불가리아 주요 경제뉴스 ( 19 - 26 SEPTEMBER 2008 )

BULGARIAN ECONOMIC TOP NEWS DIGEST

WEEKLY REPORT ( 19 - 26 SEPTEMBER 2008 )

 

 

 

Sections/headline briefs:

 

 

MACROECONOMY:

 

·        Without energy sources Bulgaria is not independent

·        New mega Ministry in charge of EU money in Bulgaria

·        PM Stanishev leaves on working visit to US

·        The textile and tailoring sector increases by 3,5-4 %

·        About 400 000 automobiles registered in Bulgaria per year

·        Taxi companies increase prices

·        Bulgaria amongst the most vulnerable

·        Financial crisis will cause delays in Nabucco construction

·        EBRD: Bulgarian economy to see correction, not recession

·        Bulgaria ranked 72nd in Transparency International CPI

·        Bulgaria boasts growing revenues from tourism

·        Bulgaria to develop cooperation in tourism sector with Chile

·        Over 200 products to premiere at Technical Fair of Plovdiv

·        Italy is Partner Country at Plovdiv International Technical Fair

·        Bulgaria's state debt amounts to �5.15 billion

·        State Energy Regulator allowed a price increase of 28.83% for natural gas

·        Bulgaria government revives hydroelectric projects on Danube river

·        Sofia to borrow � 105 М for underground extension

·        EC gives �175 M for Sofia's garbage

·        Bulgaria's farmers to get BGN 200 M from national budget

·        Bulgaria to call tender for Danube freight terminal

·        Bulgaria to tender oil/gas exploration permit

 

 

 

 

 

INVESTMENTS:

 

·        Bulgaria’s FDI on the rise in 2008, says Invest Bulgaria Agency

·        Bulgaria is first among new EU members on FDI per capita

·        Economy Minister invites Switzerland to invest in Bulgaria new industrial zones

·        Ruse machine manufacturer becomes first class investor

·        Bulgarian REIT Intercapital borrows �5 M for ski resort project construction

·        �38 M invested in the first hybrid electric plant in Bulgaria

·        Bulgaria's Papas Olio to invest �20 M in biofuels plant

·        Praktiker to open five stores by 2011

·        Bulgarian Alexandra Group to open �25 M Mall in Stara Zagora

·        Hebros Bus to invest in new methane vehicles

·        German automotive spare parts maker Witte to build �11.5 M factory in Bulgaria

 

 

COMPANIES:

 

·        Zhevago takes possession of Kremikovtzi within days

·        144 Bulgarian companies drained BGN 55 M from VAT

·        City Center Sofia mall goes to U.S. Heitman for �101.5 M

·       News Corp seeks new adviser for bTV deal

·        Turkish Ziraat Bankasi plans expansion in Bulgaria

·        Finnish Ruukki to open building materials plant in Bulgaria

·        BTK merges with Vivatel

·        Bulgarian Globul, Mobiltel protest at merger of BTC and Vivatel

 

 

ANALYSIS:

·        Moody's confirms Bulgaria's credit rating

 

 

 

 

 

 

 

 

 

 

Articles:

 

 

 

MACROECONOMY:

 

Without energy sources Bulgaria is not independent

(Excerpt from the address of Bulgaria's President Georgi Parvanov on the Day of Independence)
"By declaring its independence, Bulgaria breaks the shackles of the almost five-century-long Ottoman oppression, removes all impediments to its modernization and takes its place among the sovereign European countries. By declaring their independence, an act that impresses with its boldness and perspicacity, the Bulgarian people proved, just like they did during the uprisings against the oppressor and the Unification Uprising, that they had the political will and the necessary qualities to make our history independently and responsibly. Thank God, in 1908, the politicians did not try to make personal benefits from the Declaration of Independence. Thus they showed us, their successors, that the phrases 'common cause' and 'unity of the nation' are not only political cliches, but have tangible meaning and weight. Today, we should pay tribute to the statesmen, who contributed to the realization of the Bulgaria's sacred goal after its liberation from the Ottoman oppression.We will certainly make a mistake if we focus only on the meaning of September 22, one of the greatest dates in our history; the moral of this event is that if freedom creates opportunities, independence brings with it duties and responsibilities. Today, what makes independence possible is a strong state that has authority and respected institutions. Nowadays, energy independence has grown very important, because no state can be independent and secure without reliable and stable energy sources. Contemporary meaning of independence is also based on infrastructure, knowledge and information.

New mega Ministry in charge of EU money in Bulgaria

Bulgaria's Government envisages forming a new mega-ministry to govern all the funds coming from the European Union. The suggestion comes as a conclusion to an analytical report of 40 pages submitted to Bulgaria's Prime Minister, Sergei Stanishev a week ago, the Standart learnt. The analysis was commissioned to a work group after the sitting of the ruling coalition council in Bansko. The new institution is likely to come to life not before the next Cabinet is formed. Currently the EU funds to Bulgaria are managed by executive agencies to different ministries and are coordinated and controlled by departments in the Ministry of Finance. According to the report, at first the overall coordination of structures belonging to different ministries will be directed under the control of the newest minister - Meglena Plugchieva, Deputy PM in charge of EU funds absorption management. The second stage of the process will be the negotiations with the European Commission for all units responsible for the EU funds changing head and being under the direct control of Plugchieva. Such redistribution is possible although the accession negotiations envisaged the current structure, the report authors told the Standart. Similar units have been established in the ten countries of the EU enlargement last wave.

 

PM Stanishev leaves on working visit to US

Prime Minister Sergei Stanishev is leaving on a week-long visit to the United States today (September 23) for participation in the 63rd Regular Session of the UN General Assembly in New York. It opens on September 24, the government information service said. on September 24, The Prime Minister is scheduled to participate in the morning session of the General Debate of the UN General Assembly and in the High-level Event on the Millennium Development Goals (MDGs) on the fund for achieving the MDGs.
Stanishev will meet with his counterparts Lawrence Gonzi of Malta and Anders Fogh Rasmussen of Denmark. on the same day, the Prime Minister will open an exhibition highlighting the centenary of Bulgaria's Declaration of Independence at Scandinavia House in New York. on September 25, the High-level Event on the MDGs will open in New York and Stanishev will participate in Roundtable I: Poverty and Hunger. Later on he will meet with UNDP Administrator Kemal Dervis, with former US Secretary of State Madeleine Albright, who is currently serving as chairperson of the National Democratic Institute for International Affairs, and with Belgian Prime Minister Yves Leterme. The Bulgarian government leader will attend a reception given by Austrian Chancellor Alfred Gusenbauer to the heads of delegations and permanent representatives. on September 26, Stanishev will meet with UN Secretary General Ban Ki-moon and will join the morning session of the General Debate of the UN General Assembly. The Bulgarian Prime Minister will address the UN General Assembly and will later talk with Croatian Prime Minister Ivo Sanader. on the fourth day of his visit, Stanishev and his delegation will leave for Boston. The Prime Minister will meet with the Bulgarian community there and with representatives of the Bulgarian Harvard Club.On September 29, Stanishev will have a breakfast meeting with representatives of the Boston Chapter of the American Jewish Committee and will participate in a Bulgarian-US investment forum. The Prime Minister will meet with representatives of the leadership of Harvard University and will give a public talk at the John F. Kennedy School of Government at Harvard University on "Bulgaria as a Stabilizing Factor in South-East Europe and the Black Sea Region".Foreign Minister Ivailo Kalfin, who will be in New York, will join the Bulgarian delegation. Deputy Prime Minister Meglena Plougchieva will deputize for Stanishev in his absence.

The textile and tailoring sector increases by 3,5-4 %

The increase of production in the textile and tailoring industry sector in the first half of this year is between 3,5 and 4 percent. This was announced by the chair of the Bulgarian association of producers and exporters of clothing and textile Valeria Jekova at the opening of the sixth Balkan exhibition of clothing and textile BGate in the Inter expo and the congress center Sofia, cited by actualno.com.According to Zhekova this data shows that the industry keeps its competitiveness despite the difficult market situation in Europe and the world and the internal difficulties of the business.The sector is extremely export-oriented as 92% of the production is for export in the European countries.According to data by the association last year the export of textile and tailoring industry amounted to 1,9 billion Euro with a positive trade balance of 300 million Euro.

 

 

About 400 000 automobiles registered in Bulgaria per year

This is data from a survey of the Green Party, which celebrated the European day without automobiles. In 2007 almost 420 000 automobiles have been registered, 20-25% new, the party announced. The effect from the traffic jams is the pollution of Sofia's air, because of the increase of the emissions of harmful gases. Measurements of the air quality are constantly being done in the capital and ever higher values of harmful gases are being read.Their level has been over the acceptable norm for a long time. The polluted air is a reason for the increase of the number of pulmonary diseases, the increase of the number of asthma patients is substantial.

Taxi companies increase prices

Taxi transport in Sofia may increase by 18-20 stotinki per kilometer because of the inflation of fuels and car maintenance. According to the Chair of private transporters Rumen Krumov there must be an increase of the price of the service, but for now it is difficult to forecast when Sofia companies will decide to do it, "Dnevnik" reveals.on the world market petrol decreases in price, but this has not been reflected on prices in Bulgaria. A 15% increase is logical in order to equalize the taxi service with the price increase of fuels", Krumov said.He added that car maintenance has increased by over 10% and service stations have also increased their prices. Taxi fares increased last September, when Sofia companies "O'kay supertrance" and "Za edno evro" increased prices by 20%.Back then the day fare jumped from 49 to 59 stotinki and the night fare - from 59 to 70 stotinki. According to clients, however, companies must not increase their price, because traffic jams in Sofia make it more expensive anyway, and taxis profit more from the stay fare. Thus, for one and the same route the price now is substantially higher compared to last year.  

Bulgaria amongst the most vulnerable

Bulgaria and the Baltic countries are the economically most vulnerable newly acceded EU members, and might suffer dire credit-crunch consequences, since their economies are too dependant on international loans, that have been drawn to fill in current account deficits. Another reason for this vulnerability is the construction boom, which gave a lot of boost to economies of these countries, but which was just as much dependant on credit. This is what an analysis by the Reuters, dedicated to the effects of the global credit crisis, on the countries of Central and Eastern Europe, underscores. The commentary also points out, that the fact that the national currencies of Bulgaria and the Baltic states are "tagged" to the euro is, on the one hand, a consolation for investors, and - on the other - an impediment to ascribing to these currencies values that are equal to their actual rates of exchange. At its worst, this could result in national currency leaks and devaluation and ultimately trigger economic declines and household impoverishment.

 

 

 

 

 

 

 

Financial crisis will cause delays in Nabucco construction

 

The construction of the Nabucco pipeline will begin with a delay of at least six months, Hungarian diplomat Mihai Bayer said, as quoted by the Dnevnik daily.It is hard to find sufficient financial resources in the wake of the international financial crisis, Bayer explained. According to him the production and transportation of the fuel is a problem more serious that the eventual pipeline construction delay. Although Nabucco is a project, which originated from the EU, the European community will be unable to find enough financing for the project, Bayer also said. In the same time the European Bank for Reconstruction and Development announced its intentions to enter the Nabucco project. The start of the work on the pipe will much depend on Turkey’s position, Bayer explained.

 EBRD: Bulgarian economy to see correction, not recession

Bulgaria is one of the countries in Eastern Europe whose economy will avoid a recession and the devaluation of their currency, European Bank for Reconstruction and Development (EBRD) chief economist Erik Berglöf told Dow Jones Newswires in an interview.Bulgaria and other economies in the region may have to face certain challenges, but for the time being held their ground against the gravity laws that brought the hard landing of many European economies, Berglöf said.The feeble macroeconomic indicators of countries in the region were compensated by their membership in the European Union, which guaranteed inflows of foreign capital, he said. Romania and Bulgaria joined the bloc in 2007, while Serbia and Croatia are in talks to join the bloc.The presence of foreign groups on the local banking markets was a guarantee that domestic lenders would be backed by their majority shareholders if the credit market continued to contract.Berglöf said that the current market situation could not be compared to the crisis some of the developing economies suffered in the 1990s when their current account gaps caused serious trouble. Wide current account deficits are still an issue for many of the countries, but their economies will see corrections rather than negative growth.

Bulgaria ranked 72nd in Transparency International CPI

Bulgaria is ranked 72nd out of a total of 180 countries in the Transparency International Corruption Perceptions Index (CPI) for 2008, it emerged at a news conference at the BTA National Press Club on Tuesday. Among the EU member states, Bulgaria has the lowest CPI for 2008, said Diana Kovacheva, Executive Director of Transparency International Bulgaria. Bulgaria was first included in the CPI in 1998 with a value of 2.9 points. In 2002-2007 the index of Bulgaria does not have significant changes, and moves around 4 points. For 2008, the index for Bulgaria registers a serious decline, and stands at 3.6 points. In the report, the lowest corruption levels receive 10 points, and the highest levels receive 0 points. Dimiter Kyumyurdjiev, Deputy Chairman of the Management Board of the Transparency Without Borders Association, said that for the first time Bulgaria not only does not increase its index, but lowers it. He noted that, according to studies, Bulgaria is no longer a sustainably corrupt country but a strongly corrupt one. It is unacceptable for a country which has been in the EU for a second year to have a lower index than its neighbors which are not members of the Union, Kyumyurdjiev said.

 

 

Bulgaria boasts growing revenues from tourism

 

The revenues from tourism in Bulgaria have grown by 17.6 percent as compared to the last year. The growth has been registered by the beginning of August 2008. With a view to this upward trend by end-year the increase might well reach 20 percent, according to Anelia Krushkova, head of the State Tourism Agency. Growing numbers of tourists who vacation in Bulgaria will yield about 16 percent more revenues to the state budget. However, the number of Bulgarians who prefer to vacation abroad is on the rise, Krushkova noted.

Bulgaria to develop cooperation in tourism sector with Chile

Bulgaria's government approved Thursday the Draft Memorandum for Understanding between Bulgaria and Chile, which provides for enhancing and expanding the bilateral cooperation in the tourism field.The news was announced by the government's press service after the end of the regular weekly meeting of the Council of Ministers.The Memorandum is going to promote the organized group tourism and individual visits between the two countries, and will seek to establish new forms of specialized tourist services, and of information exchange in the field.It will expire it five years, and could be renewed automatically for five more years.

Over 200 products to premiere at Technical Fair of Plovdiv

 

Over 200 products will premiere at the 64th International Technical Fair Autumn 2008 in Plovdiv between September 29 and October 4, said Ivan Sokolov, Executive Director of the International Fair of Plovdiv. These include 46 world novelties, 16 European novelties, and 149 products appearing on the Bulgarian market for the first time.Sokolov said Autumn 2008 will demonstrate cooperation between Bulgarian and European companies and building of new business networks, increased interaction between scientific sections and companies, and the ambition of business entities to keep up the pace of development despite the crisis.A total of 3,078 companies from 45 countries will take part in the Technical Fair. The total includes 1,805 foreign companies, with Germany featuring the largest number of foreign companies, at 471, followed by Italy, at 377. The largest exhibition areas will be occupied by Bulgaria, Turkey and Germany. Eleven countries have bid to take part officially, including Italy, which is a partner country for the Fair, Austria and Greece. For the first time the Autumn Fair of Plovdiv will feature participants from Latvia, Liechtenstein, New Zealand and Singapore.Nine international exhibitions will be staged during Autumn 2008: Aquatech - on water technologies and water management, Autotech - on transport, Eltech - on electronics and electrical engineering, Eneco - on energy and environment, Infotech, Mechanical Engineering, Chemistry, Stroitech - on construction, and an Auto Salon which has already become traditional for Plovdiv. For the first time, the participants in the Fair will be able to run commercials round the clock on three multimedia screens. In the last year, the International Fair of Plovdiv has invested over 15 million leva in construction projects. 

Italy is Partner Country at Plovdiv International Technical Fair 

 

Italy is preparing a wide-scale business presence at this year`s International Technical Fair in Plovdiv, a press release on the fair's Website said. As Partner Country at AUTUMN 2008, Italy will support the business expansion of the Italian companies in Bulgaria, assist in identifying cooperation partners and organize events to boost business contacts, the release adds. Italy`s participation in the 64th International Technical Fair,to be held on 29 September to 4 October in Plovdiv, is organized by the Italian Institute for Foreign Trade in Sofia (ICE) and encompasses 315 exhibitors, nearly 10 chambers of commerce and industry and a number of prestigious business associations, the site further states. In turn, ICE Director Fabrizio Camastra told journalists that the exhibits will cover an area of nearly 1,000 sq m.Italy has been selected partner country for a second time after 2005, which is evidence of close commercial and economic contacts, Italian Ambassador to Bulgaria Stefano Benazzo said. He added that Italy encourages its companies to invest in Bulgaria, particularly in the fields of infrastructure, transport, processing of solid household waste and health care.Benazzo presented the programme of seminars and events to run parallel to the first three days of the fair and intended to underscore Italy`s role as a leading trade partner of Bulgaria.The Business Events Programme comprises round table discussions and seminars on the business opportunities for Italian companies in the Bulgarian infrastructure market; women`s entrepreneurship contribution to the creation of a modern and operative productive system; local business culture training and building of entrepreneurial networks; joint venture activities of companies, institutions and communities in the utilization of EU structural funds; Corridor No. VIII perspectives and related projects.

Bulgaria's state debt amounts to �5.15 billion

The nominal amount of Bulgaria's state debt in the end of 2007 amounts to 5.16 billion Euro, 3.53 billion of which is state debt and 1.636 internal debt. This was announced by the Ministry of finance. The decrease of debt in absolute terms compared to 2006 is 482.8 million Euro.The amount of foreign debt marks a decrease of 607.6 million Euro throughout the year as a result of the payments on the principal and a change of currency exchange rates.In the structure of the state debt according to types of creditors the biggest share up to December 31 2007 is for obligations - 32.9%, followed by DCK, emitted on the internal market - 31.7%, the World Bank - 20.9%.

State Energy Regulator allowed a price increase of 28.83% for natural gas

The state commission for energy and water regulation (DKEVR) confirmed a price increase of 28.83% compared to the current price of natural gas for the fourth quarter, Agency "Focus" announced. A profit of 3% as well as a transportation price for the amount of 19.73 levs/cubic meter is included in the price. "Bulgargaz" cannot accept the justifications in this report and the threshold price.Because of such reports and actions "Bulgargaz" has approximately 65 million levs loss for the last 9 months, which will increase by a minimum of 30 million levs", the executive director of "Bulgargaz" Dimitar Gogov said.The company offered the State commission to set the price of natural gas for the fourth quarter of 2008 to 593,53 levs/cubic meter without VAT (including 19,73 levs/cubic meter for transportation).The increase of 158 levs per 1000 cubic meters or 31,51% compared to the active price, Bulgargaz motivated with the price increase of alternative fuels on the international markets, as with a the increase of the value of the US dollar by 6,31% on average.The other major reason for Bulgargaz to demand a serious price increase of natural gas is the established by the energy regulator lower price than the one offered by the company for the third quarter of the year. The regulator allowed a price increase of 5.16%, while the company demanded 19,99% price increase.This is the biggest price increase after the changes in the contracts for supply and transit with "Gazprom" a year ago and accrued for 2008 it will reach 68.5%.

 

Bulgaria government revives hydroelectric projects on Danube river

 

Bulgaria's government decided Thursday that the Minister of Energy and Economy Petar Dimitrov was going coordinate and govern the re-launching of two joint hydroelectric projects with Romania on the Danube River - "Nikopol-Turnu Magurele" and "Silistra-Calarasi". Dimitrov is going to chair the interdepartmental working group, which must examine, analyze and confirm the technical, economic, and environmental feasibility of the two projects, and to consider the opportunities for finding private partners to realize them. The "Nikopol-Turnu Magurele" project envisages the construction of a dam on the Danube close to the Bulgarian town of Nikopol, and the Romanian town of Turnu Magurele, and about 7 km northwest of the town of Belene, where Bulgaria's second nuclear power plant will be constructed. The project will aim to improve the navigation of the river, and to take advantage of its hydroelectric potential not unlike the Iron Gates Dam between Serbia and Romania.The dam will be wide about 16 meters, which would allow the construction of a highway, and a railroad connecting the Bulgarian and the Romanian banks of the Danube.After the completion of this project both Bulgaria and Romania are expected to have new electricity production capacities of 440 MW each, which will produce about 2200 GW/h of electricity per year.The "Silistra-Calarasi" project will be similar, only of smaller scale. It will include the construction of a dam close to the Bulgarian city of Silistra, and a water-powered complex with the capacity of 265 MW, and production of 1642 GW/h of electricity per year.The construction of "Nikopol-Turnu Magurele" complex was planned in the 1960s, and was formally started in 1977. However, the positive effects of its completion were disputed by a report of the Ministry of Environment in 1999, which stated that dam would cause the river level to rise by 7 meters, and to flood three-quarters of the town of Nikopol, and 500 000 decares of agricultural land.

 

Sofia to borrow � 105 М for underground extension

Sofia municipality will sign a EUR 105 million loan agreement with the European Bank for Reconstruction and Development to finance the extension of its underground network. The 25-year loan will bankroll halfway the cost of the stretches from Mladost 1 residential district to Tsarigradsko Shose boulevard and from Obelya to Nadejda districts.The municipality should cover the rest of the project’s cost. Italian construction company Astaldi and Bulgarian tie-up Geotechmin-Stanilov and Metro Mladost have filed bids in the tender for the first stretch, which should be completed by 2011.The Obelya-Nadezhda stretch is due for completion until 2012.

 

 

EC gives �175 M for Sofia's garbage

We have the assurance of the European commission that 174 million euro will be granted to Bulgaria for installations for treatment of the garbage of Sofia. This claimed the mayor of Bulgaria's capital Boiko Borissov in front of the Sofia municipal council, cited by BNR. After the meetings I had yesterday and on Tuesday with the European commission, we were assures that after the presentation of the application form from the Ministry of environment and waters, 175 million euro will be granted for installations for treatment of the garbage of Sofia municipality. Borissov said that during the talks he had remained with the impression that the EC is satisfied with the speed of the implementation of the program for waste treatment in the municipality.The mayor of Sofia added that up to this moment Romania has six projects for waste management, which were financed by the European commission and Bulgaria has only one – that of Sofia municipality.

Bulgaria's farmers to get BGN 200 M from national budget

Two hundred million levs (1 euro = 1.95 levs) of national budget money will be shared out by farmers who have lost their SAPARD funding as Bulgaria's cabinet decided yesterday to resume the payments under frozen SAPARD projects. A hundred and fifty million levs accumulated from saved budget layouts and overfulfilled revenues, will be transferred from the Bulgarian budget to a non-budget account and additional 50 million will be provided by àn initially planned co-financing.

Bulgaria to call tender for Danube freight terminal

 

Bulgaria will call a tender for concession on its Danube freight terminal of Somovit, which is part of the larger port terminal of Ruse, the government said on Thursday. Details on the conditions of the tender will be made public after the government decision is published in the State Gazette, the government said in a statement, providing no further details. In 2006, Bulgaria scrapped the tender for a 30-year operating concession on the Somovit freight terminal after the Supreme Administrative Court overturned the cabinet's choice for the concession. In June 2005, Bulgaria selected domestic firm Oktopod-S after the firm outbid six other Bulgarian companies and one Cyprus-registered in the tender. The Somovit tender is part of the plan of Bulgaria's previous government to award concessions on nearly two dozen of the country's river and sea ports and freight terminals, aiming to modernise them and enhance their business operations.

Bulgaria to tender oil/gas exploration permit

 

Bulgaria will call a tender for an oil and gas exploration permit in the country's northwest, the government said on Thursday. The winner of the tender will cover the risk and expenses related to all exploration activities," the government said in a statement. The tender will be held 150 days after the government decision is published in the Official Journal of the European Union.The exploration area is a bloc of 1,348 square metres near the town of Knezha.

 

 

 

 

INVESTMENTS:

 

Bulgaria’s FDI on the rise in 2008, says Invest Bulgaria Agency

Invest Bulgaria Agency chief executive Stoyan Stalev told a news conference on September 24 2008 that Bulgaria got 2.84 billion euro in foreign direct investment (FDI) in January to July 2008.This was an increase of 200 million euro year-on-year, Stalev said, as reported by Bulgarian news agency BTA.He was speaking at the unveiling of the 2008 World Investment Report entitled Transnational Corporations and the Infrastructure Challenge. The report was presented by the United Nations Development Programme, Confederation of Employers and Industrialists in Bulgaria and Invest Bulgaria Agency.Stalev said that a total $16 billion was invested in Bulgaria in 2006 and 2007, more than 50 per cent more than the sum of FDI in the 16-year period after 1992. He said that for the first time, the report classified Bulgaria among European Union states rather than in the South Eastern Europe category.Stalev attributed the growth of FDI in Bulgaria to low taxes and the currency board arrangement that pegs the leva to the euro to keep the local currency stable.

Bulgaria is first among new EU members on FDI per capita

Just three of the 12 new EU member countries attracted more foreign direct investments than Bulgaria last year. Those are Poland, Romania and the Czech Republic, Henri R. Jackelen – UNDP Bulgaria said. Bulgaria attracted a total of 8.429 billion dollars in 2007 and ranked first among the newly adopted EU members in terms of FDI per capita. FDI stands at 37 billion dollars for the past seven years, Jackelen also said. The bulk of the investments to Bulgaria comes from Austria, Germany, Greece, the Netherlands and USA, Stoyan Stalev, Bulgarian Investments Agency executive director, said. He also pointed out that Bulgaria has not been seriously hit by the global financial crisis. Foreign investments are primarily directed to the sector of real estate and finance, followed by that o manufacturing. Number one in attracted FDI in the world is the US, followed by Great Britain, France, Canada and the Netherlands. 790,000 subsidiaries of foreign companies employed a total of 82 million people last year and sold goods worth a total of 31 trillion dollars.

 

Economy Minister invites Switzerland to invest in Bulgaria new industrial zones

 

Bulgaria's Economy Minister Petar Dimitrov invited Swiss companies to invest in the country's new 100 industrial zones that the Bulgarian government is planning to build with state funds.Dimitrov is on an official visit to Switzerland. on Tuesday he met with two members of the Swiss Federal Council - Moritz Leuenberger, who is the head of the Federal Department of Environment, Transport, Energy, and Telecommunications, and Doris Leuthard, who is the head of the Federal Department of Economic Affairs.The Bulgarian Minister announced his idea to construct a joint high tech center in Bulgaria with part of CHF 76 M of Swiss state funds allocated to the country as development aid. Dimitrov pointed out that the Bulgarian government was trying to develop the high-tech manufacturing and service sectors, which had a high added value. Doris Leuthard agreed that the idea about a Bulgarian-Swiss high-tech center was a great one but emphasized the importance of a well-functioning judicial system for the Swiss investors.In order to guarantee the transparent spending of the money of the Swiss taxpayers, Dimitrov suggested that the funds be governed jointly. He added the best opportunities for Swiss investments in Bulgaria were in the energy efficiency, infrastructure construction, and small and medium scale production.

Ruse machine manufacturer becomes first class investor

The Ruse manufacturer of welded units, loading and construction machines "Sparkly" received Thursday a "first class investor" certificate for its project to expand production activities evaluated at BGN 50 M.The investment is going to be gradually made over the next three years and the expansion is going to create 220 new job opportunities.The investment is mostly in high-end technology and the new production would be mainly for export.Currently the company has a monthly export valued at EUR 2 M. "Sparky" also makes limited quantities of farming machinery and parts for electric trucks for the domestic market. The new investment further includes moving production that could potentially pollute the environment away from the city's downtown.

Bulgarian REIT Intercapital borrows �5 M for ski resort project construction

 

Bulgarian real estate investment trust (REIT) Intercapital Property Development said it has borrowed 5.0 million euro ($7.4 million) in bank loans to fund the construction of a ski resort project. Intercapital received an investment credit of 4.5 million euro and a working capital credit of 500,000 euro from DSK Bank, owned by Hungary's OTP Bank, the REIT said in a filing with the Bulgarian Stock Exchange information service X3 News late on Friday. The funds will go for the implementation of a project in ski resort Borovets, Intercapital said. The company opened its Marina Cape holiday complex in the Black Sea town of Aheloy in 2007. The REIT's shares last traded on Friday, closing at 8.0 levs, down 3.0%.

�38 M invested in the first hybrid electric plant in Bulgaria

A project of the first Bulgarian hybrid electric plant, which will be built on a terrain in the area of Troyanovo village, was presented at a press conference today. The Wind-photovoltaic electric plant "Zlaten yug" (Golden south) will be the first of its kind on the Balkan peninsular.The total amount of the investment is 38 million Euro, as the first stage of construction begins 2008-2009 and is valued at 8 million Euro. The second stage starts 2009-2010 and will cost 14 million Euro, and the third stage in 2010-2012 is for the amount of 16 million Euro.The electric plant "Zlaten yug" has 6,5 megawatts power and includes a photovoltaic park with an installed power of 4,5 megawatts and wind turbines with installed power of 2,0 megawatts, for seasonal balanced electricity production, consistent with the natural wind-sun conditions. Bulgaria, which joined the European Union in 2007, should generate at least 11% of its electricity from renewable sources by 2010 and 16% by 2020 under agreements with the bloc. As a comparison, the country generated five to eight percent of the electricity from renewable sources, mainly water, in the past years.

Bulgaria's Papas Olio to invest �20 M in biofuels plant

Bulgarian edible oil producer Papas Olio plans to invest up to 20 million euro ($29.4 million) to build a biofuels plant with an yearly output capacity of 100,000 tonnes at the country's northern Black Sea coast, its CEO Georgi Tashev said.The plant will be built with an option to increase its output but not above 200,000 tonnes, Tashev told SeeNews in a recent interview.The investment, to be financed through loans, will be split in two stages. Following the first portion of investments Papas Olio will produce oils that can be used both for refining edible oils and for biofuels. In the second stage the company will install biofuels production capacities.We can stop at the first stage," said Tashev, adding that the company's investment and expansion plans strongly depend on international demand for its output. I hope we'll complete the first stage next year," he said. Papas Olio has also announced plans to go public in 2009 to finance a capacity expansion. Public offerings on the stock exchange in Sofia have faced difficulties since the beginning of the year as global volatility has made investors cautious. Some companies delayed plans to go public after local bottle cap manufacturer Herti sold just 0.11% of its planned capital hike through an initial public offering earlier this year. Papas Oil has recently won a tender for three land plots at the Black Sea port of Balchik, where it will build the edible oil-to-biofuel processing facilities. Tashev's biggest concern about the investment plan is the lack of adequate regulations in the domestic biofuels market and an overall unfavourable business climate in that market niche, a result of weak law enforcement that has drawn strong criticism from the European Union, which Bulgaria joined in 2007. Bulgarian biofuels producers unanimously agree that if the state exempts mixes of fossil and biofuels at a proportion equal to the current domestic standard for mixing 95% fossil with 5% alternative fuels, the domestic market will come to life. They say the Economy and Energy Ministry has failed to nominate an authority to monitor the biofuel content in the fuel mix, although all biofuels are exempt from excise duty. For that reason, currently no fuel traders in Bulgaria are mixing fossil fuels with biofuels. The company, which produces fodder and flour, and trades in grain, hopes to double sales to some 230 million levs ($168.2 million/114.1 million euro) this year, as output rose after drought largely devastated crops in the country in 2007, said Tashev. Papas Olio is 30%-owned by local retailer Agro Lega. Tashev and Greek businessman Papatheodoru Georgios own 35% each, according to the latest data from the Bulgarian corporate register Apis. The company's share capital is 23 million levs, divided into the same number of shares. It is based in the southeastern city of Yambol, where it has an edible oil factory.

Praktiker to open five stores by 2011

 

Germany’s second-largest home improvement retailer Praktiker intends to open at least five new stores in the country by 2011, country manager Reiner Witka informed. Praktiker runs eight units at present, in which it has invested EUR 58mn since it entered the local market in September 2004. The sales of Praktiker have increased by some 50% y/y to 68.1mn in H1. The company claims a share of 10% on the market in the country.

 

 

 

Bulgarian Alexandra Group to open �25 M Mall in Stara Zagora

Bulgarian cinema operator Alexandra Group will cut the ribbon for a 25 mln euro ($36.8 mln) shopping and entertainment centre in the southern town of Stara Zagora in October 2008. The Park Mall with a floor space of 30,000 sq m will deliver six cinema halls with 950 seats, a 2,500 sq m Piccadilly supermarket and over 120 shops, coffee bars and restaurants. The mall will create about 800 jobs and sell the renowned clothing brands of Mango, Calliope, Sprider, Beauty Zone, Adidas, Andrews, Denyl, Etere, Fox and Seven Seconds. Colliers International Bulgaria was hired to manage the retail centre. The cinema operator has office and housing projects under construction in Sofia, Stara Zagora, Plovdiv and Burgas. Stara Zagora, which has a population of over 160,000 people, will host two other malls of poultry maker Gradus 1 and Real Estate Bulgaria, and of Polish Globe Trade Center (GTC).

Hebros Bus to invest in new methane vehicles

Hebros Bus Ltd is in the final stage of negotiations with the European Bank for Development and Reconstruction (EBDR) for a 10-year credit amounting between EUR 7-8 million. The funds will be used by the company to carry out its investment programme and renovate its bus park with vehicles type Euro-4 working with methane instead of diesel. The buses will be used for the public transport in Plovdiv.

German automotive spare parts maker Witte to build �11.5 M factory in Bulgaria

 

German automotive spare parts manufacturer Witte will invest 22.5 million levs ($16.9 million/11.5 million euro) in building a production unit in Bulgaria's Danube city of Ruse, the head of the government's investment promotion agency said on Thursday."The company is to carry out the project within three years," InvestBulgaria's head Stoyan Stalev told SeeNews without providing further details."We will award to them an investment certificate these days," he added. InvestBulgaria was established to facilitate larger investments in the country. Bulgaria aims to attract more foreign direct investments (FDI) in production to make its economy more competitive. FDI in the country so far were mostly focused on real estate projects. Earlier this month, France's aluminium car parts manufacturer Montupet opened a 40 million euro plant, also in Ruse, that will initially produce parts for Renault vehicles.

 

 

 

 

 

 

 

 

 

 

COMPANIES:

 

Zhevago takes possession of Kremikovtzi within days

In a matter of days the ownership of "Kremikovtzi" will pass to the businessman Konstantin Zhevago, news.bg found out.The deal will not be publicly announced until the Bulgarian court takes a decision to declare the factory insolvent.After the sale of "Kremikovtzi", some of the production facilities and parts of the land will be sold to construction investors.According to people who work on the acquisition of PFC "CSKA" by the Ukrainian millionaire, he has declared that he will buy the soccer team, but only after he acquires the "Kremikovtzi" shares. According to them, Zhevago has prepared a budget project for the 31 time champion CSKA, which will amount to 10 million Euro, Sportal.bg announced.

144 Bulgarian companies drained BGN 55 M from VAT

 

A total of BGN 55 M from VAT from the state budget has been drained by 144 Bulgarian companies, a check-up of the National Revenue Agency revealed Monday.It is to be established if the firms, based in the cities of Sofia, Plovdiv, Stara Zagora, Haskovo andVarna, have organized schemes for money draining or the sum is missing due to accidental tax law violation.After the end of the check-ups in about two weeks, there will be conducted overall audits of the companies involved.If some tax crimes are revealed, the documentation on all the cases will be handed to the Prosecutor's Office.

 

City Center Sofia mall goes to U.S. Heitman for �101.5 M

Equest Balkan Properties sold its City Center Sofia big-box shopping centre to U.S. real estate investment management firm Heitman for 101.5 mln euro, Dow Jones news agency reported. The deal was announced on September 19 and should be wrapped up in November.Equest bought the shopping mall off-plan some two years ago. It paid 94 mln euro to the seller, Stroytown, affiliated to Roumen Gaitanski, Sofia’s former waste collection concessionaire. In December 2007 the mall was evaluated at 99.5 mln euro, Equest’s official statement reads. The new owner will pay out a 64 mln euro mortgage debt and a further 37.5 mln euro in cash upon finalizing the contract. The proceeds will finance other projects and bank loans. Heitman European Property Partners III acquires Lerma BV, which holds 100 pct in CCS’s owner, local company Auriga. Sources told Dnevnik daily that the U.S. company is eyeing other projects in Bulgaria as well. one of them is Mall Stara Zagora in the central town of the same name. The shopping centre should open doors next week. Heitman is headquartered in Chicago and operates in the USA and Europe. It has a portfolio worth $22.8 bln. Meanwhile, Equest said it will pump 45 mln euro into the construction of a retail park in neighbouring Romania. The development will rise on an 8.0 ha land plot over the next 18 months. Equest inaugurated its first Romanian retail park, Vitanis, two days ago. The project was acquired in end-2006 and expanded by a 30 mln euro investment bringing the total to 60 mln euro. It has accommodated outlets of French retailer Carrefour, local electronics retailer Technomarket and German DIY retailer Praktiker.

 

News Corp seeks new adviser for bTV deal

News Corp., owned by Rupert Murdoch, is set to appoint a new adviser for the sale of its assets in three Eastern European countries, Bulgarian daily Dnevnik reported on September 23, quoting Dow Jones Newswires.The media conglomerate is seeking buyers for stations it owns in Bulgaria, where it owns the market leader in terms of advertising revenue bTV, Latvia and Serbia.It hired Lehman Brothers, the Wall Street investment bank that filed for bankruptcy earlier in September, in July to "ascertain the value and strategic options", according to a report by Reuters news agency.The collapse of Lehman Brothers has prompted Murdoch to seek a new advisor, even though its European mergers and acquisitions arm was not affected by the bankruptcy filing, Dnevnik said.JP Morgan is touted as the likeliest replacement, but talks are under way with other banks, according to the report, which quoted sources familiar with the situation.Initial offers were expected in August, at which point investment funds Warburg Pincus, Advent International and GMT Communications Partner, as well as German media group RTL were reported to be interested in putting in bids. The next round of bidding was due to finish by end-October, but it was not immediately clear whether the change of consultants would affect the schedule of the sale, Dnevnik said.The Bulgarian broadcaster could fetch up to 1.1 billion euro, according to Dow Jones estimates from the summer, based on the fact that bTV's closest rival Nova Televizia, which has a market share half as big as bTV's, was sold to Scandinavian Modern Times Group (MTG) for 620 million euro.

Turkish Ziraat Bankasi plans expansion in Bulgaria

Turkey’s state-controlled T.C. Ziraat Bankasi A.S. will open five offices in Bulgaria, the lender’s general director Can Akın Caglar told Turkish newspaper Sabah. The bank is now in talks with the Bulgarian central bank. T.C. Ziraat Bankasi opened its first Bulgarian office in 1998. It had assets of 48.334 million levs in June 2008, under central bank data. It had a corporate and retail loan portfolio of 13.8 million levs. The other Turkish lender operating in Bulgaria, D Commerce Bank, recently launched an active campaign in both the corporate and the retail segment. Caglar said T.C. Ziraat Bankasi will aim to set foot in all countries where Turks do business.

Finnish Ruukki to open building materials plant in Bulgaria

Finnish construction components supplier Ruukki will open in 2009 a warehouse and a new office in Bulgaria, said Valentin Valov, executive director of the company’s Bulgarian unit. Ruukki stepped on the market in 2007 and plans to expand in the northern coastal city of Varna. The company said its materials have been used in some 60 percent of Bulgaria’s industrial buildings. one of the firm’s competitive edges is the low prices secured by a production unit in neighbouring Romania cutting transportation costs. Times are hard for the global construction sector but the Bulgarian industry is thriving, according to Valov. Housing construction has been making solid gains in recent years but it is yet to change its direction. The company says the construction of industrial and storage buildings is yet to unfold its potential. Ruukki supplies metal-based components, systems and integrated systems to the construction and engineering industries. It posted a net income of EUR 2 billion for January to June 2008 versus EUR 1.9 billion for the past year.

 

BTK merges with Vivatel

The Bulgarian telecommunications company will transfer properties for over 281 million Euro to newly incorporated trade companies.This was decided on a special general assembly of the shareholders of the telecom.The properties are located throughout the country, the major part is in Sofia, as the financial appraisal of the Sofia properties only amounts to 142 million Euro.Another decision of BTK (Bulgarian Telecom Company) is the merger with the company "BTK Mobile", which by now operated as a separate subsidiary company and manages the trade mark of the third GSM-operator "Vivatel".The merger was approved by the Commission for message regulation. As a result of the operation the entire property of "BTK Mobile" will go to BTK, which in turn will take the responsibilities of its liabilities. The assets of the mobile operator towards the end of May 2008 amount to 575.98 million levs and the liabilities amount to 177.5 million levs.

Bulgarian Globul, Mobiltel protest at merger of BTC and Vivatel

 

The main mobile operators in EU newcomer Bulgaria, Globul and Mobitel, on Wednesday protested against the decision of Bulgaria's telecoms operator BTC to merge its fixed-line and mobile businesses, saying this violated anti-trust regulations of the bloc. Both telecoms said they have notified European Union authorities of their concern at the plans of BTC, 65%-owned by AIG Global Investment Group (AIGGIG). Globul said the merger would create a new type of operator which could use the monopolistic position of BTC, to the detriment of free competition. After a series of events of unbalanced treatment, we decided to restate the note," Josef Vinatzer, CEO of Telekom Austria's Bulgarian unit, Mobiltel, told reporters, referring to a previous protest note three years ago. The telecommunications regulator in Bulgaria seemed to support a monopoly, he added. Mobiltel said that it controls 50% of the mobile market, Globul 38% and BTC's Vivatel 12%, while BTC holds 97% of the fixed-line and broadband Internet sector. The merger would give Vivatel an advantage over the other operators, Mobiltel and Globul said. The merger of BTC and Vivatel, which is against the rules of the EU and violates European practices, will not be in favour of end consumers and the development of the market as a whole," said Globul, the Bulgarian unit of Greek wireless operator Cosmote, in a statement. BTC has announced plans to consolidate its operations under an umbrella brand in 2009. The company's plan is to consolidate its customer services, billing system, technical base and management, offering customers its services in a package. BTC has been losing its share on the fixed-line market to fast growing competition in the past years. The company launched Vivatel in late 2005 seeking to offset falling revenue from fixed-line services that currently account for some 20% of the domestic telephony market. The anti-trust watchdog in Bulgaria, which joined the European Union in 2007, has several times punished BTC for violations of anti-trust regulations. BTC officials declined to comment on Wednesday.

 

 

 

 

 

 

 

 

ANALYSIS:

 

Moody's confirms Bulgaria's credit rating

Moody's Investors Service has on September 25 changed the outlook on the Baa3 foreign and local currency ratings of the government of Bulgaria to stable from positive. The outlooks on the A1 country ceiling for foreign currency debt and the Baa3 country ceiling for foreign currency deposits were also moved to stable from positive. Moody's believes that the prospect of an upgrade in the next 18 months has diminished because of deteriorating external imbalances from already high levels combined with the growing prospect of a sharp slowdown in economic growth next year in the context of the spreading global credit crunch."Moody's is concerned that Bulgaria's outsized external imbalances leave the economy exposed to a potential reduction in external liquidity and asset price corrections, which could exert pressure on the domestic financial system," says Kenneth Orchard, Vice President/Senior Analyst in Moody's Sovereign Risk Group. "Rapid domestic credit expansion has led to current account deficits above 20% of GDP since early 2007 and external debt to GDP is now approximately 100%. Moody's believes that such imbalances will become increasingly difficult to maintain in the current global financial environment." Moody's notes that international banks with operations in Bulgaria have been funding an increasingly large proportion of the external deficit through loans to their local branches and subsidiaries. As global funding costs rise and the European economy cools, the international banks are expected to reduce their credit extension to Bulgaria, leading to a potentially sharp slowdown of economic growth as has been experienced elsewhere in the region."Global developments over the past year have amply demonstrated that the unwinding of credit booms and large external imbalances can have unpleasant consequences for a financial system," comments Mr Orchard. "In Bulgaria's case, however, Moody's expects that the larger Bulgarian banks will receive liquidity assistance and/or capital injections from their parent banks as necessary."Moody's said that the country's failure to join ERM2 was another reason why an upgrade was ruled less likely in the very near term. "Bulgaria's inability to join ERM2  after initially indicating a desire to do so -- suggests that the European Commission and European Central Bank are uncomfortable with Bulgaria's financial stability, given the scale of its macro imbalances," said Orchard. "The lack of the ERM2 umbrella reduces the likelihood of ECB support in a hard landing scenario. on the other hand, other sources of EU funding could be made available." Mr Orchard emphasises that Bulgaria's investment-grade status is secure. In a Special Comment entitled "When Macroeconomic Tensions Result in Rating Changes: How Vulnerable Are Emerging European Sovereigns?" published in May 2008, Moody's concluded that Bulgaria's rating should be able to withstand a severe but unlikely shock. "The rating agency's decision to change Bulgaria's rating outlook from positive to stable is consistent with that conclusion and indicates that Bulgaria's government bond rating is likely to remain at Baa3 for the foreseeable future," explains Mr Orchard."The country's intrinsic economic, institutional and government financial strengths are expected to withstand the upcoming challenges," says Mr Orchard. "The significant decline in general government debt over the past ten years and large accumulated fiscal reserves should provide ample flexibility through any periods of fiscal stress. EU membership should likewise ensure that investment rates remain high and economic growth returns to trend, allowing a gradual convergence with the Eurozone average," Mr Orchard concludes.