies rapid credit growth.
Serbs rely on the Bulgarian business
Publication: Banker Daily
Even though Bulgaria recognised Kosovo's independence officially, the business relations between Bulgaria and Serbia were not affected and even expand successfully. Bulgaria's biggest investors in Serbia confirmed for the Banker weekly that the political act had by no means changed the attitude of the Serbs towards their neighbour. The owner of Serbia's largest polyester-laminated sheet iron plant, Lemind, and former director of Kremikovtsi, Valentin Zahariev, explained that Serbian people accepted Bulgarian Government's action as an inevitable political move for which people were not guilty. "The thousands of employees in our plants have not changed their nice attitude towards the Bulgarian management and even feel themselves secure for their jobs in the unstable environment in the country", he added. According to Zahariev, the Bulgarian business also enjoys great support from the local authorities which show they are interested in joint implementation of future projects. The Lemind company which Zahariev bought through his Intertrust holding in 2005 has a capacity to produce 36,000 tons of sheet iron a year which is the most expensive product in ferrous metallurgy. In October 2005, the company also acquired 79.76% of the Serbian Zastava Kovachnitsa - the metallurgical department of the popular car company Zastava, by paying EUR1.8MN. Besides, Intertrust committed itself to pay off debts amounting to EUR5.5MN as well as invest EUR3.04MN. In 2001, the holding also paid EUR4.2MN to buy the galvanized steel plant NewsCo Llamkos Steel based in Vushtrri. The Bobokovi brothers are among the Bulgarian entrepreneurs doing business in Serbia, too. Atanas Bobokov told a reporter of the BANKER weekly that the Serbian authorities treated them quite well both before and after Bulgaria recognised Kosovo's independence. "The Serbs rely on our support. Currently, we are opening jobs in the town of Indjija where the rate of unemployment is about 30% and I do not see why anybody should want to be obstructive. Bulgarian investors are usually well accepted in Serbia and people want investments, too. They are well aware of the fact that they are falling behind in this aspect and I am sure that in the future we are not going to have problems as long as we work to their benefit", he explained. Through their accumulators and batteries plant, Monbat, in 2006 Plamen Bobokov and Atanas Bobokov began to construct a plant for recycling old accumulators in Indjija. The plant cost EUR7MN and is expected to start operations soon. Another company owned by the brothers, Prista Oil, is interested in acquiring the two largest motor and industrial oil producers in Serbia. They are the Belgrade Oil Refinery and the lubricant plant FAM in Krusevac. Like Valentin Zahariev and Atanas Bobokov, the managers of the Serbian enterprises owned by Bulgaria's biggest investor there, Hristo Kovachki, see no consequences from the recognition of Kosovo's independence. The Trayal corporation Chief Executive Officer, Petar Petrov, explained that the investment climate in Serbia was very good and there were no problems with the local people. "We have no problems with the companies that supply raw materials either", he added. The manager of the Bozo Tomic paper mill in Cacak, Josif Cosic, who is also chairman of the employers in the town, only said that there was no difference among the nationalities and what was important was to work on a top level. Mila Kosseva, manager of the Nevena cosmetics company, was even more explicit: "To us and to our employees, Kosovo is simply a market that has to be conquered as soon as possible." The positive attitude towards Bulgarian businesses is also demonstrated by the fact that Belgrade intends to permit Kovachki to build a 670-megawatt thermoelectric power plant just 50 km from the Serbian capital. The plant will use coals from the Kovin mine which is owned by the businessman from Samokov, too. Apart from these companies, unofficially Kovachki is also the owner of the Serbian newspapers Svetlost, Napred, Pobeda and Nasa Rec, the Srbijanka canning factory, Metalac in Ivanica, and the Vulkan rubber plant in Nis. Therefore, it is not surprising that Serbs have no negative feelings towards Bulgaria and maybe all those talks about big losses and bad attitude on the part of Belgrade are nothing but making a mountain out of a molehill. Bulgarian investments in Serbia exceeded EUR500MN in the recent years. Turnover between the two countries grows by 47.5% on the average a year and reached EUR796MN for 2007. The commercial balance amounts to EUR360MN in favour of Bulgaria. Moreover, Bulgaria ranks first in terms of privatized companies - 29, but it is still 12th in terms of investments amount. In 2007, 40,000 Serbian citizens were issued visas by the Bulgarian consulates in Belgrade and Nis. More than 4,000 visas have been issued for the first two months of 2008 in Nis alone. About 90 Bulgarian companies operate in the Pirot free zone, with their turnover exceeding EUR50MN in 2007. The major part of the goods are exported to Russia as Serbia is the only country in the region that has a free trade agreement with this country and the duty owed is just 1 per cent. For comparison, if the same Bulgarian companies choose to export to the Russian market, they will have to pay between 25 and 45% as duties. The only requirement Bulgarian companies must meet in order to profit by the free zone privileges is to prove that at least 51% of the production remains on Serbian territory. Three big pharmaceutical companies from Bulgaria work in the Pirot free zone, too - Actavis, MM Pharma, and Apek.