불가리아 주요 경제뉴스 (23 – 30 MAY 2008 )

BULGARIAN ECONOMIC TOP NEWS DIGEST

WEEKLY REPORT ( 23 – 30 MAY 2008 )

 

 

Sections/headline briefs:

 

 

MACROECONOMY:

 

·        Inflation in Bulgaria twice higher than in Romania

·        Bulgaria copes successfully with credit crisis

·        Economic growth council discusses adverse effects of fuel price rise

·        EIU: Bulgaria GDP growth to slow down

·        European Economic Space grants �21.5 M to Bulgaria

·        Germany provides � 4M to Bulgaria for economy and employment promotion

·        Belene NPP to cost � 5B more than agreed

·        State loses � 350M over Kozloduy NPP

·        Bulgaria mulls widely using natural gas for generating electricity

·        Smart's Chinese version to be made in Bulgaria

·        Great success for Bulgaria at Wine Fair in London

·        Italian chambers of commerce hold annual summit in Sofia

·        EBRD insists on more Bulgarian projects

·        Bulgaria's state debt shrinks by �3 M

·        January-April budget surplus totals BGN 2,700 M

·        Concession of Hemus and Cherno More highways in progress

·        14% of Bulgarian workers receive money in cash

·        Bulgarians draw more and more loans

·        Bulgarian banks accused of money laundering

·        Bulgarian banks connect with external resources

·        Macedonia businessmen want railway to Bulgaria completed

·        New ferry connects Bulgaria and Romania over Danube

·        Bulgaria: Paper airline tickets no longer available after June 1

·        President Purvanov: Development of human resources is at the basis of economic growth

·        Bulgarian project for information extraction through AI to hit world IT market 

·        Vacation in Bulgaria is the most advantageous

 

 

INVESTMENTS:

 

 

·        Bulgaria is very attractive for foreign investors

·        KG Maritime Shipping presents investment plan for sea shipper Navibulgar

·        EBRD to extend up to �90 M to U.S. AES for wind power project in Bulgaria

·        EBRD to invest up to �100 M in CEE through Advent Fund

·        Spaniards to invest millions in alternative energy sources in Plovdiv

·        Alpha Grissin to build wind farms in Bulgaria

·        Wienerberger AG opens � 25 M ceramics factory in Bulgaria

·        Kazakhs invest into Bulgarian economy

·        Israeli to build new business centre in Bulgaria's Stara Zagora

·        RESB, Gradus-1 to build �72 M business complex in Stara Zagora

·        EVN Bulgaria to invest �11.5 M in southern Black Sea coast

·        Simeonovo River Park residential development to cost �100 M

 

 

 

COMPANIES:

 

 

·        Leaders of Bulgarian companies discuss investment opportunities at a forum in Sofia

·        Hyundai Finance falls 1st Bulgarian victim of global crisis

·        Rise in Bulgarian companies' profits likely to slow in 2008

·        Bulgaria's Minister of Economy expects bidding for Kremikovtsi

·        Bulgaria second largest steel mill Stomana partners with US company

·        95 companies of 18 countries to exhibit defence equipment in Plovdiv

·        Dutch C&A, German Deichmann prepare for expansion to Bulgaria

·        Restructuring at Bulgarian Posts

 

 

ANALYSIS:

 

 

• Business climate in Bulgaria - 'Favourable, even though worsening'

 

 

 

 

 

 

Articles:

 

 

MACROECONOMY:

 

Inflation in Bulgaria twice higher than in Romania

15% average yearly raise of  real estates prices of in Bulgaria is the prognosis of European property sale company ‘Era'. 62% yearly raise of the  property credits as in the EU zone it reaches 7.1% per year. Most preferred are the loans of 30, 000 EUR with repaying period of 25 years. The average raise of property deals in Bulgaria for 2007 is 4-5% as the common number of sales is 325, 000. Foreign buyers are about 25% of the common amount and most desired remain the 2 rooms' apartments of 60 square meters surface.The company also made a research in Romania and marks the interest rate of mortgage credits mark significant fall - 7.5%. The made researches show the prices of properties in Bulgaria's northern neghbour raise up proportionally to the salaries' raise. Specialists pointed out, the inflation in Romania is twice lower than the one in Bulgaria.

Bulgaria copes successfully with credit crisis

Bulgaria's and Romania's economic growths will continue being some of the highest in the EU. According to the latest forecasts of the EC as regards the two big Balkan economies that entered the EU not long ago and where Greece invests in large scale, Bulgaria's and Romania's economic growth will continue holding one of the highest levels in the EU both in 2008 and 2009. According to the EC, Bulgaria and Romania will fight successfully the international credit crisis registering small losses mainly at inflation level and in the dynamics of foreign investments. Comparing the two countries, it turns out that the Bulgarian economy is more steadfast to external pressure regardless of the considerable inflation jump in 2008 and its big external deficit.

Economic growth council discusses adverse effects of fuel price rise

 

Economy and Energy Minister Peter Dimitrov chaired a meeting of the Council on Economic Growth which discussed the adverse effects of the rise in fuel prices for city transport and road carriers, Dimitrov's Ministry said.The participants also considered proposals for changes in the regulation on mineral water bottling; amendments to the Ordinance establishing the procedure and amount of product fee payable on products creating mass distribution waste after their usage; preparations and the holding of a Bulgarian-Russian economic forum focused on investment in September 2008.The Council decided to set up an expert working group, directed by the Bulgarian Chamber of Commerce and Industry, which should sum up the problems raised at the meeting, draft an opinion and submit it to the Economy and Energy Ministry.Dimitrov informed the participants that the prices of fuel prevailing in the European Union Member States will be published on the website of his Ministry

 

 

 

 

EIU: Bulgaria GDP growth to slow down

 

A report of the research and advisory group Economist Intelligence Unit predicts that the growth of Bulgaria's GDP would slow down in the coming years. According to EIU, the country's GDP will grow by 5,7% in 2008, and by 5,5% in 2009. The share of exports and industrial production in the GDP growth will increase at the expense of consumption. The low corporate expenses in Bulgaria, however, are going to continue to attract investments and to maintain a GDP growth above 5%. The analysis points out that the current account deficit and the negative trade balance would remain the main risk factors for Bulgaria's economic growth. EIU also reports that the country's high inflation in 2007 was mainly the result of isolated factors such as the weak agricultural production and the increase in the prices of raw products. EIU predicts, however, that Bulgaria's inflation would remain above the average EU level, which would not allow the country to join the Eurozone before 2012. According to the report, the Bulgarian cabinet will manage to achieve its planned budget surplus of 3% at the end of 2008.

European Economic Space grants �21.5 M to Bulgaria

Bulgarian Finance Minister Plamen Oresharski and the Norway Kingdom ambassador for Bulgaria will present the received projects by the Finance Mechanism of European Economic Space (EES). Main theme on the meeting's discussion will be the work of Valuer Commission and the terms of ending their work in Bulgaria. Through this program Norway, Lichtenstein and Iceland grand free aid of 21,5 Million EUR to Bulgaria. The EES unites the 25 EU countries members and the three members of European Free Trade Association (EFTA) - Iceland, Lichtenstein and Norway in a united inner market, ruled by ones and the same laws. The EES agreement ensures equal conditions for companies of the whole Inner market through competition rules and state aids. The agreement also assures cooperation and aids in the so called ‘external actions'. These 'external actions' include as spheres of scientific exploring action and technological development, so information services, education, youth problems, employment, enterprises and industry and civil security.

 

Germany provides � 4M to Bulgaria for economy and employment promotion

 

Bulgaria's Economy and Energy Minister Peter Dimitrov and Germany's Ambassador in Sofia Michael Geier Monday signed a bilateral Agreement on Technical Cooperation, under which Germany provides Bulgaria with 4 million euro for programmes promoting the economy and employment, vocational training, metrology and regional development of the Rhodopi Mountains.The projects should be completed by 2010, Dimitrov said. This is the last agreement under the pre-accession instruments. So far Germany has supported Bulgaria with 300 million euro in aggregate, including through the EU funds.Under Monday's agreement, 3.255 million euro will be provided for support to small and medium-sized enterprises, for strengthening the administrative capacity and for support to economic structures. Some 250,000 euro are allocated for the establishment of vocational centres in Smolyan and Tsarevo. Ninety-five thousand euro will be spent on promotion of metrology, and 400,000 euro on regional development of the Rhodopi Mountains.

 

 

Belene NPP to cost � 5B more than agreed

The construction of the Belene nuclear power plant (NPP) will increase the electricity bills of Bulgarian consumers by EUR 110 million a year, the former chairman of the Committee for Peaceful Uses of Atomic Energy, Georgi Kaschiev, said. The construction expenses will reach at least EUR 9 billion, well above the EUR 4 billion stipulated in the contract with Atomstroyexport, Kaschiev pointed out. The price does not include additional facilities, which will cost another EUR 1.1 billion, as well as the initial nuclear fuel supply, which will cost about EUR 400 million. This is hardly so, because it is a world practice for the first supply of uranium to be part of the contract price, the executive secretary of Bulgarian Atomic Forum, Stanislav Georgiev, told the Pari daily. Besides, the agreements provides for price revisions only within the framework of the average EU inflation. Another risk for the project is the annual interest of EUR 1 billion, which NEK will have to repay after the plant is built, Kaschiev went on to say. The electricity generated by the future NPP will be twice or thrice more expensive.

State loses � 350M over Kozloduy NPP

Each year, Bulgaria loses EUR 350 million because of the closed units 3 and 4 of the Kozloduy nuclear power plant (NPP), Ivan Ayolov, executive director of the Electricity System Operator (ESO), said during the International Nuclear Forum. At the event, BULATOM presented a declaration in favour of the reopening of the two units, to be sent to the European Commission. Petar Dimitrov, minister of economy and energy, refused to sign the document. The declaration disturbed me because the authors have written that they do not agree with all clauses in the Treaty of Accession, Dimitrov said. We should not equate Bulgaria's EU accession with the closing of the reactors, the minister added. Meanwhile, it became clear that the candidates for strategic investors in Belene NPP: RWE and Electrabel, requested a three-week postponement in the deadline for final offers submission. The companies said they need more time to become acquainted with the project parameters. Claims that the price of Belene's construction will rise are unfounded, Dimitrov said. A price increase is only possible within the average EU inflation rate, the contract with executor Atomstroyexport stipulates. Some time ago, Georgi Kaschiev, former director of the Committee for Peaceful Implementation of Atomic Energy, said that the project will cost EUR 9 billion instead of the EUR 4 billion mentioned in the contract.

Bulgaria mulls widely using natural gas for generating electricity

Bulgarian Economy and Energy Minister Peter Dimitrov said Tuesday that natural gas is a better option for electricity generation, local press reported Tuesday, cited by Xinhua.
Natual gas would be a cheaper option, given that two major gas pipelines, Nabucco and South Stream, would run across Bulgaria, said Dimitrov. He made these remarks during his address at an international conference on modern energy technologies against climate change, held at the Inter Expo and Congress Center in Sofia.

 

 

Smart's Chinese version to be made in Bulgaria

Superminis similar in design to the Smart will be made in the Bulgarian town of Lovech. Litex Motors owned by FC Litex President Grisha Ganchev, may begin manufacturing the superminis under a contract with the Chinese BMW Brilliance Ltd. As The Standart already wrote, the businessman from Lovech is to be producing Chinese jeeps for both the local and neighbouring markets. They will cost around $US 10,000. About ten days ago, representatives of the Asian company came to Bulgaria to see test drives of several car models. one of them has been chosen to be manufactured at the plant in Lovech. Among the vehicles tested was the Chinese variant of the Smart supermini. "If such a car showed up on the Bulgarian market, we would sell it at around 8,000 levs, which would be quite attractive a price," experts from Litex Motors assessed.

Great success for Bulgaria at Wine Fair in London

Bulgarian wine - cellars received 40 awards in London's International Wine Fair. This is the best achievement in the last years, DW revealed. The attainment is modestly compared to world leaders like France, which bottles left with hundreds of medals and diplomas.This is the strongest presentation of Bulgarian wines on an international expo during the latest years.The international Wine Fair in London was among the most expected events for the wine-producers.In the 90's UK was flooded with Bulgarian wine. In 1999 over 20 million bottles were exported to UK. Official data of the Agriculture Ministry shows that the number these days is ten times smaller. The presence of Bulgarian wines at the Island was replaced by the New World competitiveness - producers from Chile, Argentina and South Africa.

 

Italian chambers of commerce hold annual summit in Sofia

Italy can only win the game of globalisation if it acts in a concerted effort in all territories where Italian emigrants are present, Maurizzio Achini, head of the corporate department at BNP Paribas, told participants the annual meeting of Italy’s chambers of commerce abroad based in Europe.The half-day seminar, which took place in Hilton hotel, Sofia, and was titled Italian small and medium enterprises: From export to lasting establishment on European markets, gathered representatives of Italian chambers of commerce from the so-called zone Europe, members of Italian Senate, Bulgarian and Italian governmental institutions.Participants made clear that, while the Italian emigrant community is very large and spread across all continents, its entrepreneurial activities lack a systemic approach and this is still to the detriment of Italy’s attempt to internationalise Italian business operations worldwide.For this reason, to ensure maximum success, all Italian chambers of commerce, together with Italian foreign trade institutes and organisations aiding the expansion of Italian business, both large and small, must act in a systematic fashion.Unfortunately, Italians abroad are yet to attain this goal but steps in this direction have already been taken.“Italy is the sole country, which encourages and supports the international activities of Italy’s chambers of commerce and aiming at the delocalisation of Italian enterprises abroad,” said Nikolai Burzashki, head of the Small and Medium Enterprises Agency.Since 1984, when Italy adopted legislation aimed at promoting work of Italian chambers of commerce abroad, the country’s government has financed thousands of projects, said Eduardo Pollastri, a senator and president of Italy’s Assocamerestero.Italy is Bulgaria’s largest partner with trade turnover of three billion euro, in what is a 14 per cent year-on-year increase. Between 1996 and 2007, the volume of Italian investments in Bulgaria reached 1.043 billion euro, which makes it the fifth-largest investor in Bulgaria.Among the largest Italian investors in Bulgaria are textile maker Miroglio, energy company Enel and banking group UniCredito, among others.

EBRD insists on more Bulgarian projects

The strategy of the European Bank for Reconstruction and Development (EBRD) for Bulgaria is based on three whales - production sphere, infrastructure and energy efficiency and it is almost completed as it operates since September 2005. The new strategy should be announced officially at the end of May 2008 and the expectations are that the priorities will remain the same, especially in reference with the energy efficiency and the infrastructure projects. In 2002-2008 EBRD has invested in Bulgaria 1,5 billion euros in 118 projects at the total worth of 6 billion euros, as 81% of them are in the private business. The management of the Bank, based in London, insists Bulgaria should be more active and initiate more projects. Experts of the bank think that the amount of 200 million received by Bulgaria in 2007 don't correspond to a EU member state with intensively developing economy.

Bulgaria's state debt shrinks by �3 M

Bulgaria's state debt decreased by three million euro in April and by the end of the month it was 4.734 billion euro, according to sources from the Ministry of Finance. Of these 1.556 billion euro is the internal state debt and 3,177 billion euro is the external debt of Bulgaria. In the end of April the state debt amounted to 15% of Bulgaria's GDP. Since the beginning of the year the payments on the debt have been to the amount of 1.25 billion levs (1 euro = 1.95 levs).

January-April budget surplus totals BGN 2,700 M

 

The budget surplus for January-April totals 2,704,600,000 leva, Finance Minister Plamen Oresharski said Wednesday, presenting the implementation of the consolidated fiscal programme as at April 30, 2008 to the Public Sector Financing Sub-committee of the parliamentary Budgetary and Financial Committee. Oresharski said that the reserves accumulated so far as budget revenue are due to "lagging behind of expenditure, rather than to gross over-implementation of revenue".The Finance Minister said that 602.3 million leva of the budget surplus are pre-financing under the operational programmes which will be spent by the end of the year.Oresharski said that the reduction of the tax and social security burden by three per cent had a positive impact on the fiscal policy. He said that the government's idea to reduce social security payments by small percentages did not result in lower budget revenue and at the same time had a favourable effect on the business and investment climate.Revenues in January-April totalled 9,616,000,000 leva. The target for revenue from corporate taxes is half implemented. The growth of revenue from corporate taxes, observed in recent years, is attributed to the reduction of the corporate tax rate to 10 per cent and the increase of corporate profit, among other factors. A third of the revenue target from income tax of natural persons and social security has been implemented as at the end of April. Indirect taxes account for about half of tax revenue as a result of the overall shifting the tax burden from direct to indirect taxes. Indirect tax revenue in January-April accounts for 30.6 per cent of the annual target. Commenting the resignation of the Director of the Customs Agency, Assen Assenov, and two of his deputies, Oresharski said Assenov's motives for it were purely personal: fatigue and tension. The Finance Minister said he values highly the work of the Customs Agency and its current head Assenov. Taking a reporter's question, Oresharski said that the fiscal measures to cope with inflation in Bulgaria are the planned budget surplus and streamlining the state-financed sectors, for example, by 12 per cent staff reductions. Also, the central bank has increased the mandatory minimum reserves held by commercial banks from 8 per cent to 12 per cent. The Finance Minister said that no other extraordinary measures are planned to cope with inflation which he expects to slow down in the summer, provided there are no unforeseen external shocks. Oresharski described as worrying the growth of oil prices but said this is something beyond anyone's control.

 

Concession of Hemus and Cherno More highways in progress

 

Concession of Hemus and Cherno More highways is in progress, Minister of Regional Development and Public Works Asen Gagauzov said for Focus News Agency.He pointed that the unrealized concession of Trakia highway will not delay initiation of the TOLL system. “ The question is whether it is necessary to press this matter at this stage. It was necessary to enter the TOLL- system due to the fact that Trakia highway was on concession. The system is not of great importance right now, besides in case the government decides that there must be a TOLL- system.System construction itself takes time and I can say that the system will be the same from the next year and the TOLL- system can start to operate not until the next year”, Minister said.

14% of Bulgarian workers receive money in cash

In spite of the ongoing efforts in the past 5 years to fight the so-called “grey economy” via reducing direct taxes, an estimated 1.7 mln employees are still working illegally in Q1.
According to a survey conducted by the Center for the Study of Democracy (CSD), some 14% of employees in Bulgaria have received bonuses in cash and enterprises in the country are hiding one in every five leva of their turnover. What are the main challenges the Government faces in its fight with the sector of grey economy and will the Government, the businesses and the public unite in their efforts? Those are some of the questions that would be discussed tomorrow during a round table on the problems of the grey economy in Bulgaria, BGNES reported. The Minister of Finance Plamen Oresharski, the Minister of Economy and Energetics Petar Dimitrov and The Minister of the Interior Mikhail Mikhov will take part in the discussions, as well as Sofia's mayor Boyko Borisov, Holland's ambassador Vilem Van Ee, the Chairman of the Chamber of Commerce Prof. Valeri Dimitrov, the chairman of the CSD Ognyan Shentov.

Bulgarians draw more and more loans

Experts from the Bulgarian National Bank say that in April the bank loans drawn by private persons and companies increased by 1.61 billion levs up to 40.69 billion levs (1euro=1.95levs), which is by 4.1% more than the loans drawn in March. In other words, this is an increase by 55.8% within a year. Crediting grew by 1.8% in January, 2.9% in February and 2.2% in March. The increase in the number of granted bank loans is close to the average for last year - 4.2%. Last month, the number of granted corporate credits increased by 4.1% to 25,44 billion levs. Within a year, corporate crediting measured an increase of 59,6% within a year. The loans drawn by the households measure a monthly increase of 4.2% up to 15,26 billion levs. Their yearly increase is 49,8%.

Bulgarian banks accused of money laundering

"The grey economy sector in Bulgaria spreads to twenty or thirty-five percent. The biggest under-the-table payments are detected in the sectors of construction, tourism, agriculture and services, including repair works, healthcare and private education," reads a report of the Center for the Study of Democracy (CSD), which was presented yesterday at a round table, dedicated to the fight against grey economy. The research also shows that the sectors of tobacco products and alcohol production, fuels and transportation also show tendencies for going grey. "The banks in Bulgaria are turning into money laundering institutions. The crediting institutions support the grey economy, because it lowers the risk of bad credits," Bozhidar Danev, Chairman of the Bulgarian Industrial Association (BIA), said yesterday. Mr. Danev took part in a forum dedicated to the fight against grey economy at the Sofia's Sheraton Hotel Balkan, organized by the CSD. Danev said that auditors should check the funds, with which bank loans were paid off. "Of all measures, with which we try to restrict grey economy, the taxation reform has so far yielded the greatest effect," Finance Minister Plamen Oresharski said. The CSD experts calculated that Bulgaria's economy loses 6.7 billion euro from the unemployed and those Bulgarians who work abroad; 1,700,000 Bulgarians aged between 15 and 64 are unemployed, working in grey economy sector or abroad. If these people were regularly employed, Bulgaria's economy would be boosted with 6.7 billion euro, or another 23% added to the country's GDP for 2007. Fourteen percent of the employed Bulgarians admit they have been paid under the table. Enterprises have evaded taxation on one fifth of their annual turnover.

 

Bulgarian banks connect with external resources

The local banks apparently once again have easy access to external financing as indicated by data for the month of April released by the Bulgarian National Bank. External borrowing increased by 1.366 bln levs, up from 920 mln in March and 650 mln levs in February. The resource is now being on-lend to local borrowers. Credit growth reached 4.2% in April, a fair bit quicker than the pace recorded in January - 1.8%, February - 2.9% and March - 2.2%. New household and business loans topped 1.66 bln levs in April. That figure includes 992 mln levs in business loans. The local banks now have 25.4 bln levs in corporate loans and 15.3 bln levs in household loans on their books. Housing loans added 4.4% to 6.27 bln levs in April while consumer loans rose 4.9% month-on-month to 6.44 bln levs. The annualised credit growth rate is slightly down month-on-month to 56.1% in April from 56.5% in March.

Macedonia businessmen want railway to Bulgaria completed

 

Macedonian businessmen want the completion of the railway, which is to connect their country to Bulgaria and will give it access to the Black Sea port of Burgas, the Macedonian daily Vecer reported. The statements of leading representatives of the Macedonian business were made in the context of the recent strikes in Greece, which blocked Macedonia's access to the Thessaloniki port, and exposed its dependence on its north-south directed railway system. According to Aleksandar Panov, the Director of the Skopje company Makstil, the north-south line does not have the capacity to serve the increasing volume of freight. "The completion of the Pan-European Transport Corridor 8 must become the vision for future development because Macedonia is turning into a crossroads and a strategic transportation hub in the Balkans", Panov is quoted as saying adding that as a state without access to sea, Macedonia must be using the advantages of railway transport. That is why in his words it must be linked by rail to Bulgaria and Albania in the east and the west, where it could use the ports of Burgas and Durrus. The railway line connecting Bulgaria and Macedonia has been under construction for years but the work is currently abandoned. The Macedonian side needs to construct 23 km worth about USD 240 M, whereas Bulgaria has only 2 km of rail tracks to construct. The railway line would make the trip between Sofia and Skopje only three hours. A potential railway line to Albania would require a more massive investment because of the forbidding terrain.

 

New ferry connects Bulgaria and Romania over Danube

 

The new ferry complex connecting the Bulgarian port of Nikopol and the Romanian port of Turnu Magurele over the Danube River will opened in mid July, 2008.The news was announced by Bulgaria's Deputy Minister of Transport Dimcho Mihalevski during his visit to the northern Bulgarian town of Nikopol. The ferry complex has been constructed already but some additional safety guarantees are being completed at the moment. About EUR 6,5 M have been invested in the ferry, EUR 2,5 M of which have been provided by the Bulgarian government, whereas the rest is EU funding under the PHARE Program. The Bulgarian side of the ferry complex will be operated by the Bulgarian River Shipping company.The Deputy Minister of Transport Mihalevski said in Nikopol that the new ferry would have a great economic impact as part of the country's policy to tackle the marginalizing of its border regions by opening up its borders. Mihalevsky reminded that another ferry line between the city of Silistra and the Romanian town of Caluras had been opened recently, and said that two more border checkpoints would be opened on the Bulgarian-Greek border by the middle of 2009. The Bulgarian platform of the new ferry can carry 12 trucks, and crosses the river in only eight minutes. Yet, the fees for using it have not been set because the ownership issue has not been settled. The rehabilitation of the 45-km road connecting Nikopol and the district center, the city of Pleven, is going as planned.

 

Bulgaria: Paper airline tickets no longer available after June 1

 

Tourist agencies would not be able to sell paper airline tickets after June 1. This was announced by the Association of Bulgarian Tour Operators and Travel Agents (ABTOTA) during the 97th meeting of the European Committee of the Travel Agencies' Associations.The main difficulties would be related to flights to Russia and the former CIS (Commonwealth of Independent States) countries as well as those to Latin America. She explained that the airlines would continue to have the right to issue paper tickets.Tour operators believe that with this new regulation travelers would have to personally go to airlines' offices, which will have difficulties dealing with the increased traffic or some travelers would have to fly to destinations different than their final ones, which would lead to increase in their expenses.The decision of the International Air Transport Association to stop the issuing of paper tickets in Bulgaria will decrease the number of the airline tickets currently issued by 15%. The airline ticket market is estimated by experts at � 90 M. Travel agents insist that the airlines assume the same responsibilities towards travelers as the travel agencies in case of bankruptcy.

President Purvanov: Development of human resources is at the basis of economic growth

 

The development of human resources is at the basis of economic growth and the lifting of living standards in the contemporary knowledge-based society. President Georgi Purvanov said this at the opening of a Regional Conference on Human Resources Development in the Countries of Southeastern Europe, Ukraine and Moldova.The development of human resources is a precondition for higher employment, competitive enterprises and growing incomes, he noted. The establishment of a Southeastern European Regional Centre for Training and Information on the Issues of Social Policy and Human Resources Development is a useful step in regional cooperation, the Head of State further said.Participating in the forum were also European Commissioner Vladimir Spidla in charge of Employment, Social Affairs and Equal Opportunities, Labour and Social Policy Minister Emilia Maslarova, Deputy Prime Minister Meglena Plugchieva and representatives of the trade unions.President Purvanov thanked the European Union for the support to Bulgaria and the countries of the region in their aspiration to join the European social project. The conference and the Social Policy Week, beginning Monday, will be a clear sign of the Bulgarian Government's commitment to the social issues and the country's ambition to play an active role in the common European and regional policies regarding the labour market.All countries from the region report progress in the implementation of economic reforms but they also face serious challenges, related to the need of ensuring sustainable economic growth, accelerating reforms and enhancing living standards,said Labour Minister Maslarova.In order to have political stability in the region there should be economic and social stability, which, however, is based on human resources and investments in the people, Deputy Prime Minister Plougchieva stated.The development of human resources is at the heart of the social model and this is the basis for our future success,Commissioner Spidla said before the participants.

Bulgarian project for information extraction through AI to hit world IT market 

 

Bulgarian ideas for information extraction through artificial intelligence (AI) will be able to develop and reach the world market in the form of a new IT product due to financing by NEVEQ (New Europe Venture Equity), a venture capital firm based in Sofia, Managing Partner Pavel Ezekiev said on Monday.The equity fund has acquired minority interest in Bulgaria's ontotext Lab, a semantic technology lab of Sirma Group. NEVEQ is planning to invest in the company's structuring, the expansion of its business potential and entry into new markets. More specialists will be attracted to increase the 30-strong staff to over 100.Atanas Kiryakov, head of ontotext Lab, explained the firm was developing technologies to impart some human intelligence to computers so they can do more things. Linguistic analysis of web data makes it possible to create search engines that can develop more comprehensive specifications for the information sought.Sirma Group CEO Tsvetan Alexiev said ontotext's efforts were already yielding results and a reasonable profit. ontotext clients include AstraZeneca and Britain's Innovantage, which provides business intelligence about online recruitment advertising. News companies, web portals and various Internet companies use the Bulgarian firm's products.There is no other company in Southeastern Europe to build technologies at that level, NEVEQ Managing Partner Konstantin Petrov said, citing Oracle, IBM, Xerox and Reuters as the firm's competitors. Pavel Ezekiev said the capital invested in ontotext's idea may enhance its effect and propel the Bulgarian technology to world heights.NEVEQ was launched in 2007. Its capital of 22.5 million euro is held 40 per cent by US investors and 20 per cent each by Swiss investors, the EBRD and other investors. So far NEVEQ has invested in a travel services portal site and in a Bulgarian-American firm which develops software for investment risk assessment and analysis. Ezekiev said NEVEQ was planning to at least double its capital within a year and add to its portfolio some ten companies engaged in media and telecommunications, finance and online trading.

Vacation in Bulgaria is the most advantageous

Bulgaria is the cheapest county for resting and tourism according to data of British Post department, Zagrandom reported. Jump in prices was marked mostly in the EU. In the USA and several European countries may be spend a vacation on acceptable prices, responding at the level of the given services.The most acceptable for tourism and resting countries are: Egypt, South Africa and Thailand.Europe is the most attractive for tourism continent. For comparing to the other continents, the Old continent is preferred due the historical sights, suitable climate and other characteristics, Alan Vella, member of the Tourism Union in the EC declared.According to the expert 480 million tourists had visited Europe in 2006, 185 million - Asia and the Pacific islands and 142 million - North and South America.Europe had gain from tourism 300 billion EUR, North and South America - 122 billion. France is the most visited Old continent country with 79 million tourists per year.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INVESTMENTS:

 

 

Bulgaria is very attractive for foreign investors

Bulgaria is very attractive for foreign companies because of the low corporate and income taxes, participants in the Acquisitions in the region discussion, part of the Private Equity Investing in Bulgaria and Southwest Europe conference agreed. The event was held in Sofia yesterday. With the flat rate and corporate tax at 10%, Bulgaria is a very attractive destination for EU businesses, especially in view of its accession to the EU.
A proposal for the abolishment of the 5% tax on dividends has also been made, Vladimir Karolev pointed out. Bulgaria is one of the few countries where legislation permits the establishment of the so-called real estate investments trusts (REIT). Moreover, certain amendments permitting those companies to invest abroad are soon to be passed, which means we can expect a boom in the sector, Karolev added. In his opinion, there is enough money in Bulgaria but the country lacks large private equity deals. Bulgaria has certain advantages before other countries in the sectors of agriculture and tourism, which will continue to attract investors in the future. Another sector with a lot of potential is services (including health and financial services). Maria Hesus San Pablo, CED investment director, said the service sector in Bulgaria is at a much lower level of development than the EU average. on a macroeconomic level, Vladimir Karolev said there are no reasons for worries about the country's high trade deficit, as the export is mainly formed by capital expenditures, which will have a positive impact in the future. He also said he expects the currency board to be sustained even after the country's accession to the Eurozone. Borislav Fesechiev, member of Eurohold Bulgaria management board, said the stock exchange will not be a good place to raise capital this year because of the global financial crisis. This is why Eurohold is open to private equity partnerships on possible future acquisition deals. He also pointed out return on investment projects in Bulgaria can go as high as 20-40%. The value of acquisition deals in Central and Eastern Europe stood at 2 billion dollars in 2004, which went up to 6 billion dollars last year.

KG Maritime Shipping presents investment plan for sea shipper Navibulgar

 

KG Maritime Shipping is planning to buy 25 new ships for the sea fleet Navibulgar in ten years and has already contacted producers from Japan and South Korea , Dnevnik Daily reads. The company is eyeing handysize and handymax type of boats with 15 to 35 GRT (gross register tonnage) and 35 to 58 GRT respectively for bulk cargo, especially metals. KG Maritime Shipping has recently won the privatisation tender for 70% of Navibulgar for BGN 440.1mn (EUR 225mn) and vows to invest BGN 779.8mn over a ten-year period. Most of the funds are earmarked for purchase of ships, as the average age of the fleet is 24 years at present. KG Maritime Shipping is 70% owned by the German charter firm Маrtrade Shipping Transport and 30% by the local firm Advance Properties. Martrade is chartering more than 100 vessels while Advance Properties has no experience in the shipping business. The state will offer its residual stake of 30% to KG Maritime Shipping 5 years later in case that the line investment commitments are fulfilled. The net profit of Navibulgare rose by 86.7% to BGN 35.1mn (EUR 17.9mn) last year, according to the report of the transport ministry.

EBRD to extend up to �90 M to U.S. AES for wind power project in Bulgaria

 

The European Bank for Reconstruction and Development (EBRD) said late on Thursday it will extend up to 90 million euro ($141.4 million) to support a wind power generation project of a joint venture of U.S. AES in Bulgaria. EBRD will extend long-term debt financing for the Kaliakra wind farm, which has an estimated total cost of around 258 million euro and will help the country raise the share of renewable sources in its electricity consumption, the bank said in a statement. The loan is to be approved in September. AES Geo Energy, a joint venture of AES and its Bulgarian partner GeoPower, plans to build and operate the 156-megawatt (MW) wind farm located in Kavarna region, near the northeast Black Sea coast. The wind park will consist of 52 wind turbines of the Vestas V90 3MW model and would generate more than 450 gigawatthours (GWh) per year. No timeframe for the project was available. AES Geo Energy said in 2007 it planned to complete the project in 2009. The wind farm will help the European Union member state in achieving a 11% target of sourcing its electricity consumption from renewable sources by 2010 and 16% by 2020 under agreements with the bloc, EBRD said. At present, only a few wind turbines operate in the ex-communist state. Bulgaria's energy regulator in 2006 significantly raised the preferential prices for electricity produced by domestic wind farms in order to enhance green energy generation. The current purchase price is 175 levs ($140.6/89.5 euro) per MWh of electricity generated by wind-propelled turbines that operate more than 2,200 hours a year and 156 levs per MWh for generators running less than 2,200 hours annually. The quoted prices include no Value Added Tax and are almost three times higher than the price of energy generated by coal-fired plants. AES (www.aes.com), one of the world's largest power companies, has operations in 28 countries worldwide and launched in June 2006 the construction of a 1.02 billion euro 670-megawatt coal-fired power plant at the state-owned Maritsa East coal-mining and electricity-producing complex, which generates some 30% of the country's electricity output.

EBRD to invest up to �100 M in CEE through Advent Fund

The European Bank for Reconstruction and Development (EBRD) plans to invest up to 100 mln euro ($157.6 mln) in the Advent Central and Eastern Europe IV fund focused on CEE and Ukraine. The fund was created a month ago by Advent International and is its fourth operating in the region. one of the larger local investments of Advent was the acquisition of dominant fixed-line operator Bulgarian Telecommunications Company (BTC). Advent International bought BTC through its Viva Ventures vehicle in a 280 mln euro ($441.3 mln) privatisation deal in June 2004. In early 2006 Icelandic billionaire Thor Bjorgolfsson established indirect control over BTC. His fund sold the telecom to American AIG Global Investment Group in 2007. In late 2007 Bulgaria's anti-trust watchdog cleared Avent International to acquire Bulgarian ceramic tiles maker Khan Asparuh. Advent will develop the company and sell it in the long-term.

 

 

 

Spaniards to invest millions in alternative energy sources in Plovdiv

The Spanish company ‘Ebame' will invest millions of EUR alternative energy sources in Plovdiv. The Spaniards intend to build solar parks and wind power plants.It appeared that the world famous ex footballer Hristo Stoichkov brought the company to Bulgaria.The foreigners will use Plovdiv land for the purpose - they will buy it or will use the variant for public-private partnership.Representatives of ‘Ebame' hold talks on Friday with the mayor of Plovdiv Slavcho Atanasov. After the meeting became clear that besides the power plants the Spaniards will invest in the city's infrastructure. The exact amount of the investments will be known after the company presents its project before the municipality.

 

Alpha Grissin to build wind farms in Bulgaria

 

‘Alpha Grissin Infotech' - Greek energy company intends to build a 400MW wind park in Bulgaria, Greek media informed, quoted by The Sofia Echo. The investments are estimated to 400 million EUR and the constructions are foreseen to start this year.The company appeared on local market with a portfolio of residential and office buildings.The Greeks plan to divest its entire property business by 2011 expecting a net profit of 40,8 million EUR, added from Sofia Echo.From the media also revealed that last year ‘Alpha Grissin Infotech' and Germany's Deutsche Bank formed a joint venture called Deutsche Aeolia.The new company, that focuses on renewable energy resources, currently develops three projects that cost round 65 million EUR. Deutsche Aeolia foreseen to expand to Romania, Ukraine and Egypt.

Wienerberger AG opens � 25 M ceramics factory in Bulgaria

The Austrian company Wienerberger AG, which is the largest bricks producer in the world, is opening its completely modernized factory in the Bulgarian town of Lukovit, the company press service announced. The world bricks manufacturer has invested EUR 25 M in the renovation of the old factory known as "Uspeh Lukovit" ("Success Lukovit") to turn it into the most modern of its type in the Balkans. The ceramics plant is launching the production of its new product POROTHERM - large ceramic plates used for the construction of large-scale public buildings. The Wienerberger AG factory in Lukovit is located 120 km away from Bulgaria's capital Sofia. It is reported to be the first factory of its type to meet the very latest EU standards for energy efficiency, environmental protection, and safe working conditions.The project for the new factory was created in Vienna. The modernization started in September 2006.

Kazakhs invest into Bulgarian economy

Bulgaria entered EU on January 1, 2007 and will enter Schengen zone in 2009. There is one of the lowest levels of income-tax and profit tax in the country. "It is a very favorable time to make investments in real estate, hotel business, production and other spheres in Bulgaria", service leader on trade economic issues under Bulgarian embassy in Kazakhstan Boris Yanchev said to Kazinforms correspondent.I suppose Bulgaria is in the successful period of its development. Some European programs are being realized after entering into the EU. Their purpose is to help our country reach All-European standards. Financing programs in Bulgarian economy will raise agriculture, realize modern equipments supply for production, a lot of money will be directed to infrastructural development, B.Yanchev emphasized.According to Yanchev, there is a program on rendering serious help to tourism EURO 7 bln will be assimilated in Bulgaria till 2013. Bulgaria enters into three strategic projects. They are: pipeline Burgas - Alexandrupolis, South Stream and North Stream projects. Third strategic project is the 2nd atomic station construction in Bulgaria. It amounts to USD 5 mln.KazMunaiGas JSC bought 75 per cent of "RomPetrolеum" company's shares in 2007; investments also take place on the state level. Kazakhstan's citizens invest in real estate, hotel business, and lands. Boris Yanchev noted Kazakhstan's citizens can get visas on 12 months since May 17, 2008. Today the Bulgarian Black sea coast is built up in line with international tendencies. The country is very attractive for tourists. It was visited by 400 Kazakhs in 2004 and 4 700 in 2007. According to the head of EUROINVEST mission in Kazakhstan Anvar Abdeldinov, Bulgaria has the lowest prices on real estate on the EU territory and it is very attractive for investments in this sphere. Real estate prices increase by 20-30 per cent yearly. A.Abdeldinov noted that the unique Bulgarian location in the centre of Europe gives great opportunities and prospects for any business development. Direct foreign investments to Bulgaria amount to 10 per cent of the country's GDP. Here Bulgaria occupies the leading position among Central and East Europe countries.

Israeli to build new business centre in Bulgaria's Stara Zagora

The constructions of another mall in the Southern city of Stara Zagora will start in a month. The investments are on the amount of 72 million EUR. The project is work of the Israeli architecture bureau ‘Murarchitect'.The building is foreseen to be extended over a territory of 10 decares, purchased last year for 11 million BGN (5 million EUR).The business centre will include trade part, advertisement and office part. Round 10 cinema halls are planed, along with three underground parking lots for 600 cars.The projects is expected to be completed and entered in exploitation in 2010.

RESB, Gradus-1 to build �72 M business complex in Stara Zagora

 

Real Estate Services Bulgaria (RESB) and poultry producer Gradus-1 are to invest EUR 72mn for building a business centre in the downtown of the southern city of Stara Zagora . The complex will have 56,000 square metres of built-up area that will be operational in 2010. It will comprise trade, office, and recreation areas. RESB has invested in three other realties -- Mall of Sofia, Mall Plovdiv, and Mall Rousse. Mall of Sofia and Mall Plovdiv have been sold to foreign real estates investors later on.

EVN Bulgaria to invest �11.5 M in southern Black Sea coast

EVN Bulgaria will invest over 22.5 mln Bulgarian levs ($18.1 mln/11.5 mln euro) in maintenance and repair of its power distribution grid in the southern Black Sea coast in 2008 to secure a reliable power supply service. A total of 641 new clients have requested access to the grid by April 2008 alone. Booming construction and surging power demand trigger off power failures and spotty service, the company said. The problem is acutest in the Sunny Beach and Sveti Vlas resorts. EVN plans to pump 7.0 mln levs ($5.6 mln/3.6 mln euro) into two mobile substations and four new backbone stations in the two resorts. Twenty new switchgear stations will be brought on stream in Sveti Vlas as well as a cable network. EVN (www.evn.bg) complained of lack of coordination in construction and repair works of water and power utilities and the fixed-line operator BTC which results in power failures. Power distributor E.ON recently complained of the same problem. It said unclear ownership on power equipment and denial of power infrastructure owners to give access to the equipment hampers the power grid repairs and revamp.

Simeonovo River Park residential development to cost �100 M

Bulgarian construction and investment company Litos will invest over 100 mln euro in Simeonovo River Park, a gated villa community near Sofia, a company executive told news agency SeeNews. Litos owns 50% of the project while the remainder is held by a foreign partner that was not named in the SeeNews story. The Simeonovo River Park development is in progress since the beginning of 2008 and should be completed in three years. Some 130,000 sq m of the 248,000 sq m footprint of the development are designated for green areas The 207 community villas will have a total build area of 97,000 sq m. The leisure amenities will include tennis and basketball courts. Litos is involved in the construction of a further two residential compounds in Sofia. The company has also invested in a hotel in ski resort Bansko, said SeeNews. Ireland-domiciled Inter Bulgarian Properties is listed as a business partner on the Litos corporate site.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

COMPANIES:

 

Leaders of Bulgarian companies discuss investment opportunities at a forum in Sofia

Leaders of four Bulgarian companies, two of which public, participated in a discussion entitled Hot Investment Sectors, as part of the forum on Private Equity Financing in Bulgaria and Southeast Europe, organized by Capital daily. “We are studying possibilities for acquisitions. At the same time we are constantly finding new export opportunities,”said Tzvetan Lajanski, Devin CEO. “Sopharma is a well-known company that does not need to be presented,”said the company CEO Ognyan Donev (pictured above). “This is why I will be speaking from a businessesman's point of view.” He added that the most logical initiative right now is investing in production. The next step will be to buy off everything possible in the production. A development plan should include entering the wholesale market and after that the retail market. Ognyan Donev said the biggest challenge in our region is finding a good investment opportunity and buying a factory for up to 5 million euros. He said expanding in sectors related to that of your company is the most logical next step after some time in the business. He mentioned the sectors of hospital services and heath insurance as such for the one in which his company operates (pharmaceuticals). Asked to comment on the potential of the IT sector in Bulgaria, Pavel Ezekiev, a partner in NEVEQ said, the clients in the sector are finding themselves in an interesting situation right now. He mentioned banks, telecommunication companies and goods manufacturers as clients of the IT sector. Another challenge in his words is that China manufactures everything and in large volumes. The true art of the business is to be able to foresee the direction in which a sector, for example the banking one, will be restructuring and to guess things such as what software it will need, or what will be the new functions of mobile phones be, Ezekiev also said. It is difficult to find a company with a lot of potential in the region, because the sector in which Devin operates is consolidated and there aren't many small enterprises on sale, Tzvetan Lajanski also said. But if you are closely watching the market tendencies you may find a niche for new developments. Lajanski also said that sector will not run out of opportunities for development in the following 10 years. He said he expects to see transformations in the sector of turnover goods, distribution and logistics. Traveling is a nice thing, as you may get a lot of ideas on the way, he joked. As an example he mentioned Romania where the mineral water bottling business has a history of 200 years and all companies are structured in the same way. Lajanski also said the region must be viewed as one whole and not as many countries. Ognyan Donev, however, said the glottalization is not everything. He cited the pharmaceutical sector as an example. This sector is problematic in his words because the health care is a priority issue for each nation and each country is defining the parameters for its development on its own. Veselin Danev, Sigma Capital director, said many people made a lot of money quickly in the real estate sector. The market is now more mature, he added, and companies need a good team of professionals and risk management knowledge to succeed. When a market is developing in a cyclic way, good investment opportunities emerge sooner or later, he added. Danev pointed out that he expects very good opportunities from local players to appear in a matter of a year and a half. In his words many local companies have started too many projects and are now unable to complete them. As far as the high prices on some deals are concerned, he said, sometimes it is better to restrain from a purchase. Asked to comment on Sopharma's aggressive policy in the region, Ognyan Donev pointed out that there aren't many companies in the region which are good enough to provoke Sopharma's interest. The problem of local entrepreneurs according to him is that they refuse to accept the fact that controlling 49% of a successful and developing company is better than having 100% in one that has no future perspectives. People may wish to get rich in two ways said NEVEQ's Ezekiev - immediately or in the long term run. The second is safer, he said. Prices of food and medicines will be rising in the long term perspective and you may soon hear that NEVEQ is going in those direction. As far as the problems of Bulgarian businesses are concerned Danev mentioned the lack of qualified personnel and Ognyan Donev cited the state interference in business.

Hyundai Finance falls 1st Bulgarian victim of global crisis

Bulgarian special purpose vehicle (SPV) for securitisation of receivables Hyundai Finance said on May 23, 2008 it will terminate its business operations as it cannot raise funds for its investment projects thus becoming the first local company to fall prey to the global financial turmoil. The troubled markets press down bond issue interest rates and thwart raising capital on the bourse. Hyundai Finance wanted to make a 20 mln Bulgarian levs ($16.1 mln/10.2 mln euro) six-year bond issue with a fixed rate of 6.5 pct but this would be impossible as the European base rates are rising. In addition, the turbulence makes securitisation of financial assets a riskier segment. Prokopi Prokopiev, senior official of local SPV Energetics and Energy Savings Fund, commented not the whole segment is under risk. He said major international institutional investors such as the European Bank for Reconstruction and Development (EBRD) are very keen on energy efficiency projects. Hyundai Finance was licensed in March 2007. Its asset and equity capital topped 1.0 mln levs ($806,000/511,000 euro) last year. The profit was 97,000 levs ($78,000/49,500 euro). Bulgaria had seven SPVs for securitisation of receivables in September 2007 with total assets close to 30.1 mln levs ($24.2 mln/15.4 mln euro).

Rise in Bulgarian companies' profits likely to slow in 2008

Bulgarian companies' profit growth is likely to slow this year after robust 2007 results due to speeding inflation, rising interest rates and global financial squeeze, Sofia-based industry officials and analysts said. The local stock market expected strong first-quarter results but two-thirds of industrial companies trading there showed lower profits than a year earlier despite growing revenues. Last year we had the effect of the introduction of 10% corporate tax, there was no need to hide profits any longer and this contributed to the profit figures, but the closer a company gets to maturity, the more illogical rises of 50-80% per year sound," the chairman of the Bulgarian Industrial Capital Association, Vassil Velev, told SeeNews.The government cut corporate tax to 10% from 15% in 2007, aiming to attract more foreign investments, enhance business activity and bring more companies out of the informal economy.Ivo Zahariev, portfolio manager at DSK Bank's pension arm DSK Rodina, and Nadia Nedelcheva, a financial analyst with Karoll brokerage, agreed. Negative processes are taking place in world economy, and they will affect us in some way A certain cooling off will be evident here," Velev said. Strong inflation will inevitably affect profitability as companies can hardly fully transfer the rise in the prices of raw materials into the end price," Nedelcheva said. Bulgaria ended 2007 with inflation of 12.5%, fueled mainly by surging food prices. The government has projected end-year inflation of 6.9% for 2008. Zahariev said that increased spending on salaries also is a factor in projections of lower profits in the current year, alongside with increased costs of corporate credits. He also said that companies that showed a healthy rise of 15-20% in 2007 profit are likely to keep that growth pace in the current year. Still, profit figures will be less impressive this year and are unlikely to stir up trading on the stock exchange, Zahariev said. The Sofia bourse was booming last year helped by inflows of foreign cash following Bulgaria's entry into the European Union in January 2007. However, stock indices have been mostly falling since November as foreigners largely withdrew. Companies, which have a considerable part of their sales revenue coming from the Eurozone, will most likely face a certain slowdown in the growth of their sales because of the slowing economic growth in the Eurozone," the head of portfolio management at TBI Asset Management, Svetoslav Velinov, said. I do not expect a serious fall in the sales and the profit growth of companies, whose main business is in Bulgaria," Velinov said, adding the impact would depend on the company's type of activity and diversification of markets. Companies active in the supply of heavy machinery and goods for the construction market are likely to suffer more from the current unfavourable trends, while those operating in the services, staple goods and the retail business will do better, Velinov said. Nedelcheva agreed that the growth of export-oriented companies was more likely to slow, adding that all others dependent on oil and metals would be more vulnerable. Growth rates will also decrease in the banking sector, she said. Nedelcheva and Velinov agreed that the market has somewhat calculated those risks in share prices. Overall, these risks are taken into account by investors and are part of the reasons for the current unstable situation on the market, alongside others - there are macroeconomic risks in Bulgaria like rising inflation, high current account deficit - these are all factors worrying foreign investors," Nedelcheva said. The country ended 2007 with a current account gap equivalent to 21.5% of the projected GDP, compared to 17.8% in the previous year. The government has projected a current account deficit of 21.1% for 2008.

Bulgaria's Minister of Economy expects bidding for Kremikovtsi

Bulgaria's Minister of Economy and Energy Peter Dimitrov expects a tough competition for Kremikovtsi steelworks."The candidates for Kremikovtsi will have to bid to take over the steelworks," Minister Dimitrov forecasts. Last week, Lakshmi Mittal and Kostyantin Zhevago announced their offers for the steelworks. Lakshmi Mittal, the elder brother of the present owner of the plant, Pramod Mittal, is ready to pay over 1 billion euro for the acquisition of the steelworks and the payment of its debts. Ukrainian tycoon, Zhevago, is ready to invest US$ 500-600 million. Both bidders are prepared to give commercial credits for the normal functioning of Kremikovtsi," Minister Dimitrov informed as he pointed out that the Bulgarian government was not going to compromise on the candidates' commitments over the environmental requirements and on the implementation of the plant's viability program.The bond-holders have liked Lakshmi Mittal for the new owner of Kremikovtsi. Lakshmi Mittal's offer coming from his company ArcelorMittal is much bigger than the one of Kostyantin Zhevago, stated Anzhelo Moskov, manager of QVT Fund, one of the bond-holders on the Kremikovtsi loan worth 325 million euro.

 

 

 

 

 

Bulgaria second largest steel mill Stomana partners with US company

 

Bulgaria's steel-maker Stomana Industry, formerly known as Stomana Pernik, is going to partner with the US company Newcor Inc. The Greek group Sidenor, which owns Stomana Industry, will start a joint venture with its US partner, thanks to which the steel mill located in the city of Pernik west of Bulgaria's capital Sofia, will be able to manufacture new types of products. Anton Petrov, the representative of the Greek concern Viohalco, which owns Sidenor, predicted that the joint venture with Newcor would turn Stomana into the largest Bulgarian steel-maker, a position currently held by the troubled Sofia plant Kremikovtzi. The agreement with Newcor will allow Stomana to increase its production capacity to 2,2 million tons per year, and enables the Sidenor Group companies to enter new markets including in Turkey, Cyprus, and North Africa. Newcor was founded in 1933 as National Electric Welding Machines Company and changed its name to Newcor in 1969. on January 31, 2003 the company was purchased by EXX.

95 companies of 18 countries to exhibit defence equipment in Plovdiv

 

Ninety-five companies of 18 countries, including Britain, Germany, the US and France, will participate in the International Defence Equipment Exhibition HEMUS 2008, which will take place at the International Fair in Plovdiv (South Central Bulgaria) between May 28 and 31, 2008, the Plovdiv Fair said in a press release Monday.HEMUS 2008 will display cutting-edge products of the Bulgarian defence industry: ammunition, communications, naval radars, night vision optics and optronics etc.Antiterrorist equipment is a highlight of this year's edition of the exhibition. The 4th International Conference "High Defence Technologies against Terrorism" will open on May 29 as an accompanying event. Twenty Bulgarian and foreign experts, including representatives of NATO and of the NATO Maintenance and Supply Agency (NAMSA), will deliver reports.New ammunition will be demonstrated in firing practice at the Zmeevo Range on May 29.

 

Dutch C&A, German Deichmann prepare for expansion to Bulgaria

Dutch-based apparel and accessories chain C&A and German shoewear retail chain Deichmann are busy recruiting staff in Bulgaria, Dnevnik daily reported. The chains announced plans to expand to the Bulgarian market, but said they would open their first shops next year at earliest.C&A is among Europe’s leading apparel and accessories chains with a network of at least 1200 outlets and more than 150 years of history. Its shops usually occupy central locations on shopping streets or retail complexes.Currently, the company is on the look-out for shop managers and deputy managers, as well as training specialists to train the future staff of the company. The company plans to open its first shops within the next couple of years.Among the core brands of the company are Clockhouse, Westbury and Your Sixth Sense. Its retail chain spans Austria, the Czech Republic, Hungary, Poland, Russia, Slovakia, Slovenia and Turkey.C&A is in majority ownership of Cofra Group, a company registered in Switzerland and also active in real estate, financial services and renewable energy resources.Deichmann plans to open its first shop in 2009. The company would recruit an accountant and manager for the future marketing team. The company operates in more than 16 countries and has 2200 shops and 32 000 staff.A number of European apparel brands have been mulling plans to set foothold in Bulgaria. Among them is Inditex, the owner of Zara, whose expansion would focus on a retail-entertainment centre currently under construction in Sofia. Greek Marinopoulos plans to bring Gap and Banana Republic brands to Bulgaria, having acquired the franchise rights for the two in Bulgaria.

Restructuring at Bulgarian Posts

Bulgaria's postal operator Bulgarian Posts EAD has embarked on a radical restructuring path that is due to allow private investors to buy into the state-run company, ascribe individual activities to separate companies, and diversify the company's postal business with tourism activities.A copy of the restructuring blueprint was leaked on May 18 to Dnevnik daily and was confirmed by the CEO of Bulgarian Posts Entseslav Harmandjiev. The strategy has already been put up for discussion with postal workers' labour unions.The report comes several months after Harmandjiev first broke the news about the forthcoming transformation of Bulgarian Posts (called Bulgarski Poshti in Bulgarian) into a holding.The strategy permits for the set-up of public-private partnerships (PPP), which some analysts have interpreted as a means to circumvent the present ban on Bulgarian Posts' privatisation.By October 1 2008, the strategy reads, Bulgarian Posts should already be operating as a holding comprising six companies. All would be open to private investors and, respectively, conducive to the formation of PPPs. Yet none of the possible companies in the holding would be in charge of the overall postal service operations, which, according to legislation, should be run at a low price and through a countrywide network of postal outlets. Hence, the universal postal service, which accounts for 45 per cent of total revenues, would be operated by the parent company, Bulgarian Posts EAD.The six companies are to be named Finance Post, Bulpost/EMS, Post Trans and Trade, Bulgarian Philately, Hybrid Post and Post Tourist.Finance Post would be executive for the holding's financial services, among which figure postal cash transfers and collection of payments. Bulpost/EMS is set to work on courier services both in Bulgaria and abroad. Hybrid Post will offer utility bill payment service. Post Trans and Trade will be in charge of the logistics and commercial activities, while Bulgarian Philately would handle the envelope and stamp business.Post Tourist, in turn, would become owner and operator of the three-star vacation communities in ownership of Bulgarian Posts. It would represent a digression from the core activity of Bulgarian Posts, whose assets - upon revamp - are hoped to deliver ample profits.Bulgarian Posts owns seven resort/holiday communities in coastal and mountain resorts. Their value is estimated at 20 million leva and only the one in SS Konstantin and Elena is currently operational.According to field specialists, private interest will mainly be honed to Finance Post, Hybrid Post and Bulpost/EMS because they are executives for the most profitable activities of the company.Analysts also alarmed that should Bulgarian Posts' board of directors allow for capital increases, some of the companies could eventually pass into private hands in their entirety.The strategy is yet to get the green light from the Transport Ministry. Nonetheless, Harmandjiev said that the restructuring was already underway.In 2006, Bulgarian Posts ended the year with nine million leva of net profit on revenues of 135 million leva. The company is yet to release its consolidated report for fiscal year 2007.

 

 

 

ANALYSIS:

 

 

Business climate in Bulgaria - 'Favourable, even though worsening'

Author: Elizabeth Konstantinova, Bloomberg

Bulgarian business confidence declined in May after rising in the previous four months as export orders fell on slower economic growth and labor shortages increased production costs. The business climate index fell to 21.8 in May, the National Statistics Institute in Sofia said in an e-mail today. Business confidence declined the most in construction as a shortage of workers and high prices of building materials boosted costs, it said. Labor demand increased as growth accelerated after the Balkan nation joined the European Union in 2007 and many people migrated to wealthier countries. Foreign orders in industry have declined from last year's levels, while domestic demand remained unchanged, the office said, without giving figures. Around 60 percent of Bulgarian exports go to the European Union, where growth forecasts are declining on rising energy costs and a strong euro. 'The confidence index decline is insignificant,' said Georgi Ganev, program director at the Center for Liberal Strategies. 'It is unlikely to affect growth forecasts. The construction index fell from very high levels and is still much higher than other sectors.'Bulgaria's government expects 6.5 percent economic growth this year. The Balkan nation's $40 billion economy expanded 6.2 percent in 2007, driven by record levels of foreign investment, construction and tourism. The EU's poorest member is counting on accelerating growth to help raise living standards. Business confidence perceptions among retailers remained unchanged in May from the previous month, the institute said. Confidence in the services industry fell on higher competition and shrinking demand, the institute said. Demand for services is projected to rise in the next three months, it said, as tourists and vacationers flock to the Black Sea and mountain resorts.