불가리아 주요 경제뉴스 (25 JULY – 1 AUGUST 2008 )

BULGARIAN ECONOMIC TOP NEWS DIGEST

WEEKLY REPORT ( 25 JULY  – 1 AUGUST 2008 )

 

 

 

Sections/headline briefs:

 

 

 

MACROECONOMY:

 

·        Bulgaria's PM: Ambassadors, promote Bulgaria!

·        Bulgaria with special large-scale strategy to boost exports in 2008-2013

·        14.5% increase of prices in the industry

·        Bulgarian economy to grow 6,5% in 2008

·        Bulgaria's GDP to grow by more than 6% in the next three years

·        Parliament ratifies Bulgarian-Russian agreement on construction of gas pipeline South Stream

·        9 banks keen to advise Burgas-Alexandroupolis pipeline project

·        Bulgaria, Romania to spend � 50 M on repairs of Danube Bridge

·        Serbian Minister vows to build highway to Bulgaria border in 2,5 years

·        Oxford Business Group: Bulgaria suffers from labor shortage

·        Bulgaria harvests 4.1 M tonnes of wheat from 92% of sown area

·        Grain producers wish to export to Turkey

·        Price of alcohol goes up

·         Every Bulgarian with 500 kg of waste per year

·         Bulgaria's Varna to compete for European Black Sea capital

·        Sofia underground second line to cost BGN 471 M

·        Bulgaria saves � 6 B from energy import

·        Bulgarian's financial wealth up by 23%

 

 

 

 

 

 

 

 

INVESTMENTS:

 

 

·        Bulgaria to build 100 industrial zones

·        South Stream gas pipeline project to require USD 20 B

·        Markan Development to build trade center in Ruses

·        Mall developers flock to smaller Bulgarian cities

·        EU report causes a decreаse in foreign investment

·        German automotive supplier Ixetic to wrap up �18.7 M investment in Bulgaria by spring 2011

·        Volkswagen plans to hire up to 800 personnel in its plant in Bulgaria’s Mezdra

·        Factory for Audi & Peugeot to be built in Rousse

·        Investment intermediaries await foreign competition

·        Who pays what for wind energy?

 

 

 

COMPANIES:

 

 

·        Bulgarian companies rival for $15 billion in Sochi

• Bulgarian companies construct 100 000 homes in Jordan

·        Estee Lauder buys two Bulgarian TV channels for USD 172 M

·        Public companies in Bulgaria allocated BGN 612 M for dividend payments

·        Moody's reduces the credit rating of Kremikovtzi

·        25 Bulgarian, Serb exhibitors take part in Vidin Trade Fair

·        Three new companies to compete with BDZ

·        NEC & “Atomstroyexport” signed for the construction of NPP Belene

 

 

 

ANALYSIS:

 

 

·        Bulgaria PM: Country's economic environment is extremely favorable

·        Kolchev: Brussels and Sofia are speaking different languages and that pushes foreign investors away

·        State grasps pharmaceutical monopoly

 

 

 

Articles:

 

 

MACROECONOMY:

 

Bulgaria's PM: Ambassadors, promote Bulgaria!

The Bulgarian embassies, especially these in the EU, should be active in promoting Bulgaria's progress and explaining the country's national policy; this appeal was addressed by Bulgaria's PM Sergei Stanishev and Foreign Minister Ivailo Kalfin to the participants in the conference of the Bulgarian ambassadors, held in Sofia.
The PM called on doubling the efforts and presented the actions taken in the country. In his opinion, part of the problems lied in the bad communications. According to PM Stanishev, the Bulgarian embassies abroad should play more active role in the work with institutions, political circles and media in the foreign countries.

 

Bulgaria with special large-scale strategy to boost exports in 2008-2013

 

Bulgaria's Minister of Economy Petar Dimitrov and his Deputy Yavor Kuyumdzhiev presented Monday the government's export strategy for the period 2008-2013. According to Dimitrov, the export strategy was approved by the Council of the governing coalition during its meeting in Bansko over the weekend, and was to be submitted for approval to the Parliament.The aim of the new strategy is to make Bulgaria's trade balance positive by 2014. Currently the country's trade deficit is 25,5% of its GDP.The plan envisages that in 2018 Bulgaria's exports will amount to EUR 75 B. In 2007 the country exported goods and services for under EUR 30 B.Dimitrov said the GDP was expected to grow about 7% per year, the foreign investments were expected to maintain at least their current level, whereas the country's exports was supposed to grow 18% per year.According to the new strategy, Bulgaria is also going to build 100 new industrial zones with attractive terrains for foreign investors. About BGN 100 M will be set aside from the state budget for the development of these zones every year.The Bulgarian government is also going to be more selective with respect to the foreign investors allowed in the country, and will throw its support behind the manufacturing businesses.The exports strategy points to the high-tech manufacturing, products from ferrous metals, pharmaceutical production, chemical industry, and research and development as the main exports priorities.The government also plans to open information centers in at least 30 countries in order to attract more investors. They will be managed by a special agency, which will be named Bultrade. A consultative council of the government, and a special exports council at the Economy Ministry will also be set up.

14.5% increase of prices in the industry

Prices in the industry have increased by 14 and half percent for a year in Bulgaria. This is shown by data of the national statistics of the country, cited by BNR (Bulgarian National Radio) In the recycling industry in July prices in the internal market have risen by almost 18 percent in comparison to the same period in 2007.The biggest increase is in the food and beverage industry - by 22.4%.Prices for production and distribution of electrical power, gas and water have increased by almost 10 percent.

Bulgarian economy to grow 6,5% in 2008

 

The Bulgarian economy is going to grow 6% in 2008, and 6,5% in 2009, according to the Quarterly Forecast on the Eastern EU Member States of the International Center for Economic Growth. According to the data of Bulgaria's National Statistical Institute, the country's growth in 2007 was 6,5%. The ICEG forecast points to the fact that in the second quarter of 2008, Bulgaria's exports grew 9,2% compared to 5,8% growth for the imports. It also predicts that Bulgaria's inflation in 2008 will be 11,5%, and 7,7% in 2009. The risk factors for the Bulgarian economy according to the ICEG are rising oil prices, the unstable international financial markets, and the economic slowdown in the EU. For Bulgaria's northern neighbor Romania, the forecast projects a growth of 7,2% in 2008, and a slowdown to 6,5% in 2009.ICEG European Center is an independent economic research institute based in Budapest, focusing its activities on research, macroeconomic and sectoral analyses and forecasts.

Bulgaria's GDP to grow by more than 6% in the next three years

Bugaria's gross domestic product is expected to grow by more than 6% in the next three years (2009 – 2011), according to prognoses published on the website of the country's Council of Ministers. The real GDP growth next year is expected to be at 6.5 %, and the prognoses for the following two years are for 6.9% and 6.4% respectively Foreign direct investments this year are estimated to reach 6.2 billion euros, versus 6.1 billion euros in 2007. The combined amount of FDI in the next three years is expected to reach 19.6 bln euros (6.3 bln euros, 6.5 bln euros and 6.8 bln euros respectively ). Inflation is expected to stand at 4% annually in 2009 – 2011. The average BGN/USD exchange rate for the period is expected to rise from 1.21 leva/USD in 2009 to 1.35 leva/USD in 2010 and 1.45 leva/USD in 2011. Pensions will be increased by around 14.3% in 2009, while salaries in the public sector will be growing by an annual of 10%. The minimum monthly wage will rise from 220 leva to 240 leva, according to the draft budget for 2009.

 

Macroeconomic indicators	2009 Prognosis	2010 Prognosis	2011 prognosis
GDP (in million BGN )	72230	80272	88044
Real growth %	6,50%	6,90%	6,40%
Harmonized inflation
As at the end of the year	4,20%	4,40%	4,10%
Average for the period	5,10%	4,30%	4,10%
BGN/USD Exchange rate
As at the end of the year	1,3	1,4	1,5
Average for the period	1,21	1,35	1,45
Current account (in million BGN)	-7737,9	-8214,8	-8856,2
% of GDP	-21,00%	-20,00%	-19,70%
Foreign Direct Investments (in million EUR)	6315,7	6503,7	6776,4
% of GDP	17,10%	15,80%	15,10%

 

 

Parliament ratifies Bulgarian-Russian agreement on construction of gas pipeline South Stream

Parliament ratified Friday an agreement between the governments of Bulgaria and Russia on cooperation in the building of a pipeline for the transit of natural gas via Bulgaria called South Stream. The agreement was ratified in a 140-47 vote with two abstentions. The agreement was signed during the January 18 visit here of the then Russian president Vladimir Putin. Bulgaria's interests are fully defended because the company that will develop and operate the pipeline on its territory will be with 50 per cent participating interest of Bulgaria and 50 per cent participating interest of Russia. According to the opposition forces in Parliament, the ratification of the agreement runs counter to the European view on how energy monopolies should be overcome. Also, the opposition argues that the economic benefit of the agreement has not been proven. South Stream is a Russian-Italian project for a gas pipeline to transport Russian natural gas to Italy. The 900 kilometre long offshore section of South Stream is to start from the Beregovaya compressor station at Russia's Black Sea coast, and to run to Bulgaria's Varna. An Italian project map shows that from there the pipeline branches to the Southwest through Greece and the Ionian Sea to southern Italy, and to the Northwest through Romania, Hungary, Slovenia and Austria to northern Italy. The maximum depth of the offshore section will be 2,000 m. South Stream is not one pipeline but a system of new pipelines planned to carry 30 billion cubic meters of gas to Europe annually. It will transport not only Russian, but also Central Asian and Kazakh gas. The project worth is estimated at some 10,000 million euro. South Stream does not call off the project for expansion of the Blue Stream pipeline (a major trans-Black Sea gas pipeline that carries natural gas from Russia to Turkey) to Central Europe via a Turkey-Bulgaria-Serbia-Croatia-Hungary pipeline. Nor does it call off the Nord Stream project connecting Russia and Germany through Finland and the Baltic Sea.

9 banks keen to advise Burgas-Alexandroupolis pipeline project

Nine banks have handed in their credentials to advise the Burgas-Alexandroupolis oil pipeline project, said Burgas-Alexandroupolis BG, the outfit in charge of Bulgaria's share of the venture. The advisory contract will be contested by France's Calyon, Societe Generale, BNP Paribas, ING, Project Finance Solutions, RBS, Lazard, Citi Group and Gazprombank. The selected consultant will use the technical and economic feasibility studies as a baseline to draw up the documents needed to apply for loan financing and research the market interest towards the project, said Stefan Gunchev from the regional development ministry. The official said the advisor is expected to be picked in August. Germany's ILF should update the feasibility study for the project by the end of 2008. The facility will cost 1.5 bln euro, judging by statements from Nikolai Seryogin, member of the supervisory board of the international project company in charge of the pipeline. The figure is significantly higher than the initial price tag that was seen at around 800 mln euro. The shareholders in the project company will contribute 30% of the necessary financing, securing the remainder from external sources. Russia's Transneft, Rosneft and Gazpromneft control a combined 51% in the project company. Bulgaria and Greece each have 24%. Bulgargaz and Technoexportstroy, the co-owners of Burgas-Alexandroupolis BG, will have to raise 110 mln euro in funding. The Russian media have reported that problems with the taking of private land for the project will cause the pipeline to be rerouted on Bulgarian territory. The Bulgarian side had previously reported no difficulties with the expropriation of private land.

Bulgaria, Romania to spend � 50 M on repairs of Danube Bridge

Bulgaria's Minister of Transport Petar Mutafchiev and his Romanian counterpart Ludovic Orban have agreed that the Danube Bridge connecting the two countries had to be rehabilitated. This became clear Monday after the regular meeting of the two ministers in the Bulgaria Danube city of Ruse. Mutafchiev announced that Bulgaria was going to allocated about EUR 25 M for the repair works on the so called Danube Bridge I, and that the Romanian side was probably going to spend just as much. The Bulgarian Minister also said the fees for using the bridge were definitely going to be reduced said that the exact sums would be settled in the next experts' meeting between the two sides. The two ministers also discussed the situation around the construction of the Danube Bridge II, which is supposed to connect the countries at Vidin-Calafat. According to the Romanian Minister Orban, the first sod for the construction of the auxiliary infrastructure on the Romanian side would be turned in October. The construction of the second bridge on the Danube is supposed to be completed before December 2010 but is currently delayed by six months. The project is being executed by the Spanish company FCC (Fomento de Construcciones y Contratas).The transport ministers of Bulgaria and Romania also discussed two other possibilities for the construction of bridges on the Danube connecting the two countries - one option is at Oryahovo-Beket, and the other at Silistra-Calaras.

Serbian Minister vows to build highway to Bulgaria border in 2,5 years

Serbia's Minister of Infrastructure Milutin Mrkonjic promised Monday in an interview for the Tanjug Agency that the highway between the city of Nish and the Bulgarian border checkpoint of Kalotina would be completed by 2011.The Minister even vowed to resign if he failed to complete the highway on time. The crucial infrastructure project is part of the Pan-European transport corridor No. 10. The Serbian state is going to invest EUR 260 M in the infrastructure projects in the southeast part of the country.

Oxford Business Group: Bulgaria suffers from labor shortage

The latest analysis of the Oxford Business Group concludes that Bulgaria suffers from severe labor shortage, which is caused by the fact that more and more Bulgarians take up better paying jobs abroad.The British consulting group points out that one unemployed person in Bulgaria could choose between ten different openings.It also stresses that the unemployment in the capital Sofia was close to zero, and that the total rate for the country was 6%, which was one of the lowest in Europe.According to the Bulgarian Labor Minister Maslarova, this level was close to the sanitary minimum, and the consequences from the further decrease of unemployment could lead to a growth of inflation, and a slowing economic growth.The Oxford Business Group cites data of the Bulgarian National Statistical Institute, which found that 17,6% of the companies stated they were short of workers. The data also shows the monthly salaries in Bulgaria grew 20% in 2007.The analysis points out that despite Bulgaria's relatively cheap labor within the EU, many employees in certain sectors such as IT, telecommunications, and finance receive excessively high remunerations.The consulting group recommends that the Bulgarian government reform the education system immediately in order to provide students with new skill suitable for the rapidly changing labor market.

Bulgaria harvests 4.1 M tonnes of wheat from 92% of sown area

 

Bulgaria has put to silos 4.1 million tonnes of wheat from 92% of the sown area harvested so far in 2008, in line with expectations and 70% more than it harvested last year, the farming ministry said late on Monday. The average yield per hectare has reached a 10-year high of 4.35 tonnes due to enhanced use of farming machines and favourable wheather conditions in the autumn and the spring, the ministry said in a statement. Draught and heat waves damaged last year's crop, reducing it by 25% to 2.4 million tonnes, but still well above domestic demand. Bulgaria has also collected 830,870 tonnes of barley from 99.4% of the land due to be harvested, twice as much as last year's 420,000 tonnes. The average yield for barley was 4.09 tonnes per hectare.

Grain producers wish to export to Turkey

Grain producers of the Trakia Union have decided to export wheat under better conditions that those offered by the local market, Ivan Genchev, deputy chairman of the organisation, told the Pari Daily. According to farmers, the price of BGN 0.22-0.23 per kilogramme is very low and they incur substantial losses, while the price of wheat on international markets is EUR 180-185 per tonne. The Trakia Union will insist that the Association of Grain Producers refer the issue of speculative wheat prices in Bulgaria to the Commission for Protection of Competition. Bulgaria can afford to export more than 1.5 million tonnes of wheat without affecting its grain balance, Genchev said.

Price of alcohol goes up

The price of cheap alcohol will go up due to the increase of the price of the glass bottles by 0.5 levs. The glass bottle stands for one third of the cheap wine's final price, sources from the cellars explain.This is why the prices of the cheapest wine brands will go up by some 10% - instead of 4.50-5.00 levs the cost of a bottle will become 5.50 levs, wine producers forecast.In their opinion, the prices of brand alcohol won't increase in price because of the fierce competition.We'll pay out of our pockets the increase of the bottle costs of the elite drinks, the wine producers say.Many of them intend to buy glass bottles from abroad."The glass companies abroad produce exactly what we want while in Bulgaria we are constantly blackmailed with high costs," wine producers complain.

 

Every Bulgarian with 500 kg of waste per year

 

Every Bulgarian generates 500 kg of waste during the course of the year, according to statistics of Eurostat.The total amount of waste in Bulgaria for one year is consequently 3,5 million tons. only 10% of this waste is recycled.According to Eurostat the countries that are the newest members of the European Union (EU) recycle a mere 8% of their waste.Belgium ranks firs in the EU by the recycling of waste where 90% of it is recycled.In the EU in general 50% of the paper, 43% of the glass and 40% of the alloys, excluding iron, are manufactured from recycled materials.Eurostat is the Statistical Office of the European Communities.

 

 

 

 

Bulgaria's Varna to compete for European Black Sea capital

 

Varna is one of the top two finalists for European Black Sea Capital of the European Union (EU), according to the Bulgarian daily newspaper "Standard."The EU is going to select the European Black Sea capital between two cities: Varna in Bulgaria and Konstantsa in Romania.The newspaper cites John Murray, Director of growthclusters.com - an organization working at national, regional, local and international levels in the area of cluster development saying that "Brussels' goal was not the moving of Eastern Europe to Paris or London but rather aligning the living standards." Murray had also pointed out that comparing Varna to Konstantsa would be the same as comparing the Frankfurt airport to Heathrow since Varna is a much bigger city than the Romanian resort.According to the UK expert, despite Konstantsa's advantage of its recently reconstructed port, Varna's chances to become the EU Black Sea Capital would greatly improve with the construction of a larger and modern logistic center in the Bulgarian main coastal city and port.

Sofia underground second line to cost BGN 471 M

 

For comparison, candidates at the first tender asked for BGN556MN which was the reason for the cancellation of the tender. Dogus Insaat ve Ticaret will build the stretch from Nadezhda overbridge to Patriarh Evtimiy boulevard, the total length of the stretch being 3.8 kilometres. There will be four metro stations on this stretch and the prices for building it is BGN329MN. The stretch from Patriarh Evtimiy boulevard to Cherni Vrah boulevard, whose total length is 2.6 kilometres, will cost about BGN141MN. This stretch will be constructed by Metrotrace which includes Trace Group Hold, SB Engineering and Trace Sofia. In this sector, however, there are some facilities that have already been built. The metro station below the National Palace of Culture and the tunnels leading to it were constructed some 25 years ago. Sofia mayor Boyko Borissov explained that the construction of the underground line may start in September and since the term of its completion is 45 months, it may be expected to be ready by 2012. The bulk of the funds for the construction of the second line will come as financing from the EU (BGN370MN) - in fact, this was the first project approved by the Transport programme. The financial memorandum, however, was signed by Metropoliten EAD, and not by its principal, the Municipality of Sofia, so that the entity may reimburse its VAT. Borissov then explained this move would cut the costs by 20 percent. The remaining BGN100MN will come from both the municipal and the state budget.

Bulgaria saves � 6 B from energy import

 

Bulgaria will be able to save up to EUR 6 billion from the import of energy resources, the draft energy strategy of the country by 2020 envisages. The project was published on the website of the ministry of economy and energy. The savings will be possible in case we manage to reduce energy consumption by 50% through energy efficiency improvement measures. The draft strategy also includes increased gasification of the country. The ambition to turn Bulgaria into a powerful energy centre in the Balkans will be carried out through accelerated construction of power stations, the strategy reads.

 

Bulgarian's financial wealth up by 23%

 

The expensive real estates and money sent by emigrant workers have raised the Bulgarians' prosperity levels. This year Bulgarians are richer by 23% compared to 2007, according to survey by consultant company Industry Watch. The income is bigger than the inflation of 15,3%. The analysts have calculated the income of all classes - from the yacht-owning rich to the pensioners living in the villages. The total wealth of the Bulgarians, not counting the price of the land, amounts to 175 billion levs ( 1euro = 1.95 levs). The cash is 32.1 billion levs including pocket money, savings and investments.This sum has increased by 23% for a year. Of this money, however, 10 billion are due payments for credits and leasing. Thus the net financial wealth of the Bulgarians amounts to 22 billion levs. House owning is the Bulgarians' biggest asset - almost 82% of all they possess. The cost of housing in the cities is about 73 billion levs. A third of them are situated in Sofia. Housing prices have increased by 72% over two years. only in the second half of 2007 the prices increased by 32%. Thus those who sold estates in this period had made quite a profit. The money of the Bulgarians working abroad stands for considerable part of our wealth - 4.3% of the Bulgarians earn their living in foreign countries. About 16% of the people claim that they or a member of their family worked abroad for some period of time in the last three years.According to BNB data, thanks to these people 1.2 billion euro enter Bulgaria every year. The account is based on a presumably minimum three month salary with which they maintain a minimum living standard.Of course, the situation is quite different, says Georgy Angelov economist in Open Society. According to him, our compatriots get a much higher payment as they work really hard. Apart from that, they usually spend abroad much longer than 3 months - usually 7-8 months up to a whole year.They usually don't live up to the standards of the countries that they work in, but strictly economize every penny and spend only on food and basic everyday needs.Almost all the earned money are send to Bulgaria, and often this happens cash and not via bank accounts, which means that the sum highly exceeds the sum, announced by the BNB, i.e. up to two billion euro which can't be intercepted.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INVESTMENTS:

 

 

Bulgaria to build 100 industrial zones

No less than 100 industrial zones are planned to built under Bulgaria's export strategy for the 2008-2013 period, economy minister Petar Dimitrov said at the unveiling of the blueprint. The effort will be backed with the disbursement of 100 mln levs annually. No rules have been set yet for how municipalities will apply for the funding. The ministry estimates the average cost per industrial zone at around 6 mln levs. Parliament will either adopt a separate law or make the relevant amendments to the Investment Promotion Act to provide a legislative definition of the term industrial zone. The economy ministry will fine-tune its treatment of investors, attaching priority to projects that create value added and products that are globally marketable, said Dimitrov. The aim of the new strategy is to reverse the nation's c/a deficit by 2013. Five years after Bulgaria shut down its export promotion agency, the concept will be resurrected as BULTrade, a directorate with the Small and Medium Enterprises Agency. The institution, which will operate on 16 mln levs annually, will have representation offices in 30 key export markets.

South Stream gas pipeline project to require USD 20 B

The project for the construction of the gas pipeline "South Stream" is going to require investments of over USD 20 B, instead of USD 10 M as it was previously calculated from estimates in the beginning of 2008.This was announced by the Russian Energy Minister Sergey Shmatko cited by Russian press publications.According to experts, this double increase of the necessary investment amount was possibly going to add additional obstacles for the realization of the gas pipeline project. They have stated that the competitor "Nabucco" project was going to be with 30% to 40% cheaper, which would make it more feasible.

Markan Development to build trade center in Ruses

Markan Development, a Bulgarian-Austrian joint venture, is seeking to buy a private or a municipal land plot with an area of 10,000 to 30,000 sq m for the construction of a trade center in Ruse, it was announced after company representatives met with the deputy mayor in charge of investment The municipal official said the company will be invited to bid if a similarly sized land plot is put up for sale. Ruse was picked after company research determined that the region has a dynamic economy with the right business and transportation profile.

Mall developers flock to smaller Bulgarian cities

Seven of the 20 mall-type schemes currently under development across the country are located in cities with less than 200,000 residents, shows Q2 market data of real estate consultants Forton. Four of the mall developments in progress are in Ruse with one each in Kazanlak, Gabrovo and Pleven, said Forton. No less than six mixed-use shopping and entertainment schemes have been announced over the last quarter with locations in Sliven, Kazanlak, Stara Zagora, Haskovo, Burgas ad Blagoevgrad. Shopping mall projects are also taking shape in bigger cities like Sofia, Plovdiv, Varna and Stara Zagora. The profusion of mall projects in the major metropolitan areas has sent developers scurrying for opportunities in understored cities with 30,000 to 60,000 residents. The spate of new mall developments has done little to quell demand for retail space with vacancy rates at just about zero. The yield on retail space properties in Bulgaria has halved since 2002 and now stands at around 6%. The retail space rent costs in Sofia peaked at 1,440 euro/sq m per year in 2005. They have since come down to 1,200 euro/sq m per year. Neither is the office space market showing any signs of a slowdown, said Forton. Some 850,000 sq m of office properties are under construction at the moment with another 800,000 sq m on the drawing boards.The undersupply of Class A office space is keeping vacancy levels at around 3%.

EU report causes a decreаse in foreign investment

There is a risk of recession of foreign investment because of the critical Brussels report on Bulgaria. This was announced by the Economy Minister Petar Dimitrov. He and his deputy Yavor Kuyumdzhiev presented an export strategy for Bulgaria in the period 2008-2013.A decrease in foreign investment by 500 million for the first half of the year compared to the same period in 2007 is already observed, announced Petar Dimitrov. According to him the withdrawal of foreign business will be a much harsher punishment for the country than the already suspended funds. Dimitrov and Meglena Plugchieva have already met with representatives of several Greek banks. Talks with the Bulgarian-American and Bulgarian-German business chambers are forthcoming, the Economy Minister said.At the moment the deficit is 25,5 percent of the GDP, Dimitrov announced.Dimitrov also said he expects the court to declare the metallurgical factory ‘Kremikovtzi" bankrupt so that its sale can be prepared.The first sod of the new nuclear plant "Belene" will be made in August, the Minister added.

German automotive supplier Ixetic to wrap up �18.7 M investment in Bulgaria by spring 2011

 

German automotive supplier Ixetic will wrap up a 36.5 million lev ($29.4 million/18.7 million euro) investment in its factory in Bulgaria by the spring of 2011, a company official said on Tuesday. In 2008 alone, Ixetic will spend seven million euro ($11 million) in the construction of the factory, which began in March and is expected to be completed in December, the managerial agent of Ixetic's Bulgarian subsidiary, Ivaylo Petrov, told SeeNews. The factory, near Bulgarian second largest city of Plovdiv, will produce power steering pumps and vacuum pumps. Ixetic ( www.ixetic.com ), headquartered in Bad Homburg, Germany, produces hydraulic and vacuum pumps and CO2 compressors for air conditioning for the car industry. The company has two production units, in Bad Homburg, near Frankfurt/Main, and in Hьckeswagen, near Cologne, and offices in the U.S. and Japan.

 

 

 

 

 

 

 

 

 

Volkswagen plans to hire up to 800 personnel in its plant in Bulgaria’s Mezdra

 

Volkswagen automaker has enlarged its production in Bulgaria, launching in the municipality of Mezdra a plant for electrical installations for seven brands, Mazdra Mayor Ivan Asparuhov said in an interview with Focus News Agency. The plant has been working for two-three months. Its current personnel are about 370 people and the idea is to hire up to 800. This is the second Volkswagen plant in Bulgaria, the first one being in the town of Karnobat. The unemployment rate in Mezdra will drop as a result, the mayor added.

Factory for Audi & Peugeot to be built in Rousse

The Bulgarian government granted 1.959 million BGN (0.979 million EUR) from the budget for electricity supply of the Industrial part “Rousse”, Bulgaria. The money is needed for the for the implementation of an investment plan of the French company Montupet S.A.Aluminium motor units for world brands such as Renault, Peugeot, Audi and Ford will be made in the car factory. The aim is the base to become the main production section of Montupet S.A. in Europe, writes Standard newspaper.An office which to deal with the search for suppliers in Bulgaria of techniques, equipment, raw materials and consumables is expected to be open as well.

Investment intermediaries await foreign competition

At present, there are 87 investment intermediaries and 26 of them are banks. Out of the 61 non-bank intermediaries, 27 entities have full licences (that is they can carry out deals on their behalf), while 34 have only limited licences (which means they carry out deals on someone else's behalf and may manage portfolios.) During the first quarter of the year, licences for investment intermediaries were granted to Rock Ridge Investment EAD (100% owned by the joint stock company Commercial League - National Pharma Centre) and Leader Invest Ltd. (owned by Svetla Paskaleva and Lyubomir Slavchev). In June, the Financial Supervision Commission issued another two licences - to Astra Investment AD (where the main shareholders are Odessos Holding, with 20%, Fintek, with a 21-percent share and TopPro, that holds another 21%). The second licence went to Balkan Securities. on July 9, a permission for joining the club of investment intermediaries was also granted to Global Markets (still in a process of setting up) whose capital comes to BGN250,000. The entity is run by Pavel Kochalka and Chavdar Dragiev. For comparison, in 2007 the Financial Supervision Commission issued two licences: one to KM Invest and the other - to EFG Securities Bulgaria. There has been only one investment intermediary to renounce its licence: Frontier Finances AD. From the Q1 report of the Financial Supervision Commission, it emerged that a total of 93.48% of the capital of local investment intermediaries is held by Bulgarians, while 6.52% are in the hands of entities registered elsewhere in the EU. Among the intermediaries that are partially or wholly financed from abroad are: TBI Invest (indirectly controlled by the Holland-based TBI Financial Services), KD Securities (owned by the Slovenian KD Holding), CEE Securities (owned by Vojko Odlazek and Miran Mencej), DZI Invest (as part of the Belgian KBC group) as well as EFG Securities Bulgaria (owned by the Dutch EFG New Europe Holding B.V.). Bulgaria's EU membership facilitated the entry of investment intermediaries from the Community on the basis of the common EU passport. At present, the only requirement for a company to start functioning on the local stock exchange is for it to announce its intention to the Financial Supervision Commission. According to information provided by the Bulgarian financial supervisory body, a total of 429 foreign investment intermediaries have so far expressed their intention to operate in Bulgaria or offer their services in the country through open provision of services or through a branch office. Among them are the names of the largest in the sector: J.P. Morgan Securities Ltd, Citigroup Global Markets Limited, Man Investments Ltd, Lehman Brothers Europe Limited, Morgan Stanley Securities Ltd, Goldman Sachs International, Credit Suisse Securities (Europe) Ltd. etc. It should be noted that the foreign entities have announced their expansion to Bulgarian market long ago, but still haven't undertaken practical steps to do so. Market experts say that the big players will have to concentrate on their own liquidity problems or on their restructuring until the larger world markets get more stable. According to analysts, after the crisis settles down, big players will enter Bulgarian market for sure. They will contribute to the competition in the sector and will bring foreign investors with them. Their coming will be marked by consolidation of the local investment intermediaries. According to market participants part of the entities here are not carrying out any activities at present. They cannot offer full range of services (or don't have the required capital for full licence or may have been established to conduct deals for limited circle of persons) and are very probable to be cast out of the market when the process of consolidation begins. However, even at present it is not all piece and quiet in the circles of investment intermediaries. After the tumultuous events that shook the sector last weeks, the managing board of their organisation - the Bulgarian Association of Licensed Investment Intermediaries - was abandoned by three intermediaries: Eurofinance, the First Financial Brokerage House and Bulbrokers. The first two of them had submitted their resignations in mid-July before the general meeting of the association. Karoll, TBI Invest as well as Intercapital Markets replaced them, while Capman, Elana Trading, Beta Corp and Benchmark Finance preserved their positions in the board of the body.

Who pays what for wind energy?

Investment in renewable energy sources such as wind is becoming ever more attractive for entrepreneurs in Bulgaria, data of the National Electric Company (NEK) show. According to statistics, the total capacity of wind power projects in the country amounts to 2,470 mW. Still, the current capacity of actually built wind parks amounts to only 115 mW. As with any other startup business, a number of permits are needed for building a wind park. About a year is needed for smaller projects of 2-3 wind generators, while larger projects require between 3 and 5 years to collect all documents needed, Velizar Kiryakov, chairman of the Association of Producers of Ecological Energy (APEE), said. First, a suitable location has to be chosen and its power generation potential must be assessed. As a further step, the investor needs an environmental impact assessment, a permit by the municipality and a licence by the State Energy and Water Regulatory Commission. The investor must also sign a preliminary contract for the sale of electricity to NEK. only after he gets all permits, the investor may apply for financing. The current price for buying and setting up of facilities is between EUR 1,400 and EUR 1,500 per 1 kW. Return on investment depends on the proper choice of turbines and project location. Provided that there is good project optimisation, an entrepreneur may recoup his investment in 7 to 8 years, Kiryakov said. Bulgaria has promised the EU to boost the use of renewable energy sources to 11% by 2011. However, the country has no clear vision for the development of this sector, representatives of energy distribution company EVN Bulgaria said.

COMPANIES:

 

 

Bulgarian companies rival for $15 billion in Sochi

 

Russia's trade representative for Bulgaria Aleksander Tolimov appealed to Bulgarian companies to partake in the construction of the Olympic village in Sochi. He attended the inauguration of a Bulgarian-Russian business club in the town of Dobrich. Construction projects worth US$14-15 billon will require implementation for the Sochi Olympics in 2014 and all of their funding will be provided by the Russian state alone. Private companies are expected to invest as mush as that. For a forth year in a row the exchange of commodities between Bulgaria and Russia continues to increase. It has now exceeded US$7 billion. To improve economic ties between the two countries, a distribution centre for Bulgarian goods is currently being built in Moscow. What is more, a trial run of the train ferry Varna-Kavkaz is expected to be carried out this September.

 

Bulgarian companies construct 100 000 homes in Jordan

 

The Arab kingdom has invited Bulgarian engineers for the massive construction which will continue for 5 years. This was announced by the socialist deputy Stoyan Prodanov in Yambol, cited by Standard newspaper.The member of the parliament returned from a 7-day visit in Jordan where he led the group for friendship between the parliaments of the two countries. “They gives us fields for the constructions and state guarantees”, boasted Prodanov. The homes are to be built under a program approved personally by the Jordan king Abdullah II. The need for the construction stems from the 800 000 Iraqis who have settled in the country. Most of them were coming with money and seeking where to invest it. The whole electricity system, water supply networks and part of the roads in the kingdom are made by Bulgarians. There live also more than 5 000 graduates who have studied in Bulgaria, reminded Prodanov.Prodanov announced that he would start meetings with the minister of regional development Assen Gagauzov and the Construction Chamber for the preparation of a proposal. Under his initiative, an orthdox church will be built at the shore of the river Jordan. Furthermore, Prodanov has lobbied for the direct air link Sofia-Aman to be restored. The flights were stopped in 2000. It is expected they to be restored before the visit of king Abdullah II in Bulgaria, claimed the member of the parliament.

 

Estee Lauder buys two Bulgarian TV channels for USD 172 M

 

Central European Media Enterprises, which is part of the US cosmetics giant Estee Lauder has purchased 80% of two Bulgarian cable TV channels - TV2 and Ring TV - for the sum of USD 172 M.The news was announced by U.S.Newswire on Tuesday, which points out that the American media company was continuing its expansion in Eastern Europe. The deal for the purchase of TV2, a national cable network launched in November 2007, and Ring TV, a sports cable channel, from the Bulgarian Top Tone Media Holdings Limited is expected to be finalized in two weeks. The Central European Media Enterprises is also going to sign a contract with the Bulgarian media and advertising consultant Krasimir Gergovm, who is the alleged informal owner of the two TV channels on sale. "This acquisition is an important next step in the continuing expansion of our free-to-air broadcasting operations in Central and Eastern Europe. Our entrance into the Bulgarian market represents the first new CME territory in three years... We look forward to entering Bulgaria, which has a dynamic economy and a rapidly growing television advertising market", the CEO of Central European Media Enterprises Michael Garin is quoted as saying.The Bulgarian net television advertising market was approximately US$168 million in 2007 and is forecast to experience a compound annual growth rate of 20% between 2008 and 2012. Bulgaria acceded to the European Union in 2007 and has a total population of 7.6 million, with 70% living in urban environments. CME is a TV broadcasting company with leading networks in six Central and Eastern European countries reaching an aggregate of approximately 90 million people. The Company's television stations are located in Croatia (Nova TV), Czech Republic (TV Nova, Galaxie Sport, Nova Cinema), Romania (PRO TV, Acasa, PRO Cinema, Sport.ro, MTV Romania, PRO TV International), Slovakia (TV Markiza), Slovenia (POP TV, Kanal A) and Ukraine (Studio 1+1, Studio 1+1 International, Kino and Citi). CME is traded on the NASDAQ and the Prague Stock Exchange under the ticker symbol "CETV".

Public companies in Bulgaria allocated BGN 612 M for dividend payments

Shareholders in Bulgarian public companies have so far allocated 611.9 mln leva (312.8 mln euros) for dividend payments, according to data made available to Profit.bg. More than 75% of this sum, or 459.62 mln leva (234.9 mln euros), has been approved by the Bulgarian Telecommunications Company (BTC). Not counting the telco's dividend the total figure is down to 152.29 mln leva (78.17 mln euros). Most of that money will return to the capital market, analysts say. Four companies (one of which BTC) will allocate more than 10 mln leva among investors. 31 companies will be paying more than 1 mln leva. Five companies will distribute less than 100,000 leva – Park REIT, Pleven BT, Metalopak, Mart Bulgaria and SII Properties REIT. BACB, Drujba Staklarski Zavodi and Blagoevgrad BT are the most generous, followed by BenchMark Properties REIT (9.4 mln leva) and Fair Play Properties REIT (8 mln leva). Kaolin and Intercapital Property Development REIT will allocate a little over 7 mln leva, Sopharma will pay 6.6 mln leva. Real estate investment trusts (REITs) account for 29% of the total amount, or 44.529 mln leva (22.62 mln euros) of the total sum (not counting BTC's dividend).

Moody's reduces the credit rating of Kremikovtzi

For the first time this year the credit agency Moody's Investors Service reports more reductions of ratings of Eastern European companies than increases because according to analyzers the financial crisis started in the USA is taking on global dimensions, Bloomberg reports. Moody's have decreased the ratings of four companies, among which are the metallurgical giant Kremikovtzi and the Polish Zlomrex - the biggest supplier of metal scrap for the country.Credit ratings of Eastern European companies will probably continue to decrease because inflation exerts pressure on Central banks to increase their interest rates, which in turn makes it harder for firms to repay their financial obligations.According to Moody's information the ratings of 173 companies have been decreased in the period April-June in Western Europe - over than three times more than those with increased rating.According to economists from the consulting company the credit receivers in some sectors in Eastern Europe are starting to experience the influence of the credit crisis and the slowing global economic growth. Still the ratio good-bad credit remains better than the one in Western Europe.Kremikovtzi's stock was traded at 2.140 BGN at about 12 o'clock or a decrease of 12.653% compared to the levels at the end of BFB (Bulgarian Federal Bank) session in Friday.

25 Bulgarian, Serb exhibitors take part in Vidin Trade Fair

 

Vidin, Northwestern Bulgaria, July 29 (BTA) - Twenty-five companies from Bulgaria and Serbia take part in a trade exhibition opening on Tuesday here. The event was opened by Deputy Regional Governor Martin Donchev. Ten companies from Vidin and Montana and 15 from Zaicar, Nis and Lekosvac take part in the fair. The exhibition is part of a Phare crossborder cooperation project for building of successful practices for economic development in border areas in Bulgaria and Serbia, Secretary of the Vidin Chamber of Commerce and Industry Krassimir Kirilov said. A similar exhibition will be held in September. A catalogue and database of more than 1,000 companies from Bulgaria and Serbia will be set up as part of the project, as well as an Internet site.

Three new companies to compete with BDZ

 

Two Bulgarian and one foreign company will receive a licence as private railway carriers within a month, Simeon Ananiev, executive director of the railway administration agency at the ministry of transport, said. Those are: Sofia-based Gastrade, Unitranscom, based in Bourgas and Austrian Rail Cargo, which will compete with the state-owned railway carrier BDZ in the area of cargo handling. At present, there are two private railway carriers: Bulgarian Railway Company, licensed to transport cargo on the whole territory of the country, and Bulmarket, which owns a regional licence.

NEC & “Atomstroyexport” signed for the construction of NPP Belene

At a working meeting in Belene, Bulgaria, representatives of the National electric company (NEC), “Atomstroyexport”, “WorleyParsons” and Belene municipality have signed a protocol for opening of a construction line of a nuclear power plant. This announced the press center of the municipal administration, cited by BNR.The document was signed by the chief executive director of NEC Lyubomir Velkov, the manager of “NPP Belene” enterprise Yordan Georgiev on the part of the Contractor, the vice-president of “Atomstroyexport” Genadii Tepkiyan – head of “Management of the NPP Belene construction”, the manager of “Atomstroyexport – branch Belene” Sergei Hudyakov, the chief architect of Belene Plamena Agalova and representatives of “WorleyParsons”.On July 10, a protocol was signed in line with which NEC officially gave to “Atomstroyexport” the permit for the construction of NPP “Belene”, inform from the municipality.

 

 

 

 

 

 

 

 

 

ANALYSIS:

 

Bulgaria PM: Country's economic environment is extremely favorable

Publication:  Sofia News Agency

Bulgaria now can be characterized by decreasing inflation and high economic growth, which creates an extremely favorable economic environment for the country, according to Bulgarian Prime Minister Sergey Stansihev.Stanishev spoke Friday before the Parliament during the three-hours long discussion regarding the price hike in Bulgaria. The discussion concluded with the decision that by October the Cabinet should introduce in the Parliament an analysis of the reasons for the price increase.According to the PM, the main factors triggering high inflation rates in Bulgaria were external ones, mainly the price shock rattling the global economic processes and the trading of goods on the world markets.The fact that Bulgaria has the lowest price levels in the European Union is considered by the Premier as the main internal reason for the inflation observed in the country. Stanishev pointed out that due to those levels Bulgaria would continue to experience higher inflation rates than the average in the EU while adapting its income and prices to the EU median.The PM explained that unlike Bulgaria, many countries experience low economic growth and high inflation, which was a troublesome phenomenon, luckily not characteristic for our country. For the third year in a row, the economic growth in Bulgaria is 6%, even 7% for the first trimester of 2008 while only Bulgaria, Ireland and Romania had registered industrial growth in May of 2008, compared with the previous month.Stanichev also made an analysis of the Cabinet's social policy beginning with the retirement pensions. He pointed out that in the last two years they have been increased five times - once each six months thus increasing the retirees' purchasing power. A new mechanism for determining the minimum retirement pension has also been introduced.The PM further explained that the number of families receiving social assistance was constantly decreasing and this reduction had become a permanent trend in the 2005 - 2007 period.Since the beginning of 2007 income in Bulgaria registers high rates of increase both in nominal and real values. The increase rate of the average salary is higher than the inflation one. In 2005 - 2007, the purchasing power had gone up with 27% while in 2007 the total financial wealth of all Bulgarians has reached BGN 31 B.In conclusion Stanishev summarized 15 concrete measures to be undertaken by the Cabinet, despite the decreasing inflation.Among them the most important are: realisation of a budget surplus of 3% from the Gross Domestic Product (GDP) for 2008, a budget expense ceiling not higher than 40% of the GDP, introduction of a new Law for the Protection of the Competition, increasing the internal audit powers for the control of the budget, binding financing with achieved results, determining the risk companies and market segments on a national level and their regular monitoring.

 

 

 

 

 

 

 

 

Kolchev: Brussels and Sofia are speaking different languages and that pushes foreign investors away

Publication: Profit.bg

 

“Foreign investors are going to flee the Bulgarian capital market if Brussels and Sofia do not find a way to communicate with each other,” Kamen Kolchev, chairman of Elana Financial Holding said in an interview for Profit.TV. „The market has been hitting new lows in the past several months. If the negative trend continues as a tendency that will really hurt,“ Kolchev also said. In his opinion, the reasons for such a negative scenario may be both external economic factors as well as local.„Fortunately our stock exchange is not that much dependent on external economic factors,“ he added,“As fas as political factors are concerned, they surely have an impact, which is indirect and rather affects foreign investors' attitude.”We saw a withdrawal of foreign investors once, due to the crisis in the West, and now we are seeing this for the second time. “This is not happening because of a political or economic instability in the country, but because of the lack of dialog between Sofia and Brussels,” Kolchev said.In his opinion , the declining turnovers cannot be entirely blamed on the new trading system Xetra, as this has been continuing for a long time now. It is rather due to the falling stock prices and the international crisis. The summer months are generally a very slow period for the market, which is another reason. „Elana Financial Holding is ready to be listed on BSE. Right now everything depends on the market situation,“ Kolchev said.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

State grasps pharmaceutical monopoly

Publication: Banker Weekly English

 

Bulgaria is one of the few EU countries to rule each sector of the pharmaceutical market through regulations. The biggest problem, however, comes from the model one-pharmacist - one pharmacy" that was introduced more than a year ago and which gave reason to the European Commission to announce it intended to include Bulgaria in the suit against Italy, Austria, Spain, France, Germany and Portugal. The letter announcing the possibility for adopting this measure of last resort was received last week by the Association of Pharmacy Owners in Bulgaria which is a side in the lawsuit and had previously signalled the Commission over the case. In fact, Bulgaria now has two months to do away with this requirement in the Medications Act. The latter, however, was pronounced unconstitutional and was repealed by the Constitutional Court in Bulgaria a few days ago. At present, in the country there is no regulation with regard to opening new pharmacies. A study carried out by the Dutch consultancy agency ECORYS and the University of Maastricht in 25 of the EU member states showed that in 14 of them there is no requirement drugstores to be owned by pharmacists. In the countries where there is such a requirement, pharmacists may own up to five stores and nobody regards this as monopoly. Thus, the probability Bulgaria to get away only with a note is very high. But the move that Brussels has initiated may relaunch another serious debate - the one for the prices of medications. There are certain levels, set by an ordinance of the Healthcare Ministry, and nobody can sell drugs at higher prices. It is only in Bulgaria and in four other EU countries that these regulations affect also the drugs that are sold without prescriptions, that is medications the state does not pay subsidy for. Chemists say such a regulation was useless because the competition on the market would perfectly do this job. "Medications that are sold without prescriptions are among the most sought after on the market, traders order large quantities of them and are able to get discounts from distributors", Nikolay Kostov, chairman of the association said in an effort to explain why pharmacists' guild disagrees with price limitations on these medications. Entirely different is the reasoning of the Bulgarian Pharmaceutical Union that has been insisting on fixed prices for medications for quite a while now. They want unified prices so that clients stop going from a chemist's to a chemist's (and even from town to town) in search of lower prices. This proposal was not to the liking even of the state, because it would put an end to the competition. For the same reason this model is avoided in most of the countries in the Union. According to a survey ordered by the European Commission, there are fixed prices only in Finland, Greece, Italy, and Sweden while in other six countries (Denmark, Germany, Ireland, Slovenia, Spain and the United Kingdom) this is the practice only with respect to the prescription-sold medications. That is why the wise thing to do now in Bulgaria would be to cut VAT rate on drugs to below the present 20-percent level. The proposal was first made around a year ago, but since then there was a severe discussion concerning the scope of the reduction, and the Parliament left this question unsettled. With the Government having acknowledged healthcare sector as its priority, this topic is back on the agenda. Irrespective of the state regulations, a lot of rules are created by the pharmacists' sector organisations. In the code for good pharmaceutical practices, there are requirements for minimal working area of the pharmacy, ways of storing drugs, opening hours and the number of staff. one of the pharmaceutical union's revolutionary ideas was to forbid all advertisements in retail units. Due to the criticism against Bulgaria regarding the ownership requirement for pharmacies, the idea was not met with enthusiasm in the ruling circles. In order to preserve the competition in the sector, the state is even mulling over whether to revoke the union's right to issue permits for opening new pharmacies and transfer it to the state. In general, every country in the EU has the freedom to decide what kind of regulations it may impose on the pharmaceutical industry. The conclusions from the survey of the European Commission show, however, that restrictions cause losses not to traders but to patients, because as a rule they have a negative effect on the services on offer. Quality services, on their turn, are offered by pharmacies that can provide different services, including consultations from a pharmacist. Chemists would do best if they have freedom to run their stores as they wish. According to ECORYS, a reduction in the operational restrictions would increase the productivity of the pharmacies by 40.1% and will raise their effectiveness from the current 54% to the more acceptable 94 per cent.