BULGARIAN ECONOMIC TOP NEWS DIGEST
WEEKLY REPORT ( 5 – 12 SEPTEMBER 2008 )
Sections/headline briefs:
MACROECONOMY:
· �200 M to be spent on regional development
· Government passes new road infrastructure agency rules
· Vine-growers and merchants try to outwit each other
· Bulgaria to get �166 M for vine growing
· Bulgaria's Black Sea airports to have new terminals in 2011
· Bulgaria is among the most risky economics
· Bulgaria and Hungary to co-operate on EU energy security
· Revenues from sales in the sector of trade and repairs grow 10.7% in July
· Bulgaria industrial production up by 2,1% in July
· Bulgaria's foreign trade gap hits BGN 8.4 B
· Price decrease of mobile phone services
· Sofia to inject BGN 60 М into subway project
· Bulgaria Varna Port with most modern specialized terminal in Black Sea
· Mother banks imported BGN 8.5 billion for a year
· Finance, insurance stride a top of Bulgaria’s M&A market
· Flat tax pumps up Bulgaria's budget
· Investments in real estates in Bulgaria brings more profit than stocks
· Bulgaria's import rises 28% in Jan- July
· Food produced in EU may receive a special logo
· Bulgaria ranks first in food prices’ growth dynamics
· Nearly 40,000 new vehicles sold in Bulgaria in January-August
· Cigarette prices to rise in 2009
INVESTMENTS:
· Greece companies invest over � 2 B in Bulgaria in first half of 2008
· Germany's Dr. Schneider to invest �10 M in car parts factory in Stara Zagora
· If Voestalpine builds steel plant in Bulgaria, it will invest over � 5 billion and appoint 4,500 workers
· Investra to take on Pleven’s stopped industrial project
· Lighthouse Golf Resort to build � 70 M complex near Balchik
· Construction of super modern business park initiated in Bulgaria's Ruse
· Carrefour chain to build store for � 50M
· Italian consortium invests � 5 M in new factory in Bulgaria's Krivodol
· Razlog invests in infrastructure
· Eco village for � 250M to be built in Razlog
COMPANIES:
· Bulland Investments to build Nissan auto complex
- Bulgartabac to be sold on the Stock Market
· Bulgarian road firms fret over frozen EU money
· Devin eyes SEE acquisitions
· Kirov unveils sales and service center in Sliven
· Bulgaria company receives prestigious business award
· Prista Oil opens third terminal
ANALYSIS:
· Bulgaria retains stable ranking in Doing Business 2009 Report
· FT: Bulgarian energy sector seeks to recover its Balkan role
Articles:
MACROECONOMY:
�200 M to be spent on regional development
By the end of 2008 contracts for 200 million euro will have been concluded under the European Union (EU) operational programme Regional Development, Deputy Minister of Regional Development and Public Works Iskra Mihailova said during a meeting in Rousse on September 4. After concluding the contracts, Bulgaria would fulfil its financial engagements for the second year of EU membership within this programme, she said, quoted in Bulgarian-language daily Dnevnik.The work, under the EU Regional Development operational programme, started on November 14 2007. To date, municipalities from all Bulgarian regions have signed contracts amounting to 175 million leva. In the Danube River region alone, agreements amounting to 59 million leva were concluded with the municipalities of Vidin, Vratsa, Rousse, Silistra, Glavnitsa, Berkovitsa, Nikopol Kozlodui, Slivo Pole and others, Mihailova said. The money is for repairing municipal road infrastructure, kindergartens and schools as well as cultural and social infrastructure.
Government passes new road infrastructure agency rules
The leading principle of work at the Road Infrastructure National Agency (RINA) is legal, transparent, effective, ethical and professional management of the projects on the development and maintenance of road infrastructure, the Government information service said.The new rules of organization and procedure of this body, tabled by the Prime Minister Sergei Stanishev, are a clear sign to Bulgaria's EU partners that this country will apply strictly the rules and procedures adopted in the Community, which is a step towards restoring confidence in Bulgaria.The objective is to improve the management of activities in the sector of roads by streamlining the management and control systems at RINA, integration and coordination between the central administration and the specialized units, establishment of structural and functional mechanisms for effective administration, regulation of relations with the managing authorities on the operational programs of the EU and others.The new organization of work will provide a powerful and reliable control system, which will guarantee the correct and expedient spending of funds.RINA will be a first-level spending unit operating with budget credits, with an executive director who will bear the main responsibility on operational activity and will report it to the Council of Ministers. The director will be responsible for the implementation of each concrete RINA project co-financed under the structural funds and the Cohesion Fund. Later in day, Prime Minister Sergei Stanishev appointed Ivan Atanassov as Chairman of the Supervisory Board of RINA. on August 28 the government chose the five members of the board with a five-year mandate, including Ivan Atanassov, Milosh Potskov, Traicho Popov, Tsvetan Nanov and Tsveta Kamenova.The board has a five-year mandate.Before being appointed chairman of the board, Atanassov headed a program group for coordination, control and monitoring of the Belene N-plant project at the Ministry of Economy and Energy. He has also been CEO of Devnya and Vulkan cement companies, as well as MP in 1994-1997.
Vine-growers and merchants try to outwit each other
We will not start gathering the grapes even they rot on the vines, vine-growers from the region of Septemvri town say. The vines are heavy with ripe, sweet grapes, but nobody is anxious to hire hands to gather them."We want a wholesale price of one lev per a kilo of merlot and at least 0.65 lev for a kilo of pamid,vine-growers say. To their words, merchants and the local wineries offer to buy their output at ridiculously low prices, so they would rather sell the grapes to Greek merchants. "The Greeks will buy our production at the price we want and then will sell it to the Bulgarian wineries, producers say. However, winemakers say the prices that the vine-growers want for their production are too high. The Muscat is too expensive,Vini Sliven winery CEO Valeri Chulin told the Standart. The crop is not as rich as it was last year in terms of both quantity and quality,Krassimir Krustenov, Director of the Vini Sliven Managing Board, added. The more the vine-growers postpone the wine harvest, the worse the quality of the grapes will be and the lower the prices at which they may sell their production. Krustenov said that the Bulgarian winemakers might import grapes from the neighboring countries like Romania, where the prices are quite comfortable.
Bulgaria to get �166 M for vine growing
In a month Brussels is going to approve Bulgaria's national programme for developing of vine-growing and wine industry and grant EUR 166 million for it, Plamen Mollov, chairman of National Vine and Wine Chamber, said. About EUR 20 million of them will be used for new vineyards, 20% for insurances and 10% for advertisements. The programme will improve life in the country and make it attractive for young people.
Bulgaria's Black Sea airports to have new terminals in 2011
Bulgarian Black Sea airports of Bourgas and Varna will boast new passenger terminals in 2011, the firm that holds the concession on the two airports, Fraport Twin Star Airport Management, has said. The terminals will cost more than than 65 million euro to build, of which 36 million euro will be spent on the Bourgas airport, 26 million euro on the one in Varna and seven million euro will be go to design and project management. The Bourgas airport will have a larger and more expensive terminal given the bigger tourist numbers and bed capacity of the country's southern Black Sea coast. The airport serviced 1.6 million passengers in the first eight months of the year, compared to 1.1 million who landed at the Varna airport. Fraport will launch the procedure to pick the main contractor by end-September, with construction set to start in mid-2009. The three-storey buildings will have similar design, with the luggage handling area underground, luggage pickup and check-ins on the first floor, while the second floor will host security and departure areas. The two terminals will not be equipped with airbridges, so passengers will be transferred by buses, Fraport technical director Karl Mai said. The project will follow the requirements for seaside airports, which handle high number of passengers over short periods of time.
Bulgaria is among the most risky economics
United Nations placed Bulgaria among the most risky economics in Eastern Europe. The country has the highest deficit in its running account in EU, report of the United Nations Conference on Trade and Development (UNCTAD) shows. The countries with similar problem are Estonia, Latvia, Lithuania and Romania. Between January and June 2008 the operating account of Bulgaria has increased to 11.5% of the expected gross domestic product (GDP) to EUR 3.79 billion. For the same period last year it was 10% of GDP.
Bulgaria and Hungary to co-operate on EU energy security
Bulgaria and Hungary are working actively to guarantee the European Union's energy security as well as the diversification of energy resources, Bulgarian Prime Minister Sergei Stanishev and newly appointed Hungarian ambassador to Bulgaria Judit Lang both agreed upon meeting, the Government press service said in a statement on September 8 2008. Over the talks, the two officials reaffirmed their countries' interest in the realisation of both the Nabucco and the South Stream gas pipelines. There have been regular and fruitful contacts between Bulgaria and Hungary at the highest political level, Stanishev and Lang said. In addition to being friends, the two states are also natural partners in the framework of the European Union and Nato, the prime minister affirmed. Lang, for her part, said that there was great potential for bilateral economic co-operation between Bulgaria and Hungary and defined the investment climate in Bulgaria as very good for Hungarian companies.
Revenues from sales in the sector of trade and repairs grow 10.7% in July
The revenues from sales in the sector of trade in, and repair and maintenance of, cars and motorcycles, personal belongings and household goods increased 10.7 per cent between July 2007 and July 2008, according to early estimates of the National Statistical Institute made public Tuesday.The increase of July 2008 revenues compared to July 2007 was the largest in wholesale trade - 11.7 per cent. This was mostly due to the growth in the wholesale trade in nonagricultural intermediate products by 17.8 per cent.The drop in the trade in household goods by 2.3 per cent and the slower rate of growth in the wholesale trade in machines and equipment and the trade in foods, drinks and tobacco products by 8.6 per cent and 0.5 per cent, respectively, had a controversial effect on the overall index.The trade in cars and fuels and car repairs posted an increase of 10.4 per cent, of which the trade in cars and motorcycles increased by 13.4 per cent and the retail trade in car fuels and lubricants by 5.2 per cent. In structural terms, the two types of activity have similar relative weight and form over 97 per cent of the amount of revenues.Growth is also observed in retail trade in and repair of personal belongings and household goods - 6 per cent. Among component activities, a larger than average increase was reported in trade in textiles, apparel and footwear - 6.3 per cent, trade in pharmaceutical and medicinal goods - 7.1 per cent, and trade in household goods and home appliances - 6 per cent.Wholesale trade in July 2008 compared to June 2008 increased 7.5 per cent and trade in cars and fuels and retail trade went up 4.1 per cent and 3.5 per cent, respectively, in the period under review.
Bulgaria industrial production up by 2,1% in July
The total industrial production in Bulgaria for the month of July is 2,1% higher compared with the previous month of 2008, according to preliminary data of the National Statistics Institute (NSI).The July index of the processing industry is 4% higher than the June one.
The production of metals registers a 13,4% growth, while the production of plastic and rubber is 9,4% higher.The total industrial production for the month of July of 2008 is 3,3% higher compared with the same month of the previous year while the production of the processing industry is 6,3% more.Preliminary data shows that the revenues from industrial sales in July of 2008 went up by 1% compared to June and up by 1,8% compared to June of 2008.The July revenues from industrial sales are 3,3% higher than those of July of 2007.The sales of products from the processing industry grew by 4,5% with sales of chemicals, plastic and rubber products growing by 31,1% and those of metal products except machines, equipment and appliances - by 9,2%.In the same time the extractive industry shows a production decrease of 5,5% compared to July of 2008 while the sales from the branch went down by 9,9%.The production and the distribution of electric energy, natural gas and water also show a decrease - 7% less than July of 2007 and their sales are 4% less.
Bulgaria's foreign trade gap hits BGN 8.4 B
Bulgaria's foreign trade deficit reached 8.4 billion levs (1 euro = 1.95 levs) in the first half of 2008, National Statistical Institute analysts announced. Import to this country continues growing at a much faster pace than export. For a six-month period, it scored a 27,9-percent growth and, along with transportation and insurance costs, totaled 24,75 billion. The export rate has been on the rise as well, as it grew by 23,9 percent or by 15,13 billion levs. Bulgaria's export to Saudi Arabia swelled by twenty times in a half-year, to 126,1 million levs. Next comes the export to the United Arabian Emirates, which rose by twelve times in amount. The export to Turkey grew by 17,6 percent to 1.6 billion levs, placing it among the most wanted destinations for Bulgaria's business. Greece, Germany and Italy come right after Turkey.
Price decrease of mobile phone services
From summer 2009 onward the price of a one minute phone call between a BTK subscriber and a mobile phone operator and vice versa will decrease to 25 stotinki per minute. Night phone calls will even be cheaper. This is according to the schedule of the price decrease between fixed and mobile phones prepared by the Commission for message regulations (KPC) and the operators, bTV announces."For the period of one and a half years we reduced prices by 35% in the high-traffic zone and 48% in the off-topic zone", the Chair of KPC Veselin Bojkov said.Before the state pushed telecoms for these price rebates, the European Commission criticized Bulgaria many times that the prices and the profits of this kind of service are among the most expensive in the EU. In the fall the regulator will have new market analysis for the expenses and profits of telecoms. If prices continue to be inadequately high, the Commission will order a new price decrease."Then we will have the right to levy even lower prices, lower than these we have already established with the operators. So this will be a major element in our relationship with the operators", Bojkov announced.
Sofia to inject BGN 60 М into subway project
Sofia municipality will make some 60m levs advance payment for the construction of the section linking the northern-lying Nadezhda borough with the downtown Cherni Vrah boulevard. The councilors will vote tomorrow on pouring a further 241m levs into the project. Half of the amount should come under Transport operational programme and the rest from the budget. The contractors, Turkish company Dogus Insaat and Bulgarian tie-in Metrotrace, are to break ground on the project by end-2008. The section should be up and running in 45 months. By 2012 the system is planned grow into 31 km of rails and carry 420,000 people a day.
Bulgaria Varna Port with most modern specialized terminal in Black Sea
Bulgaria's Transport Minister Petar Mutafchiev officially inaugurated Wednesday the specialized terminal for unloading and storage of refined base oils at the Varna port.
The specialized terminal would be the largest and most modern Black Sea terminal. The investment in the terminal is estimated at EUR 10 M.Former Interior Minister Rumen Petkov also took part in the opening ceremony because the company investor wanted to honor him for his support of their attempts to change a fire safety order that had proved difficult to comply with.The concession of the hazardous chemical materials terminal at the port of Varna is currently being prepared as a separate concession from the one for the entire port, according to the Transport Minister, who spoke during the opening ceremony.After the failure of the first procedure to select an investor for the hazardous chemical materials terminal, a second one has already been announced.There is also a possibility, along with the concession, to create joint stock companies, according to Mutafchiev, who added that his Ministry has also taken the first steps into negotiating with the Defense Ministry a location choice for a deepwater terminal in Varna.
Mother banks imported BGN 8.5 billion for a year
World economic crisis didn't hinder west financial institutions to finance their affiliates in Bulgaria with BGN 8.5 billion over the last year, reports of Bulgarian National Bank managed by Ivan Iskrov show. Total investment in the banks is BGN 16 billion by the end of June 2008 with the highest growth in the last half-year when almost BGN 6 billion came as deposits from abroad. Bankers comment this as a good sign for the country.
Finance, insurance stride a top of Bulgaria’s M&A market
Finance and insurance sectors topped Bulgaria’s M&A market in terms of deal numbers in the first half of the year, showed a survey of DealWatch. The market registered 64 mergers and acquisitions worth a combined $2.6 bln of which finance and insurance made ten. Sixty deals worth $3.0 bln were struck in the same period last year. Acquisitions accounted for 42 of all M&A deals in first-half 2008. Sixteen companies sold minority stakes and four went private. There was also one merger and one internal shake-up of a holding company. Foreign investors did 35 of all transactions. Greek companies topped the chart signing nine deals, followed by the UK, Germany, Switzerland, Austria and the US with four each. Bulgarian companies inked six deals abroad, half of them in Serbia.
Flat tax pumps up Bulgaria's budget
The 10-percent flat tax on personal incomes and company profits brought part of Bulgaria's dark economy to light, and enlarged the revenues to the state budget to 2.877 billion levs (1 euro = 1.95 levs), the report on the fulfillment of the government-approved state budget reads. This figure represents 55 percent of the planned revenue for 2008, or 24,6 percent more revenues compared to the same period last year. The revenues from VAT and excise duties reached 5.77 billion levs or only 47,4 percent of what was expected. Nevertheless, there still is a 27,5-percent increase compared to the first half-year of 2007. The budget surplus end-July is 3.777 billion levs; 526 million out of it came from EU subsidies and 3.25 billion was from the national budget. Bulgaria absorbed 945 million levs from the EU and contributed with 359,2 million to the common European budget. The large budget surplus comes to both increasing personal incomes and withheld payments at the start of this year. By June 30 the budget expenditures amounted to 10,25 billion levs, or 40,4 percent of the planned for the year. The capital expenditures amount to barely 24,3 percent of the envisaged for the year. This is a result from both seasonal factors and the fact that there are many tender procedures launched in the beginning of the year, the payment under which takes place at the end.
Investments in real estates in Bulgaria brings more profit than stocks
An investment in a real estate in Bulgaria, although having low liquidity, \brings far bigger profit when the property is sold than one in financial assets, shows a survey of Industry watch on the real estate market in Bulgaria over the third trimester of 2008. In a year's time, the prices of real estates in Bulgaria have soared by 32 percent, while the investments in stocks or mutual funds bring negative profitability on annual basis, and effective interest on newly-opened bank deposits is six percent. After the first visible effects of the global crisis in the middle of last year, the prices of real estates in Bulgaria increased drastically and the difference between the real estate prices here and in most of the EU countries is getting narrower. Still, an apartment in Sofia is twice cheaper than one in Vilnius, the capital of Lithuania. Mortgage loans have a 12-percent share in the Bulgarian economy, as against 39% in the Eurozone, although the total amount of housing loans in Bulgaria grosses seven billion levs. Credit expansion will continue to be an important factor determining the demand for real estates, and the growth in the mortgage loans on annual basis is expected to reach 20-25% over the next few years.
Bulgaria's import rises 28% in Jan- July
Bulgaria imported goods worth a total of 24.7 billion leva (12.6 bln euros) in the first six months of the year, the National Statistical Institute said in a report today. This is a hike of 27.9% against H1 last year (19.35 billion leva, 9.8 bln euros). Exports rose 23.9% to 15.13 billion leva (7.7 bln euros), the foreign trade balance stays negative (at 9.62 billion leva, 4.9 bln euros). Imports from eight countries top 1 billion leva during the period. Russia tops the chart with 3.4 bln leva, followed by Germany (2.88 bln leva) and Ukraine (2.2 bln leva). Other main importers to Bulgaria are Italy (1.9 bln leva), Romania (1.4 bln leva), Turkey and Greece with 1.3 bln leva each and Austria (1 bln leva). Largest importers of Bulgarian goods are Turkey (1.6 bln leva) and Greece (1.5 bln leva), as well as Germany and Italy (over 1.3 bln leva). Belgium also imported more than 1 bln leva worth of goods from Bulgaria. Imports from Georgia, Saudi Arabia, Syria, Japan, Egypt, Albania and Romania are rising at a steady pace, as well as our export to Saudi Arabia, UAE, Republic of Korea, Vietnam, Syria and Georgia. Bulgaria mostly imports machines, fuels and oils.
Food produced in EU may receive a special logo
The European Union will introduce several programs for certification for food produced inside the Union. The purpose of the program is to increase the popularity of these products and stimulate export. Another option is the introduction of a special logo, which will guarantee that the products was made according to all EU procedures and standards. The ideas were presented in the special report on food policy of the European Union.
Organic food is market niche with a great potential for future development as the demand for such goods by far exceeds the current supply, the report also says. The high standards and quality of European food sector may be used successfully as a market strategy, the report suggests.
Bulgaria ranks first in food prices’ growth dynamics
Bulgaria is on the top of the list of EU Member States when it comes to growth dynamics of food costs in the country, a recent Eurostat reports suggests. Food prices in Bulgaria have seen the most tangible increase, surging by over 25% on annual basis (April 2008), whereas Portugal marks the bottom line with a bit over 3%. Right after Bulgaria come Latvia and Estonia. Eurostat reports also revealed that back in 2006 Bulgaria has been at the bottom of the list in terms of hourly payments - EUR 1.65/hour – against a EU average of EUR 20 per hour. Bulgaria’s population has shrunk by 8% over the last decade against a 3% increase in the overall population of the club of 27.
Nearly 40,000 new vehicles sold in Bulgaria in January-August
Sales of new vehicles in Bulgaria in January-August totalled 39,926 vehicles, or 18.4 per cent more than the like period in 2007, data of the Association of Auto Producers show. Of this figure, 37,003 were cars or vans which is 15.9 per cent more than a year ago. The sales of buses and trucks increased by 61.8 per cent compared to the first eight months a year ago, or from 1,806 in 2007 to 2,923 vehicles in 2008. The increase in sales of motorcycles was 28.6 per cent, or from 409 in January-August 2007 to 527 in 2008. The most sold vehicles were Opel, 4,033, or 10.9 per cent of the total sales. Second and third are Toyota, 3,606 vehicles or a market share of 9.75 per cent, and Volkswagen, 3,245 vehicles and 8.77 per cent respectively. Peugeot sold the greatest number of motorcycles, 208, or 39.47 per cent, followed by Yamaha, 123, and Piaggio, 120. Mercedes sold the greatest number of heavy-duty trucks and passenger vehicles, 1,033, or 35.34 per cent of the total sales in this segment. Next come Iveco with 984 vehicles or 33.66 per cent, Volvo, 487 vehicles and 16.66 per cent and MAN, 316 vehicles or 10.81 per cent.
Cigarette prices to rise in 2009
Prices of cigarettes in Bulgaria will rise between 25% and 30% at the beginning of 2009, the general manager of British American Tobacco forecasts. This will be due to the engagement of the country to reach the minimal tobacco excise duty in Europe. The process started in 2008 and will finish in 2010. Tobacco excise duty will be EUR 54 per 1000 cigarettes in 2009 and EUR 65 in 2010.
INVESTMENTS:
Greece companies invest over � 2 B in Bulgaria in first half of 2008
Greek companies and financial institution invested over EUR 2 B in Bulgaria in the first six months of 2008, the Athens newspaper Imerisia announced Tuesday. The Greek investments in Bulgaria are concentrated mainly in real estate properties. In addition, Greek banks own 29% of all bank assets in the country. During the same period, investors from Greece have invested about EUR 3,5 B in Bulgaria's northern neighbor Romania. Thus, Greece remains among the four most important foreign investors in the two countries.
Germany's Dr. Schneider to invest �10 M in car parts factory in Stara Zagora
The German spare automobile parts producers Dr. Schneider intends to invest about EUR 10 M in the construction and opening of a new factory in the southern Bulgarian city of Stara Zagora. The company's representative Thomas Freundorfer has met with the Deputy Mayor of Stara Zagora Velizar Balabanov to discuss the opportunities for building the new factory, which is supposed to produce spare parts for some of the BMW models. The Dr. Schneider Group has asked the Stara Zagora Municipality to provide an appropriate plot of 7000 square meters for the construction of the new plant. About 500 persons, including highly-skilled laborers such as engineers, are expected to be employed in the new factory. According to the German investors, Stara Zagora was a good logistics center and had all necessary conditions for the successful development of their business. Stara Zagora's Deputy Mayor said the new factory could be built in the new industrial zone in the nearby Elenino village, which is located on a plot of 206 decares and is still under construction. Dr. Scheider expects to receive an offer for an appropriate terrain for their factory by mid October. The German company has factories in Germany, Poland, Slovakia, Spain, the USA, Brazil, and China. Its annual production is worth EUR 3 B.
If Voestalpine builds steel plant in Bulgaria, it will invest over � 5 billion and appoint 4,500 workers
If Austrian Voestalpine company decides to build a steel plant in Bulgaria, it will invest over EUR 5 billion and appoint 4,500 workers. The competition for the construction site of the plant is extremely serious, because Romania, Turkey and Ukraine have shown interest in the investment as well, Bulgarian Minister of Economy and Energy Petar Dimitrov said at a press conference, Focus News Agency reported.
Minister Dimitrov and Alfred Dusing, Voestalpine’s chief financial director and member of the Board of Directors, signed a memorandum of understanding.
Investra to take on Pleven’s stopped industrial project
Sofia-based investment company Investra will spend some 20m levs on the construction of a retail and industrial park in Pleven, in the north. The news was announced at a work meeting between mayor Naiden Zelenogorski and the firm’s executive director Georgi Rusev. The park will sprout on a 2.5 ha plot the investor purchased earlier in the year. It will deliver 17,000 sq m of commercial, exhibition, storage, office and servicing space. The construction is due to begin in 2009. The new park will cool down the demand for industrial plots, which heated up after the municipality’s industrial park project ground to a halt as the European Commission blocked payments under the Phare pre-accession programme, said Dikran Ovanasyan, project management and development head at the municipality. Pleven hoped to get some 6m levs of Phare aid for preparation and technical monitoring of the park. Another Sofia-based company, Bulatt, will also build a retail and industrial park in Pleven.
Lighthouse Golf Resort to build � 70 M complex near Balchik
Lighthouse Golf Resort has absorbed 50m euro of the cost of a 70m euro complex that will go up close to Balchik, on Bulgaria’s northeast edge, executive director Georgi Chuklev said at the ribbon-cutting of the golf course. The project, named Lighthouse Golf Resort & Spa, will comprise 1,000 housing units, of which some 600 now under construction and 350 already sold to buyers of various nationalities. The five-star hotel part will feature retail space, bars and restaurants, a spa and wellness centre, a tennis court and swimming pools.The complex will pop up close to two other golf courses – Black Sea Rama and Thracian Rocks, giving golfers the chance to switch courses.
Construction of super modern business park initiated in Bulgaria's Ruse
Bulgaria's Deputy Prime Minister Emel Etem turned Monday the first sod of the new highly modern business park in the Danube city of Ruse. About EUR 30 M will be invested in the construction of the business park by Iris JSC, which is also a partner in the construction of the nearby Mall Rousse. The main building of the Business Park Ruse will have eight floors, one of which will be underground, with a total all-out area of 32 000 square meters. The complex will include stores and showrooms on the lower floors, class "A" office space, as well as conference halls and storage facilities, which will be located nearby. 600 parking spaces will be available on the parking lot. The construction of the business park will be carried out in two phases. The first phase will be completed in the first trimester of 2010, at about the time the nearby Mall Rousse is expected to open its doors. The whole project will be finished several months later. Between 1600 and 1900 persons are expected to be employed at the Business Park Ruse. The investor in the project Iris JSC is a successor of the first textile factory in Ruse founded in 1905. It is presently investing in the construction of business, commercial, and logistics space.
Carrefour chain to build store for � 50M
Carrefour chain for retail trade will build a store in Stara Zagora in southeast Bulgaria for EUR 50 million, Yordan Stefanov, manager of Eurobuild, the co-investor of the project, announced. The store will be ready by mid-2010 and will be situated on 21,000 sq. m. The mall will have two underground parking places for 1,200 cars and two floors with 106 different shops, restaurants and Carrefour hypermarket
Italian consortium invests � 5 M in new factory in Bulgaria's Krivodol
The Italian consortium Elco SpA is going to invest EUR 5 M into the construction of a new factory for the production of small electric motors in Bulgaria's northwest town of Krivodol. A managerial team of the company is expected to arrive in the town later on Tuesday to discuss with the Mayor Nikolay Ivanov the second phase of the project after the draft design of the new plant has been completed and a construction permit has been issued. The new plant is expected to employ about 150 persons. It will be built on a plot of 36 decares. The Bulgarian subsidiary of Elco SpA, Elco BG Property is considering relocating its headquaters from Sofia to Krivodol, where it would receive tax breaks because of the higher unemployment in the region, and would be spared the 10% corporate tax.Krivodol is located 130 km north of Sofia. It has a population of about 3 500 people.The Italian consortium Elco SpA has operations in Italy, Spain, the UK, Hong Kong, and Brazil.
Razlog invests in infrastructure
The investment programme for 2008 of Razlog municipality has already been 60% fulfilled, Lyuben Tatarski, mayor of the town, said. The projects in it cost BGN 20 million, half of which are own funds. Main priority in the programme is improving the tourist infrastructure in the region: water-purifying system, two reservoirs for drinking water, gasification, joint project of four municipalities for a new waste deposit site for EUR 10 million.
Eco village for � 250M to be built in Razlog
The construction of an eco village started near Razlog. It will be one of the biggest complexes in the region situated on 150,000 sq. m with five-star facilities used all the year round. The investment in the village and the infrastructure will be at the total sum of EUR 250 million. Investors are Bulgarian Investment Group and the Israeli companies Tidhar Group and Asim Investements. Construction works will start in 2009 and finish by 2012, the investors said. Tidhar Group is currently working on 22 projects including several developments in Sofia and other Bulgarian towns.
COMPANIES:
Bulland Investments to build Nissan auto complex
Bulgarian real estate investment trust Bulland Investments has broken ground on a Nissan showroom and service centre in the northern town of Veliko Tarnovo, said executive director Valentin Karabashev. The REIT has signed a ten-year lease preliminary contract with the car maker. The project will absorb some 4.0 mln levs and open in seven months on a 0.7 ha area. The centre will showcase and sell Nissan and Renault vehicles. Bulland Investments has pledged to lay power and water pipes servicing the whole area. It will also improve the nearby infrastructure.
Bulgartabac to be sold on the Stock Market
"Bulgartabac's cigarette plants in Sofia and Blagoevgrad will be sold separately on the stock market, but on one condition: that the buyers are strategic investors," Bulgarian Minister of Economy and Energy Petar Dimitrov told The Standart yesterday. "This is the only possible way to denationalize Bulgartabac Holding under the adopted strategy," he said. "We have still not decided yet on the buyer of Kremikovtsi Steelworks," Dimitrov added. Who is going to get Kremikovtsi ownership will be the state's call, since it is the company' largest creditor. The first general meeting of the creditors of the steel company will be summoned on Septermber 26 when they will have to choose the next owner. But before that, all of them have to declare that the company owes them money to be included in the list of the assignee in bankruptcy and approved by the court. Bulgaria already claimed back 700 million levs (1 euro = 1.95 levs) of principal amount and interests, which the company, up to this point, has been considering as a state aid. And that's not all: the smelter must also repay old liabilities to the state-owned enterprises such as the National Electrical Company, Bulgargaz and the State Railway Company (BDZ).
Bulgarian road firms fret over frozen EU money
Frozen European Union money and competition from abroad have started to take their toll on Bulgaria's public road builders, the first-half 2008 reports of Trace Group Hold, Holding Putishta and Moststroy showed. In July, the European commission halted Bulgaria's 825 million euro worth of Phare, Ispa and Sapard projects for suspected fraud and corruption suspicions. Thus, infrastructure projects can only be funded by the state budget. Foreign firms, which stepped on the market after Bulgaria's EU accession on January 1 2007 further dampened the financial performance. Trace Group Hold swung to a 3.5 million leva loss, compared to a profit of 5.9 million leva in the same period of last year, as operating costs soared to 31 million leva. The profit of Holding Putishta dropped to 1.5 million leva from 4.9 million leva as operating costs widened to 49.9 million leva. Moststroy's loss stood at 256 000 leva versus 364 000 leva a year earlier. Still, the prospects of the Bulgarian road construction firms are not terrible, Tsanko Arabadjiev of UBB Asset Management commented. If the companies can manage to handle the high costs of raw materials and the workforce shortage, Bulgarian infrastructure companies may even expand in the region, he said.
Devin eyes SEE acquisitions
Bulgaria’s bottling firm Devin is studying takeover options in the region, executive director Tsvetan Lazhanski said at the ribbon-cutting ceremony for the company’s revamped plant. The firm plans to step up presence in Romania and unveil new warehouses plus another plant with a capacity of some 20,000 bottles an hour. Devin pumped nearly 17m levs into the overhaul of its mineral water unit, thus wrapping up its 2008 investment program. The project was bankrolled by the IPO the company carried out on the Bulgarian Stock Exchange last year. The company said the rollout of its fruit-flavored water has earned it the widest product range of all peers on the Balkan Peninsula.
Kirov unveils sales and service center in Sliven
Kirov, Bulgaria's biggest importer and distributor of industrial equipment and professional tools, has wrapped up the construction of a sales and service center in Sliven, Southeastern Bulgaria. The center has a built-up area of 2,000 sq m and has stomached more than 6m levs. Kirov boasts the widest sales and service network on the market and operates in Bulgaria’s ten biggest cities. It made over 200m levs in turnover last year.
Bulgaria company receives prestigious business award
The Bulgarian company "Overgas" became the recipient of the prestigious international business award "Stevie", as announced by the company's press center. The award was received for the company's development of projects for young employees in the area named "Over-Talent: Investment in Youth". The gold statue was awarded by the Strategic Sales Manager of "Dow Jones International" and "The Wall Street Journal Europe", Adam Ezro at an official ceremony in Dublin, held on Monday.This year's competition was organized under the patronage of Richard Branson, who is the 245th richest person according to Forbes' 2008 list of billionaires.Currently "Overgas" has invested over BGN 14 M in social programs. The young people, employed by the company, who participate in some of those programs are over 13,700.
Prista Oil opens third terminal
The biggest terminal in the Black sea region for receiving, keeping and expedition of refined oils was officially opened in Varna on Wednesday. The investment amounts to EUR 10 million and this is the third project of Prista Oil lubricant producer from Rousse, the other two being in Odessa and Turkey. The equipment was built for only one year and is one of the most modern in Europe. It is highly technological and follows the European eco standards, Plamen Bobokov, president of Prista Oil Board of Directors, said and can be used by all interested Bulgarian and foreign companies. The terminal is located on 29,000 sq. m and consists of 16 reservoirs, a quay for tankers over 10,000 tons and up to 130 m length, a pumping station for simultaneous filling of eight cisterns. This investment will increase the importance of Varna port, the mayor of the town Kiril Yordanov said. Ergon Europe MEA Inc., the biggest lubricant manufacturer in the world and Prista Oil signed a contract for exceptional distribution of oils for transformers in Bulgaria, Romania, Serbia, Montenegro, Kosovo, Bosnia and Herzegovina and Turkey. Ergon signs such an exclusive contract for the first time in its history but the Bulgarian company won the trust with its leading position in the branch and the investments in Odessa and Turkey.
ANALYSIS:
Bulgaria retains stable ranking in Doing Business 2009 Report
Publication: Sofia News agency
Bulgaria has retained its stable ranking in the global lists of countries conducting regulatory reforms, according to the "Doing Business 2009" report"the sixth in a series of annual reports published by the International Monetary fund (IFC) and the World Bank.
Bulgaria's "Doing Business 2009" rank is 45th among 181 economies. Bulgaria is ahead of Romania (47th) and other countries from the area, members of the European Union (EU) such as Slovenia (54), Italy (65) and Poland (76). "Doing Business" ranks economies based on 10 indicators of business regulation that record the time and cost to meet government requirements in starting and operating a business, trading across borders, paying taxes, and closing a business. The rankings do not reflect such areas as macroeconomic policy, quality of infrastructure, currency volatility, investor perceptions, or crime rates. In 2005 Bulgaria has realized five of the reforms that are monitored by "Doing Business": Starting a Business, Paying Taxes, Enforcing Contracts, Closing a Business while Dealing with Construction Permits has been made more difficult.Bulgaria passed two new laws - the Civil Procedure Code and the Law for the Commercial Registry, which will speed the resolution of bankruptcy.The Civil Procedure Code removed the requirement for the Supreme Cassation Court to hear all cases. Now the court can decide whether or not to hear a case. Bulgaria made business start-up easier by creating a central electronic database for commercial registration. This reform consolidated and reduced the number of registration procedures and cut other registration formalities. Amendments to the civil procedural code have helped speed contract enforcement. They reformed rules for evidence and default judgments, raised the minimum threshold for cases in the lower courts, and empowered the civil court of last instance to decide which cases to hear, limiting abuse of the appeals process.Bulgaria introduced a new Corporate Income Tax Act and a new Value Added Tax Act to synchronize local tax legislation with EU legislation.Dealing with construction permits has become more difficult. The fees for obtaining construction permits were increased by about 16 percent in 2008. Stricter environmental requirements mean that companies in Sofia now have to obtain a certificate of energy efficiency before and after construction. This adds 2 steps and 8 days for dealing with construction permits.For the fifth year in a row, Eastern Europe and Central Asia has led the world in "Doing Business" reforms"the region accounts for a third of all reforms observed since "Doing Business 2004". In 2007 Eastern Europe and Central Asia surpassed East Asia and Pacific in the average ease of doing business and has maintained its place this year. Around the world, more regulatory reforms were recorded between June 2007 and June 2008 than in any previous year"113 economies implemented 239 reforms.Azerbaijan led the world as the top reformer in 2007/08, with improvements on seven out of 10 indicators of regulatory reform. Azerbaijan started operating a one-stop shop in January 2008 that halved the time, cost, and number of procedures to start a business. Business registrations increased by 40% in the first 6 months. Azerbaijan also eliminated the minimum loan cutoff of $1,100, more than doubling the number of borrowers covered at the credit registry. Also, taxpayers can now file and pay their taxes online. Azerbaijan's extensive reforms moved it far up the ranks, from 97 to 33 in the overall ease of doing business.Albania, the runner-up in reforming regulations, rose from 135 to 86 in the global rankings on the ease of doing business, with reforms in four areas. These made it easier to start a business, eased tax burdens, and strengthened investor protections and credit information."Countries in Eastern Europe and Central Asia continue to lead the world in easing the regulatory burden on business and in sustaining their reform agendas," said Svetlana Bagaudinova, a coauthor of the report. "We see many of these countries advancing to the top 30 in the overall rankings on the ease of doing business. Many countries that made improvements this year looked to earlier pacesetters for ideas on how to reform."Economies need rules that are efficient, easy to use, and accessible to all who use them. Otherwise, businesses are trapped in the unregulated, informal economy, where they have less access to finance and hire fewer workers and where workers lack the protection of labor law," said Michael Klein, World Bank/IFC Vice President for Financial and Private Sector Development. "Doing Business encourages good rules, and good rules are a better basis for healthy business than ‘who you know,'" he added. Singapore leads the global rankings on the overall regulatory ease of doing business for a third consecutive year. New Zealand is runner-up, and the United States third. Bahrain and Mauritius join the ranks of the top 25 this year. The top 25 are, in order, Singapore, New Zealand, the United States, Hong Kong (China), Denmark, the United Kingdom, Ireland, Canada, Australia, Norway, Iceland, Japan, Thailand, Finland, Georgia, Saudi Arabia, Sweden, Bahrain, Belgium, Malaysia, Switzerland, Estonia, Korea, Mauritius, and Germany.
FT: Bulgarian energy sector seeks to recover its Balkan role
Publication: Profit.bg
Bulgaria’s energy sector is growing but the country is still some way from its goal of becoming a regional hub linking the European Union with the Black Sea rim, the Financial Times reports.The government is committed to joining three international pipeline projects, Nabucco and South Stream for gas and the trans-Balkan oil pipeline from Bulgaria to Greece. But all three are at an early stage of development. “Bulgaria is strategically located for energy transit routes to western Europe, but there are other opportunities in the sector,” says Anthony Hassiotis, chief executive of PostBank, a Sofia-based lender controlled by Greece’s EFG group. The country’s immediate priority is to recover its former role as the leading exporter of electricity to power-hungry Balkan neighbors, following the shutdown of Chernobyl-era units at the Kozloduy nuclear plant as a condition for EU accession in Jan 2007. NEK, the state-controlled electricity company, is due to select a strategic partner by the end of this month for a �5bn ($7bn) nuclear project at Belene on the Danube river. Germany’s RWE and Electrabel of Belgium are bidding. The utility will have a 51 per cent stake in a joint venture to operate two 1,000MW latest-generation units to be built by Russian, French and German contractors. These are due to be completed by 2015. But to compete effectively with central European energy companies, NEK must seek a listing on a western stock exchange or acquire a long-term strategic partner, or both, says Ilian Vassilev, chairman of Deloitte Bulgaria. “We’re still in transition mode. Our energy companies are undercapitalised compared with central Europe so we don’t yet have trans-national players, and the biggest energy company is foreign-owned,” Mr Vassilev says. CEZ, the Czech energy group, and Germany’s Eon have acquired regional electricity distributors, spun off from NEK under the government’s privatization program. Both are seen as potential investors in new generating capacity. Lukoil, the private Russian oil group in which ConocoPhillips of the US has a 20 per cent stake, is investing �1bn to upgrade the Neftochim refinery – the largest in south-east Europe – which it acquired in an early privatization deal. The Russian group this year overtook Petrol Holding, a private Russian-Bulgarian group, as the country’s biggest operator of petrol stations. Lukoil paid �230m for 75 profitable outlets, increasing its market share to around 20 per cent, ahead of Austria’s OMV with around 15 per cent. Neftochim will also supply Akpet, a Turkish network with almost 700 filling stations which Lukoil acquired in July for around $500m. In gas, foreign investors are showing interest in onshore and offshore exploration off the Black Sea coastline and in building storage capacity for natural gas. But the regulatory environment is still undeveloped, while Bulgaria’s dependence on Russia for oil and gas supplies has raised questions about access to local markets for groups based elsewhere in the EU. Concerns over transparency, along with Bulgaria’s slow progress on convergence with EU legal and judicial standards, contribute to a wait-and-see attitude among investors. “For major energy deals the adequate jurisdiction of the legal system is a key element. on the other hand, the more projects there are, the greater the pressure on the government to enforce reforms,” Mr Vassilev says. After reaching a record �5bn last year, foreign direct investment fell by around 30 per cent in the first half following a slowdown in the property market. Yet the economy is still growing strongly at a projected rate of around 5.5 per cent this year, while unemployment has fallen below 6 per cent. Salaries for managers have risen to central European levels, encouraging Bulgarians to return from jobs abroad. “There is productive investment coming in, not only funds for buying property and for banks to meet domestic demand for credit,” Mr Hassiotis says.