불가리아 주요 경제뉴스 (8 – 22 AUGUST 2008 )

BULGARIAN ECONOMIC TOP NEWS DIGEST

WEEKLY REPORT ( 8 – 22 AUGUST 2008 )

 

 

 

Sections/headline briefs:

 

 

MACROECONOMY:

 

·        Bulgaria second in export increase in the EU

·        Japan's export to Bulgaria increases by 213%

·        Bulgaria's export to Arab countries hits a record

·        Foreign trade of agricultural products rise 11.2% for 2006

·        Inflation outpaces income

·        Bulgarian salary - lowest in the EU

·        Burgas to develop industrial zone

·        Automobile sales up by 20% in 2008

·        Bulgaria harvests 1.6 mln tons of premium wheat

·        KRZ Port Burgas plans grain terminal

• Price of Nabucco goes up by 80%

·        Bulgaria & China to strengthen military cooperation

·        Real Estate agencies go bankrupt

·        EIU: Bulgarian GDP growth to slow down to 5.9 % by 2010

·        Mining industry seeks help from Europe

·        Bulgaria's trade balance with non-EU states at negative BGN 4,88 B

·        Bulgaria's trade with Romania booming

·        Bunge to export 15-20,000 Tonnes of vegetable oil to Bulgaria

·        Telecommunications make up 6% of Bulgaria's GDP

·        Sofia Airport handles 300,000 passengers in July

·        Kozloduy nuke makes record in power generation

 

 

 

 

 

 

 

INVESTMENTS:

 

·        Central and Eastern European investment activity slows down in H1

·        Bulgaria's foreign investments down 18% in first half of 2008

·        Foreign Investments in Bulgaria stand at � 25 B for 12 years

·        Foreign buyers eye Plovdiv area arable land plots

·        Danish firm to invest in wind turbines near Rousse

·        Bulgarian Tesy to build retail centre in Shumen

·        New-age refinery to be built near Shoumen

·        Dekotex to invest � 35 M in Sliven

·        Greek Company Invests BGN 4 M in new cosmetics factory in Ruse

·        Oman Investment Fund to build in Bulgaria

·        Peshtera municipality to build sports auditorium

·        IFC invests � 15 M in farmland fund Advance Terrafund

·        Zarneni Hrani invests � 20M in installation

 

 

COMPANIES:

 

·        Japan's Brother Industries Bulgarian unit sees sales rising by 30% yearly until 2012

·        Bulgarian Unit of Japan's Yazaki Denies Plans To Build Second Plant in Bulgaria

·        Ecobulpack to launch new recycling facility in Sofia

·        Lukoil reduces fuel prices

·        Electric company to increase prices in 2009

·        U.S. Direct Petroleum Exploration posts positive initial resluts in Bulgarian gas well

·        57 Rouse Companies to Have Business Licenses Revoked

·        Record high output in Maritza Iztok mines

 

 

ANALYSIS:

 

·        Oxford Business Group report 'Bulgaria 2008'

 

 

 

 

 

 

 

 

 

Articles:

 

 

MACROECONOMY:

 

Bulgaria second in export increase in the EU

The trade balance of the Euro zone towards the rest of the world for June 2008 is 100 million Euro deficit according to information of the statistics agency in Eurostat. In May the deficit was 3.9 billion Euro. In June export has increased by 1.4%, while import - by 2.9% compared to the previous month.For the period January-May 2008 Bulgaria registered a 26% increase of export and import compared to January-May 2007.Regarding the increase of export, from 5 billion to 6.3 billion, although the amounts are much smaller, Bulgaria is second in the European Union after Lithuania (33% increase).Regarding the percentage increase of import (from 8.1 to 10.2 billion), however, Bulgaria is first, money.bg comments.Most significant is the deficit of the European Union in the "Power Engineering" industry - 148.6 billion Euro for the period January-May 2008 compared to a little over 100 billion for the same period in 2007, Eurostat data shows.

Japan's export to Bulgaria increases by 213%

 

Bulgaria has registered a very serious jump in the import of Japanese goods. Over the past twelve months, the amount of goods imported from Japan has increased by 213.5%, mostly due to the increasing demand for Japanese cars in Bulgaria. Last year, Toyota was the best-sold car make in Bulgaria. The increasing demand for air-conditioned cars in Bulgaria further encourages the import from Japan.Of the EU countries, Bulgaria has the highest exchange of merchandise with Germany. In the period January-May, the import of German goods in Bulgaria increased by 15,7%, up to 2.317 billion levs (1euro =1.955 levs), whereas the export to Germany increased by only 3.1%. At the end of May, Bulgaria reported a negative foreign trade balance of 7.56 billion levs, which is by 27.8% more than it was last May.

Bulgaria's export to Arab countries hits a record

Bulgaria's export to Arab countries for the first six months of 2008 marks a record growth. Information provided by the National Statistical Institute based on statistical data for January-June 2008 shows that exports to Saudi Arabia increased 20 times and to the United Arab Emirates, 10 times. Bulgaria's export to India has grown nearly 3 times, to Vietnam - over 3 times, to Georgia - over 2 times. The foreign trade deficit for the analysed period reached 4,193 billion euro. Bulgaria's exports (FOB prices) totalled  759 billion euros and the imports - 11,752 billion euros.  According to statistics, exports increased by 35%, imports  - by 39,9%.

 

 

Foreign trade of agricultural products rise 11.2% for 2006

 

Foreign trade of agricultural products rose 11.2 per cent year-on-year to 310 million Bulgarian leva for 2006. The tendency of increasing the agricultural products trade is preserved, said an annual report on the status and development of agriculture (Agriculture Report 2007) to be discussed on Thursday at the regular meeting of the Council of Ministers.At current prices, the 2006 gross produce of the agricultural sector was 7,107.9 million leva. The relative share of plant-growing is 50.5 per cent, of animal-breeding 31.4 per cent and of the agricultural services and other non-agricultural inseparable activities 18.1 per cent. The gross value added (GVA) generated by the agriculture and forestry sector was 3,415 million leva or 8.6 per cent of the total GVA of the country's economy. However, the sector registered a year-on-year drop of 1.9 per cent of the GVA's physical volume.The report covers the status of the subsectors of fishery, viticulture, wine-producing and of the forestry sector. Information about the activities performed in the field of plant protection, veterinary activities, selection and reproduction, research and advisory activities in agriculture was presented.The document provides also information on the financial support of farmers.The priorities and the objectives of the agricultural sector and the activities for their achievement in 2008 represent an inseparable part of the annual report. Funds required for their achievement are pointed out as well.

Inflation outpaces income

According to statisticians in June the income of the average Bulgarian household is 689.36 levs. The average for a person in the household is 277,85 levs. In June 2007, however, things were much worse. The average Bulgarian household received 614.09 and the average for a person in the household was 243 levs.Consequently, the income of Bulgarian households has increased by 12.2% for a year. We remind you that according to the latest data inflation in Bulgaria is 14.2% on a yearly basis in June. Thus, inflation outpaces household income by 2%.If we take a look at consumer spending, we will see that on food and non-alcoholic beverages the average Bulgarian household spends 246.53 levs (36.6%). on alcohol and tobacco people spend another 4.5% of their finances or about 30 levs.On housing expenses (water, electricity etc) in June 2008 households spent 80.04 levs or 11.9% of the entire budget. After July 1 2008 the prices of water electricity and central heating in Bulgaria were increased so that we may expect higher percentages and higher bills.On transport households spend 53.62 levs (8%, considerably more than 2007 when expenses were 6.3%), on health care 30.31 levs (4.5% as much as the sum on alcohol and cigarettes), on clothing and shoes 21.31 levs (for the entire household).The conclusion is, and it should not come as a surprise to anyone, that in order to finance the increased spending on food and transport, the Bulgarian citizen must sacrifice clothing and entertainment.

Bulgarian salary - lowest in the EU

It turns out that the income of Bulgarian citizens is not only the lowest in the EU, but is lower than those of citizens of countries outside the Union, like Croatia. The average salary in Bulgaria is almost two times lower than those of Romania and almost 19 times lower than those of Germany, data from a survey carried out by the Federation of European employers shows.The countries with the highest salary levels are Denmark, Switzerland, Norway, Lichtenstein, Germany and Luxembourg. At the bottom are Spain, Greece and Portugal. In fact the average weekly income of Portugal is only 28% than that of Germany.In Bulgaria a worker in the private sector earns 1,2 Euro per hour, while in Romania - 2,2 Euro. The survey shows that the minimal salary in Bulgaria is 110 Euro, which is about 13 times lower than that of British citizens.Slovenians are the best paid citizens among the new members of the EU. They earn almost 6 Euro. After them come Croatians and Czechs, who earn about 5 Euro per hour.Despite the low expenses of labor, Bulgaria is not among the most attractive countries for investment mainly because of the low qualification, the lack of qualified specialists and the low level of labor organization.The threat for the Bulgarian economy, as well as for the economies of other countries from Eastern Europe, is the Asian labor markets, where the labor force is cheaper and with comparatively high labor output. India and China are among the countries, whose citizens earn less than 1 Euro per hour.

 

Burgas to develop industrial zone

The municipality of Burgas has earmarked a land plot that will be developed into an industrial park, said the local government. The project, funded by EU's Phare program, is expected to boost the inflow to the area of foreign invest and will bolster the regional economy, said Burgas mayor Dimitar Nikolov.

Automobile sales up by 20% in 2008

According to data by the Association of automobile producers and their authorized dealers, over 35000 new automobiles have been sold in the first seven months of 2008. The new automobiles that have been sold in the internal Bulgarian marker for the period January-July 2008 are 32 844, new motor cycles - 488, new autobuses and trucks - 2651.For the same period in 2007 the total umber of new motor vehicles sold is 29 381, therefore on a yearly basis sales in Bulgaria have increased by over 20%.In the automobile market the competition is yet again won by OPEL with 11.09% market share of all new automobiles. Toyota comes second with 9.78% market share."Volkswagen" is third, "Ford" fourth; significant are the sales of "Peugeot", "Dacia" "Citroen", "Skoda", "Chevrolet", "Renault". 450 are traditionalists, who have purchased "Lada".

 

Bulgaria harvests 1.6 mln tons of premium wheat

At least 1.6 mln of Bulgaria's 4.3 mln ton wheat crop harvested this year is of premium quality, said Zlati Zlatev, director of the government's grain executive service.The government official dismissed as untrue earlier reports that as much as 80% of the wheat crop was only good enough for animal feed and the country would have to import quality wheat.Domestic consumption has fallen over the last couple of years to 850,000 tons.Laboratory testing has determined that 1.5 mln tons of this year's crop meets bread production standards. It will be mixed with 100,000 tons of fodder wheat to achieve the desired quality, said Zlatev.The record harvest has depressed domestic prices, more or less keeping a lid on commodity trading in the first month after the 2008 crop came to the market.After Bulgaria joined the EU, the Agriculture State Fund no longer subsidises grain storage. Farmers have to sell immediately to secure cash for the fall sowing.Wheat exports also remain sluggish despite a recent farming ministry statement that over 200,000 tons of wheat and barley had been shipped broad in a month.Deputy farming minister Svetla Bachvarova has said wheat exports could top 2 mln levs but could be bottlenecked by the limited cargo handling capacity of Bulgarian ports.

KRZ Port Burgas plans grain terminal

KRZ Port Burgas, which operates a port facility in Burgas, on the Black Sea, said annual cargo traffic is seen flat year-on-year at 187,000 tons in 2008.2008 is only the second year in which the port has been offering cargo handling. It previously operated as a ship repair yard.The port started processing grain shipments this year and plans to build a dedicated cargo terminal. It has so far processed over 10,000 tons of grain for export.The port plans to extend its quay wall 180 m to the west, increasing the harbor area to 3.0 ha. The quay will accommodate three 125 m mooring berths.The expansion project has been approved by the environment ministry.The design work and the talks with potential creditors and contractors will begin as soon as the company obtains the necessary permits, said executive director Veselin Statev.The project should be completed within three years.

Price of Nabucco goes up by 80%

The expenses on Nabucco pipeline project will exceed the anticipated sum by more than 80%. The investments will reach 7.9 billion euro; by now figures between 4.2 and 4.5 billion euro were mentioned. The pipeline has a capacity of 31 billion cubic meters. It is expected that the Caspian gas will pass via Turkey, Bulgaria, Romania, Hungary and Austria - the route will be 3,300 kilometers long. A market research shows that the demand for gas highly exceeds the pipe's capacity, announced sources from Nabucco Gas Pipeline International, the manager of the project.It is expected that the pipeline will be ready in 2013. The survey was made among speditors for supply under unbinding conditions. The Austrian OMV, Hungarian MOL, Romanian Transgas, Bulgarian Bulgargas, Turkish BOTAS and German RWE are the shareholders in the project.

Bulgaria & China to strengthen military cooperation

Chinese Defense Minister Liang Guanglie pledged here on Monday the Chinese armed forces would strengthen cooperation with the Bulgarian military to raise ties.Liang, also a state councilor, made the remarks in a meeting with his Bulgarian counterpart Nikolay Tsonev.He called on the Chinese and Bulgarian armed forces to make joint efforts in contributions to safeguarding world peace and stability.He added the China-Bulgaria military-to-military friendly ties have been continuously deepened in recent years, with frequent high level visits and extensive cooperation in various areas. He said the Chinese People's Liberation Army (PLA) would continue to promote such cooperation.Liang hailed the good relation between the two countries, citing traditional friendship, enhanced mutual political trust and fruitful cooperation in economy, trade and other fields.Tsonev said Bulgaria had always attached great importance to keeping a good relationship with China, and he was glad to see the relation between the two armed forces making remarkable achievements.He hoped the two sides would continue to strengthen friendly exchanges in various fields, such as training.He reiterated Bulgaria's adherence to the one-China policy, saying the Bulgarian government considered Taiwan and Tibet as inalienable parts of the Chinese territory.Tsonev and his delegation members were here to watch the Beijing Olympic Games.

 

 

Real Estate agencies go bankrupt

Thousands of Varna brokers that deal with vacation homes stopped work in the last months, "Narodno delo" writes.The number of bankruptcies is increasing, the local association of real estate signals. The number of working firms in the industry is expected to decrease significantly by the end of the year, experts forecast. According to them this tendency started after the ascending period of real estate deals.The crisis on the local market was felt the most in the sales of vacation homes. This is why mostly agencies that have concentrated in this market are declaring bankruptcy, people from the association explained. The negative influence on deals is mainly exerted by the decrease of British, Irish buyers, the over-construction on the Bulgarian coast, which put off many potential foreign clients.There are 500-700 agencies in Varna. Bankruptcies affect not only the so-called domestic brokers and small dealers, data shows. Some comparatively big companies, that service Western European clients, are already facing the same problems.

EIU: Bulgarian GDP growth to slow down to 5.9 % by 2010

The Bulgarian economy remains dependant on the west-European markets and on the global economic slowdown, shows a recent report of Economist Intelligence Unit (EIU). The Bulgarian GDP growth will ease to 5.9 pct through 2010 and to 3.0 pct in 2010-2030, the report said. The slowdown will start in 2008 when the GDP growth will fall to 6.1 pct. Bulgaria`s economic growth is helped by surging domestic consumption which boosts the import of goods and services. However, private sector consumption shrunk to 5.1 pct in 2007 from 8.5 pct in 2006. Despite the active lending and the rising employment, EIU has projected a humble 5.0 pct rise in private consumption in 2008. In the next years this growth will shrink to 2.0 pct. The global credit crunch, which will sooner or later put an end to Bulgaria`s lending expansion, as well as Bulgarian demographic crisis will have a negative effect on the country's economic growth, EIU said.

Mining industry seeks help from Europe

Even before appearing in the state gazette Darzhaven Vestnik, more than 100 companies, members of Bulgarian Mining Chamber (BMC) with president Lachezar Tsotsorkov, declared that changes are needed in the new mining sector. According to the branch, it is written mainly by office workers in the Ministry of Environment and Water and solves none of the already existing problems, on the contrary: it creates new for the investors.
That is the reason for BMC to ask an expert examination of the law to be made by EUROMIN - the European organization of mine industry. Our expectations are our arguments to be taken into consideration and evaluated and the opinion or the European institutions to help the changes in the decisions in the law that hinder business, Tsotsorkov said. Without explanation the Parliament's Commission on Environment rejected the proposal of the mining sector for an integrated centre for issuing licenses for prospecting and extraction. At present, three ministries administrate mining activities: the Ministry of economy and energy, the Ministry of regional development and public works and the Ministry of environment and water. This only dilutes the responsibility among them. Another issue still not clarified is lack of terms in mining and processing. We insist for greater transparency, as natural resources are national wealth, Tsotsorkov commented.

 

 

Bulgaria's trade balance with non-EU states at negative BGN 4,88 B

 

Bulgaria's trade balance with non-EU countries stands at minus BGN 4,88 B in the first half of 2008, according to the preliminary data of the National Statistical Institute.Bulgaria's exports to non-EU states in January-June 2008 amounted BGN 5,993 B, which is a 35%-increase compared to the same period of 2007. Its imports were BGN 10,87 B, which is a growth of 39% compared to the first six months of 2007. In the first half of 2008 Bulgaria's exports to Saudi Arabia grew 20 times, whereas its exports to the United Arab Emirates grew 10 tens compared to January-June 2007. Its imports from states like Georgia, Syria, and Japan have grown significantly. In its trade with Russia and the Ukraine combined Bulgaria has a negative trade balance of almost BGN 5 B. Bulgaria's exports to Russia was BGN 462,3 M, whereas it imported goods for BGN 3,4 B, much of which is oil and natural gas. Bulgaria's exports to the Ukraine amounted to BGN 147,6, whereas its imports from there were BGN 2,2 B.

 

Bulgaria's trade with Romania booming

 

The bilateral trade between Bulgaria and Romania has reached a record high, the Standart Daily newspaper points out Tuesday citing recently released data of the National Statistical Institute. In the first five months of 2008 Bulgaria's exports to Romania increased by 70% compared to the same period of 2007 to reach BGN 718 M. At the same time, however, Romania exported to Bulgaria goods for BGN 1,149 B, which is a growth of almost 80% compared to January-May 2007. According to Standart, the Bulgaria's negative balance of BGN 431 M with Romania is due to the expansion of the Romanian petrol industry, cigarettes, and car manufacturing on the Bulgarian market. The Rompetrol oil company has opened dozens of gas station in Bulgaria, and the Romania brand of cigarettes "Viceroy", and cars "Dacia" are said to be becoming more popular in the country.

Bunge to export 15-20,000 Tonnes of vegetable oil to Bulgaria

Bunge Romania, the leader on the Romanian vegetable oil market will start to export approximately 15-20,000 tonnes of vegetable oil to the Bulgarian market in September this year, that is almost 8% of the total oil production of Romania, Ziarul Financiar reported.At an average shelf price of 5.8 RON, this means Bunge will get approximately 116 million RON (32 million euros) from the production allocated to Bulgaria, according to ZF estimates. Taking into account the average ex works price (VAT not included), the value of sales stands at about 15 million euros."The factory in Buzau has a high enough capacity to cover both the domestic needs of vegetable oil of Bunge and the needs of Bulgaria," Michael Whitney, general manager of Bunge Romania said. He did not reveal, however, the production capacity of the facility Bunge has in Buzau.Romania's vegetable oil market is put at approximately 250,000 tonnes a year, which means that almost 8% of the domestic oil output will go to Bulgaria.

 

 

 

 

 

 

Telecommunications make up 6% of Bulgaria's GDP

 

Bulgaria's telecommunications sector comprises 6% of the country's GDP, according to data of the Communications Regulations Committee. This gives the telecommunications an equal share with the agriculture in the composition of Bulgaria's gross domestic product.In 2007 the telecommunications market in Bulgaria had a volume of BGN 3,358 B, which is an increase of 11% compared to 2006.

Sofia Airport handles 300,000 passengers in July

Sofia airport serviced a total of 297,873 passengers in July, up by 17 % compared to the corresponding period of 2007, when passenger traffic at the airport stood at 254,468 passengers. The airport handled a total of 9,336 passengers on July 29, which turned out to be last month's busiest day. The Sofia airport registered an increase of 32% in the number of international charter flights. The number of passengers on such flights handled by the airport rose by nearly 45% compared to the corresponding period of 2007. Foreign companies accounted for 88% of the international charter flights to and from the airport. London was the most preferred destination from the Sofia airport with a record-high 41,000 passengers in July, up 50% year on year. The Sofia-Vienna destination ranked second with 25,300 passengers in July, which represents a 15-percent year on year increase. A total of 20,800 passengers traveled to Frankfurt last month. The passenger traffic on domestic destinations went up by 45% in July 2008, compared to July 2007. The cargo shipments handled at the Sofia airport in July rose by 8% to 1,703 tonnes.

Kozloduy nuke makes record in power generation

 

Kozloduy NPP set another electricity generation record.The planned 10.2 million MW that had to be produced for nine months were produced by August 20, 41 days earlier. By the end of September the NPP will produce 11.2 million MW more.This achievement resulted from shortening the repair works of the fifth unit that started functioning in advance.The sixth unit that will be stopped for its annual repair worked at 82% of its capacity.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INVESTMENTS:

 

 

 

Central and Eastern European investment activity slows down in H1

Central and Eastern European (CEE) investment activity in the first half of 2008 (H1 2008) decreased to 5.9 bln euro, a 14% decline from the same period in 2007 and 24% down from H2 2007 results, real estate services provider CB Richard Ellis said in an investment market report. Closing transactions now takes longer and has become more difficult. one of the reasons for this is that banks have become more restrictive in their lending policies. The number of purchasers is declining as listed property companies feel the impact of declining share values, said the report. Compared to the overall European slowdown in investment activity, market activity in CEE remained relatively high in H1 2008. Compared to the same period last year, European investment turnover fell 49% in H1 2008 to a level of 63.4 bln euro. CEE real estate investment activity now accounts for 9.3% of total pan-European investment activity. This is significantly higher than 2007 levels (6.0%), said the report. The Bulgarian real estate investment market had a strong first half of 2008, with 20 deals recorded worth 745 mln euro – almost 85% of Bulgaria’s total investment volume in 2007 and 29% growth compared to H1 2007, said the report. Unlike in most other CEE markets, Sofia has not experienced prime yields decompressing thus far. Bulgarian investors accounted for more than half of investment volume in Bulgaria in H1 2008. A strong development market, especially in the office and retail segments, is likely to be a driver of continued demand for investment products in Bulgaria, said the report.

Bulgaria's foreign investments down 18% in first half of 2008

The foreign direct investments in Bulgaria during the first six months of 2008 amounted to EUR 2,078 B, which is 18% less than in the same period of 2007. This becomes clear from the preliminary data of the Bulgarian National Bank, which also announced its revised data for 2007.According to them foreign direct investments (FDI) in Bulgaria in January-June 2007 were worth EUR 2,537 B, which EUR 34 M more than the preliminary data for the period. Bulgaria's total FDI in the first half of 2007 amounted to 8,8% of its Gross Domestic Product, whereas the FDI in January-June 2008, which are EUR 459 M smaller, are 6,3% of the GDP.

Foreign Investments in Bulgaria stand at � 25 B for 12 years

The foreign investments in Bulgaria for the last 12 years stand at some 25 billion, a check up of Profit.bg shows. According to BNB data, while the investments in 1996 amounted to 137 million, in 2007 they reached the record-breaking 6.1 billion euro.For the seventh year in a row, i.e. since 2002, there has been a constant annual growth. In 2003 and 2006 this growth reached almost 90%.Only in the last two years Bulgaria attracted 12 billion euro direct investments and in the last three years the sum exceed 15 billion euro.The investments in 2008 are expected to stand at more than 7 billion euro, announced Minister of Economy and Energy Petar Dimitrov.

Foreign buyers eye Plovdiv area arable land plots

Foreign investors are shifting their interest from holiday apartments and country houses to Bulgaria's stock of arable land, said Gidas, a real estate agency specialising in the farmland market. Potential Polish and Greek buyers are currently looking for attractive farmland plots in the Plovdiv area, said Gidas manager Gencho Dechev. Depending on location and soil quality, arable land in the Plovdiv area sells at 0.50 to 1.20 levs/sq m versus 1 to 3 euro/sq m in neighboring Greece. Local and prices in countries like Greece and Italy are on a convergence course, said Dechev.

Danish firm to invest in wind turbines near Rousse

Vestas Windsystems A/S, a leading Danish company specialising in the production of wind turbines, has announced plans to invest in Rousse, investor.bg reported.Currently, the company is analysing possibilities for bringing their environmentally-friendly concept of electricity production to Bulgaria, investor.bg quoted town hall officials as saying.The company is looking to either buy or rent a land plot between 10 and 15ha along the Danube River coast. It also intends to hire 200-300 well-trained specialists such as welders, blacksmiths, painters and electricians.According to company statistics, Vestas Windsystems holds 23 per cent share from the wind turbines world market. It was found in 1979 and today employs 15 000 people. So far, it has more than 35 000 turbines installed in 60 countries.

Bulgarian Tesy to build retail centre in Shumen

Bulgarian household heating appliances maker Tesy plans to build a modern retail centre in the northeastern town of Shumen, Dnevnik daily reported on August 19, 2008. Tesy owner, Zhechko Kyurkchiev, presented the investment plans to the local municipality, which cleared the project. The construction works will take 24 months to complete, once the contract is signed. The initial plans are for an eight-storey building. The company will have to pay 1.25 mln Bulgarian levs ($946,000/642,000 euro) for the plot, after going through a sales procedure. The investor (www.tesy.com) pledged to build a 70-car parking lot for municipal use, as well as to prepare a project for a pedestrian overpass to link the retail centre and the Simeon Veliki Boulevard. Tesy`s retail centre is the second mall project in Shumen. In two years Israeli Plaza Centres will build a three-storey shopping centre in the town on a 29,000 sq m plot.

New-age refinery to be built near Shoumen

Mega Group, a joint-stock company, has announced plans to invest 100 million euro towards constructing an oil refinery in the town of Smyadovo, near Shoumen, Stroitelsvo Gradut weekly reported. The project, according to the company’s management,   complies with European Union and Ministry of Environment and Water Affair regulations regarding the traffic, deposit and recycling of oil waste and petroleum processing.This is the first such eco-friendly facility in Bulgaria in which production will not lead to soil and water pollution. The refinery will be built on the premises of Smyadovo’s old chemical factory, the weekly reported. Mega Group is in the process of selecting a business partner. So far, Israeli companies have expressed an interest in investing in the logistics of the future refinery. Its capacity will reputedly be around 1.5 tons annually, of which oil processing comes to 1.25 tons and oil waste comes to 250 000 tons. Most of the refinery’s production will be exported to neighbouring countries and the EU.The project is scheduled to be completed in three years and will involve three stages of production capacity. Construction work has already begun, the weekly reported. The first stage should be attained by the end of the year with actual production of 180 000 tons. The second stage is due in 2009 with annual production of 450 000 tons. The third stage will be completed in 2010 with 1.5 million tons of production. The Bourgas-based company of Promishleno-montajno upravlenie (Industrial-Assemblage Management) has been entrusted with constructing the refinery on a land plot of 72 ha. Mega Group is a company active in the trade of oil products as well as property and industrial investments.

Dekotex to invest � 35 M in Sliven

The mayor of Sliven and the investor Dekotex started a project to build Twida Gardens residential complex. The construction will be carried out in three stages and will finish in 2014. The complex will be located on 80,000 sq. m and will offer luxury buildings: apartments, houses, office, sports and recreation spaces. The business space has floorage of 6,000 sq. m. There will be 70 residences for needy families.

 

Greek Company Invests BGN 4 M in new cosmetics factory in Ruse

 

The Greek firm Septoma is going to invest BGN 4 M into the construction of a new cosmetics factory in the free economic zone of Bulgaria's Danube city of Ruse. The new factory will be located on a plot of 85 decares owned by the company, which is close to the Danube Bridge connecting Bulgaria and Romania. About 100 people will be employed at the plant once it is ready. The firm has had manufacturing operations in Ruse for three years, and is satisfied with its results.The Athens-based cosmetics company Septoma was founded in 1979.

Oman Investment Fund to build in Bulgaria

Oman Investment Fund (OIF), the state fund of Oman has bought grounds for construction in Bulgaria, Oman Daily Observer announced. Details of the deal are not mentioned but the company is famous for investing in share and real investments and recently has geographically increased its influence. OIF is the second Oman fund to invest in Bulgaria after the state reserve fund of Oman joined the Super Borovets project last year.

 

Peshtera municipality to build sports auditorium

The municipality of Peshtera has taken out a 2.25 mln euro investment credit to build a new sports hall and replace the water pipes on four street, said the local administration. Some 1.2 mln levs form the new credit will be used to refinance an outstanding loan facility contracted by the municipality in '07.

IFC invests � 15 M in farmland fund Advance Terrafund

 

The International Financial Corporation (IFC) has invested EUR 15mn in the local agricultural fund Advance Terrafund. The Fund is operating a 150% (EUR 33.7mn) capital hike to EUR 56.2mn at present and IFC will subscribe 25% of the new shares. Advance Terrafund expects to raise EUR 63.9mn from the local stock exchange to finance a twofold increase of the land portfolio of the fund by end-2009 and to cover a EUR 15mn bridge loan provided by the National Bank of Greece through its unit in London . A total of 75% of the portfolio of Advance Terrafund is held in agricultural land. Advance Terrafund owns 245,000 decares of agricultural land at present valued at more than BGN 100mn (EUR 51.1mn).

Zarneni Hrani invests � 20M in installation

Zarneni Hrani invests EUR 20 million in new installation for production of biodiesel. The capacity is 100,000 tons a year and that will meet 60% of biodiesel consumption in the country. Bulgaria produces agricultural crops several times more than the country needs and the alternatives are two: either to export them unprocessed or to process them in the country, which serves Bulgaria's interests.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

COMPANIES:

 

Japan's Brother Industries Bulgarian unit sees sales rising by 30% yearly until 2012

The Bulgarian unit of Japanese printing solutions provider Brother Industries Ltd plans to raise its sales by one-third each year until 2012 and raise its market share as part of the global strategy of its parent, a company official said. Brother's Global Vision 21 strategy targets a doubling of the company's current global annual turnover to $10 billion (6.8 billion euro) in 2012. Southeast European markets are expected to grow faster than saturated Western markets in the medium to long term. Brother Bulgaria will aim to maintain a 30% annual rise in turnover," Brother Bulgaria general manager Ivo Apostolov told SeeNews in a recent interview. Brother Bulgaria plans a 25% rise in turnover to 2.0 million euro ($2.95 million) in 2008, targeting the higher price segment.

AN EUROPEAN PLAYER

Brother, a typical Japanese industrial fairy tale that has started repairing sewing machines 100 years ago and now develops high-tech products like wireless multimedia glasses, was the market leader in the multifunctional devices in Europe with a 23.1% market share for 2007.Brother was closely followed by Samsung, a very dynamic market challenger that is quickly expanding its products portfolio and targeting the most popular low-price segment, Apostolov said. The Japanese company is a distant second in printer sales in Europe with 14.2% market share for last year, compared to 47% for HP, according to Infosource data. Brother is trying to fill in the gaps in its product portfolio in order to become generally competitive to majors like Canon and HP. It is developing 10 new models and will launch a new professional inkjet multifunctional device on the market by the end of 2008. Price levels are going down and you aim to offer added services - a lot of new things - direct photoprint, touchscreen display, wireless devices," said Apostolov.

DOMESTIC MARKET

Brother Bulgaria plans to become the leader in the multifunctionals segments with a 40% share of the domestic market in the short term and one of the two leading vendors of printing solutions as a whole. Company plans, however, largely hinge on public procurement orders, because a large order from a government institution can heavily advance one company compared to its rivals. The Socialist-led government coalition in Sofia that faces elections next year has almost halted tenders for public producrement orders since early 2008 after the European Commission suspended funding under several pre-accession programmes to the EU newcomer on suspicion of irregularities in their absorption. on the other hand, Bulgaria's government, which targets a budget surplus of 3.0% of GDP this year, will likely spend the extra money in a short period of time ahead of the elections, which will open room for corruption, said Apostolov. Brother Bulgaria reported a 57% surge in 2006 revenue thanks to an order for 3,000 high-class laser multifunctional devices for the Education Ministry. Last year, the company's revenue grew by 38%. The value of hardware sales was just 14% up in 2007, shadowing the global trend of sales of devices rising, while value decreasing. The company doubled its sales of consumables for last year. In addition to its dependence on government orders, the sector also faces the problem of parallel imports, which is generally the re-exporting of a product on sale in one country, to another - at a lower price, for instance imports from Taiwan, or Dubai. EU membership has not automatically reduced parallel imports and fake products," said Apostolov, adding that Brother relies on large distributors like TNC to secure the sale of original consumables. Bulgaria joined the EU in 2007.

Bulgarian Unit of Japan's Yazaki Denies Plans To Build Second Plant in Bulgaria

 

The Bulgarian unit of Japanese automotive components manufacturer Yazaki Corporation on Wednesday denied a statement by the mayor of the Bulgarian town of Targovishte that the company was planning to build a second plant in the southeast European country. The mayor, Krasimir Mirev, said last week that the recruitment and training of a 650-strong staff for a new Yazaki plant will start as early as September and production can begin by the end of 2008. Mirev's audio taped comments were provided to SeeNews by his PR officer. We are in contact with a [Bulgarian] subcontractor [...] which has nothing to do with Yazaki," Uwe Abraham, general manager of Yazaki Bulgaria, told SeeNews from Yambol, where the company's first plant n Bulgaria is located. Yazaki is open for investment opportunities in the European Union newcomer, but no project is currently in the pipeline, he added. The company launched its first plant in Bulgaria late last year. It produces wiring installations for Renault's Megane and Scenic models.Yazaki Corporation, which develops and manufactures vehicle power and data solutions, as well as electrical distribution systems and automotive electronics, has announced it will invest 62.6 million levs ($49.1 million/32.9 million euro) in Bulgaria, creating 2,900 jobs by June 2009.Yazaki Bulgaria has around 1,800 employees. Bulgaria continues to successfully lure foreign investors with its low labour costs and proximity to key markets in Europe. The country joined the European Union in January 2007.

 

Ecobulpack to launch new recycling facility in Sofia

Ecobulpack, one of Bulgaria's packaging recovery organisations, said it will launch a new waste recycling installation on the Sofia ring road by the end of September. In May, the organisation opened in Sofia's Filipovtsi borough a plant for the recycling of waste glass and the sorting and baling of plastic and paper waste. Ecobulpack has so far launched recycling installations in Sliven, Gabrovo and Ruse and plans to add to the list Plovdiv, Yambol and Gorna Oryahovitsa by the end of 2008.

"Lukoil" reduces fuel prices

At 8 o'clock on August 18 2008 "Lukoil" changed the end prices of almost all fuels, according to information from the website of the company. The price of diesel is changed and is now 2202 levs/1000 liters, as the reduction is 4.23%.Gas has also decreased its level and is now traded at 2149.20/1000 liters or the reduction is 4.28%.There is no change in the price of the heavily used gasoline A-95 which is traded at 2092.80/1000 liters and A-98 - traded at 2202/1000 liters.At gas stations the commonly used A-95 is traded at around 2.26 levs per liter.The price of propane gas also kept its current price and is still traded at 2046 levs per ton.

 

Electric company to increase prices in 2009

The electric company "CEZ" has issued 2 million invoices in the last 3 months as only 7 thousand reclamations have been made from the company's start in Bulgaria. This was announced at the presentation of the ways of alternative payment of energy bills to "CEZ".Lubos Pavlash, Regional Manager for "CEZ" Bulgaria said that there are problems in the company not because of the three month term for reading but in the renewal of registration of clients.Guev (PR manager) is emphatic that the practice of reading energy for a period longer than 1 month is effective and most European countries use this system. According to him the only ones that read energy once a month are the east-central parts of Bulgaria and Serbia, while Great Britain, Germany and the Czech Republic make these calculations once a year.Guev pointed out: "In the different European countries there are different periods of reading energy, but always a monthly payment period.We hope that what will happen in the following months will not to lead to a repeal of monthly payment, since this will lead to greater expenses for our company.Guev said that a situation may happen in which "CEZ" will ask for a raising of the price of energy from July 1 2009, because the company has incurred a lot of expenses during the transition from 1 to 3 month energy reading.According to Yasen Guev, a payment once in 3 months instead of once a month is out of the question.

U.S. Direct Petroleum Exploration posts positive initial resluts in Bulgarian gas well

 

U.S.-based Direct Petroleum Exploration Inc. (DPE) late on Monday reported positive results in the initial phase of the completion of its Deventci R1 gas discovery in northern Bulgaria. "This is the highest pressure gas reservoir ever encountered in Bulgaria" said Kolyo Tonev, Manager of Direct Petroleum Bulgaria, which is a wholly owned subsidiary of the U.S. firm. DPE has indicated substantial gas and rich condensate flows at the surface of the well, located some 150 kilometers northeast of Sofia, but no verifiable measurements have been taken due to the limited availability of testing equipment for the high pressures encountered." The 12 hour shut-in tubing pressure was measured at 8,000 pounds per square inch (psi). While we were unable to conduct a long-term test due to the high-pressure conditions, the well performed as predicted by our modeling of the reservoir, supporting our technical evaluation of this discovery," said David Nelson, the company Vice President of Exploration and Production. In September, DPE will resume work after it gets specialised high-pressure testing and production equipment from the United States. In late January, Direct Petroleum said it found gas at the A-Lovech Block in northwestern Bulgaria. It started drilling on the site in July 2007. The company has four oil and gas licences in Bulgaria, which imports 85% of the gas it needs under contracts with Russia's state gas monopoly Gazprom. DPE is a privately held company based in Denver, Colorado with operations in Bulgaria, Morocco, Russia and the United States.

 

 

 

 

 

 

 

57 Rouse Companies to Have Business Licenses Revoked

 

The tax inspectors from the Bulgarian Danube port and city of Rouse have requested cancellations of the business licenses of 57 companies from the city whose business is related to taxi cab and freight transportation.The reasons stated is the fact that they have failed to make timely payments of insurance and tax in the amount of over BGN 5,000.
The authorities in charge of issuing licenses and permits have been notified about all 57 companies. The notices insist on revoking their rights to conduct business until they deposit the amounts owed in the State budget.

Record high output in Maritza Iztok mines

 

These record high figures are to a great extent due ro the fact that in the end of March the state-run company began exploiting a new deposit in the pit. According to the prospecting, the deposits amount to 200 million tons, but 25 million tons of them have been already dug out. The remaining quantity is sufficient to ensure problem-free operation of the mines for a few years ahead. As company insiders explain, the preparation of operations to utilize that coal layer has continued almost 30 years and EUR250MN-plus has been invested. The big output will satisfy the future needs of the heating stations in the Maritsa Iztok 2 and 3 complexes and in those that would be commissioned later on. The US company AES is already building a 670-megawatt capacity on the site of the Maritsa Iztok 1 thermoelectric power plant. A consultant for preparing the tender dossiers for choosing an investor to construct a new 600-megawatt capacity in Maritsa Iztok is expected to be picked up soon. In the end of 2007 an interdepartmental panel of experts moved to the Ministry of Economy and Energy a proposal for holding a two-stage competition for an investor and companies offering highly efficient technologies for coal combustion can take part in the contest and eventually sign a contract with the mines. According to preliminary estimates, the construction of the new capacity will cost some EUR1BN. So far interest in the construction fo the new power station has been announced by several firms, among them the American AES, Germany's RWE and E.ON, Italy's Enel, and Briquel, owned by Hristo Kovachki. Briquel's site as well as that of Enel's Maritsa Iztok 3 TPP are some fo the most appropriate for building the new capacity. However, it's not known yet where it will be situated. Apart from being used to fuel the Bulgaria TPPs, the coal from Maritsa Iztok Mines may be exported as well. A few months ago the Greek State Energy company РРС announced interest to buy some 1-2 million tons of Bulgarian coal for its power stations in the northern part of the country.

 

 

 

 

 

 

 

 

 

 

 

ANALYSIS:

 

 

 

Oxford Business Group report 'Bulgaria 2008'

Publication: Standart daily

 

Accession to the EU in 2007 has been the major driver of change in Bulgaria of late, and the country is working to come on line with its new EU neighbours on the political and economic front. The country has seen consistent growth in foreign direct investment (FDI) over the past three years, and both the industrial segment and tourism look particularly strong. The banking sector also looks set to continue to enjoy good health, as the injection of EU funds into various programmes will require co-financing from banks. A tough agricultural season in the summer of 2007 led to rising prices and climbing inflation, though the government is confident that domestic measures aimed at boosting the supply side, as well as continued investment, will help cool off the economy in 2008.

THE ECONOMY

 

Bulgaria finished up 2007 with a growth rate of 6.2%, largely due to fixed capital investment and strong domestic demand, as well as excellent performances from the manufacturing, construction and services sectors. While industry continues to grow, contributing 31% to GDP last year and pushing up exports, the demand for raw materials and investment goods has caused the trade deficit to widen, in turn inflating the current account deficit. However, industry experts predict manufacturing companies will remain competitive and Bulgaria is already growing its share of European markets. Growth for 2008 is forecast at 6%, thanks to continued inflow of EU funding. Such grants and loans will have a major impact on a variety of sectors, from construction to tourism to education. The government has remained committed to a tight fiscal policy and successfully maintained a budget surplus for the past few years, achieving 3.8% of GDP in 2007. Economists are predicting the surplus will remain stable for the next three years, though there is some concern that politicians will be tempted to use the surplus for activities related to the 2009 elections. Foreign direct investment (FDI) has grown for the third year in a row, and reached a record high of 4.4bn euros in 2006. There is some imbalance in these inflows, however, with 60% of FDI going to real estate, tourism and commerce, and only 30% to production. The drought in summer 2007 was a tough time for Bulgaria, causing food prices to soar and driving year-on-year inflation up to 12.5% in December. Inflation is expected to stay up in 2008 with higher energy prices and excise taxes, though the state hopes that building up capacity to bolster the supply side, as well as high investment rates, can lend a hand in cooling the economy.
This chapter includes interviews with Andr? Bergen, CEO, KBC Group; Anand Seth, Director for Bulgaria, Croatia and Romania, World Bank; and Milen Ivanov, Managing Partner, Jordan Sheppard; while Plamen Oresharski, Minister of Finance, provides a viewpoint.

 

 

 

 

BANKING

Credit growth was the major story in 2007, with banks continuing to lend and EU accession bringing renewed interest from foreign investors. The banking sector is nearly saturated, with an assets-to-GDP ratio of almost 100%. However, growing incomes and increasing numbers of small- and medium-sized businesses should continue to provide opportunities. With EU membership bringing a vast amount of funding, banks should have plenty of chances to co-finance development projects and new products are already being introduced for such programmes. Increased competition in the sector may bring a round of mergers and acquisitions. The country's 29 banks have seen total assets more than double in the past three years, with this progress due largely to reforms and the push to privatise enacted after the financial crisis of 1996. A currency board pegging the lev to the euro was also instituted at that time and is still in place.The participation of foreign groups has brought a healthy dose of competition and boosted confidence in the banking sector. As a result, Bulgaria's banks have shown resilience to the recent upheaval in global financial markets. To the future, credit growth is predicted to continue in the next few years, though this will provide a challenge to the central bank as it takes efforts to keep spending in check.

 

CAPITAL MARKETS

 

Despite being relatively young, Bulgaria's capital markets have underlying strengths which have been attracting significant attention from investors, and the Bulgarian Stock Exchange (BSE) has shown positive growth every year since 2001. An initial drop in the first two months of 2007 was chalked up to a natural correction, and the exchange achieved 44% growth for the year. The BSE is divided into two sections, termed the official and unofficial markets, based on the size and liquidity of the companies listed. Bulgaria's accession to the EU has helped put the bourse into international investors' frame of reference, and economic reforms have put the country closer in line with European standards. In 2008, for example, the BSE intends to upgrade its trading platform, using the Deutsche Borse's technology, which will enable a greater volume of international trade. Bulgaria's capital markets currently consist of stocks and bonds, with the bond market quite small, though some analysts are predicting this may shift if the equities market does not pick up soon. Futures and short-selling will probably not be introduced for another two to three years. There is a strong indication that mutual funds, as well as pensions, are becoming more popular. Despite the slight downturn due to the November 2007 correction, observers are generally optimistic that by the second half of 2008, many investors will return to Bulgaria.
This chapter includes interviews with Bistra Ilkova, Executive Director, Bulgarian Stock Exchange, and Krassimir Tahchiev, Head of Research, First Financial Brokerage House. First Financial Brokerage House provides share analysis of the following companies: Eurohold Bulgaria, First Investment Bank, Holding Roads, Kaolin, and Lead and Zinc Complex.

 

 

 

 

 

INSURANCE

 

The Bulgarian insurance market has been showing steady growth in recent years, with 37 companies operating in the country as of February 2008. Motor vehicle insurance dominates the non-life segment, though areas such as property, industry and marine insurance have all registered gains. The life insurance sector is also making a comeback after challenges due to massive inflation in the late 1990s, and should continue to show growth as Bulgarians increase in wealth. The market is dominated by large international insurers, which have introduced a healthy dose of competition and led to new products, yet there are some concerns that they are beginning to push out local players. In response, some local insurance groups have started to look to expanding their share in neighbouring markets such as Macedonia and Romania.Rapid growth is expected to continue for at least the next three to four years, and EU accession should lead to some restructuring of the industry, though a new insurance code should minimise the number of dramatic regulatory changes to the sector.