BULGARIAN ECONOMIC TOP NEWS DIGEST
WEEKLY REPORT ( 3 – 10 OCTOBER 2008)
Sections/headline briefs:
MACROECONOMY:
· Chinese company to build ultra modern stadium in Burgas
· Bush's envoy meets Bulgaria's President and PM
· Economy Minister: Bulgaria won USD 16 B from renegotiating Gazprom contract
· Planned repairs of unit 6 of Kozloduy NPP completed
- RWE wins bid for 49% of Bulgaria's Belene nuclear plant
· The construction of Belene NPP starts in March 2009
· President Parvanov reprimands the energy policy of the EU
- German businessmen horrified by number of hotels at Bulgaria seaside
· Economists: Spur up Euro introduction
· The financial crisis will not affect banks in Southeastern Europe
· 16% of Bulgarians pay 90% of all taxes
· 2009 – Year of Bulgaria in Russia
· Trade turnover with Russia ups to $ 12 Billion
· Bulgaria doubles up export to Russia in 2009
· Russia to pay off debt to Bulgaria
· � 5 B for Bulgarian farmers till 2013
· New car sales rise 18.3% y/y in Jan-Sep
· Construction of two major highways in Bulgaria starts in 2009
· Bulgaria last on e-commerce in the EU
· Finance Minister to attend ECOFIN meeting
· Following the trend: Bulgarian heating plant opens doors for tourists
· Real estate tax may increase by 50%
· 3509 approved SAPARD projects for 2001-2008
· Commercial areas in Varna increase by over 30%
· Bulgaria is a deposit paradise for now
· Macedonia ‘should eye Bulgaria nuke role’
· Bulgaria moves three places ahead on competitiveness
INVESTMENTS:
· Bulgaria aims to contract 50 wastewater treatment plants for �277 M by 2009
· Crisis brings Russian, Arab investors to Bulgaria's real estate market
· Bulgaria's Black Sea city Varna with favorable business climate
· Football star Stoichkov brings Catalonia investors to Bulgaria
· Iberdrola to invest � 44.6 M in holiday complex
· Cost of Mall Bulgaria doubles
· One in five investors distrust corporate financial reports
· Raiffeisen's alternative energy unit sees its wind power capacities in Bulgaria rising to 40 MW by end of 2008
COMPANIES:
· Bulgarian companies struggle for projects in Sochi
· Sales of top machine-building companies up by 14%
· Over 180 companies in Advertisement Expo
· Alpha Bank opens 14 new offices in Bulgaria
· Newly registered companies in Bulgaria at 40,000 in 2008
ANALYSIS:
· Who will supervise the supervisors?
· Eastern Europe - investors take flight
Articles:
MACROECONOMY:
Chinese company to build ultra modern stadium in Burgas
China's most powerful state-owned construction company, SCG, will build a super modern Chernomorets stadium in the coastal city of Burgas, the Standart was informed. Mitko Subev, owner of Petrol Holding JSC, is in active negotiations with the Chinese builder. The day before yesterday he came back from Shanghai, where he was talking over the parameters of the project. The stadium costs four hundred million euro and the whole sports complex, over one and a half billion euro. SCG has built ninety percent of the highway rings in Shanghai and it is now building a big sports somplex in St. Petersburg. SCG masterpieces are the 480-meter-high Jin Mao Tower and the 511-meter-high Motomi tower in Shanghai.
Bush's envoy meets Bulgaria's President and PM
A special envoy of US President George W. Bush for Eurasion energy was received yesterday by Bulgaria's President Georgi Parvanov, PM Sergei Stanishev and Foreign Minister Ivailo Kalfin. The visit of Boyden Gray took place a day before the sitting of the intergovernmental Bulgarian-Russian commission for economic cooperation to be held in Sofia. The Bulgarian-Russian forum will discuss energy issues. Energy was the top agenda at the talks during Mr. Gray's visit. Boyden Gray's visit to Sofia comes as a response to the increasing interest of many states in Bulgaria's energy policy, sources from the press-office of Bulgaria's cabinet released. Bulgaria's President Parvanov acquainted Mr. Gray with the plans for the construction of Belene NPP. He underlined that the South Stream project could not be an alternative of the Nabucco pipeline. PM Stanishev stressed upon the significance of Bourgas-Alexandroupolis and Bourgas-Vlora projects. Boyden Gray pointed out before President Parvanov that Bulgaria might assist the consolidation of the states that showed interest in gas export and transition for Europe.
Economy Minister: Bulgaria won USD 16 B from renegotiating Gazprom contract
Bulgaria's Economy and Energy Minister Petar Dimitrov stated Friday the country had won USD 15,9 B as a result of renegotiating in 2006 its contract with Gazprom for the purchase and transit of natural gas. Dimitrov's statement came as a response to the claims made Thursday by two opposition MPs, Martin Dimitrov and Ivan Sotirov, that Bulgaria had lost BGN 500 M from the new contract. According to the Minister, Bulgaria's revenue from the gas transit under the 2006 contract amounted to some USD 5 B. In his words, if the gas supplies are increased as negotiated, the revenue could reach USD 7,9 B. Dimitrov pointed out that if the contract had not been renegotiated, Bulgaria's transit revenue would be only EUR 835 M."From its 2006 contract with Gasprom Bulgaria has won a total of USD 15,9 B. That is why I am asking everyone who makes anti-Bulgarian statements to pay attention to the gas as well", Dimitrov stated. He added the contract with the Russian energy giant could not be made public because it contained an article requiring the written agreement of the other side for such a step. "Pardon me but I am not an irresponsible atom, whom someone met on the street", the Minister said explaining he could not make a commitment to renegotiate the contract with Gazprom in order to make it public.
Planned repairs of unit 6 of Kozloduy NPP completed
Unit 6 of Bulgaria's Nuclear Power Plant in the Danube town of Kozloduy was turned on four minutes before midnight on Saturday after its planned annual repairs were completed successfully. The putting into operation of the 1000-MW reactor was allowed with a permit issued by the Nuclear Regulation Agency in Sofia. The planned annual repairs of Unit 6 started on August 23, and were completed as scheduled. The reactor was also reloaded with new nuclear fuel. The other unit in operation at the Kozloduy plant, Unit 5 was also repaired as planned over the summer, and is currently working at 100% of its capacity.
RWE wins bid for 49% of Bulgaria's Belene nuclear plant
German company RWE has won the bid for acquisition of 49% of Bulgaria's future Belene nuclear power plant, Minister of Energy and Economy Petar Dimitrov announced.
The winning offer of RWE, which competed with the Belgian Electrabel was EUR 1.275 B, the minister said. It is still possible, however, that the rivals join efforts and participate together in the project.The Russian company Atomeksportstroy is expected to complete the construction of Bulgaria's second nuclear power plant at the Danube town of Belene by 2013. The plant will have initially two 1000-MW reactors as the construction is estimated to cost about EUR 5 B.The majority owner with 51% of Belene will be Bulgaria's National Electric Company NEK.
The construction of Belene NPP starts in March 2009
The construction of AEC "Belene" will commence in the beginning of March 2009.This was agreed upon by the Economy Minister Petar Dimitrov and the Russian vice Premier Sergey Sobyanin. They we co-chairs of the 12th session of the intergovernmental commission for economic and science-technical cooperation, whose sessions took place yesterday and today in Sofia. The final protocol of the session was signed today.There are no delays in the schedule of the central and in the budget of the Russian federation 3,8 billion Euro have been provided for its construction by 2010, Dimitrov said. By the end of the year Russia will make advance payments for the production of the necessary equipment for the central.Talks between "Bulgargaz" and "Gazprom" for the increase of the supplies of "blue fuel" for Bulgaria are getting near. According to rough estimates another 500 million cubic meters of gas per year will be needed, Dimitrov pointed out.By the end of October the signing of the agreement between "Bulgargaz" and "Gazprom" for pre-project analysis of "Southern Stream" is expected to be signed.
President Parvanov reprimands the energy policy of the EU
I define as unsatisfactory the pace of debates on the common energy policy of the European Union. This is what Bulgarian President Georgi Parvanov told a press conference with Cyprus President Demetris Christofias yesterday. In his words the EU has so far been debating on the ‘what shouldn’t be admitted’ side, rather than on the perspective of ‘what should be done’, He pointed out that Bulgaria ‘grants further energy security to Europe with its agreements reached in early 2008’. ‘Instead of wrangling on whether South Stream is an alternative to Nabucco, Bulgaria undertook concrete steps towords launching an European project with secured energy shipments in the years to come’, Parvanov added.
German businessmen horrified by number of hotels at Bulgaria seaside
Representatives of German business have asked Varna Mayor Kiril Yordanov if the Bulgarian seaside is becoming like the Spanish, where hotels needed to be demolished because of rampant overconstruction.During their visit, the members of the Carl-Duisberg Foerderkreis organisation were horrified by the huge number of hotels built in recent years at Bulgaria Black Sea coast, the 24 Hours daily reported.According to the mayor, the problem concerned to a greater extent the southern region near the coastal city of Burgas and overconstruction was not so fierce in Varna.The guests also wondered how Bulgarian authorities are to solve the absurd situation of massive construction of private hotels along with underdeveloped state-owned infrastructure.The German experts recommended that private business takes part in the construction of the new Varna port, as well as a railway line from the airport to the nearby resort of Zlatni Pisatzi (Golden Sands).
Economists: Spur up Euro introduction
"There are two possible scenarios for the Bulgarian economy in the current situation of a global crisis: it either steers clear of it by implementing prudent policies, or falls into a recession," Georgi Angelov of the Open Society Institute said. The second scenario will lead to catastrophic consequences such as a slump in household incomes and large-scale unemployment. The construction sector, whose share on the local market three months ago was 26 percent, has diminished to 7.7 percent. "Bulgaria is third in the EU in terms of GDP growth, but most member states are already in the grip of the crisis. In this connection it is worth remembering that Bulgaria is the poorest among them," Angelov underscored. "Entering the Eurozone is of vital importance to Bulgaria," Georgi Ganev, Chairman of Bulgarian Macroeconomics Association (BMA), said and added that the reasons why the European Central Bank will not accept new members are purely bureaucratic. Ganev also stressed the significance of saving and not spending the budget surplus.
The financial crisis will not affect banks in Southeastern Europe
The results of the financial crisis in the USA will be restricted and will not have a direct effect on bank systems in Southeastern Europe. This was the position of central bankers from Serbia, Romania, Bulgaria, Monte Negro, Macedonia, Cyprus, Albania, Greece and Bosnia and Herzegovina after their third meeting in Sofia.There are no investment banks in the region, only commercial ones, the manager of Bulgarian National Bank Ivan Iskrov pointed out.According to him in this part of Europe there are no banks, holding securities in their portfolio of the type, which created problems in the USA. The crisis, however, may have an indirect effect, in the form of price increase of loan interests - an average of 1.5% in the region, Iskrov added.
16% of Bulgarians pay 90% of all taxes
16 percent of tax payers in Bulgaria provide 90 percent of all taxes, submitted in the declarations for 2007, the National Income Agency announced. 125 thousand Bulgarians have declared personal income of over 7 200 levs for last year.The sum, which they must submit in the budget, is over 152 million levs.Calculations show that each of these taxpayers must submit an average of over 1200 levs.Most, almost 38 percent, of taxpayers, have declared income in the lowest scale - from 1 lev to 2 400 levs per year.
2009 – Year of Bulgaria in Russia
Days of the Bulgarian culture, presentations of the economic opportunities and tourist products of the Bulgarian regions, exhibitions of Bulgarian goods and services are part of the initiatives, which the Center of the Bulgarian industry in Moscow will organize next year. 2009 is the year of Bulgaria in Russia and therefore there will be many events as it became clear during the presentation of the center, which is part of the business schedule of the 64th International technical fair held in Plovdiv. 3202 companies from 45 countries take part in the fair, informs journey.bg.The development of the economic relations between the two countries on a regional level and the stimulating of the Bulgarian companies to do business in Russia are among the priorities of the Center of the Bulgarian industry in Moscow. The center will mark its 25th anniversary since its establishment. The representative offices of 76 Bulgarian companies most of the big ones with rich experience on the Russian market are situated in the center. More than 2500 employees work there.
Trade turnover with Russia ups to $ 12 Billion
The trade turnover between Bulgaria and Russia may well reach 12 billion dollars within the next three to four years, according to the prognosis of the Russian trade representative in Bulgaria Aleksander Tomilov. "Its volume is on its way to reach $US 8 billion this year and is expected to swell by another billion by the end of the next," he pointed out. However, there must be some discrepancy between the Russian and Bulgarian statistics. In 2007 Bulgaria scored 4,1 billion dollars in commercial exchange, and this year the figure does not differ much, according to Deputy Minister of Economy Yavor Kuyumdzhiev. The great export-import misbalance perseveres as in 2007 Russia imported a 3,7-billion-dollar worth of goods, mostly raw materials such as oil and gas whereas the Bulgarian export barely totals $US 450 million but the good news is that it has underwent a near 100-percent increase since June 2006, when the figure was 220 million. Another good news is that this year too the trends of ascend has been preserved. The first half-year has seen a growth rate of 90 percent and an export volume of 370 million dollars. Russia is Bulgaria's fourth most important partner in trade and No. 1 importer.
Bulgaria doubles up export to Russia in 2009
Bulgaria's export to Russia has grown by 96 percent within the last year, PM Staishev said at the inauguration of an exposition "Russia in Bulgaria" in Sofia. The Premier emphasized that the country's cooperation with Russia will be gaining momentum not only because of our traditional cultural ties but also thanks to such new ambitious projects as South Stream pipeline and the Belene nuke. Russia's vice premier Sergey Sobyanin also spoke at the opening of the impressive expo promoting over 12 regional industrial centers of Russia. Each pavilion boasts the latest achievements of the Russian science and technology - ranging from nanotech to the new makes of Lada, the pride of Russian automobile industry.
Russia to pay off debt to Bulgaria
"Russia is ready to pay cash, at one time, its debt to Bulgaria amounting to USD$ 38,5 million," Russia's Vice PM Sergey Sobyanin stated after the sitting of Bulgarian-Russian Commission. This is the last part of Russia's debt to Bulgaria. The issue has not been discussed at the sitting because the engagement for the payment of the debt was undertaken personally by Russia's PM Vladimir Putin during his meeting with Bulgaria's PM Stanishev two weeks ago in Sochi. Initially, it was planned that the debt be paid with equipment supplies for Kozloduy NPP which was written down in previous protocols of sittings of the intergovernmental commission.
� 5 B for Bulgarian farmers till 2013
5 billion euro will be granted to the Bulgarian farmers for a period 2007-2013, said the Bulgarian prime minister Sergei Stanishev at the opening of the information campaign under the Program for rural development 2007-2013. Sergei Stanishev claimed that 2 billion euro are direct subsidies for the Bulgarian farmers and over 3 billion euro will be received through the Program for rural development. on her side, the deputy prime minister Meglena Plugchieva emphasized on the fact that it is necessary to invest in the people. The minister of agriculture Valeri Tsvetanov also took part in the opening ceremony. The information campaign under the Program for rural development is conducted under the motto “Traveling teams for advice in agriculture – door to door”.The aim of the campain is the agricultural producers, the owners of forests, food processing companies and municipalities in rural areas to obtain information and expert help from the ministry of agriculture and the Payment agency about the funding opportunities and the eligibility criteria under this program.To remind, according to the executive director of State fund “Agriculture” the people are informed and prepare well their projects. A proof for this is that so far only one project has been rejected for inconformity with the main eligibility criteria.Fund “Agriculture” decided to start an information program, door to door. For this purpose, special cars for mobile offices will be purchased. In this way, experts from the Payment agency and the agricultural ministry will meet the potential beneficiaries under the program.The idea is to visit predominantly the small municipalities, where there aren't established structures for consultations about the program and help for the preparation of business plans.
New car sales rise 18.3% y/y in Jan-Sep
The number of new passenger cars sold on the local market by members of the association of automobile importers rose by 18.3% y/y to 44,490 in Jan-Sep, almost unchanged in a month but slowing from 22% last year. The association estimates that turnover exceeds 45,000 during the period when the sales of the non-members are added. The sales of the new passenger cars flattened at 15.9% to 41,166 units. Opel retained its leading position on this segment with a market share of 10.6%, followed by Toyota with 9.9%, Volkswagen (8.9%), Peugeot (7.7%), Ford (7.67%), and Dacia (6.7%). The sales of buses and trucks slowed to 58.8% y/y to 3,324 units from 61.8% y/y in Jan-Jul. The market leader in the sector continues to be Mercedes with share of 35%, followed by Iveco (33.1%) and Volvo (17.1%). A total of 551 motorbikes were sold on the local market during the period, up by 20.8% in a year. Peugeot accounted for 40% of all sales in the segment.
Construction of two major highways in Bulgaria starts in 2009
The construction of the highways “Struma” and “Maritsa” as well as the intermodal terminal in Sofia will start in 2009. This said Nelly Yordanova, head of the FP “Transport” in the Bulgarian transport ministry during the institution's Day of open doors, informed Darik radio.The construction of “Struma” highway is the most expensive project funded under the European program. Its value is 600 million euro and includes the construction of 3 sections till 2013. In the second program period the state will apply for 600 million euro more for the construction of the section around the Kresna gorge, pointed out Yordanova.According to Nelly Yordanova the intermodal terminal in Sofia for transport of passengers and goods will be built in three phases. In March next year starts the construction of a terminal platform and a control point.
Bulgaria last on e-commerce in the EU
Bulgaria is last in the European Union on e-commerce in the Internet, the Consumer Protection Commissioner Meglena Kuneva announced yesterday, SagaTechnology writes. only seven percent of Bulgarian sellers offer their products online in the rest of the EU and only six percent of Bulgarian citizens shop online in foreign web pages.In comparison the average level of online shopping in the EU is 24 percent, as one out of two Finns, Swedes, Austrians and Danish buys products online.According to Bulgarians, who participated in the Eurobarometer study, the major reason for the low activity of online shopping in Bulgaria the language barrier.Data from the study shows that Bulgarians are also afraid of problems with product returns and are the most pessimistic about the protection of their consumer rights.
Finance Minister to attend ECOFIN meeting
Bulgarian Finance Minister Plamen Oresharski will attend a meeting of the EU Economic and Social Affairs Council (ECOFIN) in Luxembourg on Tuesday, Oresharski's Ministry said.The condition of the Economic and Monetary Union ten years since its establishment, the situation on the financial markets and EU supervision, and the unstable prices of oil and raw materials are among the topics to be discussed at the meeting. The Council will also prepare the meeting of the European Council on October 15-16.In the field of financial services, a draft directive on the solvency of insurance enterprises will be discussed.In the field of taxation, the participants will discuss proposals to amend the VAT directive and the regulation for administrative cooperation in view of combating tax fraud relating to transactions inside the Community.
Following the trend: Bulgarian heating plant opens doors for tourists
The visits of electric plants are the newest trend in the tourism field in Italy. After the tours of wine cellars, castles, Roman sightseeings, the curious Italians turned their attention of the places where the man meets the technologies, informs ProntoSofia. A similar practice will be introduced in Bulgaria.Thousands of residents on the Apennines visit structures of the energy production, which are very often part of the dazzling scenery.The Italian energy group Enel owns over 600 plants for the production of energy from renewable sources. Many visit them to enjoy their architecture, considering that more than half of them are built in the beginning of this century. Others go there to see how man, nature and technologies embrace each other.Every year Enel takes part in the initiative Ises Italia, which is the Italian version of International Solar Energy Society. The idea behind the event is to make “more visible” for the ordinary people the energy and its production through renewable sources.Enel has also a special program Centrali Aperte (Open plants), through “the energy plants” could be visited by anybody wanting to get acquainted with the science of making energy in a way that preserves the environment.“The energy tourism” however gains speed also in Bulgaria, where Enel is owner of the Enel Maritza Iztok 3 heating power plant close to the town of Stara Zagora.This year the plant opened doors for visits. only withing several days since the end of May, it was visited by more than 600 students, participants in the competition Young Energy 2008.
Real estate tax may increase by 50%
This will become reality if the municipalities continue to determine the tax in the same way - on the basis of the tax evaluation of real estate, BNR announces.The Ministry of Finances offers from next year tax evaluation to increase by 50%. So that the real estate tax does not increase automatically, as well as other taxes on acquiring real estate, financiers offer that municipalities change the formula for calculation as the weight of the tax assessment is decreased.For example, on the real estate tax the size to become 1-2 permille and not 1,5-3, as it is now.Each municipal council must determine local taxes by the end of 2009. It is up to the municipality to determine whether to increase taxes and respectively change the formula, so that citizens are not taxed too heavily."Inheritance" tax will be owed if you are given a property over 70 thousand levs and not 250 thousand levs, as it is the case this year.Taxes on gasoline will not be increased in the next 2 years. "Income" and "Profit" tax remain at the same levels of 10%. VAT will remain 20% next year.
3509 approved SAPARD projects for 2001-2008
The approved SAPARD projects are 3509 as their total investment value is 2,8 billion levs. The approved subsidy for them is 1,4 billion levs, BNR announced.The participants in the 15th regular session of the Committee for observation in SAPARD, which takes place twice a year, were informed of this result.The amount of work done by the SAPARD agency and the Ministry of Agriculture in the last months is huge, regarding the control exerted in the application of the programme as well as the strengthening of the administrative capacity, Vice Premier Meglena Plugchieva emphasized.The audit results from "Ernst & Young" are expected today, the national head of the SAPARD programme Dimitar Ivanovski informed.He also noted the positive effects from the last months in the mutual work between the institutions, engaged in the application of the programme.
Commercial areas in Varna increase by over 30%
Commercial areas in Varna have increased by over 30% for the first half of 2008. only by opening Varna Mall in June their size has increased by 33 000 square meters. New stores, which opened in this period, possess over 40 000 square meters total. This constitutes almost one third of the completed commercial areas in the entire country, whose amount reaches 138 000 square meters, "Narodno delo" writes.A total of 545 000 square meters commercial centers of the type "malls" are being built at the moment, a study of the consultancy company on real estate "Colliers international" shows, which was made public yesterday. In the segment office areas by 2010, 730 000 new square meters must be built.The planned projects for commercial centers in the country have increased by 141 400 square meters. According to "Colliers" some cities have already reached the point of saturation.In the first half of the year a 7% increase of the area of modern office buildings was registered, as in Sofia it reached 759 000 square meters. The second in size market - Varna started to shape and for the moment has a total of 106 000 square meters modern office buildings type A and B. It is no surprise that in both markets - Sofia and Varna, they are concentrated in the outskirts.For the first time the areas at the main commercial streets were measured. A study made by "Colliers" showed that in Sofia's center they amount to 38 000 square meters, while in Varna - approximately 16 000 square meters.
Bulgaria is a deposit paradise for now
Out of 1,000 deposits in Bulgarian banks only eight are not guaranteed, data of the central bank show. They are not guaranteed because they exceed BGN 40,000. This is the limit covered by the Guarantee Deposit Fund in the country. For the last year the banks had to deposit about BGN 137 million in the fund. With the proposal to increase the guarantee sum from BGN 40,000 to BGN 100,000, i.e. 2.5 times, the additional sum of annual BGN 200,000 million will have to be paid by the state. Experts think that this is useless in the present-day situation. The effect of this is expected to be minimal: non-guaranteed will be not eight, but only five deposits. The average rate of deposits in Bulgaria at the moment is much lower that that in Western Europe that's why only 60% of the deposits there were guaranteed while in Bulgaria the percent was 99%. That was the reason the countries in the old continent to undertake this step as banks suffer from lack of trust. Assen Yagodin, executive director of Eurobank EFG and deputy chairman of the Association of Banks in Bulgaria, commented for Pari Daily that there is a tendency large deposits from abroad to flow into the country. Despite the smaller guarantees in Bulgaria, foreign investors realise the higher stability of our financial system and entrust their money to it.
Macedonia ‘should eye Bulgaria nuke role’
Macedonia should take part in the building of a new Bulgarian nuclear plant or acquire some of Kosovo’s coal mines to avoid a future energy crisis, the country’s president urged. Unfortunately, the government has so far stayed deaf to these suggestions, Branko Crvenkovski’s office told local A1 TV on October 6 in a written statement. Crvenkovski reiterated that Macedonia will be facing a shortage of coal in several years' time and that if no alternative is found on time it could face a serious power crisis. The government replied that they are still waiting for an offer from Bulgaria to arrive. “We have not received any offer or any document for possible participation by Macedonia in Belene so far,” Deputy Prime Minister Ivica Bocevski told local media on October 6. The Bulgarian nuclear plant is being built by Bulgaria’s state-owned energy giant NEK and Germany’s RWE. The plant is predicted to come online in 2013. Its construction is aimed at seriously improving the power supply in Bulgaria and in the Balkans as a whole.According to statistics, Macedonia annually produces around 6000GWh of electricity but this satisfies only around 70 per cent of its power demand. The rest is acquired from imports that rise every consecutive year. The country gets most of its power from coal power plants. But experts say this resource that Macedonia produces will soon be completely depleted.
Bulgaria moves three places ahead on competitiveness
Bulgaria has moved three rankings ahead in the Global Competitiveness Report 2008-2009, released Wednesday by the World Economic Forum, featuring a total of 134 global economies.The country has moved from the 79th to the 76th position, but the report notes thatBulgaria has the most unfavorable ranking compared with all other countries members of the European Union.Romania has ranked behind Bulgaria for several years in a row, but now has moved from 74th to 68th position. Croatia (61) and Monte Negro (65) are also ahead of Bulgaria. Despite the financial crisis, the United States tops the overall ranking, Switzerland is in second position followed by Denmark, Sweden and Singapore. European economies continue to prevail in the top 10 with Finland, Germany and the Netherlands following suit. The United Kingdom, while remaining very competitive, has dropped by three places and out of the top 10, mainly attributable to a weakening of its financial markets. China continues to lead the way among large developing economies, improving by four places this year. Several other Asian economies perform strongly with Japan, Hong Kong SAR, Republic of Korea and Taiwan. In Latin America, Chile is the highest ranked country, followed by Panama, Costa Rica and Mexico. A number of countries in the Middle East and North Africa region are in the upper half of the rankings, led by Israel, Qatar, Saudi Arabia, United Arab Emirates, Kuwait and Tunisia.In sub-Saharan Africa, South Africa, Botswana and Mauritius feature in the top half of the rankings, with several countries from the region measurably improving their competitiveness.The Global Competitiveness Report's main competitiveness ranking is the Global Competitiveness Index (GCI), based on 12 pillars of competitiveness: Institutions, Infrastructure, Macroeconomic Stability, Health and Primary Education, Higher Education and Training, Goods Market Efficiency, Labor Market Efficiency, Financial Market Sophistication, Technological Readiness, Market Size, Business Sophistication and Innovation. According to the report, the main reason for Bulgaria's relatively unfavorable position is the negative assessment of the Institutions in the country such as slow and ineffective legal system, wide-spread corruption practices, ineffective fight against organized crime, insufficient protection of intellectual property, lack of transparency in public tenders and others. Bulgaria ranks barely 111, according to the Institutions pillar.Another pillar where Bulgaria ranks very low is the Infrastructure - 95th place. The country also lacks behind in pillars such as Sophistication and Innovation (96th position from 88th last year), Higher Education and Training (96). The Health and Primary Education pillar, however, shows a much better position (39).Bulgarian companies have the most serious problems in areas such as adequate policy for qualification and training of the human resources, marketing, professional management, lack of implementation of innovations and modern technologies.
INVESTMENTS:
Bulgaria aims to contract 50 wastewater treatment plants for �277 M by 2009
Bulgaria's Environment Ministry on Tuesday said it plans to contract by May 2009 the construction of 50 wastewater treatment plants in the country under a 510 million lev ($377.5 million/277.8 million euro) budget to meet EU requirements. We expect very serious efforts on the part of the municipalities and mayors by December 15, which is the submission deadline for the projects," Environment Minister Dzhevdet Chakarov said in a statement. The ministry started collecting projects last week. The ex-communist state that joined the European Union in 2007 must build water purifying stations in all population centers with more than 10,000 residents by 2010. It should reconstruct another 37 facilities within that timeframe.
Crisis brings Russian, Arab investors to Bulgaria's real estate market
The global financial crisis will serve to attract more Russian and Middle Eastern investors to Bulgaria's real estate market, according to the Russian online edition rambler.ru. The reason for that is that the financial crisis is forcing the investment companies in Bulgaria to freeze or delay the execution of a number of real estate projects. The lower prices are expected to attract primarily Russian and Arab clients.The article points out the value of recreation real estate deals in Bulgaria has already declined by 10%. In addition, the Bulgarian Land Development firm is reported to have postponed two of its projects in the Black Sea town of Kavarna and the mountain resort of Borovetz. Black Sea Property has terminated the execution of a project in the sea resort of Tsarevo, whereas Bulgarian Property Development has discontinued its investments in the mountain town of Bansko.The director of the Green Life investment company Nikolay Penlivanov is quoted as saying that a number of speculators were abandoning the Bulgarian real estate market. Some 50 000 of holiday homes are on sale along Bulgaria's Black Sea coast, according to the article, which also points out that the recent sale of one of the largest mall in the country City Center Sofia brought to the vendor Equest a profit of only EUR 7,5 M.
Bulgaria's Black Sea city Varna with favorable business climate
Bulgaria's Black Sea city of Varna is emerging as a prime destination for international businesses to locate, according to a research of Colliers International. According to the consulting company, the Bulgarian "Black Sea capital" Varna is reported to be especially suitable for research and development activities, IT business, and opening of call centers.
Its main advantages include lower investment costs than capital Sofia, good infrastructure, and a sufficiently qualified labor force, thanks to the technical and economy universities in the city. In addition, Varna has a well-developed transport sector with a busy airport; it also located at the easternmost end of the Pan-European Transport Corridor No. 8. Its services sector is rather advanced thanks to the over five million tourists, who visit the city every year. Varna's location close to leading sea resorts such as Golden Sands, its recreation opportunities, and rich cultural heritage are also seen as advantages.
Football star Stoichkov brings Catalonia investors to Bulgaria
The legendary Bulgarian football player of the 1990s Hristo Stoichkov is working to bring investors from Catalonia to his native country.In his capacity as Chair of the Bulgarian-Catalonian Friendship Association "St. George", Stoichkov signed Monday night in Barcelona a cooperation agreement with the Union of the Bulgarian Black Sea Local Authorities (UBBSLA), which is chaired by the Mayor of the town of Aksakovo Atanas Stoilov.The agreement is paving the road for joint projects of Bulgaria's Black Sea municipalities and Catalonian businesses.Aksakovo, which is located in Varna's suburbs, and the Catalonian town of Igualada, which is close to Barcelona, have already become sister cities with an agreement signed on Sunday.Together with the Portuguese city of Guimarães and the Italian city of Lecco, which have partnerships with Igualada, Aksakovo and its Catalonian sister city are going to apply for EU funding with joint projects.The UBBSLA Chair Stoilov pointed out that the cooperation agreement was aimed not only at promoting Bulgaria's image in Catalonia and Spain. In his words, it would enable Catalonian firms, which had expressed their interest in investing in Bulgaria, to do business in its Black Sea regions.The Bulgarian football star Hristo Stoichkov was a key player for the Barcelona FC throughout most of the 1990s, and enjoys great popularity in Catalonia.
Iberdrola to invest � 44.6 M in holiday complex
The real estate subsidiary of the Spanish Iberdrola energy company will invest EUR 44.6 million in a holiday complex in Tsarevo on the Black sea. The funding is for the purchase of 120,000 sq. m, building the infrastructure and developing the design. The company plans to finish the project in four years. The Coral Beach Elite complex will consist of nine parts with 2,400 apartments altogether. It will have commercial sector, restaurants and other community units.
Cost of Mall Bulgaria doubles
The construction of Mall Bulgaria bog-box shopping centre will gobble up twice as much as initially planned two years ago, it emerged after Italian lender UniCredit said it will bankroll the project by EUR 220 million. The cost of the office and shopping mall scheme was seen at EUR 120 million in 2006. The retail complex is a joint project of local LSProperty and international property management group Salamanca Capital. Mall Bulgaria is managed by Eli Egosi, who was part of the team that saw though the Mall of Sofia project.The development will have a build area of 140,000 sq m, including 33,000 sq m of leasable retail space and 25,000 sq m of office space.The mall, which will accommodate 140 shops, will be anchored by the outlets of French retailer Carrefour, local electronics retailer Technomarket and the Arena cinema chain.Twenty to thirty mall projects are drafted to mushroom around Sofia but only a handful of them have secured funding. Market representatives say many of them will be abandoned with the global economic plague starving banks for cash and making them more stringent.
One in five investors distrust corporate financial reports
Only one in 20 investors in Bulgaria regards data in annual financial reports as accurate and reliable and one in three find reports incomprehensible and incomplete. These are the findings of a survey carried out by Dnevnik daily and odit.info, the Bulgarian website that focuses on accounting matters.The survey draws on the answers of 1400 people and will be showcased at an October 10 roundtable titled “The Role of Financial Reports for Bulgarian Stock Market Development”. The forum will pool investors and accountants, as well as representatives of regulators directly involved with financial accountability issues.More than 30 per cent of respondents answered negatively to the question “Do you always read audit reports and trust them?” About 33 per cent answered “Rather not.”Pessimism is not shared by accountants. Two in five accountants trust report findings.Follow-up questions reveal that investors’ distrust draws on their high reliance on reported information. one in two investors admit they could not do their job without reading financial reports. A quarter of all respondents answer they likely could not.One in five accountants believe investors can handle their duties without reading financial reports.
Raiffeisen's alternative energy unit sees its wind power capacities in Bulgaria rising to 40 MW by end of 2008
Raiffeisen Energy & Environment (REE) plans to increase its wind power capacities in Bulgaria by 32 megawatts (MW) to 40 MW by the end of this year and to keep up this growth pace in the coming years, the company's managing director Rudi Plasil said on Wednesday."We intend to operate 40 MW by the end of this year and we see a similar development within the coming years," Plasil said in a statement e-mailed to SeeNews.The company has two wind farm developments, Kavarna East and Kavarna West, on Bulgaria's northeast Black Sea coast. It launched its first project of four wind turbines in June and is planning to launch a second wind farm of sixteen turbines with a capacity of 2 MW each by the end of this year. Wind turbine manufacturer Vestas Central Europe announced on Monday that REE has ordered the turbines for the second project, which are to be delivered and commissioned by the end of the year. "We invest currently approximately 65 million euro ($88.7 million) [in Bulgaria]. We plan to invest a similar amount within the next years," Plasil said. Bulgaria, which joined the European Union in 2007, should cover 11% of its electricity consumption by power generated from renewable sources by 2010 and 16% by 2020 under agreements with the bloc. At present, wind turbines with an nstalled capacity of around 120 MW operate in the country, whose estimated potential for wind farms is roughly 2,200 MW. Raiffeisen Energy & Environment (www.ree.at), the alternative energy investment division of Austrian financial group Raiffeisenbank, specialises in the acquisition, development, construction and operation of energy projects, including renewables. It is operational in all southeast European markets, except for Macedonia, Montenegro, Moldova, Greece and Turkey. "We see Turkey in the medium term and the other countries in the long term as target markets," Plasil said. Wind power projects are the fastest growing energy sector in the world. Wind capacities in southeast Europe are still far less than in western Europe but the region is seen as increasingly attractive by investors in this sector.
COMPANIES:
Bulgarian companies struggle for projects in Sochi
'The participation of Bulgarian construction companies in the building of facilities for the winter Olympics in Sochi will be one of the topics of discussion at the oncoming Bulgarian-Russian Commission for Economic Cooperation. The forum will be held in Sofia October 8-9, Minister of Economy and Energy Petar Dimitrov told the Bulgarian National Radio. The top agenda at the conference is Bulgaria's cooperation with Russia in the energy sector, the big energy projects Belene nuke and South Stream pipeline. The Russian delegation will be led by Deputy PM Sergey Sobyanin. There will be eighty people on the Russian delegation, six of them are deputy ministers. 'Since the end of 2007, the price of Russian natural gas transited via Bulgaria has increased by 85.4% and the end users pay by 72.9% more for natural gas,' Minster Dimitrov said also.
Sales of top machine-building companies up by 14%
The total sales incomes of the machine-building companies on the stock exchange increased by 13.7% at the end of June 2008, analysis of Pari Daily shows for the results of the five biggest in market capitalisation companies by October 3, 2008. For the first half-year of 2008 the sales of M+C Hydraulic, HES, Sparki AD, Elprom-SEM and Mashstroy reached BGN 107.6 million compared to BGN 94.7 million a year earlier. The growth of total turnover of all machine-building companies is slowing down by 6.1%
Though neither of the company decreases its sales, the profits of three of them dropped by 10.2% in the total profit and for the first six months of 2008 it was BGN 9.9 million compared with BGN 10.99 million a year earlier. M+C Hydraulic has the highest capitalization in the branch of BGN 98.3 million. The company has also the biggest share in sales and turnover. Sparki AD has the highest loss of 39.7% to BGN 3.3 million.
The instability of the financial markets abroad and might hinder the development of the branch in future, experts commented. The slowing down of world economy might shrink the turnover in the branch. In a situation of world insecurity, high interest rates and low liquidity it is normal to foresee that the five machine building companies will register drop in sales profits, Andrei Georgiev from Balkan Capital Management commented.
Over 180 companies in Advertisement Expo
The 18th edition of Advertisement Expo 2008 will take place on November 6-9 under the patronage of the Ministry of culture. The event is organised by National Palace of Culture and Prim Design Agency. For the first time there will be participants from abroad: M.I.P.Group from the Check Republic, Pixika from France, NOEX from Poland. The emphasis this year is on practical aspects of ad business.
Alpha Bank opens 14 new offices in Bulgaria
Alpha Bank has opened 14 new offices in Bulgaria since the beginning of 2008, the bank announced Thursday.Alpha Bank opened offices for the first time in the towns of Velingrad, Peshtera, Gorna Oriahovitsa, Kozloduy, and Belene and the total number of offices in Bulgaria has reached 90."Our strategy aims at expanding the banking network in the country and considerably increasing our presence in major cities," manager of the Alpha Bank in Bulgaria, Philip Petrou, said.In 2006, the bank, which is the second largest in Greece, announced plans for a massive expansion in Southeastern Europe. Alpha Bank, which has operations in Romania, Bulgaria, Albania, Serbia and Cyprus, then aimed to reach 10% market share by 2010 in Southeastern Europe.
Newly registered companies in Bulgaria at 40,000 in 2008
The number of newly-registered companies in Bulgaria amounts to 633 in the period October 1-6 alone. A total of 40 222 new companies have been entered in the Trade Register since the beginning of the year. Nineteen of these companies have been closed.
See the table for more details on the number of the registered companies in the first three quarter of the year:
|
Period |
Newly registered companies |
|
Jan 1 – April 1 2008 |
7199 |
|
April 1 – July 1, 2008 |
15288 |
|
July 1 – October 1, 2008 |
17102 |
|
October |
633 |
|
Total |
40222 |
A total of seven companies have been declared insolvent since the beginning of the month, while their total number this year amounts to 526 so far. See the table for more details on the number of insolvent companies by quarters:
|
Period |
Insolvent companies |
|
Jan 1 – April 1 2008 |
74 |
|
April 1 – July 1, 2008 |
244 |
|
July 1 – October 1, 2008 |
201 |
|
October |
7 |
|
Total |
526 |
A total of 1 045 companies have been re-registered this month, while the number amounts to 106,010 since the beginning of the year. A total of 2,015 of these companies have been closed. See the table for more details on the re-reregistered companies by quarters:
|
Period |
Re-registered companies |
|
Jan 1 – April 1 2008 |
17160 |
|
April 1 – July 1, 2008 |
41903 |
|
July 1 – October 1, 2008 |
45902 |
|
October |
1045 |
|
Total |
106010 |
ANALYSIS:
Who will supervise the supervisors?
Publication: Banker Weekly English
Provider: Financial Information Agency Ltd.
Well, the piece of work will most probably reach EC experts, but it is doubtful if their possible criticism on it will ever go public. The authors of the text from the Ministry of Justice and the National Assembly would most probably keep silence so that they don't discredit themselves again. At the beginning of the summer, the project was drafted at the Ministry of Justice in only three days. A working group at the Interior Ministry, led by the then minister Roumen Petkov, allegedly started working on a text against the conflict of interest in March. Then came the slashing report from the European Commission on country's corruption practices and … the bill was devised in the nick of time. Which means that the governmental working group had done nothing about that earlier. Since June, the hastily composed regulation has rushed through several parliamentary committees and even through a plenary session for its first reading. At this stage, maybe even its authors from the Ministry of Justice won't recognize it. After painstaking consultations and meetings with magistrates, local authorities and mayors, the Parliament's administration committee decided … that nobody could be fired on the ground of a conflict of interests if his/her superior who has appointed him/her to the position is not willing to do so. MPs devised a way how they themselves as well as many other top officials may remain intangible. This group consists of the President of the Republic, the Prime Minister, ministers, members of Parliament, supreme magistrates, the ombudsman, the chairman and the members of the National Auditing Office, the Central Bank, the National Health Insurance Fund, mayors and councillors, who, if a case of conflict of interest is established, will be fired by … the Constitution of the Republic of Bulgaria. Since they have been appointed to their positions according to the Constitution, it will be the constitutional procedures that will supervise them. Can we guess if these procedures will be triggered at all? Especially if top officials are to be supervised by their own people. A parliamentary committee is to check the signals over cases of conflict of interests among politicians and top magistrates. The Movement for Rights and Freedoms proposed that the supervising authority be the present state administration committee at the National Assembly. There are also voices for the Anti-Corruption Commission to be entitled with these functions. Opposition insists on entirely new committee that should not be dominated by the ruling party or coalition. There would be no wonder if in the short period remaining from the mandate of the 40th National Assembly a new committee gets set up, especially since MPs receive additional remuneration for participation in parliamentary committees. However, as it happened with the Committee on the Dossiers, a two-month quarrel may follow as to what the exact participation of different parties would be. If it is established at all, and if it starts working within this National Assembly, the committee will issue decrees on whether there are cases of conflicts of interests or no. It will be possible its decisions to be appealed before the Supreme Administrative Court. It is again their own people who will supervise members of town councils and mayors. Can you guess who will be the members of the new commissions for checking signals for conflicts of interests in local authorities? The bosses of the Supreme Court of Cassation, and the Supreme Administrative Court, the judges, the prosecutors and investigators will also have their own commission for initiating such checks. The fines for non-submission of declarations for conflicts of interests have also been reduced significantly in the process of reviewing the text. For failure to submit declaration in the due course, violators will be fined by between BGN1,000 and BGN3,000 for a first infringement and by BGN3,000 and BGN5,000 for a second one. In case a conflict of interest is established, the fines are between BGN5,000 and BGN7,000 for a first instance of violation and between BGN7,000 and BGN10,000 for a second one. There is also a ban a top official to enter into labour and other employment contracts with companies the official has worked with during his period of office for one year after leaving the state administration position, A violation of this ban will be sanctioned by between BGN10,000 and BGN15,000. As a matter of fact, the procedure for proving and sanctioning a case of conflict of interests will lead to a even greater judicial mess, opposition and NGO legal experts told the Banker weekly. Until the bill enters plenary session (popping round Brussels inbetween) Bulgarian MPs may decide how to define the term "relative" (including or excluding ex-spouses) that in joint business relations, appointments and other activities may form a case of a conflict of interests. These conflicts are now obvious for the whole nation and are invisible only for those in power. And if the MPs fail to pass a working regulation, the next National Assembly will have to do it, or at least to fix the problems and improve what is now being prepared.
Eastern Europe - investors take flight
Author: Stefan Wagstyl, The Financial Times
While much of the world's attention has been taken by the astonishing economic rise of China and India, it is Central and Eastern Europe that have been scooping up much of the capital.But just as the big inflows of money to East Asia in the 1990s ended in crisis, so relying on footloose foreigners to finance investment has also put the region at risk of a severe reversal.In 2007 Central and Eastern Europe overtook emerging Asia as the single biggest recipient of the flows of capital into emerging economies. It took in $365bn out of a global total of $780bn, most of which was debt and nearly half of which went to Russian corporates.Even in the first half of 2008, confidence remained and the region continued to borrow. But with oil prices falling and investors fleeing from risky assets, not to mention Russia's aggressive foreign policy, financial markets and systems have started hurting badly.Russian equities are 60 per cent off their peak; Ukraine's are down more than 70 per cent. Banking systems are seizing up, notably in Russia, Ukraine and Kazakhstan.Further west, the Baltic states, with more stable politics but without huge energy exports, have built up large current account deficits they are struggling to finance. Latvia and Estonia are in recession; Lithuania may follow. Romania and Bulgaria, labelled "gravity-defiers" by the European Bank for Reconstruction and Development, are growing fast but also have imbalances.
