BULGARIAN ECONOMIC TOP NEWS DIGEST
WEEKLY REPORT ( 13 - 20 MARCH 2009 )
Sections/headline briefs:
MACROECONOMY:
· Renewable energy in Bulgaria should reach 16% until 2020
· Bulgaria's PM demands millions of euro for Kozloduy NPP
· Economy Minister Dimitrov: Bulgaria banking system indecently healthy
· Bulgarian National Bank reserve shrinks by €735 M
· Furniture exports jump by BGN 200 М in 2008
· No money in the budget for Trakia
· Sofia among world's top 20 costliest industrial locations
· Bulgaria to get € 70 М from EU stimulus
· IMF: Bulgaria’s economy to grow by 1% in 2009
· EBRD pours € 250 M in businesses and banks
· Critics acknowledge stability of Bulgarian currency
· White wines sell as successfully as red
· Bulgarian online trade jumps by up to 30% in 2008
· Bulgaria exports building materials for 2014 Olympics in Sochi
· Bulgaria exported 57 million liters of wine in 2008
INVESTMENTS:
· Germany's Enertrag plans to invest over € 1 B in wind farm in Bulgaria
· Razgrad seeks partner for PV solar power plant
· Bulgaria's Farin seeks partner for construction of wind farms worth total € 200 M
· Bulgaria's Chimimport to build €81.6 M multi-sport facility in Varna
· Fraport not to halt Bulgarian investments
· Mall for € 52 M оpens in Bulgaria city of Plovdiv
- Arteks Engineering is to invest € 100 М in a luxury complex
- 3EParking to pump € 20 M in Plovdiv
- Meat firm Mekom to build € 7 M cogeneration unit
- Intersnack to build BGN 18 M crisps factory in Ihtiman
- EBRD to boost Bulgarian investments by 25%
- Bulgaria's Trace Sofia to build 2 kindergartens worth total € 2.55 M
- Bulgaria continues to attract the interest of foreign investors
- Egged to invest € 3.5 M in Rousse
COMPANIES:
· Europe's largest retailer Carrefour is to open its first unit in the country by the end of this month
· Multirama with 8% market share in Bulgaria
· Canadian company buys Bulgarian gold mines
· Debt between Bulgarian companies may cause a chain of bankruptcies
· Raiffeisenbank signs € 72 million portfolio guarantee
· WebEx steps in Bulgaria
GLOBAL FINANCIAL CRISIS ANALYSIS AND NEWS:
· Crisis narrows Bulgaria’s external deficits
· Heavy-freight automobile transport insists for measures against crisis
· Stamboliiski paper mill shuts down under crisis
Articles:
MACROECONOMY:
Renewable energy in Bulgaria should reach 16% until 2020
Renewable energy in Bulgaria should reach 16% of the whole energy in the country until 2020, director of Energy Strategy Directorate with the Ministry of Economy and Energy Ivanka Dilovska said in an interview with FOCUS News Agency. In her words renewable energy reaches 9,6% now. “We should add another 6,6% to the current share of the renewable energy”, she said. That would be achieved due to logistic connection with the European Commission. “There would be a directive for renewable energy sources which envisages every state to work out an action-plan. That plan should include short term goals from 2012 to 2020. The EU Commission will make a monitoring and assessment of the achievements, it will make a recommendation, she added.
Bulgaria's PM demands millions of euro for Kozloduy NPP
Bulgaria's PM, Sergei Stanishev, demanded additional compensations from the EU for the pre-term decommissioning of Units 3 and 4 of the Kozloduy nuke. At the summit of the Council of Europe held in Brussels, PM Stanishev underlined that Bulgaria had already submitted a detailed and well-grounded document regarding the additional compensations. The reason for PM Stanishev?s demand is the present re-examination of the EU financial perspective till 2013. Bulgaria insists on getting the same amount in compensations as the other EU states that decommissioned their reactors received. It is a question of millions of euro.During the meeting with his counterparts from the EU, PM Stanishev insisted on coordinated European policies for fighting the economic and financial crisis. Stanishev presented the anti-crisis plan of Bulgaria?s cabinet before the leader of the Alliance of Liberals and Democrats in the European Parliament Graham Watson. Stanishev also stressed that due to the prudent fiscal policy of his cabinet, Bulgaria had not demanded a single eurocent from the EU to cope with the crisis.
Economy Minister Dimitrov: Bulgaria banking system indecently healthy
Bulgarian Economy and Energy Minister, Petar Dimitrov, supported the Bulgarian banking system and stated that the country was on the verge of attracting a large number of multinational companies into the Bulgarian Energy market, at an upbeat meeting in Varna.Dimitrov stated that Bulgaria's banking system is, "not only healthy, but actually indecently healthy". He added that Bulgaria has had a regime of anti-crisis since 1997, so is currently coping well with the global financial problems."Bulgaria's banks made an overall profit of BGN 1.4 B in 2008 and at the moment we have a currency reserve of BGN 25 B and a fiscal reserve of BGN 8.4 M," Dimitrov stated in support of his positive mood, BGNES reported.Minister Dimitrov pointed out that Bulgaria's economic growth in 2008 amounted to 6% and that put it in third place in the EU. He added that due to the global economic crisis, Bulgarian economic growth for 2009 would drop to 2 or 2.5% instead of the previously forecast 4.5%.There was also positive news from Dimitrov on the subject of foreign investment. He said, "a few multinationals are already preparing to enter the Bulgarian energy market. Besides renewable energy sources, these multinationals are interested in investing in business construction, information and communication technologies."
Bulgarian National Bank reserve shrinks by €735 M
In January, the reserve of the Bulgarian National Bank fell by 734.7 million euro, the bank management announced. The commerce banks have put this money in foreign banks in pursue of higher profit. In January, the Bulgarian National Bank (BNB) decreased the mandatory reserve that each commerce bank should have as a guaranteed deposit at its vault from ten to eight percent and the released two percent amount to about one billion euro. The Bulgarian banks have allocated about one fourth of this sum in the form of different loans and the rest of the money has been placed in foreign banks as security deposits, analysts say. According to them, this is a very good way to manage the liquidity in the banking system. As the global financial slowdown has hit hard on Bulgaria's real-term economy, the demand for bank loans has decreased and this is why the crediting business could appropriate only one-fourth of the released money. In addition, the state securities market and the stock exchange trade in Bulgaria has shrunk considerably and this makes the banks seek other investment opportunities, which include making deposits abroad.
Furniture exports jump by BGN 200 М in 2008
The output of Bulgaria’s furniture and wood processing firms surged almost 30% and exports rose by around BGN 200 million annually before the crisis broke, the industry chamber said. Furniture manufacturers increased production by 30% and wood processors registered a 16% growth in 2007. In the face of the crisis, they remained almost intact by October 2008 and managers hope 2008 would turn out a successful year. Exports topped BGN 200 million in 2007, up from BGN 184 million in the year before. Furniture makers ship almost a third of their output, with their main markets Germany, the UK and France. Wood processing plants sell in Italy, Macedonia and Turkey. The sectors’ healthy growth was underpinned by hefty investments, said chamber chairman Kalin Simeonov. In 2006 the companies put BGN 110 million into production capacity upgrades and new factory openings. The investment reached BGN 140 million in 2007. EU funds will be also tapped for business makeovers as around half of the companies plan to apply for funding, according to preliminary information. The Bulgarian furniture and wood processing industries nourish around 4,000 companies, many of them small and medium-sized. Professional skills are still a major challenge and so the chamber is preparing joint projects with German international cooperation enterprise for sustainable development GTZ.
No money in the budget for Trakia
The construction of the last three lots of Trakia motorway most likely will not begin by the end of the year, experts forecasted for Pari daily. The reason is lack of money in the budget. The allocated BGN 150 million from the 2008 budget surplus have been spent on various smaller roads. At present, different ways for the finishing of the motorway with EU funds are being sought but specialists say it is unlikely to be financed from Transport Operative Programme.
Sofia among world's top 20 costliest industrial locations
Industrial space rentals in Bulgaria added 8% year-on-year in 2008 ranking the Bulgarian capital among Europe’s leaders in terms of price hikes, showed the annual sector report of property consultancy Cushman & Wakefield, presented by its exclusive partner for Bulgaria, Serbia and Macedonia, Forton International. The report compares industrial property rents in 135 industrial zones in the world. Of all the locations, 34% registered a rise, 41% slid and 24% stayed intact. With an average annual rent of EUR 79 (USD 102.7) per sq m or EUR 6.5 per sq m a month, Bulgaria climbed 12 positions up the table to the 20th spot, outpacing many European capitals. Rental prices in Bulgaria seem even higher against the region’s average EUR 66 per sq m a year. Despite ongoing and planned investments in large-scale industrial and logistic projects, the offering is still limited which explains the high rental fees for juiciest locations in Sofia, said Sergei Koinov, executive director of Forton International. Investors’ plans to rent out ready schemes first and then kick off new projects will keep demand high this year, he forecast. Bulgaria’s neighbouring states showed feeble development with Romania staying at 38th place with annual rents of EUR 60 per sq m and Athens slipping four spots down the ranking with EUR 72 per sq m. Prices in Zagreb were similar to those in Bulgaria and Croatia breathed down Bulgaria’s neck at 21st place. Unlike staggering rise in office prices, industrial rents in Turkey were stable, hovering around EUR 65 per sq m a year. Global rents growth slowed down to 2.4% in 2008 from 6.1% in 2007 with developed markets in north America and western Europe being the first to take the downward road and the slump spilling over to almost the rest of the world by the year's end. Europe's annual growth decelerated to just 1.7%.
Bulgaria to get € 70 М from EU stimulus
Bulgaria will receive around EUR 70 million from the economic recovery plan of the European Commission, state news agency BTA quoted as saying Boyko Kotsev, Bulgaria’s permanent representative to the EU. At Monday’s General Affairs and External Relations Council (GAERC), ministers failed to agree on the distribution of the EUR 5 billion aid package of the European Commission. The latest draft plans to invest EUR 45 million in linking the gas transmission systems of Bulgaria and Greece, EUR 10 million in connecting Bulgaria and Romania and a total of EUR 80 million for building reverse gas links between nine countries in the region. Bulgaria should receive some EUR 15 million for reverse links. A further EUR 250 million will be allocated to the pre-feasibility study for the Nabucco pipeline, which will carry gas from central Asia to Europe starting in 2013.
IMF: Bulgaria’s economy to grow by 1% in 2009
The Bulgarian economy will expand by just 1% this year and there is serious risk for an even slower growth, the International Monetary Fund said in a report. In the worst-case scenario, the economy will be in recession by the end of 2010, with real gross domestic product (GDP) falling 3% this year and 1% in the next. Reining in the rise in wage is just one of the measures Bulgaria should take to shelter from the crisis, according to the IMF. The government should curb public spending if it is to meet its surplus target of 2% of GDP. At any rate, it will miss its goal and have a surplus of no more than 1.4% of GDP or even a deficit, the IMF predicted. Another buffer against the crisis will be restricting the rise in wages or increasing labour productivity because the growing gap makes Bulgaria less competitive. Bulgarian banks’ foreign owners have restricted capital flows to their local branches although the latter have enough capital at the moment and the banking system is well equipped to combat the downturn. Banks have booked handsome profits so far but ebbing financial resources are likely to erode their profits, the IMF commented. The institution welcomed the Bulgarian National Bank’s moves to make more liquidity available for local lenders. one of the main tasks for the country is protecting confidence in the currency board, which pegs the lev to the euro. The mechanism bars the central bank from acting like a lender of last resort but the government can assume this role through the fiscal reserve which accounts for 18% of the country’s GDP, the report said. In the pessimistic scenario, Bulgaria’s GDP will shrink by 3% year-on-year if net capital inflows fall to 0% of GDP. As the government’s optimism cooled off in the final months of 2008, fiscal policy was adjusted to bleaker economic forecasts. The IMF advised the central bank to apply stress tests to check banks’ credit and liquidity risks. The Financial Regulation Commission (FSC) should implement effective oversight on stock market trade and the settlement system as well as revise pension insurance regulations.
EBRD pours € 250 M in businesses and banks
The European Bank for Reconstruction and Development (EBRD) will allocate 250 million euro to finance businesses and help the realization of priority energy projects in Bulgaria. The news spread after a meeting between EBRD President Thomas Mirow and Bulgaria's PM Sergey Stanishev and Finance Minister Plamen Oresharski. This year's EBRD tranche of 250 million euro is by a quarter higher than what was previously allocated for financing of businesses and projects in Bulgaria. Half of the sum will be invested in the country's banking sector to allow the banks revive their now gasping crediting business. Mr. Mirow warned that the Bulgarian companies might suffer losses in the conditions of a global financial crisis, because fresh capital would become scarce and bank loans - more expensive. EBRD will also finance the realization of some priority energy projects in Bulgaria like the connection of the country's natural gas network to the systems of Greece, Romania and Turkey and the upgrade of the gas depot near the village of Chiren and the one near Cape Galata. The project for upgrade of the Chiren depot will cost 250 million euro, said Bulgaria's Economy and Energy Minister Petar Dimitrov.
Critics acknowledge stability of Bulgarian currency
Some of the most fervent critics of the countries with pegged exchange rates acknowledged that Bulgaria's national currency - the lev - is quite stable as currency. "Analysts from Denmark's central bank - Danske Bank - who have been particularly aggressive in their criticism on fixed exchange rates states such as Bulgaria, are now using the Bulgarian lev to test their own market," Bulgaria's Minister of Finance Plamen Oresharski said as a comment to Danske Bank's issuing lev-denominated bonds worth 70 million levs on the Bulgarian securities market. According to Minister Oresharski, this was a kind of recognition that both Bulgaria's lev and currency board are reliable.
"We have sent our comments as regards the way the financial institutions of the Kingdom of Denmark are intervening the local market using the guarantees of our government, to the Finance Minister of Denmark and the Governor of the Danish central bank," Oresharski stated.
White wines sell as successfully as red
White wines have grown up to the significance of the red ones. Leveling the rates of consumption of red and white wines is one of the tendencies that will become obvious at Vinaria exhibition. The traditional exhibition within Plovdiv Fair opens today and will give floor to 319 companies from 19 countries to show their best wines as well as new technologies, equipment and materials for winemaking and vine growing. The Bulgarian cellars at the exhibition are 146, of the foreign participants Italy's presence is the strongest - with 67 companies, followed by France (53) and Germany (14). The crisis will not seriously affect wine's domestic market, traders expect. They even believe in growth of the industry of 2 or 3% as it has been over the last few years. Wine is a product that is tolerant to ageing and can be sold over the years if demand is reduced. Bulgarian wines' major rivals are the wines from Chile and Argentina, especially in restaurants. Producers think this is just a question of temporary fashion that will soon die out. What will happen to the export of Bulgarian wine in the crisis in 2009, is the main topic of discussion for experts in the sphere. For the time being most specialists believe export will decrease and Bulgarian wine producers will have to look for new markets. The export shrinking tendencies became clear as early as 2008 when the export sank by 17% in the first half of the year. The main reason for the decrease was the collapse of the export for Russia which draws between 65% and 70% of Bulgaria's wine export. The share of Bulgarian wines sold in Russia will decrease by about 40 or 50% this year, believes the head of the Bulgarian National Wine and Vine Chamber, Plamen Mollov.
As a whole the cheaper products as well as the wine on the tap will have better chances. In Europe the demand for Bulgarian wines remains stable. Some shrinking of consumption may occur but insignificant because in times of crisis the consumption of beverages does not change. If there is change in consumers' preferences it is more to the direction of buying cheaper products. The traditional markets for Bulgarian wines remain the Great Britain, Germany, Sweden and Denmark, Belgium and the Netherlands as well as Poland. The whole of the Asiatic market provides great opportunities. China even is expected to demand wines of higher class. "The Bulgarian producers do not use to whole potential of the Asian markets," says Mollov. Export to China, Korea and Singapore does exist but the contracts in these markets are single phenomena still. The weak dollar which influences the price of wine makes export to the USA and Canada unprofitable, experts say.
Bulgarian online trade jumps by up to 30% in 2008
Bulgarian on-line trade has increased between 20% and 30% for 2008 year-on-year.Chair of the Bulgarian Association of on-line Traders, Petar Vanchev, announced Thursday, as cited by the Pari Daily."Statistics reporting that Bulgarian on-line trade is not developed are completely wrong. In Bulgaria, 90% of payments are done cash, when the item is delivered. In comparison, 90% of the payments in on-line trading in Denmark is done by credit cards, which is why it is considered as more developed market", Vanchev said.Actually, Bulgarian on-line market is comparable to the European market, he added.In Vanchev's words, there are almost 1 000 on-line shops, because every website that sells something is referred to as a shop. Nevertheless, the real number of Internet trading companies are not more than twenty, and those with six-digit profit are five or six, he explained.The global financial crisis has not affected the on-line trade, because the credit market crisis does not have an impact on it., Vanchev said."My expectations for 2009 are entirely positive", Vanchev asserts.
Bulgaria exports building materials for 2014 Olympics in Sochi
Bulgarian companies taking part in the building of the Russian Olympics 2014 town of Sochi will export cement and gravel.Bulgaria's Minister of Regional Development and Public Works, Asen Gagauzov, announced that at a press meeting in Bulgaria's Kyustendil.In his words, the government will aid Bulgarian companies in their work in Russia as an anti crisis measure. Infrastructural projects in Bulgaria will not be able to create enough jobs for all the construction companies, who are without work due to the dramatic reduction in investments, Gagauzov said.The Bulgarian Builder Association was established in May 2008 in order to assist the negotiating, organizing and implementation of construction projects in Russia. It was initiated by the Bulgarian Construction Chamber (BCC), official representative of the construction branch in Bulgaria, and six major Bulgarian construction companies - Glavbolgarstroy AD, Enemona AD, Midia AD, Promishleno Stroitelstvo Holding EAD, Trace Group Hold AD and Patishta Holding AD.
Bulgaria exported 57 million liters of wine in 2008
Bulgaria exported a total of 57 million liters of wine in 2008, and nearly all of those – 56 million liters – went to Russia, Belarus, and Moldova.This was announced by Bulgaria’s Minister of Agriculture and Foods, Valeri Tzvetanov, as he opened Wednesday morning “Vinaria 2009”, the international exhibition of vine-growing, and wine producing, which is taking place in the southern city of Plovdiv.Tzvetanov also said his Bulgaria was preparing to open up a wine-tasting center in Moscow as a preventive measure against the gray economy network of Russian wine distributors, who sell cheap and bad-quality wines.The Vinaria 2009 expo is organized by the International Fair Plovdiv, and is co-organized by Bulgaria’s National Vine and Wine Chamber.313 businesses from 19 countries are taking part in the seventeenth annual edition of Vinaria in order to advertise their products, establish business connections, and research the latest trends in the industry.The Bulgarian participants at the Vinaria expo are 149. 67 Italian, 53 French, and 14 German firms are also represented.Vinaria 2009 also includes a Wine Festival, and a ball entitled “Wine and Love, Love and Wine”.
INVESTMENTS:
Germany's Enertrag plans to invest over € 1 B in wind farm in Bulgaria
German wind park developer Enertrag plans to invest over 1.0 billion euro ($1.3 billion) in the construction of a wind farm at Bulgaria's northern Black Sea coast, Bulgarian Klasa daily reported on Thursday. The company will invest 95 million euro in the project this year. The project is to be completed by 2017, Klasa (www.class.bg) quoted the head of the German-Bulgarian Industrial and Trade Chamber in Sofia, Mitko Vasilev, as saying. The installed capacity of the wind farm is still under discussion, Klasa said. Austrian power utility EVN and Enertrag jointly started the construction of a 100 million euro wind farm in Kavarna, in northeastern Bulgaria, last year The wind farm would have an installed capacity of 50 megawatts (MW) and a further 30 MW could be added later.
Razgrad seeks partner for PV solar power plant
Bulgaria’s northern town of Razgrad has identified a site for a photovoltaic (PV) solar power station and is looking to attract partners, mayor Dencho Boyadjiev said. The local government will vote at its next session on designating a 25 hectares area in a municipal forest for the project. Located close to a motorway power mains, the site will allow cheap grid-connection of the future plant. Boyadjiev will advise councilors to back the creation of a joint venture between the municipality and the prospective investor in which the town will make an in-kind contribution of the land plot. This partnership would secure the municipality’s revenue for decades to come, Boyadjiev said.
Bulgaria's Farin seeks partner for construction of wind farms worth total € 200 M
Bulgarian diversified company Farin is looking for a partner in the construction of four wind farms worth a combined 200 million euro ($260 million), the company's executive director said on Tuesday. This year the company will concentrate on renewable energy generation, a sector it now enters, and on agriculture, Veselin Bakardjiev told SeeNews in an interview. We have projects for the construction of four wind farms, each with an installed capacity of 50 megawatts," Bakardjiev said. "The average investment in each of the parks is some 50 million euro, so the total amount of the project is some 200 million euro." The wind farms are to be built near the northeastern town of Dobrich where Farin is headquartered.The project is at a very advanced stage of preparation. Currently, we are seeking to establish a joint venture partnership, as many foreign companies have shown interest," Bakardjiev said but declined to name them. Farin has been working on this project for a year. It has conducted wind tests and has a preliminary agreement with state-run power grid operator NEK on connecting the farms to the country's power grid, he explained. STAYING FOCUSED on AGRICULTURE: Apart from renewable energy, this year the company will stay focused on agriculture as the global crisis has hit hard construction, another sector in which the group operates, Bakardjiev said. Farin group, set up in 1997, comprises 28 companies operating in fodder production, trade in agricultural production, construction and furniture, transport, leasing and auto services. Construction accounts for 5% of the group's annual turnover, which totalled 50 million levs ($33.2 million/25.6 million euro) in 2008, Bakardjiev said. The company has frozen some of its construction projects, he added but declined to name them or disclose their value. Farin is considering closing down its wooden door factory, located in the town of Kavarna, in northeastern Bulgaria. The 1.5-million lev factory was opened in 2007. It has a monthly turnover of some 40,000 levs. We sell its output in Bulgaria only, but again due to the financial crisis we are currently considering if we should keep the factory operational or shut it down," Bakardjiev said. The company has given up then idea to establish a chain of showrooms offering a full range of products and machinery for farmers due to the small market niche for such products in northeastern Bulgaria. The first showroom, worth an estimated 1.1 million euro was planned to be opened by the end of 2008. However, we spent the money planned for investment on increasing our arable land," Bakardjiev said. Farin has 8,000 hectares of arable land, up from 6,000 hectares in 2007. The company also increased its total storage facilities to 70,000 tonnes, and bought new farming machineries. Our projects in the agricultural sector, including the purchase of farm machines, last year alone are worth 4.5 million levs," Bakardjiev said, adding that 50% of the funding is a bank loan and the remainder is a grant under am EU-funded rural development programme. He added that the company has still not received the grant but that the machines have been delivered and paid. Farin cultivates barley, maize, sunflower and rape seed, as most of the production is exported to Spain. In Bulgaria there is an excess of agricultural production. only a very small part of our company's production is sold on the domestic market," Bakardjiev said. In 2006 Farin issued a 5.0 million euro five-year collateralised bond with a floating rate to re-finance debt and fund investment projects.
Bulgaria's Chimimport to build €81.6 M multi-sport facility in Varna
Bulgarian industrial conglomerate Chimimport will build a 160 mln lev ($104.4 million/81.61 million euro) multi-sport facility in the Black Sea port city of Varna, a spokeswoman for the project said on Friday. Chimimport will own 65% of the facility with the remaining 35% held by the municipality of Varna, the project's PR officer, Petra Dimitrova, told SeeNews. The construction work should be completed 26 months after the designer of the complex, German company GMP International GmbH, delivers the full technical documentation on the project, Dimitrova said. The company official did not elaborate on the project's funding scheme. The complex (www.sportcomplexvarna.com) will occupy a 69,300 square metre municipal plot and will comprise a football stadium, swimming pool, sports auditorium and underground parking lot. Chimimport shares, part of the blue-chip SOFIX index of the Sofia bourse, gained 1.96% to close at 1.295 levs on Friday.
Fraport not to halt Bulgarian investments
A total of EUR 20 million will be poured into the airport in Bulgaria’s Black Sea city of Varna, said Andreas Helfer, general executive director of concessionaire Fraport Twin Star Airport Management, which manages also Bourgas airport under a 35-year concession arrangement. Half of the sum will be spent on the construction of a new passenger terminal, which should get underway within months and will not be affected by the global financial meltdown. In spite of the crisis the airport operator will not freeze investments or reduce workforce, Helfer pledged. Traffic at the Varna airport surged 30% in the winter, when only regular flights are run, he added. Bookings for the 2009 seasons have so far been close to last year’s numbers without any major drop, but one can never be sure what comes next, said the airport’s head Dimitar Kostadinov. The new terminal should be completed ahead of the 2011 season. The project envisages extension of the platforms and the taxiways to streamline traffic management, to the tune of EUR 2 million.
Mall for € 52 M оpens in Bulgaria city of Plovdiv
The newest shopping mall in Bulgaria, Mall Plovdiv, was opened in the southern Bulgarian city of Plovdiv on Thursday.More than EUR 52 M have been invested in the construction of the first shopping mall of its kind in the city of Plovdiv.Mall Plovdiv is located on an area of 45 000 square meters, and hosts over 110 famous brands some of which are entering Plovdiv's market for the first time.These include Mango, Esprit, New Yorker, Benetton, Terranova, Calliope, XYZ, Oviesse, Tom Tailor, Lee Cooper, Kenvelo, Celio, Etam, Seven Seconds, Mexx, Naf Naf, Tally Weijl, Fox, Mothercare, Okaidi, adidas, Pierre Cardin, Etere, Leonardo, Geox, Foot Comfort, Hush Puppies, Beauty Zone, Oxette, Swarovski, Levi's, Playlife, Studio Scandal, Replay.The Plovdiv Mayor, Slavcho Atanasov, pointed out he was happy the city kept attracting large-scale investments. The Bishop of Plovdiv, Nikolay, inaugurated Plovdiv's first shopping mall with the traditional religious ritual."I am not just happy, I am especially proud and thankful to all institutions and partners who worked on the realization of the project of Mall Plovdiv - a modern and unique complex, combining hi-tech, aesthetics, and entertainment", the CEO of the Mall Plovdiv investor, Real Estate Services Bulgaria, Petar Dudolenski said at the opening.Thus, Real Estate Services Bulgaria (RESB) became the only company in Bulgaria which has taken part in the construction of two shopping malls - Mall Plovdiv and Mall of Sofia, which was the first shopping mall in Bulgaria, and was opened in 2006.RESB is currently working on the construction of three more shopping malls - Mall Rousse, Mall Stara Zagora, and Park Tower in Sofia.100% of RESB is owned by Cinema City International, a leading international movie theaters operator with over 600 multiplex complexes in Europe and Israel.
Arteks Engineering is to invest € 100 М in a luxury complex
The project, named Bellagio Bulgaria, will comprise trade area, residential segment, offices and sport facilities. Construction works are expected to start at the end of this year and to finish in five years. Arteks Engineering has placed a bond issue last year to finance the project.
3EParking to pump € 20 M in Plovdiv
Luxembourg-based firm 3EParking has expressed interest in building a EUR 20 million parking lot in the southern city of Plovdiv, ADP News reported. The project envisages both covered and open-air parking bays and can be a big step towards solving the parking problem in Bulgaria’s second largest city. Company managers will arrive in the city in May to view five suitable land plots identified by the municipality earlier this month. The project will be implemented on a public-private partnership or by own funds.
Meat firm Mekom to build € 7 M cogeneration unit
Bulgaria’s Silistra-based meat processor Mekom has started works on a biogas, electricity and steam production installation, executive director Stefan Raichev told Dnevnik, confirming reports by British publication farminguk.com.The cogeneration facility will have a nameplate capacity of 2 MW and produce 70% power and 30% steam for the company’s needs. The scheme will cost EUR 7 million, which will be sourced from bank loans and own funds. “The management aims to convert animal waste from the complex into raw material for an energy complex to meet the company’s needs,” Raichev explained. Construction could finish within a year or a year and a half, he said, adding that talks are underway on a loan agreement with United Bulgarian Bank (UBB). Moreover, Mekom is studying funding options offered by the European Bank for Reconstruction and Development (EBRD), which prioritises energy efficiency projects and offers 20% grant funding. Mekom could use as additional feedstock waste from the local landfill, which takes up a portion of Sofia’s garbage too. The company said the new scheme will create economic benefits and reduce its carbon dioxide footprint. Mekom’s 2008 profit rose 26% year-on-year to BGN 5.33.
Intersnack to build BGN 18 M crisps factory in Ihtiman
Inersnack Bulgaria, a subsidiary of Germany’s leading manufacturer of salted crisps and snacks, will spend BGN 18 million on the construction of a crisps factory in Ihtiman, near Sofia.The company has earmarked a further BGN 2 million to encourage Bulgarian potato growers. In addition, it will launch a BGN 600,000 campaign to promote salted snacks consumption by special arrangement of shop shelves and good service. Food and fast-moving consumer goods are two in just a handful of industries expected to escape the economic turbulence with minor injuries. Intersnack gave away TV sets to domestic retailers who racked up record sales of its Chio, Chipi, Pom-Bär and Baked products. The Bulgarian salted snacks market is worth BGN 250 million, Inersnack said. A survey by marketing research agency Market Test revealed that around a fifth of the Bulgarians aged 15 to 24 spend more than nine hours a day glued to the TV and 42 percent do it over crisps. Television goes with crisps for almost 70 percent of the younger of the polled.
EBRD to boost Bulgarian investments by 25%
In terms of finance Bulgaria seems to be more stable than its neighbours, Thomas Mirow, president of the European Bank for Reconstruction and Development, said at his visit to Sofia. But he warned that Bulgaria will suffer a serious impact from the economic downturn. Yesterday Mirow and the Bulgarian finance minister Plamen Oresharski signed a memorandum of cooperation in the energy field. Both said new areas have been identified for further partnership.This year alone the EBRD will increase investment in Bulgaria by 25% to almost EUR 250 million. Nearly half of the funds will reach local banks to ease access to trade credit as banks are growing more reluctant to lend. The EBRD will also finance energy and EU funds projects. The resources will be made available to companies that have proved their viability but have been pressed by the financial crisis. They will be supported to increase their productivity, Mirow explained. Energy minister Petar Dimitrov, who also attended the meeting, said the parties have discussed Bulgaria’s ambitions to build alternative gas supply routes. The institution may finance the construction of gas links to Romania and Greece. “The Bulgarian government could receive around EUR 250 million to expand the Chiren gas repository,” the minister said.
Bulgaria's Trace Sofia to build 2 kindergartens worth total € 2.55 M
Bulgarian construction company Trace Sofia said on Tuesday it signed agreements to build two kindergartens worth a combined 5.0 million levs ($3.32 million/2.55 million euro) in Sofia. The two projects should be completed in eleven months, Trace Sofia said in a statement to the Bulgarian Stock Exchange (BSE). The construction is funded by the municipality of Sofia. one kindergarten will cost 3.57 million levs and the other 1.62 million levs. Trace Sofia is part of local road construction holding Trace Group Hold which participates in the construction of the Sofia underground. Shares in Trace Group closed 0.65% up at 30.7 levs on the Bulgarian Stock Exchange on Tuesday. The statement was released before the end of the trading session.
Bulgaria continues to attract the interest of foreign investors
Bulgaria is still an attractive destination for foreign investors, Prime Property BG REIT pointed out. The company is one of the six that represented our country on MIPIM Real Estate Exhibition in the French town of Cannes. Interest was manifested by investors from Russia, Greece, Belgium, Italy, and the USA. In the opinion of Prime Property, there will be new possibilities for development of our market and the crisis will have positive impact expressed in the opportunity to negotiate better terms because of the limited construction.
Egged to invest € 3.5 M in Rousse
Egged Israeli company has been implementing a pilot project in Rousse for the last five months. For this period, it provided 11 renovated trolleybuses and approve the company's goals for the next two years. The second stage of the project will be participation in the coming bus transport competition in the town and supplying new ecological buses suitable for the handicapped. Total investment will be EUR 3.5 million in the next two years.
COMPANIES:
Europe's largest retailer Carrefour is to open its first unit in the country by the end of this month
The store with a retail area of 8,300 square metres will be located in the southern Black Sea city of Burgas. The retailer plans to open hypermarkets in Sofia, Varna and Stara Zagora as well. Carrefour is the world’s second largest retailer running more than 16,000 stores in 30 countries. Its sales reached EUR 97.6bn last year.
Multirama with 8% market share in Bulgaria
Multirama chain for computer equipment and digital technology has already 8% market share in Bulgaria, general director of the Bulgarian company of the Greek parent firm Aristotelis Fotilas said on the opening of the sixth store of Multirama in Pleven. It is located on 600 sq. m and offers over 6,000 articles. He added that another seven stores would be opened countrywide by the end of this year.
Canadian company buys Bulgarian gold mines
Australian mining company International Resource Holdings (IRH) has agreed to sell its stakes in its two Bulgarian projects.Martern, a unit of Canadian mineral exploration firm Euromax Resources, will become the new owner of IRH's units in Bulgaria after agreeing to buy them at a price of USD 169 M, which equals half the value of the funds invested by Martern in the projects under a convertible note agreement signed by the two companies in December.Under the terms of the deal, International Resource Holdings will sell Thrace Resources, its wholly-owned unit in Bulgaria, following an evaluation of its financial position and the economic environment, tradingmarkets.com reported late Monday.Thrace Resources holds the gold and silver drilling licences for the Rakitovo and Breznik deposits, in southern and western Bulgaria, respectively.
Debt between Bulgarian companies may cause a chain of bankruptcies
There is a danger of a reproduction of corporate obligations, including between separate companies, that my cause a chain of bankruptcies in Bulgaria, the Industrial Chamber's deputy chairman Kamen Kolev told BNR Tuesday. The rate at which the medium debt rate in the real rector has grown had doubled in the last year - from 20% to 43%. Expectations are that the volume of corporate debt volume in the end of the year will be 150 billion Euros. This is extremely worrying as the medium rate of GDP is 6% and the debt rate of companies is twice as big as the entire country's GDP. Companies' profits are around 10% than their obligations, meaning they could not be covered, said Kolev.
Raiffeisenbank signs € 72 million portfolio guarantee
Raiffeisenbank (Bulgaria) EAD became the first privately-owned Bulgarian bank to sign a Portfolio Guarantee issued by the European Investment Fund (EIF) under the European Union's (EU) Competitiveness and Innovation Framework Programme (CIP) for Bulgaria. The Portfolio Guarantee amounts to 72 million euros, Raiffeisenbank Bulgaria said in a press release yesterday. Commenting on the transaction, EIFs Chief Executive Richard Pelly said, quoted in the press release: "The European Community CIP program gives EIF the opportunity to renew its collaboration with Raiffeisenbank in support of small and medium sized enterprises (SMEs). We hope that it will be another success story which will further help growth and entrepreneurship in the region, particularly in the current economic context". The facility makes it possible for Raiffeisenbank Bulgaria to provide its SME and micro clients with enhanced access to finance by offering them more flexible criteria, reduced collateral and interest rates and extended loan maturity. "Thanks to this facility, Raiffeisenbank will further support the business development and the competitiveness of Bulgarian SMEs by financing projects in technological development, innovation and technology transfer", said Momchil Andreev, CEO of Raiffeisenbank Bulgaria. The CIP Guarantee allows the bank to provide loans to micro and SME companies with a maximum loan amount of 300,000 euros and a minimum term of 18 months.According to the preliminary and unaudited results, in 2008 Raiffeisenbank kept its leading position in financing SMEs. Its loan portfolio in the segment reached nearly 2,000 million leva, or up 32 per cent from 2007. Compared to December 31, 2007, in 2008 the bankТs overall profit after tax increased by 22 per cent, reaching 132.6 million leva. This facility is the EIFТs second Guarantee Scheme to Raiffeisenbank Bulgaria. In 2006, the Bank signed EUR 20 million MAP (Multiannual Programme for Enterprise) Guarantee Facility which was successfully implemented by the end of 2008, says the press release.
WebEx steps in Bulgaria
US online video and audio conferencing company WebEx, part of US network equipment maker Cisco Systems Inc., presented for the first time in Bulgaria its Web-based conferencing service WebEx Meeting Center. The first of its kind software as a service (SaaS) can be used against a subscription without investments in additional equipment. The showcase of Cisco WebEx was the first online media event staged by Cisco Bulgaria. The WebEx Meeting Centre targets individual users, small and medium-sized firms and big corporations. The service is available at USD 79 (EUR 58.7) a month by April 30. The client gets software for online talks with up to 25 partners at a conference and 25,000 minutes of VoIP conference calls. The connection is encoded and hence reliable and secure. Each conference can be recorded and then watched offline as well as stored at a desktop library or a remote server of WebEx. As of April 2009, WebEx Meeting Center can be used via iPhone as well.
GLOBAL FINANCIAL CRISIS ANALYSIS AND NEWS:
Crisis narrows Bulgaria’s external deficits
As two silver linings of the economic slowdown, Bulgaria’s trade deficit shrank by 44.6% year-on-year to EUR 339 million in January and foreign direct investment (FDI) contracted by 37.4% to EUR 206.2 million, showed data of the Bulgarian National Bank (BNB). Economists welcomed the figures, accounting for the faster slide in imports compared to exports with the fall in energy and raw material prices. The weaker investment activity was the second major factor, according to expert. Bulgaria’s current account gap narrowed by 45% year-on-year to a nominal EUR 439 million, or a preliminary 1.2% of the projected gross domestic product (GDP) compared to a revised 2.4% of GDP a year before. FDI covered 46.9% of the current account gap in January, growing from 40% a year before. The financial account ended January with a shortfall of EUR 634.4 million versus a surplus of EUR 524.3 million in the same month of the previous year. The deterioration was driven by currency deposits of foreign banks. A boom on the Bulgarian credit market in the nine months of last year backed by local lenders’ international headquarters cooled off at the end of 2008 through January as banks started to sober up. Thus the bulk of the liquidity the central bank made available by relaxing the reserve requirements was deposited and used to pay off debts. “The interbank market turned out too small to take in all the released resources and instead of parking them in accounts with the BNB that bring no interest, banks have chosen to deposit oversees to produce return,” commented Georgi Angelov, macroeconomist with the Open Society Institute. His view was echoed by Lachezar Bogdanov of local think-tank Industry Watch, who said: “Given that banks are more liquid than before but at the same time they have tightened the credit, it is normal that they should have resources for which they should seek return”. Investor withdrawals from the local stock market and from other financial undertakings continued, which is seen in the outflow of portfolio investments. Having also started last year, the trend accelerated in January.
Heavy-freight automobile transport insists for measures against crisis
International Transport Automobile Union (IRU) and its members call upon governments and institutions of the EU for packages of measures concerning effects of the economy crisis over automobile branch. Measures are pointed out in a declaration of the International Transport Automobile Union about after effects of the crisis over heavy-freight automobile transport in the European Union, Association of the Bulgarian Enterprises for International Road Transport and the Roads (AEBTRI) informed. Measures that IRU offers are as it follows: To suspend the introduction of new taxes and in particular - to stop the decision of the Directive Euro-vignette as threatening economic development and competitiveness in Europe; To review and reduce the current taxes; To provide carriers business incentives to be able to continue to invest in modern and environmentally friendly vehicles; Use of economic incentive packages for investment in road infrastructure; To persuade financial institutions - to grant appropriate credit lines so that carriers can finance investments and activities; To convince suppliers of goods and services in cooperation with auto transport branch To create a social framework that will allow auto transport branch to suspend the active work of qualified staff, not lose it to retain good professionals in the industry. IRU: 140 000 working positions cut down over crisisBG 174391 2009-03-16 19:38:09 Sofia. International Transport Automobile Union (IRU) called upon its members to insist for adjournment of the so-called Directive for Euro Vignettes. The directive will cause increasing of prices of cargos in Europe, International Transport Automobile Union stated, cited by Association of the Bulgarian Enterprises for International Road Transport and the Roads (AEBTRI). The economy crisis has already led to cutting down of about 140 000 working positions in the automobile carrier branch and increasing of the percent of bankrupts of enterprises for international transport in the EU with 110%, the IRU stated.
Stamboliiski paper mill shuts down under crisis
Bulgaria’s biggest paper factory, owned by international paper and packaging group Mondi, will be idled due to the global financial crisis until market conditions improve. The news was announced in the group’s annual financial statement filed with the stock exchanges in London and Johannesburg and was confirmed by Mondi Stambolijski managing director Alexander Krikler. The hard market conditions and the troubles with main raw material supplies – energy and timber – are the main reason for the decision, he explained. The company will dismiss of all of its little over 400 employees and pay the compensation provided by law. Production operations are expected to be halted in May and resume only when demand steadies enough and the company signs favourable long-term supply contracts, Krikler said. Another negative impact has been the significant rise in gas and timber prices to above Western Europe’s average, according to Krikler. The expected cut of gas prices from April would not be enough and the government has not been specific about the expected second decrease in June, Krikler said. Mondi set foot in Bulgaria in 2006. Last year its Bulgarian subsidiary worked at around 60% of its top annual production capacity of 120,000 tonnes. The shutdown is part of Mondi’s restructuring plan aimed at curbing the effect of the crisis. The company has temporarily closed or offloaded factories in the UK, Sweden, Hungary, Denmark, France and Spain in order to focus on core operations and optimise production.