불가리아 주요 경제뉴스 ( 22 – 29 AUGUST 2008 )

BULGARIAN ECONOMIC TOP NEWS DIGEST

WEEKLY REPORT ( 22 – 29 AUGUST 2008 )

 

 

 

Sections/headline briefs:

 

 

MACROECONOMY:

 

 

·        Bulgarian wine makers report 18% decline in Q1 exports

·        8 000-11 000 tons of honey produced in Bulgaria per year

·        Bulgaria exported 2800 kg ostrich meat since January

·        4000 Bulgarian citizens receive income from interest in the EU

·        55% of Bulgarians work in the service sector

·        Bulgarian tourism loses � 5 M due to visa problems

·        Tourism 14% of Bulgarian GDP

·        91 new hotels completed in Bulgaria in April-June

·        EC vice president Verheugen: Bulgaria's economic progress is impressive

·        Customs Agency collected 11% more than projected revenues in July

·        Bulgaria's foreign debt totals � 32 billion

·        Fifteen Bulgarian banks attract over BGN 1 B each in six months

·        Credit record in time of crisis

·        Construction of Belene NPP starts off

·         Authorities of Burgas and Greece's Alexandroupolis to discuss pipeline

·        Minister Petar Dimitrov: EU should do more for Nabucco

·        Half of all Bulgaria farming equipment is obsolete

·        Bulgarians sold two yachts for � 50 M abroad

·        Contracts on extension of Sofia underground signed

·        Sofia Municipality gives central mineral bath on a 20-year concession

·        Bulgarians look for real estate in Greece

·         Bulgaria first in Europe in transport gasification

·        Laptop sales in Bulgaria up 100% in first half of 2008

·        Fitch: Bulgaria, Croatia, Romania among most vulnerable to external financing pressures in East Europe

·       Bulgaria and Japan sign a loan agreement

INVESTMENTS:

 

 

·        Chinese holding re-builds glass factory in Bulgaria's Razgrad

·        Israel's BSR Europe, Luxembourg's partner to build �200 M mixed-use compound in Varna by 2014

·        Israeli businessmen propose to build �50 M real estate project in Bulgarian Blagoevgrad city

·        UniCredit Bulbank to finance business complex construction for over � 30 M

·        Greek investment at BGN 1.304 M in Nova Zagora

·        Plovdiv airport to have new terminal, modernized runways

·        Bulgaria attract direct foreign investments

·        Obstacles to biodiesel business

·        Rousse to invest � 57 M in infrastructure

 

 

COMPANIES:

 

 

·        Toyota to build second sales and service center in Sofia

·         Spanish company FCC wants more time and money for Danube Bridge II

·        Navigation Maritime Bulgare sells 26 ships

·        30 Vietnamese еmployed by Varna Shipyard

·        News Corporation expects at � 1 B from sale of local media assets

·        Over 400 companies to exhibit at Dobrich Fair

 

 

 

ANALYSIS:

 

·        Economic growth more likely in Bulgaria than recession

 

 

 

 

 

 

 

 

 

 

 

Articles:

 

MACROECONOMY:

 

Bulgarian wine makers report 18% decline in Q1 exports

Bulgarian wine exports have posted a sharp decline so far in 2008 which will not be possible to make up in the remainder of the year said industry representatives. Local wine makers shipped 20 mln liters of wine in the first quarter of 2008 versus 25 mln liters a year ago. In terms of value, Q1 2008 wine exports missed by 13 mln euro the year-ago mark of 32.9 mln euro, shows data of the national statistical authority. Wine exports topped 113 mln liters in 2007 with the bulk, 81 mln liters, shipped to Russia. The Bulgarian wines remain stuck in the low price segment despite the attempts of the producers to upmarket their brands. At the moment, Bulgarian wines retail at 0.75-0.90 euro in Russia but face stiff competition from similarly priced Portuguese, Italian and Spanish offerings.The outlook for the grape harvest is good with average yields seen at 5,000-7,000 kg/ha, down from 8,000-9,00 kg/ha harvested on average during the past two years.

8 000-11 000 tons of honey produced in Bulgaria per year

Bulgaria produces between 8000 and 11000 tons of honey, announced in Burgas Gancho Ganev, Chair of the National organization "Bulgarian bee union", Agency "Focus" reported. The consumption of bee honey per person in Bulgaria is 400-500 grams per year. In Germany the numbers are 2-3 kilograms, while the average consumption for Europe is 1,5-2 kilograms, Ganev announced. The production of honey in the country in different years varies and depends on climatic conditions, as last year production did not even reach 8 thousand tons.Between 5 and 8 thousand tons of honey are offered for sale. "The export is between 3 and 6 thousand tons of honey. We want to popularize honey consumption in Bulgaria. It is proven that the price on the Bulgarian market is better, than that of export, because Bulgaria with its export takes 1% of European honey trade. 140000-150000 tons of honey are traded per year in Europe. The major business partner of Bulgaria is Germany, after that come France, Italy, Spain, but the quantity is between 300 and 500 tons per year, Gancho Ganev says.

Bulgaria exported 2800 kg ostrich meat since January

Bulgaria has exported about 2800 kilograms of ostrich meat from the beginning of the year. This was announced by Kosio Nikolov, Chair of the Association of Ostrich Breeders. The export mainly went to France, Italy and Belgium. Bulgarian producers, however, have problems with export because of the dumping prices offered by producers from Africa and China on the European market.The sale of the "exotic meat" in Bulgaria is slowly increasing. Bulgarian citizens still love pork chops, Nikolov comments. In Bulgaria ostrich meat is sold at 15-40 levs per kilogram.A problem for the local producers is the expensive fodder, which is 30% more expensive than fodder in other countries. Many Bulgarian slaughterhouses refuse to slaughter ostriches and producers consider taking their animals to another country for that reason.Since recently Bulgarian farmers have a new problem. The Agriculture Ministry has made the status of ostriches equal to that of quail, which will lead to difficulties in taking better credits.There are 7 working ostrich farms in Bulgaria.

4000 Bulgarian citizens receive income from interest in the EU

About 4000 Bulgarian citizens receive money from bank account interest, stock interest, securities interest and others in the EU, the National income agency (NAP) announced. That was revealed by information from the tax administrations of the EU member states on income from interest of Bulgarian citizens. Except member states, NAP receives information from Switzerland, Monaco, Liechtenstein, Andorra and San Marino, as well as from ten independent associated territories.EU citizens who receive income from bank account interest, stock interest and securities interest are obligated to submit declarations to the local tax administrations. The deadline for Bulgarian citizens is April 30 of the next year after receiving the income from their savings in the EU.

55% of Bulgarians work in the service sector

Over 55% of the economic active population of Bulgaria (about 3.4 million people) works in the service sector, data from NSI (National Statistics Institute) shows, cited by ipo.bg. The second biggest employer is the industry, where 1.2 million people or 36.7% of the economic active population work. Third is agriculture and foresting, which provides 272.4 work places or 8%.Over 73% work in the private sector, statistics shows. Their number has increased by 6.7% for the last year at the expense of administration.

Bulgarian tourism loses � 5 M due to visa problems

The fast issuing of tourist visa for citizens of CIS (Commonwealth of Independent States) will help the Bulgarian tourist branch. All measures undertaken so far by the Bulgarian state only worsen the situation with the issuing of visa. This claimed Chavdar Alexandrov, chairman of the Association for promotion of foreign investment.Even the introduction of electronic submission of documents was not in a rational way and instead of easing the situation, on the contrary – makes the tourism of the Russian tourist here more difficult, is said in a statement sent to the media, informs burgasinfo.com.According to Alexandrov, the problem is that after submitting electronically his documents, the person wishing to have a holiday in Bulgaria, must wait on a queue to receive his visa and the payment can be done only in cash in the Bulgarian consulates.This of course, is a prerequisite for corruption, believes Alexandrov. It is logical this complicated procedure to make the Russian citizens prefer other tourist destinations. Chavdar Alexandrov insisted on the government, the State agency on tourism and the Ministry of foreign affairs to find a way to solve the visa problem, because tens of thousands of people from Belarus have already re-directed from Bulgaria to Turkey, Greece or Spain only because of this problem. This is 4-5 million euro loss for the Bulgarian economy, concluded Alexandrov.

Tourism 14% of Bulgarian GDP

The tourist industry in Bulgaria provides 14% of the GDP of the country, Moreto.net announces, quoting information from Darik radio. These are the results of the authoritative publishing company Oxford Business Group, on data from 2007. According to the issue in 2008 the tourist sector continues to have an important role in the development of the Bulgarian economy, creating new job positions and providing a constant flow of foreign tourists in the country.Only during the first 8 months of last year tourism in Bulgaria has generated 1.83 billion US dollars turnover, which is an increase of 14.3% compared to the same period last year.Compared to neighboring countries the tourist field in Bulgaria is developing at a steady rate and a steady flow of investment is observed in the accommodation, resting and entertainment locations in the last several years, despite the old road infrastructure and over-construction in some zones.One of the main advantages of Bulgaria as a tourist destination is the fact that it attracts tourists in two different seasons: in summer - through the Black Sea beaches, and in the winter - through ski resorts, as both ways of vacation are financially affordable, especially for foreigners.The development in the field continues through a number of projects that are currently taking place.  

 

91 new hotels completed in Bulgaria in April-June

 

91 new hotels were completed in Bulgaria during the second quarter of 2008 according to data of the National Statistical Institute released Monday.Thus, the total number of hotel and hostels in the country has reached 2 643, with a total of 105 500 rooms, and 234 000 beds.39% of all hotels with 67% of the beds in Bulgaria are located along the Black Sea coast. There are 272 hotels in the District of Burgas, 223 in the District of Varna, and 81 in the District of Dobrich.The number of persons who stayed at Bulgarian hotels in April-June 2008 was 128 000 more than in the same period of 2007 reaching 1,3 million persons with 4,6 million night's lodging. 33% of these were Bulgarians. The number of guests from Malta rose fivefold, from Latvia - by 170%, from Estonia - by 130%, from Lithuania - by 65%, Poland - 53%, Slovenia - 52%, Austria - 43%. The greatest number of foreigners, who stayed at Bulgarian hotels over the second quarter came from Germany - 19% of the total number.The total income from hotel stays in April-June grew by 9% compared to the same period of 2007 to reach BGN 175 M.

 

EC vice president Verheugen: Bulgaria's economic progress is impressive

 

The Vice President of the European Commission Günter Verheugen, who is also the Commissioner for Enterprise and Industry, praised Bulgaria for its impressive economic progress during his visit to Sofia on Wednesday. However, Verheugen also reminded that the criticism against Bulgaria in the recent monitoring reports of the EC, showed the same weaknesses the country had ten years ago - feeble administration, corruption, and need to reform the judicial system. The EC Vice President also pointed out the EC reports did not rank Bulgaria within the EU, and that if the Commission had applied the same strict monitoring criteria to other member states, it might have discovered grave problems elsewhere as well. Veheugen, who was European Commissioner for Enlargement in 1999-2004, did say, however, he was worried by the worsening image of the country. "Despite the EU sanctions I don't see any euroscepticism in the country with the exception of part of the vociferous opposition", the EC Vice President said apparently meaning the extreme right Ataka party. Verheugen had meetings with Bulgaria's PM Sergey Stanishev, the Deputy PM on EU funds absorption Meglena Plugchieva, the President Georgi Parvanov, the Minister of Energy and Economy Petar Dimitrov, and the Minister of Finance Plamen Oresharski.

 

 

Customs Agency collected 11% more than projected revenues in July

 

Revenues of 812.8 million leva were collected in July, the Customs Agency said at its monthly National Council meeting.These revenues are 11 per cent higher than the projected 732.7 million leva and come from customs duties, import VAT and excise tax.Revenues of about 627 million leva were collected a year ago.In July, import tariffs topped 25 million leva, compared with a projection of 18.7 million leva. Import VAT topped 430 million leva, compared with a projection of 376 million leva. Excise tax totalled 357.7 million leva, while the projection was 337.7 million leva. Nearly 355 million leva in revenues came from domestic transactions. Import excise tax accounted for slightly over 3 million leva in revenues. In July, the customs authorities drew up 598 statements of administrative violations, of which 407 statements for customs violations, 170 for violations of the Excise Duties and Tax Warehouses Act and 21 for violations of the foreign exchange regulations.

Bulgaria's foreign debt totals � 32 billion

 

Bulgaria's gross foreign debt totaled 32 billion euro at the end of June 2008. It has risen by 3.774 billion euro (13.4%) since the beginning of the year thus reaching 97.2% of the country's GDP, BNB data about the first half of 2008 show.The credits allotted by the commercial banks which have increased by two billion euro (36.9%) amount to a total of 7.868 billion euro or 24% of the gross domestic product.More than 2.9 billion euro have been paid since the beginning of the year thus decreasing the state's debt to 2.662 billion euro.

Fifteen Bulgarian banks attract over BGN 1 B each in six months

Bank Loans at 52.5 Bln Leva as at End-JuneBulgarian banks had attracted a total of 58 bln leva as at the end of June 2008, data of the Bulgarian National Bank show. The figure includes 21.7 bln leva in leva, 32.7 bln leva in euros and 3.56 bln leva in other currencies.
Banks' interest costs amounted to 875.3 in the first half of 2008. Group 1 banks, which include UniCredit Bulbank, DSK Bank, UBB, Raiffeisenbank, and Eurobank EFG, attracted a total of 33.06 bln leva in the first half of the year, while the Group 2 banks, which stand at 19, attracted 21.5 bln leva. Alpha Bank, BNP Paribas, Citibank, ING Bank and TG Ziraat Bankasi, which fall into Group 3, attracted 3.45 bln leva in the period. UniCredit Bulbank tops the ranking in terms of funding attracted as at the end of the first half of the year, followed by DSK Bank and UBB. A total of 15 banks attracted over 1.0 bln leva each in the first six months of 2008. The group also includes Raiffeisenbank, Eurobank EFG, FIBank, Piraeus Bank, Alpha Bank, SG Expressbank, EIBank, KTB, Allianz Bank, CCB, MKB Unionbank and Municipal Bank.

Bank ('000 leva)	Attracted funding
UniCredit Bulbank	8639440
DSK bank	7230965
UBB	6396007
Raiffeisenbank	6209049
Eurobank EFG	4581645
FIBank	3712161
Piraeus Bank	3585587
Alpha Bank	1951921
SG Expressbank	1822707
EIBank	1592645
KTB	1518511
Allianz Bank Bulgaria	1508623
CCB	1392899
MKB Unionbank	1122945
Municipal Bank	1109623
Investbank	985314
ProCredit Bank	918661
BNP Paribas	743842
BACB	602896
International Asset Bank	459706
Citibank	410349
ING Bank	325995
Tokuda Bank	276580
Emporiki Bank	272706
D Bank	259693
West East Bank	184656
Encouragement Bank	174545
Texim Bank	37194
TG Ziraat Bankasi	21138
Total	58048003

Data: BNB

Credit record in time of crisis

Banks in Bulgaria set a record by lending the business BGN 3.2 billion for the second quarter of 2008, data of BNB show.Though 2006 and 2007 were the golden age for the credit institutions worldwide, the treasuries in the country haven't lent more than BGN 2.96 billion in one quarter. The strangest thing is that this record happens when world economy is in stagnation due to financial instability. This growth is most likely due to the inertia over the last months, Assen Yagodin, executive director of Eurobank EFG, said.
The top credit recipients are companies in the trade, real estate and construction sectors with BGN 975 million, BGN 501 million and 485.6 million respectively. The policy in real estate business has changed worldwide, Levon Hamparzumian, executive director of Bulbank Unicredito Bulgaria, commented for Pari Daily. In Bulgaria the problem is only with the vacation villages. Though construction business still has considerable part of banks portfolio, crediting in the sector decreases, Hamparzumian added. Even if funding decreases by the end of the year, the banks will have given more credits in 2008 than during the boom in 2007. That is the reason for the bankers to call for reasonable financing, as this rapid growth will not be going forever. If that happens at once, it may have serous effects on our economy, Stoyan Dinchiiski, executive director of Bulgarian American Credit Bank (BACB) warned.

Construction of Belene NPP starts off

"The official start of the construction of Belene NPP is expected, but the date of the ground-breaking ceremony is yet to be specified," informed sources from the National Electrical Company. The contractor Atomstroyexport (Russia) is ready to start the construction, its employers are already working at the future construction site, sources of the Company added.The decision which of the two European companies - the Belgian Electrabel or the German RVE - will become a strategic investor of the project is expected to be taken by the end of September. They will share the stakes of the future nuke with the National Electrical Company.

 

Authorities of Burgas and Greece's Alexandroupolis to discuss pipeline

 

The local authorities of the Bulgarian city of Burgas, and the Greek city of Alexandroupolis are going to hold a joint meeting in September in order to discuss the issue around the construction of the Burgas-Alexandroupolis Oil Pipeline.The joint meeting was suggested by the Alexandroupolis Mayor George Alexandros, and was agreed upon by his Burgas counterpart Dimitar Nikolov. All members of the two city councils are going to participate in the meeting together with the two mayors. The main topics will have to do with the issues that might arise from the construction of the pipeline, and the joint practices on how to deal with them.The 279-km pipeline is expected to be completed in 2011, and is estimated to cost up to EUR 1 B.In Bulgaria the project has raised concerns about its environmental effects, which could damage the local tourism industry.In the spring of 2008 the project was rejected overwhelmingly in two local referendums in the region - in the city of Burgas, and in the resort town of Sozopol. Both referendums, however, failed to reach the participation of 50% of the eligible voters, and are non-binding to the Bulgarian authorities.

 

Minister Petar Dimitrov: EU should do more for Nabucco

 

The Nabucco project is in danger unless the EU undertakes actions at a high political level in order to ensure provisions from the Caspian region, said Bulgarian Minister of Economy and Energy Petar Dimitrov in an interview for Reuters. The EU has made the 7.9 billion-Euros-worth project into a turning point in its policy for restricting dependence on Russian gas, but according to Minister Dimitrov that would not be enough and strong political lobbying would be necessary. The provision of sufficient supplies is a problem and it could not be solved only through the efforts of the Nabucco consortium companies, Dimitrov further pointed out. The case would not be solved without a political deal, the Bulgarian minister added. The pipeline is envisaged to transport 30 billion cubic meters of Caspian or Middle East gas annually, taking it from Turkey to Austria through Bulgaria, Romania and Hungary. The device is to be launched for exploitation in 2013, Reuters further informs, as cited by Dnevnik Daily.

 

 

 

 

 

 

Half of all Bulgaria farming equipment is obsolete

 

130 new, high productivity wheat harvesters have been imported in Bulgaria in 2008, according to Georgi Georgiev, Executive Director of the National Control and Technology Inspection Services.The number of the super modern, air-conditioned harvesters in Bulgaria is estimated at 800. However, over 50% of the farming equipment in the country is old, even obsolete - manufactured 10 years ago and longer; part of it is older than 20 years.9900 harvesters are currently registered in Bulgaria; in reality, only 6000 have been used to collect the wheat crop this summer. 1500 have been taken out of operation because of their owners wish or due to technical faults. However, the high percentage of old farming equipment does not affect that productivity since the small number of new harvesters have the biggest harvesting share with one modern machine cultivating over 300 dekares per day compared with the old ones with capacity of 80 to 150 dekares.Farming equipment that has not been certified in complience with the requirements of the European Union (EU), was currently not offered for sale in Bulgaria, according to Georgiev. He further explained that despite some attempts on the part of people, who were not aware of Bulgarian legislature, there was no illegal import because such machines cannot be registered in the country and approved for participation in projects financed by the EU. In addition, Bulgaria, with its location as an outer border of the EU, has the task to stop the import of uncertified equipment from China, Russia, Belarus, Turkey.48 accidents and one fatality related to the use of farming equipment have been registered in Bulgaria over the summer.

Bulgarians sold two yachts for � 50 M abroad

Bulgarian company ICS Yachting sold two luxury yachts of the French Couach to Ukrainian undertaker at total sum of over EUR 50 million. This is the most expensive single deal signed by Bulgarian dealer, Avram Avramov, director of ICS Yachting, said. Negotiations are being carried out for the purchase of another 50-metre long boat though the model has not been officially introduced yet.

 

Contracts on extension of Sofia underground signed

 

Contracts on the construction of two sections of the Sofia Underground were signed between Metropoliten EAD and the chosen contractors on Wednesday. Attending the ceremony were Transport Minister Peter Moutafchiev and Sofia Mayor Boiko Borissov. Following a bidding procedure the joint stock company, Doush Ingnshaat ve Ticaret, was selected for the construction of a 3.8 km section, Nadezhda Road Knot-Central Railway Station-Sveta Nedelya Sq.-Patriarch Evtimii Blvd. and four stations. The company should invest about 330 million leva in the construction activities. The construction of a 2.6 km section, Patriarch Evtimii Blvd. - National Palace of Culture - Cherni Vruh Blvd., and three stations was assigned to Metrotrace. This project is of some 142 million leva's worth. The underground extension project is about to be financed under the Operational Programme Transport by some 185,190,000 euro.After the completion of the projects and parallel construction by the Sofia Municipality the Sofia Underground is expected to have two operational lines and to transport over 420,000 passengers on a daily basis.

 

Sofia Municipality gives central mineral bath on a 20-year concession

Sofia municipality opened a procedure for giving on a concession the construction of a lot “Central mineral bath – hydropathic and SPA center”, informed the municipality. The establishment is a public municipal property. Its all-out built-up area is 5603 sq.m. The place is given on a concession for the next 20 years. The future concessioner should guarantee that he will conduct hydrotherapy and SPA procedures with mineral water.Other allowed activities include: restaurants, fitness, hairdresser's and cosmetic services as well as services related to the organization of cultural events, is written also in the requirements of the tender documents. Documents for participation including data and requirements needed for the preparation of a proposal can be received in Sofia municipality on presenting payment order.

Bulgarians look for real estate in Greece

More Bulgarians look for summer houses in Greece, because of the over-development of the Black Sea coast, Focus agency informs on data of the electronic issue of the Greek newspaper "Kathimerini". Bulgarian citizens look for property in the neighboring countries with different and more pleasant atmosphere, which except a place for family vacation are a good investment, according to the publication.One can buy a house of 158 square meters, 300 meters from the sea, for EUR 229 000. There are cheaper houses for 90 thousand, but smaller and farther from the sea. There are even offers for 70 thousand.The "Kathimerini" issue points out also that the biggest companies for investment in real estate buy property in other Balkan countries. Until now Eurobank Properties has made 36 investments in real estate, which amounts to 76% of its portfolio.

 

Bulgaria first in Europe in transport gasification

 

Bulgaria ranks first in Europe by the rates of the gasification of vehicles in the country, according to the European gas transportation community's magazine, Gas Vehicle Report."Overgas" also confirms that several years in a row Bulgaria has been holding the first place in the transition rates of cars and buses from gasoline to natural gas.Currently over 45,000 private and public vehicles in Bulgaria use the "blue" fuel. one of the main reasons for this increased use of natural gas is the lower cost - about BGN 7 to 8 for a 100 km trip.

 

Laptop sales in Bulgaria up 100% in first half of 2008

 

The sales of portable computers in Bulgaria have gone up 100% during the first six months of 2008 compared to the same period of 2007, according to data of the market research company IDC. Bulgaria's growth in laptop sales puts it before Romania, where the increase is 90%. The country fourth in the Balkans with 7% of the total value of the computer sales in the region. Over 55% of the computers sold in Bulgaria in 2008 are laptops, and according to IDC, this figure will be over 60% in 2009.The company also predicts that the IT market in Bulgaria, which was about BGN 1 B in 2007, would reach BGN 2,6 B by 2012 with an annual growth of 20,5%.Romania is ranked second with an annual growth of its IT market at 18,9%, whereas Turkey and Macedonia share the third position with 13,7%.

Fitch: Bulgaria, Croatia, Romania among most vulnerable to external financing pressures in East Europe

 

Bulgaria, Croatia and Romania rank among the most vulnerable emerging economies in a Fitch index of relative vulnerability to external financing pressures of east European countries, the global rating agency said on Thursday. Croatia ranked second, Romania was fifth and Bulgaria ranked seventh among the 20 emerging economies from Eastern Europe, the Caucasus and Central Asia included in the index, Fitch said in a report. Latvia led the list. Serbia ranked ninth, Moldova - fifteenth and Macedonia - eighteenth. Fitch's index of relative vulnerability is based on equal weighting of three factors: the current account balance plus net equity foreign direct investments (as a percentage of GDP), short-term external debt on a residual maturity basis (as a percentage of foreign exchange reserves) and net external debt (as a percentage of current external receipts) for 2008. It is somewhat surprising to see Croatia as high as second in this list, though relatively weak external finances have been the main factor constraining its rating at 'BBB-' for some time," Fitch said. Regarding Bulgaria and Romania, Fitch said that the magnitude of the two countries' current account deficits, which are among the 10 largest out of all 105 Fitch-rated sovereigns, is unsustainable and raises concerns. Romania's current account gap for last year was equivalent to 14% of the country's gross domestic product (GDP). Romania's National Prognoses Commission has projected the 2008 current account gap at 14.9% of GDP. Bulgaria, where booming domestic demand has pushed the country's current account deficit to 21.7% of GDP in 2007, expects the gap to narrow to 21.1% of the projected GDP in 2008.External borrowing to finance current account deficits is increasing external debt burdens in most of these countries, Fitch said. Current account deficits, in combination with rapid bank credit growth, strong real estate activity, asset price booms and rising inflation raises point to economies overheating and the risk of a painful macroeconomic correction ahead.Also, tighter global liquidity, reduced global risk appetite and elevated risk premiums on counties with large current account gaps and declining growth prospects heighten the risk of finances drying up, which could lead to recession and/or downward pressure on exchange rates. Such a scenario poses additional risks for countries with currency board arrangements or currency pegs," Fitch said. Since July 1997 Bulgaria has been operating an IMF-prescribed currency board system, a tight monetary arrangement that ties the level of cash in circulation to the amount of central bank reserves. The fixed exchange rate of the Bulgarian lev under this system is 1.95583 per euro. A clear adjustment of unsustainable macroeconomic imbalances has yet to take hold in Bulgaria and Romania. The slowdown in export markets will make it more difficult for them to reduce their CADs [current account deficits]," Fitch said.

Bulgaria and Japan sign a loan agreement

An agreement for loan will be signed today (29 August) between Bulgaria and the Japanese bank for international cooperation in the Granite Hall of the Council of ministers building.The loan is for funding a project “Establishment and development of new container terminals at the harbours of Burgas and Varna”.The minister of finance Plamen Oresharski will sign the document from the Bulgarian side. For the Japanese bank, the agreement will be signed by its CEO Shenya Edjima.

 

 

INVESTMENTS:

 

 

Chinese holding re-builds glass factory in Bulgaria's Razgrad

 

The Vice President of the Chinese holding Luoyang Glass Company Ltd Li Wei and the owner of the Bulgarian firm Via Properties Denis Barekov announced Wednesday a large-scale investment into the rebuilding and reopening of the glass factory in the city of Razgrad.Some of the old buildings of the former factory, which was closed down years ago, will be preserved but most will be torn down, and rebuilt. The new factory is expected to be reopened in 18-20 months, and the total investment will be about EUR 80-120 M. About 340-500 persons will be employed including a number of Chinese specialists.The Luoyang holding was among the main sponsors of the 2008 Beijing Olympics. It is the largest producer of glass in China. The company is planning to set up an innovations center in Razgrad at a later stage of its investment program there.

Israel's BSR Europe, Luxembourg's partner to build �200 M mixed-use compound in Varna by 2014

 

Israeli real estate developer BSR Europe and its Luxembourg-registered partner Edmond de Rothschild Real Estates (EDRRES) will build a 200 million euro ($294 million) office and residential compound in Bulgarian city Varna by 2014, a project manager said on Tuesday.The construction of Varna one is planned to start in November or December this year and is expected to be completed in 2014, BSR Varna's chief financial officer Stratiya Stratiev told SeeNews. BSR Varna is the Bulgarian-registered company which will develop the project.Varna one will have a footprint of 74,421 square metres, accommodating six office and five residential buildings as well as two hypermarkets. BSR Europe also plans to invest 126 million euro in a mixed-use project in the capital Sofia, a company official who declined to be named told SeeNews in January. Construction works there are expected to start later this year or at the beginning of 2009. BSR Europe already has two projects in Sofia. An office building completed by the company in 2002 has been sold to London-listed Atlas Estates for 7.3 million euro, according to an Atlas Estates statement from October 2007. A BSR Europe residential complex of 630 apartments that is to be completed by 2010 was sold to another Israeli real estate company, AFI Europe, for 8.3 million euro in 2007. In August 2006, the European Bank for Reconstruction and Development (EBRD) said it was investing 35 million euro alongside BSR Europe to create a real estate joint venture for countries in Eastern Europe including Bulgaria, Croatia, Moldova, Montenegro, Romania and Serbia. BSR Europe is listed on the Tel-Aviv Stock Exchange. The company has projects in ten countries in central and east Europe. Bulgaria's real estate market has enjoyed considerable interest from domestic and foreign investors drawn by the prospects for high yields after the country's accession to the European Union in 2007.

 

 

 

 

 

 

Israeli businessmen propose to build �50 M real estate project in Bulgarian Blagoevgrad city

 

Two Israeli businessmen have proposed to build a hospital complex and a business park worth a combined 50 million euro ($73.5 million) in the southwestern Bulgarian city of Blagoevgrad, the city said on Tuesday. Yair Gelfer and Avishai Berkowitz have operated in Western Europe and the U.S. and have been focusing on residential, commercial and industrial projects in Bulgaria and Croatia over the past three years, the Blagoevgrad municipality said on its website without mentioning a timeframe. The businessmen have also proposed to develop an urban plan that would envisage the construction of shopping centres, a hotel and office buildings. Further details were not immediately available. Several attempts by SeeNews to reach municipality officials by phone went unanswered on Tuesday.

UniCredit Bulbank to finance business complex construction for over � 30 M

 

UniCredit Bulbank, the Bulgarian unit of Italian banking group UniCredit, said on Monday it will finance the construction of a 17-storey business complex in Sofia worth more than 30 million euro ($44.2 million).The project, called Vertigo Building, is designed to cover an area of 14,000 square metres and should be ready by early 2011, the bank said in a statement. The office complex will be developed by Italy's Casa Chic.UniCredit Bulbank has consulted Casa Chic on the purchase of the construction site and the feasibility study.The real estate market in the ex-communist state has been booming for years with many foreign investors drawn by the prospects for residential, office, commercial and industrial developments in the large cities and mountain resorts and along the Black Sea coast.UniCredit Bulbank (www.bulbank.bg) was leading in terms of assets among the 24 domestically-registered banks and five branches of foreign lenders at end-June. It was formed after the merger of the three domestic units of UniCredit - Bulbank, HVB Bank Biochim and Hebros Bank.

Greek investment at BGN 1.304 M in Nova Zagora

Municipality in Nova Zagora in southeast Bulgaria has good relationships with foreign investors. The latest investment is of the Greek Palirriya-Souliotis S.A. and estimates at BGN 1.304 million. The company in Bulgaria is specialized in the preparation of canned vegetables and the production is mainly for export. Another investor in the town is the textile manufacturing Miroglio Group.

Plovdiv airport to have new terminal, modernized runways

 

Transport Minister Peter Moutafchiev visited Monday the Plovdiv Airport and discussed with its management the forthcoming modernization of the facility.The meeting was also attended by Plovdiv Regional Governor Todor Petkov and MPs. The design project for the modernization of the airport will be ready next week, Moutafchiev said. This will be followed by the development of a master plan for the modernization of the entire infrastructure of the airport.Moutafchiev said that a procedure for the selection of the contractor for the building works will be held. The two key facilities of the modernization will be the construction of a new terminal and rehabilitation of the runways.The Minister assured that the best value for money will be sought in the modernization of the Plovdiv Airport. Moutafchiev stressed that the local power in Plovdiv has failed to prove itself as an active partner of the government in its efforts to develop the city. By way of example the Transport Minister, who is also the leader of the local chapter of the Bulgarian Socialist Party, said that the Municipal Council has not yet started a procedure for the appropriation of private real estate needed for the extension and modernization of the Plovdiv Airport. Other problems where the Municipal Council has failed to show sufficient initiative are the project for drinking water supply to the town from the Vucha reservoir, the completion of the plant to process solid household waste in the village of Shishmantsi, and others, Petkov said.

Bulgaria attract direct foreign investments

Bulgaria managed to attract considerable direct foreign investments (DII), over 20% of the gross domestic product (GDP). This is a sign that conditions for making business and realising profit are pretty good. This tendency will be preserved as long as the conditions remain good, Petar Chobanov, executive director of the Agency for Economic analysis and forecasting, said.

 

Obstacles to biodiesel business

 

The hopes of many investors that biodiesel fuel production would turn into a gold mine were shattered. Though Bulgaria had committed itself before Europe that 2% of total consumption of fuels will be from bioproducts, their use is still neglected. Since the beginning of 2008, the law requires all conventional fuels to contain 5% biocomponents but this is not enough motivation for the development of the branch. Most of the already installed production lines for biodiesel and bioethanol remain idle. The biodiesel production plant near Vidin in northwest Bulgaria doesn't work at all, as there is no market for the production, the manager of Ecoproekti company Stefan Dimitrov said. All production capacities have been brought to a standstill, Radosav Shunk, executive director of Evroethyl AD, one of the first companies with investment in the branch, said. Legislation in the sector is also vague and this is the reason for many projects to be frozen and investments withdrawn. Another hindrance is the absence of a licensed laboratory to control the mixing of fuels with biocomponents. Biodiesel business is entirely dependent on the market. If prices of wheat, sunflower and rapeseed grow, then biodiesel production becomes unprofitable. Biofuels cannot be transported on long distances, that is why it is mainly a regional business.

Rousse to invest � 57 M in infrastructure

The town of Rousse in northeast Bulgaria will have the most modern water and sewerage systems in the sector. The project amounts at EUR 46.8 million and is the first of the kind in the country using gratuitous help from ISPA programme of EU. Additional national financing is provided amounting at EUR 10.937 million, thus the total value of the project reaches EUR 57.737 million.

 

 

 

 

COMPANIES:

 

Toyota to build second sales and service center in Sofia

TM Auto, one of the Toyota dealers in Bulgaria, said it has started the construction of a second sales and service center in Sofia, naming no investment estimate. The 12,000 sq m site of the new Toyota center is located on the Evropa boulevard in the direction of the Bozhurishte borough. Toyota Sofia West will have a build area of 11,000 sq m, 400 parking spaces and the capacity to service simultaneously 20 vehicles. It should be operational by the second half of 2009. The first Toyota center in Sofia is located on the Tsarigradsko Shose boulevard. Away from the capital, Toyota dealerships operate in Blagoevgrad, Burgas, Varna, Veliko Tarnovo, Gabrovo, Dobrich, Pazardjik, Plovdiv, Pleven, Ruse, Sliven and Stara Zagora. Toyota ranked as the nation's no.2 auto brand in January-July with 3,212 sold units. It trailed only Opel.

Spanish company FCC wants more time and money for Danube Bridge II

 

The Spanish company FCC, which has been selected to construct the second bridge connecting Bulgaria and Romania across the Danube, has asked for a deadline extension and more money to complete the project. The news was announced Sunday by the Bulgarian National Television, which cites Simeon Evtimov from the government unit managing the project. The construction of the Danube Bridge II, which will connect the Bulgarian city of Vidin and the Romanian town of Calafat, has already been delayed by three-four months because of the land expropriation procedures, geological explorations, and changes in the initial project. According to the National Television, FCC had asked for EUR 100 M in addition to the construction cost of EUR 225,6 M for 1971-meter-long bridge. The bridge was supposed to be completed by the end of 2010 and the Transport Minister Petar Mutafchiev has stated repeatedly that the executor would make up for the delay, and would complete the project on time.

Navigation Maritime Bulgare sells 26 ships

 

Navigation Maritime Bulgare (NMB) will sell 26 of its vessels, i.e more than one third of all the company's ships, The Standart learnt. Eleven of these vessels were built in Japan, one - in the former USSR, 12 - in Varna and two in Rousse."We'll sell all the ships older than 25 years," explained Kiril Domuschiev, owner of the Bulgarian participant in the consortium."This sale is a must if we want to escape ecological problems," he added.
"The crews of the old vessels will be moved to other NMB ship," Domuschiev said.

30 Vietnamese еmployed by Varna Shipyard

 

Thirty Vietnamese work as welders at the Rousse Shipyard and the company wants to employ at least another 70, management team member Ivan Petkov said.The welders have been selected on spot in Vietnam. They have previous experience in the ship building sector and do not need additional training. The Vietnamese welders are distributed in groups and there is one interpreter for each group.The Vietnamese workers will work in Rousse for at least one year as their work permit will be periodically renewed.Currently, the Rousse Shipyard employs over 1,200 people.

News Corporation expects at � 1 B from sale of local media assets

 

World’s leading media group News Corporation expects to cash at least EUR 1 billion from the planned sale of local media assets managed by Balkan News Corporation, according to speculations in the local media. The local portfolio of News Corporation includes Bulgaria ’s largest TV broadcaster bTV and several smaller TV channels in Bulgaria and neighbouring Serbia and Turkey . The management of bTV informed the local media regulator of possible changes in the shareholders’ structure about a month ago.Negotiations are held with several foreign entities, including strategic investors and private equity funds. The price expectations for the deal look realistic in comparison with the recent deals in the sector. The Swedish media company Modern Times Group (MTG) has signed a EUR 620mn deal for the full stake in Nova Televisia Bulgaria , owner of the country’s second largest TV channel Nova Televisa, and Central European Media Enterprises (CME) has acquired the nationally broadcasted TV2 channel and sports cable channel Ring TV for USD 172mn.

Over 400 companies to exhibit at Dobrich Fair

 

The latest scientific and technical innovations will be exhibited at the 16th edition of the international Dobrich Fair AD. The record number of 400 companies has applied for participation in the exhibition Agriculture and everything for it. The stalls will be located on 13,000 sq. m. For the first time the organisers will give bounties to all companies that show innovation.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Economic growth more likely in Bulgaria than recession

Publication: Profit.bg

 

The uncertainty around the global financial markets and the slowing growth seen by some major European economies are expected to have an impact on Bulgaria as well. So far experts from different spheres of economy are optimistic about Bulgaria, even in the case of recession for some European countries. According to the Agency for Economic Analyses and Forecasting (AEAF) the “ Uncertainty on the global financial markets and the slowing growth recorded by some major European economies will influence Bulgaria in two ways.” on one hand, those factors have led to a global appreciation of credit resources and have made foreign investors more cautious when taking decisions. “This may cause a decline in real estate investments - an important component of the FDI,” the agency said. “Also, the growth slowdown in the EU can lead to lower foreign demand, which can hurt the economy and cause the FDI to decline. So far there are no indications that this will happen and it seems that our country will manage to weather the storm, “AEAF concluded.„Indeed, the Eurozone's growth is expected to slow down from the current 2.1% to 1.2% in 2009 but this will not affect Bulgaria in a drastic way. Some exporters may see weakening demand but there will be no implications on a macroeconomic level,”Georgi Stoev, managing partner in Industry Watch says.The opinions of the two institutions differ as far as recession possibilities are concerned. AEAF's experts think the country will rather report economic growth than recession. The next official GDP forecast comes out in the autumn. The last prognosis was for a 6.2% hike in 2008. “There are no reasons to think that the forecast will be lowered.” Georgi Stoev, however, warns that the recession risks are coming from inside the country. “The lack of reforms in the public sector and in the judicial system are not only hindering growth, but posing recession risks as well,” he said. As far as the different sectors of economy are concerned, AEAF said that a slowdown in construction of residential buildings is expected. “But this will be compensated by the active construction of office and business buildings,” the agency commented. In the financial sector, the AEAF pointed out that the capitalization of Bulgarian banks and financial institutions is very high and they will not be hurt. „The effect of the global slowdown has been felt in Bulgaria for some time, but not on all market segments. Some markets (such as the vacation homes segment) suffered a correction even before the problems in the Eurozone started,“ said Atanas Gergov, Colliers International managing director. In his words, all segments are developing well. “Those niches in which the deals are sealed between the entrepreneur and the client themselves have not been hurt by the crisis (once again with the exception of vacation homes). The investment market is the only one that really suffered from the global trend.” Petar Slavov, chairman of ProCredit Bank's management board commented on the functions of the banking system in the background of the global uncertainty. “We saw what could happen if we get involved in the war for market share – where you pursue growth but undervalue the fundaments of banking, and more specifically of crediting.” Prokopi Prokopiev, Corporate Policy director in Enemona Jsc, said the weakening European economies will limit the chances of Bulgarian exporters to expand their positions on the stagnating European market.„Bulgaria's economy will continue to grow but its pace will inequitably slow down as the current levels are unstable,” he said. As to the level of indebtedness of local public companies, Prokopiev said debt always poses a risk, but in his opinion, Bulgarian public companies have not accrued a lot of debt. Konstantin Abrashev, BenchMark Asset Management portfolio manager, commented on the prospects before the Bulgarian Stock Exchange. In his words “unlike other times where markets suffered periods of massive sell-offs due to a single reason (the Enron scandal, the September 11 attacks, the Russian crisis) the factors today are many and different.” In such cases investors are examining the development scenarios for each company, paying more attention to the negative factor and this leads to their extreme cautiousness. If the leading international economies see positive development, the good news will come to Bulgaria and will eventually influence the local market. But until that happens, the current situation will not change,” Abrashev pointed out.