BULGARIAN ECONOMIC TOP NEWS DIGEST
WEEKLY REPORT ( 28 SEPTEMBER – 2 OCTOBER 2009 )
Sections/headline briefs:
MACROECONOMY:
· Japan and Bulgaria to boost energy and infrastructure cooperation
· Bulgarian delegation visited USA
· Bulgaria becomes focus for South Africa in Eastern Europe
· Hungary Economy Minister: Hungarians love Bulgaria
· Bulgaria moots EUR 1 billion World Bank loan
· IMF: Global economy expands, contraction in Bulgaria slows down
· Brussels races Sofia metro extension
· Bulgaria trades waste emissions quotas
- EBRD loans EUR 5,5 M to Bulgaria dairy producer
- Bulgarians to consume mainly imported meat 2019
- Brussels allocates EUR 16 M for fishery
- Eurofunds absorption is still winding
· Berlin loses interest in Eastern Europe
· Foreign reserves rise 2.2% m/m in September
INVESTMENTS:
· Greek-Spanish consortium to build EUR 155 M Bulgaria wind park
· Israeli firm to plough EUR 20 M into Sofia business park
· Pearl Park Mall to open doors in Sofia in spring
- Bulgaria government invests BGN 1 B to fight unemployment in 2010
- Bansko to invest BGN 11 M in infrastructure
COMPANIES:
· Crisis helps solid companies gain market share
· 10% of Bulgaria Building Firms Set for Bankruptcy
· Belgian financial group KBC set to give up Bulgaria assets
· Pharmaceutical firm Sopharma sells non-core assets to improve profitability
THE CRISIS:
· Bulgaria IT market to shrink by 15% in 2009
Articles:
MACROECONOMY:
Japan and Bulgaria to boost energy and infrastructure cooperation
Japanese companies are willing to plough investments into Bulgarian energy and infrastructure projects, it emerged after Monday's meeting of the Confederation of Employers and Industrialists in Bulgaria (CEIBG) and the International Friendship Exchange Council, or FEC. The meeting was the first of a series of events and initiatives aimed at cementing Bulgarian-Japanese ties. Japanese businesses expressed general interest in joining the Sofia metro extension, the Hemus highway, rail transport projects, renewables and nuclear energy schemes. Representatives of both organisations agreed that the recent general elections in Japan and Bulgaria had opened new foreign investment horizons in the face of the crisis. Though suffering its worst moments, Bulgaria is expected to emerge more competitive from the current economic slowdown, said Ivo Prokopiev, chair of CEIBG and co-publisher of Dnevnik daily and Capital weekly.
Bulgarian delegation visited USA
The working visit of a Bulgarian delegation led by Bulgaria's Deputy Prime Minister and Minister of Interior Tsvetan Tsvetanov in Washington D.C. is over. The delegation included directors of Bulgaria's major rights protection institutions. The delegation members met with high representatives of the US Department of State, Department of Justice, Federal Bureau of Investigation, Drug Enforcement Administration and Secret Service. The discussion topic throughout the visit was interinstitutional cooperation towards corruption and organized crime combat. Here is how the delegation leader Tsvetan Tsvetanov, and some of the delegation members - Minister of Justice Margarita Popova and Prosecutor General Boris Velchev - evaluated the visit.
Bulgaria becomes focus for South Africa in Eastern Europe
"Bulgaria should become the main focus for the Republic of South Africa in Eastern Europe, in the context of the European Union," said Ms Sheila Camerer, the Ambassador of the Republic of South Africa (RSA) to Bulgaria in a press conference about the starting of a new Internet page of the Embassy. She has been the first accredited South African diplomat to Bulgaria of the rank of an ambassador, all of her predecessors were charge d'affaires. She pointed out that her task was promoting of deeper bilateral relations because currently the trade and investments between the two country did not match their potentials. "The ports in Varna and Bourgas as well as the projects for the construction of roads and the energy sector in Bulgaria are of great interest to the Republic of South Africa," Sheila Camerer said. The RSA would be glad to receive Bulgaria's President, Georgi Parvanov in Pretoria and a possible visit of South African President, Jacub Zuma to Bulgaria is a desirable option, Ms Camerer answered a question of the Standart.
Hungary Economy Minister: Hungarians love Bulgaria
Hungary's Minister for National Development and Economy, Istvan Varga, has said that Hungarians were especially interested in what Bulgaria had to offer in terms of tourism opportunities.Varga and his Bulgarian counterpart, Traicho Traikov, gave a joint press conference in Bulgaria's southern city of Plovdiv, where the two visited the Plovdiv International Fair."Your country offers a lot of good family packages for our tourists, and the Hungarians themselves really love Bulgaria. It is a close destination that offers increasing improving tourism," the Hungarian Economy Minister said as quoted by BGNES.Varga said both Hungary and Bulgaria were interested in the realization of the two large-scale gas pipeline projects, Nabucco and South Stream.The two Ministers vowed to create conditions for the cooperation of the small and medium-sized enterprises in the two countries.Hungary is an official partner country of the Plovdiv International Fair, Fall 2009 edition.
Bulgaria moots EUR 1 billion World Bank loan
The Bulgarian cabinet is considering taking a EUR 1 billion loan from the World Bank under the Government Priorities funding pot, regional development and public works minister, Rosen Plevneliev, told the parliamentary committee. The new credit will add to the EUR 1 billion the country is seeking from the European Investment Bank (EIB). The money will back schemes that are high on the cabinet’s to-do list such as wastewater treatment plants and infrastructure projects, Plevneliev said without elaborating further. Talks with the World Bank are likely to start by the end of the year. At the same time, the EIB was ready to extend the first tranche of the EUR 1 billion loan that will be used to co-fund European projects, with the technical details yet to be specified, the minister added.
IMF: Global economy expands, contraction in Bulgaria slows down
The International Monetary Fund has raised its forecast for global growth next year as more than USD 2 trillion in stimulus packages and demand in Asia pull the world economy out of its worst recession since World War II.The Washington-based IMF said the economy will expand 3.1 % in 2010, more than a July forecast of 2.5 %.The world economy will contract 1.1% this year, less than the 1.4 % projected in July, the IMF said.So-called advanced economies including the US, Germany and Japan will lead the slump, shrinking 3.4 %. As a bloc, emerging economies will expand 1.7 %.“The global economy appears to be expanding again, pulled by the strong performance of Asian economies and stabilization or modest recovery elsewhere,” IMF said in its semi-annual World Economic Outlook.Still, the rebound will be “sluggish, credit constrained and, for quite some time, jobless.”"Emerging Europe has been hit particularly hard by the drop in capital inflows. This led to major contractions in the Baltic economies, Bulgaria, and Romania, although exchange rates acted as a shock absorber in economies with flexible regimes,“ the document said.According to the IMF the pace of contraction has slowed dramatically in much of the region, with risk appetite returning, exports accelerating, and the inventory drawdown moderating, although private credit remains sluggish and unemployment is on the rise.Despite the improved outlook, however, the fund said there were a number of risks to the recovery.It cited major government stimulus packages, central bank support and restocking by companies that have run down inventories as three temporary factors that "will diminish during the course of 2010".It also highlighted the fact that banks are being forced to hold more cash in reserve, which will limit the amount of credit available "for the remainder of 2009 and into 2010".With less money available to companies and individuals to borrow, and therefore invest, demand may be stifled.Most serious, it concluded, was the fact that "private demand in advanced economies remains very weak".The IMF’s forecast for the global expansion in 2010 is below those from Deutsche Bank AG and JPMorgan Chase & Co., which anticipate growth of 3.5 % and 3.4 % respectively.
Brussels races Sofia metro extension
After nine-month talks the European Commission cleared a EUR 157 million funding for the construction of the second arc of the Sofia underground railways, said Prime Minister Boyko Borisov. The stretch linking Nadezhda quarter and Cherni Vrah Boulevard is worth EUR 247 million, with the balance due to come from the state and the Sofia municipality. The new extension, scheduled for completion in mid-2012, will give residents of Nadezhda, Moderno Predgradie and Tolstoi a seven-minute ride to city’s centre, Borissov added. The construction of the second metro diameter will create 3,000 jobs and will employ local materials. The premier is hopeful other infrastructure projects will be fast-tracked once Brussels restores its faith in Bulgaria.
Bulgaria trades waste emissions quotas
Global climate changes and their effect on the environment, biological diversity and agriculture will be the issues, to be discussed at an international conference in Sofia. Representatives from thirty countries from Central and Eastern Europe will take part in the forum, which will be opened today by deputy minister of environment and water Ivelina Vassileva. Bulgaria might profit 500 to 600 million euro if it deals on the EU market for greenhouse emissions the rights for throwing out 50 million tones of toxic gases, explained for 'The Standart' Mitko Brankov, deputy chairman of the Bulgarian Industrial Association (BIA). BIA has proposed the Bulgarian government to include that possibility in its Programme of anti-crisis measures. Currently on the international markets the price of greenhouse gases is 12-14 euro per tone. Before the global economic crisis it was higher - 25 euro per tone. The European Commission foresees in the period 2012-2020 the prices to be about 39 euro.
EBRD loans EUR 5,5 M to Bulgaria dairy producer
The EBRD will fund one of the leading Bulgarian dairy producers with EUR 5,5 in its drive to optimise operations and diversify production.The European Bank for Reconstruction Development and will finance the investment program of Fama, Bulgaria’s third largest manufacturer of milk products, The Financial reported Tuesday. With the EBRD support, Fama will increase its competitiveness, boosting the development of the local dairy industry.According to bank, the project will enable Fama to expand its market share by building its own distribution network in Varna, Sofia and Plovdiv, the company’s largest regional markets.The company will also launch the production of added value products, such as long-life milk, while outsourcing low-margin products.In addition, the EBRD funds will help Fama to refinance its short and medium-term loans, strengthening its balance sheet.
Bulgarians to consume mainly imported meat 2019
The crisis in rearing animals for the meat industry in Bulgaria is deepening, judging by recent data of the Agriculture and Food Ministry. In May 2009, livestock farms in the country had 549,000 cattle and buffaloes, down by 6.3% year-on-year. Sheeps numbered 1.686 million, or 55% less, while goats have decreased to 620,000. The worst situation is in the pig-breeding sector: their number dropped by 17.3% year-on-year to 625,000. If their number falls below 500,000 than meat imports for processing and direct consumption will exceed 70%, experts predict. What should be taken into account is that at least 30% of the animals are not intended for market as they are bred by separate families. The number of pig-breeding farms fell by 24.2%, while the farms that breed mother sows - by 18.9 percent. The reasons for this trend, which is about to put an end to the country's livestock industry, are several. First comes the strong competition from imported meat, which is still preferred by meat processors for use in sausages and other delicacies. Despite the good quality of the Bulgarian pork and beef, it turns out to be more expensive. only in chilled meat for direct consumption Bulgarian meat still holds 60-65% of the market, traders say. Farmers who begin rearing animals have in fact to start from scratch. Everything set up as a base twenty years ago - buildings, communications, infrastructure, silos - have already been stolen or destroyed. For launching an average-size pig-breeding farm one now needs about BGN400,000 - an investment that is difficult to do in the course of seven or eight years. After Bulgaria joined the European Union, the requirements for such farms increased substantially, particularly with regard to hygiene, environmental standards and animal welfare. At the same time the state lacks its own policy to support the industry and has left them survive on their own. All these factors have substantially decreased the number of those willing to work in the animal husbandry over the last 10 years. In 2008, beef imports remained at their level of the previous year when some 15,000 tonnes were imported. In the first half of 2009 they have increased slightly, and by the end of December will probably reach about 17,000 tonnes. Imports of pork and bacon increased by 11% year-on-year and hit 83,700 tonnes in 2008. According to the sector representatives, the highest quantity of imported pork was filleted meat. In August this year, the average reference price of pork in the European Union fell by 8% to EUR154.07 per 100 kg of carcass weight. The Bulgarian exports are almost symbolic as compared to the huge imports. According to the data provided by the Association of Meat Processors, in 2008 the country exported 1,801 tonnes of beef and 1,200 tonnes of pork. More significant is the poultry export despite that it dropped by 32% year-on-year to 11,800 tonnes in 2008. Lamb export also shrank to 6,314 tonnes in 2008 as compared to 8,263 tonnes in 2005. The average price of exported lamb meat is USD6,300 per tonne for the EU and USD6,800 per tonne for third countries. Forecasts on the development of the Bulgarian livestock industry over the next few years are not optimistic. The trends for decreasing the number of locally reared animals and increasing imports will be preserved. Organic farming is a chance for farmers, but it is still in its infancy. Moreover, the economic crisis significantly reduced the European market share of this expensive, but high-quality meat.
Brussels allocates EUR 16 M for fishery
The EC granted a EUR 16 million aid for the development of the fishing industry in Bulgaria, deputy minister in agriculture Tsvetan Dimitrov said. The aim is to revive the fishing villages along the Black Sea, the Danube and other aquaculture regions and create attractive conditions for life and business. The fund absorption will be on a public-private-partnership principle.
Eurofunds absorption is still winding
Publication: Banker Weekly English
Despite the lavish promises and shuttle diplomacies to Brussels on the part of the GERB Government, the eurofunds absorption under pre-accession programmes is still far from perfect. According to latest data available on the Finance Ministry's website, there is a minimum growth of the paid funds under the PHARE and ISPA programmes as at August 31, 2009. A total EUR602.36 million have been absorbed under the ISPA programme as at end-August (out of a total EUR1.648 billion), up by just 2% compared to July 31, 2009. The funds have been paid for just five projects among all the 40 projects under the programme. Despite being still slow, the construction works on the water treatment stations in Stara Zagora and Dimitrovgrad is continuing. In July 2009, the absorbed funds under this project amounted to EUR26.5 million (out of a total EUR43.4 million) and grew by 2% to EUR27.58 million within one month. We will remind that the executor, a consortium between German Heitkamp and Turkish MASS, promised in the middle of the year the Dimitrovgrad facility to be put into operation until the end of October 2009 and that in Stara Zagora - until the end of 2009. It is obvious now that it cannot happen. Two more projects have received funds - those for improving the water supply and sewage systems in Burgas and Ruse. The project in the seaside city will eat more than EUR21 million. Of them, EUR14.24 million or 70% of the total sum have been absorbed until the end of August 2009. Just a month earlier the absorbed funds amounted to EUR12.7, down by 8 percent. The situation pertaining to the water cycle in Ruse is far more different. Its improvement will need EUR57.73 million and the absorbed sums for it have grown by 2% month-on-month indeed (from EUR19.56 million to EUR21 million). However, the project is still on the brink of ruin. We will remind that the new Regional Development Minister defined the project as a crucial one. Just several days ago, Minister Rossen Plevneliev said the executor, ''Building Development Holding'' ЕООD, has to put efforts in order to finish its work, not to seek ways to feel comfortable. The other project, whose work is in the full swing now, is the biggest one under the ISPA programme. This is the Electrification and Reconstruction of the Plovdiv-Svilengrad Railway project for which EUR340 million have been earmarked. As at 31 August 2009, a total 24% of the sum have been absorbed or up by 2% compared to a month earlier. We cannot help mentioning that the payments on another crucial project for the local economy, namely Lyulin highway, were ceased within the last month. The section that is intended to redirect the Sofia ring road's traffic to Daskalovo road junction near Pernik costs EUR148.45 million, of which EUR111.4 million should come under the pre-accession programme. So far, the absorbed funds amounted to EUR50.72 million or 36% of the total - exactly as they were a month ago. Such a delay is quite alarming since the project's European financing was thawed out still in mid-May 2009 and the highway has had to be completed until the end of the year. The good news, nevertheless, is that the construction works on the Danube Bridge II project have been finally launched. As BANKER weekly already wrote the construction of the bridge's bearing columns at the river's deepest part was launched last week after more than a one-year delay. The money that was paid in August speaks for the serious preparation: they amounted to EUR51.339 million as at July 31, 2009 or 30% of the EUR225-million project. A month later the amount of the absorbed money jumped by 11% to EUR70.46 million. The negotiation of additional funds on the Kyustendil's water cycle may also be considered positive. The Finance Ministry's latest data show that they jumped to EUR30.37 million in August from EUR8.4 million in July 2009. But it is still unclear when exactly the project will be implemented. We are cherishing hopes that the deadlines on the ISPA programmes will be extended since Bulgaria has already received the EC's support on the issue. one has not to forget, however, that the extension will be different for each of the programmes. As for the PHARE programme, everything seems to be winded up. After our country lost EUR220 million last year it is now about to bid farewell also to the bulk of the remaining EUR562.5 million that were earmarked under the 2005 and 2006 memorandums. The Regional Development and Public Works Ministry, which manages 513 projects for a total EUR133 million, is already carrying out a full analysis on PHARE, which has to be ready within the several days to come. However, it is sure that EUR32 million will be given back to Brussels because of infringements. Moreover, it is expected that the Bulgarian party will negotiate with an EC working group on the closure of the pre-accession programme's projects. Similar is the situation with the other ministries that are managing PHARE projects. The information that has been compiled as at August 2009 is eloquently revealing that there were almost no payments on the projects of the 2006 memorandum (totalling EUR212.4 million). Out of them, just EUR45 million have been contracted and the funds paid have amounted to just EUR28 million under 20 projects, Finance Ministry data show. And it seems that it will be the PHARE programme's dismal end in Bulgaria since 10 years were not enough for three governments to do their job. As for ISPA, there is still a chance for its large-scale transport projects to be saved because of their importance for the European transport system. Let's hope that we will use our last card. BANKER KAPE: Bulgaria is preparing a concession for the biggest part of Hemus highway, Prime Minister Boyko Borissov said during the week while visiting Kavarna. "This highway is quite expensive and there are no willing to construct it. We therefore decided to build the Veliko Tarnovo-Sofia section on a concession basis, while the Veliko Tarnovo-Shumen section will be built by the state itself when it has enough money," Premier Borissov said. The Government is also pondering over the opportunity to build on a concession basis the Ruse-Veliko Tarnovo section, which is not part of the autobahn. Similar was the idea of the Simeon Saxe-Coburg-Gotha Cabinet's Transport minister Valentin Tserovski, but he didn't manage to realize it at all. Hemus highway should link Sofia with Varna. The section between Sofia and Yablanitsa (which intersects the Stara Planina mountain) and the section connecting Shumen with Varna are alreay in operation. A tender procedure is expected to be launched in spring-2010 for the connection of Hemus highway with Sofia ring road and its executor should be selected in the summer. Its construction is expected to be completed within a two-year time. And the tender documentation for the first two sections of the uncompleted part of Trakia highway, namely Stara Zagora-Nova Zagora and Nova Zagora-Yambol, should be ready at the end of October 2009. Its executor will be selected this winter and its construction will be completed in the summer of 2012.
Berlin loses interest in Eastern Europe
Publicatrion: Franz-Lothar Altmann, Deutsche Welle
It seems that the free democrats will win the post of foreign minister, i.e. Guido Westerwelle will be appointed as the new foreign minister of Germany. However, little is known about him and his party as regards their foreign policy orientation. Should we expect any change, it will probably materialize in weakening interest in what's happening in Eastern Europe as a whole. This is also conditioned by the fact that the outgoing social democrats had a few figures strongly connected with Eastern Europe, first among them being Gernot Erler, state minister in the Foreign Ministry, who is in the government of the German-Bulgarian Forum. The new Bulgarian government will lack such connections and in this sense we can expect certain weakening, I would refrain from calling it deterioration, in Germany's relations with Bulgaria and the SE Europe as a whole. We can hardly expect any change towards easing of pressure towards Bulgaria and Romania. Rather the opposite is likely - increase of criticism and sensitivity to the problem and these will not produce a counter effect so much on Bulgaria and Romania but on the process of further EU enlargement. I can imagine that reserves concerning the enlargement will increase - firstly because of the experience with countries like Bulgaria and Romania and secondly because of the pressure coming mostly from the conservative political space. As for the participation of the German energy giant RWE in the Belene NPP project, the business, more precisely the energy companies, should be content with the elections results. Because the two parties that will govern Germany are for the lengthening of exploitation time of the NPPs functioning in the country. This will possibly have an impact on international projects, I mean, when for instance the German government regards less critically the participation of RWE in Belene NPP.
Foreign reserves rise 2.2% m/m in September
The foreign reserves advanced by 2.2% m/m (EUR 263.9mn) to EUR 12.39bn as of end-September, according to data of the central bank. The increase sustained for a second consecutive month after the 3.6% (EUR 417.5mn) expansion m/m in August. It should be noted, however, that the central bank received on August 28 SDR 474.6mn from the IMF valued at total of EUR 517mn as part of the programme of the IMF to allocate USD 250bn to member states to contain the adverse effects from the world financial and economic crisis. on September 9, the bank received another tranche of SDR 136.3mn (EUR 148.7mn) from the IMF under the special one-off SDR distribution, which was recently ratified by most of the member states. The contraction since the beginning of the year narrowed to 2.5% as compared to 4.6% at and-August and 7.9% as of end-July. In September, the deposit of the government at the central bank added 0.7% m/m implying improvement of the fiscal stance during the month. The holdings of commercial banks added 7.7% in September after falling by 3.1% m/m in August. The annual contraction of the foreign reserves widened marginally to 15.8% in September from 15.6% y/y in August and 14.2% y/y in July. The ratio of foreign reserves to short-term debt deteriorated slightly to 94.1% as of end-July, down by 0.3pps in a month. It is expected to improve in next two months in line with the increase in the foreign reserves but will remain much lower as compared to pre-crisis levels of 126.3% at the end of 2007, and about 300% in 2002-2004.
INVESTMENTS:
Greek-Spanish consortium to build EUR 155 M Bulgaria wind park
A Greek-Spanish consortium has announced that it set to build a EUR 155 M wind farm in Central Bulgaria after being granted a 30-year concession for a 842,4 hectare plot near Karnobat.Greek company Alpha Grissin and Spanish company Preneal Internacional will share the project to operate a 11 MW wind park an official press release announced Monday. The contract of the concession was signed on Sunday, by the Mayor of the town of Karnobat and the representatives of the consortium. Preneal is already operating 13 wind parks of 330MW total power worldwide, while it is also participating in the development of projects of 2,590MW, both in Spain and globally. The consortium is already in process of receiving all the necessary licenses, expected to be issued within 2009. The total investment is expected to reach EUR 155 M.
Israeli firm to plough EUR 20 M into Sofia business park
Israeli investor BSR Sofia will put around EUR 20 million into a business park in the Bulgarian capital, it emerged at Wednesday's ground-breaking ceremony. The 36,000 sq m of offices and parking lots will sprout in Slataina district in two years. Local Planex Build has been hired to build the park. Its manager, Zdravko, Kardashev, hailed the project is a signal of the improving business climate in Bulgaria. The comeback of large investors with long-term goals is a sign that the time is ripe to kick-start efficient and financially secured projects, said Plamen Andreev, manager of Planex Holding.
Pearl Park Mall to open doors in Sofia in spring
The construction of one of the biggest shopping centres in the southern part of Sofia is pending completion, with the ribbon-cutting ceremony scheduled for spring, the project manager, Valentin Zhekov, told reporters on Wednesday. The mall will pop on the ring-road and will target wealthy Sofianites from the upscale suburban quarters of Boyana, Dragalevtsi and Simeonovo as well as transit shoppers and entertainment seekers. The seven-storey complex with a 500 sq m extension option has a floor space of 9,000 sq m including 7,000 sq m of retail area and 300 parking slots, said owners, Petya and Valentin Zhekovi, whose company has a 20-year experience in retail construction. The first floor will host a hypermarket and the next four levels will accommodate shops and retail outlets, with leisure and entertainment facilities due to open on the fifth and sixth floors. The building's top level will offer a pastry shop and a restaurant with a panorama view to the city and the Vitosha Mountain. The rental prices are set at EUR 10-15 a sq m or substantially lower than retail space rents in other locations in Sofia and major cities, said Valentin Zhekov. The shopping centre will be erected by construction firm Bulan with the financial backing of local lender UniCredit Bulbank.
Bulgaria government invests BGN 1 B to fight unemployment in 2010
Bulgaria's Labor Ministry is going to invest about BGN 1 B on the labor market in 2010 in order to tackle the unemployment that is expected to result from the economic crisis.BGN 250 M are going to come from the EU funds under the "Development of Human Resources" Operational Program. The state budget will provide BGN 400 M; half of those will be spent on active labor market measures, and the other half - on passive measures.The other BGN 400 M are funds to retained by the Bulgarian businesses when the employers' social security payments are reduced by 2% starting January 1.The priorities of the Labor Ministry in 2010 will have to do with developing new policies on training and qualification.Minister Mladenov cited data from a World Bank report saying that 25% of the people between 15 and 24 years of age in Bulgaria did not study, work, or had any desire to pursue such activities.One of the short-term measures to be adopted by the Ministry is increasing from the period for receiving unemployment benefits from 6 to 9 months if the unemployed person is involved in some kind of qualification training.
Bansko to invest BGN 11 M in infrastructure
Bansko municipality will invest some BGN 11 million in infrastructure improvements in the winter, mayor Alexander Kravarov said. Occupancy in the most active season last winter (Dec-Mar) was 70%. Bookings from the Scandinavian countries now are 10% down but we expect more Russian tourists, Kravaror added. Our goal is to make Bansko an all-year destination by developing sports and SPA tourism.
COMPANIES:
Crisis helps solid companies gain market share
The prize Mobiltel received, Advertiser of the Year, is proof of its successful marketing strategy, CEO Andreas Maierhofer told the Pari daily in an interview. M-Tel looks on the crisis as an opportunity for strengthening its brand and gaining market share. Market leaders cannot give up innovations and advertising. The last thing M-Tel will cut from its 2010 budget is investments in image.
10% of Bulgaria Building Firms Set for Bankruptcy
Bulgaria's Minister of Regional Development, Rosen Plevneliev, has announced that 10% of the building firms in the country are likely to go bankrupt in the next few months over the global financial crisisPlevneliev said that the building industry is in dramatic situation, with between 500 and 600 of a total 5500 construction companies in serious financial distress.He continued that his Ministry will try to revive the industry by providing new contracts for road construction in October and November. He added that the Road Agency’s budget has increased by BGN 700 M.In connection with winter cleaning Plevneliev indicated that BGN 35 M would be provided for snow removal and BGN 17 M for maintenance of roads. The funds will be provided by the Ministry of Finance.
Belgian financial group KBC set to give up Bulgaria assets
Belgian-based financial group KBC said it would continue doing business in Central and Eastern Europe but it might sell a part of its non-core assets in Bulgaria and Romania.KBC announced its plans in a restructuring plan submitted this week to the European Commission, Belgian press reported.The plan stated; "The bank considers giving up the non-strategic actives it holds in Romania and Bulgaria. We already put out for sale the shares we have with the Slovakian bank NBL, but we could not find any buyeron the Bulgarian market KBC owns CIBANK, DZI insurance and it also has an outlet of KBC Securities.
Pharmaceutical firm Sopharma sells non-core assets to improve profitability
Management of the country’s leading pharmaceuticals producer Sopharma has empowered CEO Ognyan Donev to settle the sale of the company’s stake in two subsidiaries – Mineralcommerce and Spharm Investments Limited. The two companies are not part of the core business of Sopharma and the interest disposal is to improve its profitability. Sopharma holds 70% in Mineralcommerce. The latter is specialised in the production and trading with amorphous silicon dioxide and sodium silicate solution under the trade mark Amosil. Sopharma controls the full stake in the Cyprus-registered Spharm Investments Limited, which activities comprise financial assets management. Earlier this week, Sopharma announced plans to acquire 51% of the capital of its Latvian peer Briz OOO, which is to double its capital to EUR 4.2mn placing a total of 4,497 shares with unit issue value of EUR 500. Sopharma expects sales to increase by 25% next year.
THE CRISIS:
Bulgaria IT market to shrink by 15% in 2009
Bulgaria's information and telecommunication technology market will shrink by not more that 15% in 2009.This prediction has been made by, Lyubomir Minchev, TeleLink Holding Group Executive Director and Co-Founder, in an interview for the Pari Daily.In his words, in the first half of 2009 the decrease is between 10% and 15%. Even this numbers are over three times higher than the expected overall fall of the economy, which is disturbing enough, Minchev said.However, this current situation is the thing that the business is trying to use as a new working model, he explained. The crisis is forcing the companies to increase their efficiency – cut some expenditures, and staff, and so on, Minchev commented.IT and telecommunications markets everywhere suffer from the negative effects of the global economic crisis, he added. This tendency is observed not only in Bulgaria, but in Serbia, Macedonia, Romania, and the Ukraine, where the company has clients.“Talking about Bulgaria, the IT and telecommunications market is equally affected as the one in Romania. There are some differences, of course. Bulgarian telecom operators are still increasing the amount of investment, while in Romania this sector is staying still”, Minchev explained.The common thing, though, is that there is a drastic fall of the investments of the biggest clients – companies in the financial and communications sector, he added.