BULGARIAN ECONOMIC TOP NEWS DIGEST
WEEKLY REPORT ( 9 – 16 APRIL 2010 )
Sections/headline briefs:
MACROECONOMY:
· Bulgaria’s drug market grows by 7% Y/Y in 2009
· Exports continue expanding in February
· IMF: Bulgaria economy to bounce back thanks to exports
· Bulgaria's Minister of Economy and Energy:Bulgaria is like Korean car
· Bulgaria offers 5 railroad stations for concession
· Bulgaria moves to build final section of Trakiya Highway
· Dundee Precious Metals discovers new gold deposits in Bulgaria
· Veliko Tarnovo opens school for EU funds
· Bulgaria's government aircraft to be sold for $2,5M
· Sofia seeks EUR 20 M for tech park
· Bulgaria's 2009 wheat harvest falls 14.1% to 3.98 million tonnes
· What is Public private partnership?
INVESTMENTS:
· French investors interested in Sofia Water Company concession
· US army orders boost Bulgarian machine building plant
· U.S. ambassador: Bulgaria is very attractive investment destination, but needs rule of law
· Total TV Steps in Bulgaria, invests EUR 45 M
· Tsarigradsko Shausse becomes Sofia’s new business hub
· Bulgaria's Krepezhni Izdelia to raise capital tenfold to back solar energy project
- Bulgaria's FDI down by 95% in January-February 2010
COMPANIES:
· Italian companies form Balkan Business Association
· Bulgarian companies selected to build north Sofia Metro line
· State-owned firm loses Bulgaria finance ministry IT monopoly
· 7 companies eye new DTT tender in Bulgaria
THE CRISIS:
· Bulgaria's new car sales drop by 40% in 2010 Q1
· Bulgaria with sharpest fall in EU industrial output
MACROECONOMY:
Bulgaria’s drug market grows by 7% Y/Y in 2009
The Bulgarian pharmaceutical market shrugged off recession in 2009, pulling off a 7% increase over the twelve months, Kuncho Trifonov of research outfit IMS Bulgaria told reporters. Drug sales added up to EUR 878 million, with hospitals accounting for EUR 152 million and pharmacies for the balance of EUR 726 million. For 2010, sales are expected to gain a new 5%, taking the market total to BGN 1.8 billion. Trifonov attributed the improvement on the higher purchasing power of the population. The hospital market is not expected to stage an increase this year thanks to continuous pressure by the health ministry to rein in public spending. No growth is expected in terms of sold packages either as sales are increasingly shifting towards more expensive treatment. Bulgaria allocates to healthcare the smallest amount of public spending across the EU. In 2009, the National Health Insurance Fund (NHIF) reimbursed 36.6% of the price of medication. The figure is expected to shrink to 35% in 2010. This compares with an average of 85% for European countries. IMS Bulgaria said the most suitable healthcare model in Bulgaria is state healthcare combined with no more than one fully-fledged private health fund. In the US, the public administration gobbles up 25% of the health fund’s revenue, and Bulgaria should not let this happen, Trifonov cautioned.
Exports continue expanding in February
Exports increased by 8% y/y to BGN 1.9bn (EUR 973mn) in February, preliminary data of the statistical institute showed. The indicator rose for a fourth month in a row. The rate decelerated from a revised 13% y/y in January but figures were affected by low base effects from last year. Since the beginning of the year, Bulgarian sales abroad have expanded by 10.4% y/y. At the same time imports continued falling and the contraction accelerated to 11.4% y/y in February as compared to a revised 5.4% y/y in January. As a result, the foreign trade gap narrowed by 61.4% y/y in February and 55.2% y/y in Jan-Feb and accounted for 0.9% of the projected full-year GDP in Jan-Feb as compared to 2% of GDP a year earlier.
IMF: Bulgaria economy to bounce back thanks to exports
The increase of export will be the major catalyst of the recovery of the Bulgarian economy in 2010, according to an IMF forecast.The forecast of the International Monetary Fund is contained in a still unreleased report to be presented to the Bulgarian authorities at the beginning of May 2010 but has been cited by the BGNES agency which claims to have obtained a copy of it.The Fund says that the stronger recovery of the global economy will boost growth in Bulgaria.The IMF expects that the Bulgarian GDP will see a 0.2% growth in 2010. This is rather close to the expectations of the Bulgarian government of a 0.3% GDP growth in 2010 – a forecast issued in January 2010 as the Cabinet revised the 2% GDP decline forecast included in the 2010 State Budget Act in the fall of 2009.Bulgaria’s internal market consumption is said to continue to drop despite the stabilization of the financial markets. This will largely stem from the decline of employment, which is expected to increase from 7.8% on average in 2009 to 9.2% in 2010.The Fund also forecasts a continued decline of investments in Bulgaria as a result of the harsh credit conditions and the low economic dynamic.According to the IMF, Bulgaria’s current account deficit will keep going down – from 9.5% of the GDP in 2009 to 6.25% of the GDP in 2010. Bulgaria’s 2010 inflation is predicted to be 2.2%.The IMF thinks that the expectation of the Borisov government for a 0.7% budget deficit in 2010 is really challenging and optimistic, and forecasts a budget deficit of 1.8% of the country’s GDP.The Fund’s report warns Bulgaria over considerable risks for its economy posed by the possibility that the parent banks might drain liquidity from their Bulgarian subsidiaries.
Bulgaria's Minister of Economy and Energy:Bulgaria is like Korean car
”Bulgaria is like a Korean car of the 1990s - a good one but there is something missing to be perfect” Bulgaria's Minister of Economy and Energy, Traycho Traykov used this metaphor to explain the attitude of investors to Bulgaria. According to global surveys, Bulgaria ranks among the first in terms of opportunities for making business but it is hardly the first country investors think of when they decide to invest in Europe, Traykov further explained.
Bulgaria offers 5 railroad stations for concession
Parts of 5 Bulgarian railroad stations will be offered for concession, Transport Minister, Alexander Tsvetkov, reported Wednesday during the cabinet's meeting.Private management will be sought for the waiting areas, commercial buildings and facilities, and equipment of the railroad stations in Sofia (the Central Station and the “Poduene” one), Plovdiv, Varna, and Burgas.With the move the cabinet hopes private companies with greater financing will be able to reconstruct and manage the railroad stations better than the Sate. The concessionaires will have to modernize the facilities, increase the quality of service and provide new job openings.The Transport Ministry expects to increase the budget revenue by over BGN 1 B.The institution's strategy also plans concessions for the Black Sea ports in Varna and Burgas and the Danube ones in Vidin, Ruse and Lom and for the airports in Plovdiv, Gorna Oryahovitsa, Stara Zagora and Ruse. A cargo terminal at the Sofia Airport is also going to be build by a concessionaire.A report of the Transport Ministry, published on March 25, shows the Bulgarian State received nearly BGN 17 M in concession fees and taxes from private port and airport operators in 2008.The Ports of Varna, Balchik, Silistra, Svishtov, Oryahovo and Lom, and the airports of Varna and Burgas have all been given to concessionaires, which, according to the report, adhere to their contracts with the State, including social program commitments and job openings.
Bulgaria moves to build final section of Trakiya Highway
The Bulgarian government has given a green light to the procedure for the construction of the final 115-km section of the Trakiya Highway.During its meeting on Wednesday, the Cabinet authorized the Road Infrastructure Agency to sign a contract for the construction of the last three lots of the Trakiya Highway from the city of Stara Zagora to the town of Karnobat in Southeast Bulgaria.The government’s decision to give the project a go-ahead will guarantee the construction of the highway within the deadline – Trakiya is supposed to be ready in 2012 becoming the first fully completed Bulgarian highway.Advanced payments for the construction of the last three lots will come from the EU Transport Operational Program, explained Bulgaria’s EU Funds Minister Tomislav Donchev.The construction will be launched after the European Commission grants the money. The Bulgarian government has prepared the application for the EU funding with expert aid from JASPERS (Joint Assistance to Support Projects in European Regions).If the EC does not approve the project or provides less funds than expected, the Bulgarian government will cover the cost of the construction of the final section from the state budget. The European Commission’s decision is expected by the end of 2010.At the beginning of February 2010, "Unified Highway Trace", a Bulgarian consortium, won the contract for the construction of a new section of the Trakiya Highway. The tender on offer was for the construction of a 32 km section linking the city of Stara Zagora and the towns of Nova Zagora.Though incomplete the Trakiya Highway is the Bulgarian highway project which is closest to completion. It will connect the capital Sofia with the Black Sea city of Burgas. A total of 328 km of the 443-km highway have already been built.
Dundee Precious Metals discovers new gold deposits in Bulgaria
Toronto-based Dundee Precious Metals has discovered two new high-grade targets of gold deposits near the Chelopech Mine in Bulgaria, the company announced.The new mineralized zones can easily be accessed from current development. Further drilling and interpretation will continue during 2010 to fully evaluate the size and characteristics of these new zones.The blocks are characterized by low sulphur contents (less than 10%), which are associated with high recoveries during processing, the mining company said.Dundee Precious Metals announced in January this year that it has abandoned plans to develop a plant in Bulgaria, buying a smelter in Namibia instead.Bulgaria's Economy Ministry confirmed that the company has informed them of the acquisition of a plant in Namibia and the freezing of its plans to build a metallurgy plant near Chelopech, about 60km east of Sofia, using cyanide to extract the gold.The decision came in the wake of a ruling of the supreme Bulgarian court from the end of last year, which revoked a 2008 environmental impact assessment resolution, which gave the green light to its gold and copper mine in Chelopech.The company has failed to secure all necessary permits from Bulgarian institutions for five years and has faced strong opposition from environmentalists.In Bulgaria Dundee Precious Metals also hopes to secure a concession at Krumovgrad gold project, a mining development project.In addition the company owns 95% of the Kapan Mine, a gold / copper / zinc concentrate producer in southern Armenia and holds significant exploration and exploitation concessions in some of the larger gold-copper-silver mining regions in Serbia.
Veliko Tarnovo opens school for EU funds
The district management of the town of Veliko Tarnovo and The Standart plan to open the first school for EU funds in Bulgaria. The modern scientific and technological park which will help businessmen and farmers from northern Bulgaria to work out and write their projects to Brussels will be founded in Veliko Tarnovo. The idea comes from the district governor of Veliko Tarnovo Assoc. Prof. Pencho Penchev. Mr. Penchev and his team will apply under Development of the Competitiveness of Bulgaria's Economy operational program of the EU. The project fits "Support for Establishment of Technology Parks" measure for which the indicative program for 2010 provides 20 million levs (1euro=1.95levs). If the project is approved, Veliko Tarnovo will enjoy the first European-like technology park in Bulgaria. Everyone who wants to apply for EU funding will get expert help. From the town of Veliko Tarnovo, The Standart gives the start to its nationwide campaign for 2010. This year, the campaign is dedicated to the EU projects in different operational programs.
Bulgaria's government aircraft to be sold for $2,5M
The plane is in good shape but prohibited in EU aviationTU-154 - the aircraft used by Bulgaria's high officials will be sold by the end of the year. Its price was estimated at $2,5 million, transport minister Alexandar Tsvetkov announced before Nova TV channel. The airplane is in good technical shape and it has few flying hours. This plane could be used for flights out of the EU only, as the use of TU-154 has been banned in EU civil aviation. Even the Russian 'Aeroflot' airline has stopped using it.It was precisely with this model of Tupolev aircrafts that Polish president Lech Kachzinski died tragically a week ago. Immediately after the air accident with the Polish president Pencho Penchev - director general of Bulgaria's Aviation Squad 28 issued an order for suspending the flights of Bulgarian high officials with the TU-154 until the investigation of the accident is closed.
Sofia seeks EUR 20 M for tech park
Sofia municipality will try to obtain EUR 20 million under the Competitiveness and Regional Development operational programmes to fund construction of its technology park, said deputy mayor of finance Minko Gerdjikov. The city council has not yet picked a site for the project, which will house high-tech production and research. “We’ll start off with a plot by the Bulgarian Academy of Sciences (BAS), which is our partner, and then seek expansion of municipal property or replacement of Kremikovtzi steel plant on the proposal of Sofia chief architect Petar Dikov,” Gerdjikov said. The city council has estimates construction of the technology park will take some two and a half year since obtaining the financing to complete.
Bulgaria's 2009 wheat harvest falls 14.1% to 3.98 million tonnes
Bulgaria's wheat harvest fell 14.1% to 3.98 million tonnes last year, figures from the farm ministry indicated.In 2008, Bulgaria harvested 4.6 million tonnes of wheat, a four-year high and twice as much as the country needs to meet domestic demand.Farmers put to wheat 1.254 million hectares in 2009, 12.5% down from 2008, the ministry said on its website.In 2010, wheat sown area is expected to fall to 1.08 million hectares, the ministry added.The country's 2009 barley harvest was 2.2% down on the year to 858,679 tonnes and maize output fell 5.7% to 1.291 million tonnes.Sunflower harvest increased 1.3% to 1.318 million tonnes.Bulgaria's total agriculture output fell 11% last year due to lower yields. only rice and rye crops were higher than in 2008 by 12.4% and 27.7%, respectively, at 43,441 tonnes and 18,858 tonnes.
What is Public private partnership?
Provider: Sofia Echo Media Ltd.
Public private partnership (PPP) is a phrase often used but not always fully understood. A PPP may be described as a project jointly undertaken by a public body (such as a government body at any level from national to municipal) and one or more private enterprises.Whereas the private party typically develops and operates the project and provides the entrepreneurialism and drive, the public body may contribute the land (for a highway, railway, prison, hospital and so forth) and sets the rules of the game, in the public interest, by way of enabling legislation, regulation, or via tender rules.For a PPP to be successful, there must be a well-defined public need - in the case of a school, more than simply suggesting there is a need for a school building, also mapping out the number of students, the size of the classrooms, the recreational facilities required, or, in the case of a bridge, defining the exact location of the bridge, the load that the bridge must bear, its life span, among other considerations.Rather than the public body itself building the project, it would normally create a tender, defining in the tender documents what each of the public and private parties are expected to contribute to the project and the allocation of risks and rewards.The advantages of PPP from the public perspective are manifold: first, it reduces the amount of public spending required, thereby helping to reduce financing needs and deficit.Second, bringing in a private sector party to manage the project usually allows for a more entrepreneurial and flexible form of management than is typical for an entirely public project. Third, certain risks are better absorbed by the private sector than by the public sector (if expected demand does not materialise or if there is litigation against the project).And fourth, full ownership of the project and any real estate or assets associated with the project will usually revert to the government after a predefined period.As a good example, PPP projects in the highway sector may save billions of euro of public expenditure. The quid pro quo is that users of the highway will need to pay a toll for a defined period, to defray the costs of construction, operating costs, and to ensure a reasonable return for the private operator. There is actually a certain degree of justice in making the users of a particular highway pay for the use of that asset, rather than having society at large pay for the project.However, what happens if the toll is set too high? That can create a social backlash, causing a loss of popularity for the government; excessive tolls may also cause demand to diminish, meaning that the number of users required to break even or generate a return does not materialise, and that the project may lose money.In other words, in the case of most PPP projects, careful analysis is required prior to implementation, involving extensive market studies, to estimate the optimum and socially-acceptable pricing. Tenders should be carefully constructed to create healthy competition so as to keep costs in check.The cost of the project can also be borne by the public body, as opposed to the end consumer; this would be the case in the case of a PPP for a fire department, prison or ambulance service.In such cases, poor design or implementation may also result in excessive costs, which are "buried" away from the public eye. Therefore, the two options of directly providing the service or outsourcing it via a PPP must be carefully considered by the public authority.With most Central European governments trying to comply with the Maastricht criteria, most importantly keeping debt below 60 per cent of gross domestic product (GDP) and budget deficits below three per cent of GDP, PPP represents an excellent mechanism to boost growth and employment, accelerate the funding of infrastructure, harness the creativity, dynamism, and funding capacity of the private sector, and allow the population to enjoy an improved standard of living and productivity.What is often lacking in the public sector is the know-how to design and implement these very sophisticated tenders and there is the potential for corruption to increase projects costs and risks and consequently costs to the consumer. Nevertheless, Central European governments at all levels are only scratching the surface when it comes to exploiting the full potential of PPP and we need to see big changes in the future, throughout the region.
INVESTMENTS:
French investors interested in Sofia Water Company concession
Investors are interested in taking over the concession for the Sofia water supply and sewerage utility. This emerged Tuesday from remarks by French Ambassador here Etienne de Poncins at a workshop on the French experience in public-private partnerships in the water sector. It was confirmed by Ivan Ivanov, the CEO of Sofiyska Voda AD which is the current owner of the Sofia water concession. Sofiyska Voda AD holds a 25-year concession to operate and maintain Sofia's water supply and sewerage system, that commenced in 2000. Its shareholding capital is divided between the Municipality of Sofia (22.9 per cent) and United Utilities of the UK and the European Bank for Reconstruction and Development (together holding 77.1 per cent).The Sofiyska Voda CEO said that unlike previously, this time they expect specific financial proposals from companies which have shown interest in the Sofia concession. He said there are French companies among them. He hopes that possible changes in the shareholding capital will not result in dramatic changes in the way the company is managed. He sees no reason why changes in the shareholding capital should affect the price of water. "We have a five-year business plan which expires in late 2013 and it sets out the amount of expected investment and the prices." He also said that water prices are expected to go up from January 1 next year but the exact increase is up to the regulator. This year Sofiyska Voda will invest 50 million leva - mostly in the sewer network, in new water mains and action to bring down water losses. Investment last year stood at 52 million leva and the total investment for the business plan period until 2013 is 240 million leva. "That is a lot on the backdrop of the total investment in the Bulgarian water sector but not enough, it turns out, to achieve all goals we set by ourselves and the regulator," commented Ivanov. He added that the investment for the next five-year period should be much bigger and planning should start now. It is Sofiyska Voda's position that more efforts should be made to get EU funding for building new sewers so that itself and the other operators can focus their investments on replacing water mains. Addressing the workshop, Minister in charge of EU funds Tomislav Donchev said that Bulgaria's water sector needs at least 12 billion leva in investments.The money will be spent on the reconstruction of the entire network.Projects contracted under the Operational Programme for Environment add up to about one billion leva. This sum is likely to go up, though not by much. In Donchev's words, needs are severalfold greater.According to Donchev, Bulgaria has very limited experience in utilizing mechanisms for public-private partnership. The Minister voiced his conviction that these mechanisms can be used if there is political will and if requirements for equality and transparency are observed. Donchev also believes that the existing concession law has to be changed, as mechanisms are cumbersome. Water losses stand at 61.7 per cent nation-wide, Roumen Arsov of the Bulgarian Water Association said. 73 per cent of the water mains are asbesto-cement and 57 per cent of the water supply network was built before 1970. Water companies have an aggregate of 73,500 km of water mains. 98.9 per cent of the country's population gets its water provided by centralized water supply systems operated by water companies. The country's 42 drinking water treatment plants handle some 44 per cent of the drinking water. Just under 70 per cent of the population are covered by sewerage systems operated by water companies. 90 per cent of the network was built before 1990 and as much is concrete and reinforced conrete. The existing sewers have a total length of 10,400 km. Some 41.1 per cent of the population which generates 64 per cent of the waste water has it treated at this country's 72 waste water treatment plants run by the water companies. 54 of these plants have a biological cycle. By 2015, Bulgaria is expected to have a total of 430 waste water treatment plants for settlements with 2,000-plus population.
US army orders boost Bulgarian machine building plant
The Bulgarian machine building factory Dynamo has seen a staggering 300% growth in its orders for the first half of 2010 year-on-year.The boost for the machine plant located in the eastern Bulgarian city of Sliven has come from orders for its “brushless alternator”, type DEA 450, according to the company’s statement issued Thursday.The company has announced that the alternator has been a real breakthrough for the factory as it has become an integral part of the production of transport equipment for the US Army because of its advantages to analogical products.Dynamo Sliven, which describes itself as “one of the best functioning industrial plants in Bulgaria”, has started work on an improved version of its alternator, which is expected to help it achieve even better business positions in the coming months.Some 90.5% of the company’s produce is exported with 80% of that going to the USA and Russia.Dynamo Sliven has pointed out that it is not suffering because of the economic crisis, and that it is even experiencing a shortage of qualified labor. The company has appointed 20 new employees since the start of 2010, and looking to hire 40 more emphasizing its high technical education standards.
U.S. ambassador: Bulgaria is very attractive investment destination, but needs rule of law
Bulgaria need a very strong Penal Procedure Code to clearly demonstrate nobody is above the law, that crimes are prosecuted and the guilty people – punished, U.S. ambassador in Bulgaria James Warlick told a forum called “Bulgaria: Attractive Investment Destination,” Focus News Agency reports. Bulgaria is a very attractive investment destination, but it needs several things – rule of law, stimuli for business, education and training and infrastructure. The rule of law is the most important element to persuade foreign investors, the diplomat said further. The concrete parameters of the penal code are subject to discussion, but all politicians and people want a strong Penal Procedure Code to come into force soon, said James Warlick. This would be a message that there are no untouchable people and the people to blame would be punished, he added. The second element is investment stimuli. Not only financial stimuli, but also the opportunity to generate profits. “You should show and persuade the world that they can earn money here – not only foreign, bust also local companies,” said Warlick. The third issue is opportunity for business improvement – for example, reduction in red-tape. Education, training and infrastructure are essential for the investments in Bulgaria.
Total TV Steps in Bulgaria, invests EUR 45 M
Regional satellite TV provider Total TV, part of private equity investment firm Mid Europa Partners, announced plans to invest EUR 45 M in Bulgaria.The investment will include the takeover of ITV Partner, the repayment of its debt and expenditures on its development. The acquisition means that ITV Partner thousands of subscribers will gain immediate access to the satellite platform of Total TV.“Over the last six months we assured that our subscribers get high-quality services,” Ivan Totev, Total TV Director for Bulgaria, commented.The company currently holds a 15% market share and expects to expand it up to 30%.Mid Europa Partners bought satellite pay TV operator Interaktivni Tehnologii AD, traded as ITV Partner and now rebranded to Total TV, in 2009, but the price was not disclosed.Over the last four years Total TV stepped on the market in Serbia, Slovenia and Montenegro, Bosnia and Herzegovina, Croatia and Macedonia.
Tsarigradsko Shausse becomes Sofia’s new business hub
Sofia’s Tsarigradsko Shausse boulevard will soon emerge as Sofia’s new business destination as half of its 300,000 square metres of office space currently under construction due for completion by the end of 2010. The European Trade Center will open doors next week, while Megapark and Poligrafia Business Center will be finished by the end of the year. “The market is picking up, prices are leveling off as five-year contracts are signed for an average EUR 11 per sq m,” said Sergei Koynov, manager of real estate consultants Forton. Office prices on Tsarigradsko Shausse boulevard remain high compared with levels in Bulgaria and Todor Aleksandrov boulevard of EUR 8 to 10 per sq m, said Krasimir Dimitrov, managing partner of Source Real Estate. He predicted large supply will press rent prices on Tsarigradsko Shausse boulevard level with those on the capital’s other main boulevards. “Small demand and big supply of new quality office space pressured prices and rents went back to 2005 levels,” said Nikolay Neov, space manager at MBL. “The slide reaches 30-40% from their end-2008 peak.” “Demand for new offices is largely driven by efforts to streamline costs through a better office under better rent terms or more efficient space distribution. Outsourcing firms are the most active,” according to Anton Slavchev, business property manager at Colliers. Forton said new office rents have surged for the third consecutive quarter but volumes remain low given the size of projects started two years ago that are now coming out on the market. Sofia had 17.9% of vacant office space at the end of 2009.
Bulgaria's Krepezhni Izdelia to raise capital tenfold to back solar energy project
Bulgarian metal fixtures manufacturer Krepezhni Izdelia said on Wednesday it plans to raise its capital tenfold to finance a project for the construction of a small photovoltaic power system.The company plans to issue new shares worth 2.393 million levs ($1.666 million/1.224 million euro), it said in a statement.The capital increase will be considered successful if the subscribed new shares are equal to at least 50% of the company's existing share capital of 239,343 levs. Krepezhni Izdelia plans to mount a 1.0 megawatt photovoltaic system on the roof of its production unit, located in Plovdiv, in southern Bulgaria. The company shareholders will vote on the proposed capital increase on May 27.The company will also seek a shareholders approval for a 640,000 euro loan from Eurobank EFG Bulgaria aimed at refinancing an existing credit line.Krepezhni Izdelia posted a net profit of 5,000 levs in 2009, down from 146,000 levs a year earlier. Sales fell to 2.5 million levs last year from 4.5 million levs in 2008.The company's shares were last traded on the Sofia bourse on January 15 at 1.0 levs, down 9.0% from their previous trading on December 23, 2009.
Bulgaria's FDI down by 95% in January-February 2010
Bulgaria’s foreign direct investments showed a staggering 95% drop in the first two months of 2010, year-on-year, the country's central bank announced.According to preliminary data of the Bulgarian National Bank released Thursday, the net FDI in Bulgaria in January and February of 2010 was only EUR 28 M (0.1% of the GDP).In the same period of 2009, the foreign direct investments in Bulgaria amounted to EUR 555 M (1.6% of the GDP).By country, the five with largest net direct investments in Bulgaria for the period January – February 2010 were Hungary (EUR 19 M), Austria (EUR 10.5 M), Spain (EUR 9.6 M), Germany (EUR 9.5 M) and the United Kingdom (EUR 8.2 M)."Mainly due to the fact that in the period payments on intercompany loans of non-financial sector enterprises were higher than intercompany loan disbursements, for the remaining countries (“Other”) the net direct investment flow in the country was negative, amounting to EUR 28.9 M," the BNB said.
COMPANIES:
Italian companies form Balkan Business Association
Italian business association from several Balkan countries have come together to form a union, Confindustria Balcani.The founding ceremony was held on April 12, Monday, in the Albanian capital Tirana.The founding members of Confindustria Balcani are the Committee of the Italian Entrepreneurship in Bulgaria, the Association of the Italian Entrepreneurs Operating in Albania, the Association of the Italian-Macedonian Entrepreneurship, the Consultative Committee of the Italian Entrepreneurship in Croatia, and “Sistema” (Forum for the economic development of Italy and Serbia).The project for the forming of the business association of Italian enterprises in the Balkans has been supported by Confindustria, the Italian employers’ federation founded in 1910.Representatives of Italian companies working in Kosovo, Montenegro, and Bosnia and Herzegovina were also present at the signing ceremony.During the first three years of its existence, Confindustria Balcani will be managed by the Committee of the Italian Entrepreneurship in Bulgaria (CIIB - acronym in Italian), which is throwing its way behind the new business association in order boost Italian investments in the Balkans, the Committee has announced.“The project for the founding of Confindustria Balcani is of decisive importance of the Italian companies which are active in the Balkans,” said Massimo Bartocci, President of the CIIB.“The interest of such an important organization as the Confindustria in the business in the Balkans is a testimony to the importance of the Italian presence in the region, and will help to attract new investments. We believe strongly in the future of this part of Europe, and this is precisely why we are taking steps to boost Italy’s commitment in the Balkans,” Bartocci explained.Italy’s Confindustria has over 150 000 member companies, which provide employment to over 5 million people with combined revenue of EUR 500 B.
Bulgarian companies selected to build north Sofia Metro line
Two Bulgarian companies, Consortium BKS Centre – Balkanstroi and Metro Build 2010, have been selected for the construction of the north line of the Sofia Metro, a process which has to be completed inside 24 months, Stroitelstvo Gradut weekly reported on April 12 2010.The excavation of the tunnel for the new Sofia Metro line commenced on April 6. The tunnel-boring machine (TBM), alternatively known as a mole, is tasked with digging the tunnel spanning from the Nadezdha interchange until the Patriarch Evtimii and Vitosha Boulevards junction.The mole will have to excavate a total of 3.8km of tunnel, and according to the Sofia municipality, the machine will process 9.4 metres of earth a day at an average depth of 15 metres under the surface. Authorities say that the machine will work around the clock.According to the report, for the section a total of 16 firms participated, Bulgarian, Austrian, Italian and Croatian, but the Bulgarian companies were selected for both sections of the north line, having tabled the lowest bid.BKS Centre – Balkanstroi and Metro Build 2010 are entrusted with the metro section spanning from Obelya borough until Beli Dunav Boulevard. Balkanstroi tabled a 21.356 million leva offer including value added tax, for a section which is predominantly overground, while Metro Build's offer was 25.754 million leva for the part of the north line that will be subterranean.The new new metro line tunnel must be excavated in full by July 2011.The Sofia Metro mole was constructed between February and December 2009 at a cost of 15 million euro by German factory Herrenknecht, in Baden-Wurttemberg province. It took two months for the mole to be transported to Bulgaria, and another two-and-a-half months for it to be assembled, Dnevnik daily reported.
State-owned firm loses Bulgaria finance ministry IT monopoly
Bulgaria's State-owned Information Services company will no longer have monopoly on the IT services for the Finance Ministry, according to the public tender results announced Tuesday.The Information Services, whose last contract is from 2007, will only implement Lot 4 of the public order while 3 consortiums will serve the other 3.The review of more than 40 000 pages of offers' documentation took almost three weeks - longer than initially planned, because the Ministry asked all bidders for information explaining the big price differences.From a total of 13 bids from 10 companies and consortiums, 4 consortiums have been discarded through technical assessment and 1 company was dropped after opening the price offers because they failed to provide a sound explanation as to why their price was 30% lower than the average.The winners of the other three lots are the consortiums that filed the best offers. Lot 1 was won by Siemens, Kontrax and Paraflow for BGN 11.73 M. Stone CNSys won lot 2 with a BGN 10.437 M bid. Lot 3 will cost BGN 7.245 M and will be implemented by the VCA consortium. Information Services won lot 4 of the contract with a BGN 725,800 offer.The 10-day deadline to appeal the results began Tuesday, and the contracts will be signed after that period.Until now IT services have cost the Ministry BGN 54 M, with the new contracts the amount is reduced in half – BNG 27 M.Half of the profits of the State-owned Information Services company have come from the Finance Ministry, while the other half was generated through the processing of election results.
7 eye new DTT tender in Bulgaria
The Bulgarian Communications Regulation Commission (CRC) has received a total of seven bids for the operation of what will be the country’s public service DTT multiplex.The regulator has finally named the bidders, which include mobile operators Vivacom and Mobiltel, as well as NURTS, the national transmission company in which Vivacom (BTC) sold a 50% stake to Mancelord Ltd earlier this month. Mancelord Limited is represented in Bulgaria by Bromak Ltd., majority shareholder in Bulgaria’s Corporate Commercial Bank Ltd.Bromak also holds a stake in the media group of mogul Irena Krasteva, who is believed to have been funded by the Corporate Commercial Bank.Others are Bulgarian Broadcasting System, Bulsatkom, Krida Art and General Satellite Corporation.The future operator of the multiplex, which will distribute the digital programs of the national state-owned television BNT and radio BNR, will receive a permit for 15 years and will provide services to 12 cities across the country – Blagoevgrad, Burgas, Varna, Vidin, Kardzhali, Pleven, Plovdiv, Russe, Smolyan, Sofia, Starta Zagora, Shumen.Bulgaria’s two national commercial DTT multiplexes will be operated by Slovakia’s Towercom and Hannu Pro, which is based in Latvia.
THE CRISIS:
Bulgaria's new car sales drop by 40% in 2010 Q1
A total of 4 116 new cars were sold in Bulgaria in the first three months of 2010, which is a 42.74% decrease year-on-year.According to data of the Association of Car Importers released Wednesday, the drop is rather significant as 7 188 new cars were sold in Bulgaria in the same period of 2009.The Car Importers’ Association, however, points out that the sales decrease is slowing down as it was 47% in January 2010, 44% for January and February 2009, and is now down to 42% in the first quarter of year.Of the 4 116 new vehicles, 160 have been sold by dealers that are not members of the Car Importers Association.The French brand Peugeot is the only one with a market share of over 10% in Bulgaria as it sold 410 new cars in the first quarter.Ford is second with 378 sales, and a market share of 9.56%. Volkswagen and Dacia come third and fourth with 331 and 330 sold new cars respectively.Toyota, which used to be a leader on the Bulgarian market in 2009 comes next with 311 vehicles sold in the first three months of 2010.Citroen, Renault, Chevrolet, Skoda, and Opel each have sold between 200 and 300 cars in Bulgaria since the beginning of the year.Hummer, Jaguar, Corvette, Cadillac, and Piaggio have sold no cars in Bulgaria yet in 2010.The sales of new buses and trucks in Bulgaria decreased by 45% year-on-year in the first quarter with only 160 vehicles sold. Iveco sold 71, Mercedes – 48, and Mann – 20.The sale of motorcycles in January-March 2010 dropped by 38% down to 42. Yamaha is doing best with 16 motorcycles sold in the first quarter. As the construction market shrank, Heavy goods vehicles staged the most drastic decrease of 52% across 130 deals between January and March, versus 274 a year earlier. Dealers moved more than 900 heavy goods vehicles in the first quarter of 2008. “My colleagues and me each month wonder whether we’ve finally hit the rock bottom and can start to bottom out but there’s now answer,” BMW Group Bulgaria manager Aleksandar Milanov said earlier this year, an observation that is completely valid for the first quarter, too. Given these circumstances, forecasts are hard to make. “I won’t be surprised if the market fails to pass the 20,000-unit mark against 54,000 for 2008,” Moto Pfohe managing director Dimo Nikolov told Dnevnik.
Bulgaria with sharpest fall in EU industrial output
Bulgaria marked the largest fall in industrial production among European Union member states in February 2010 compared with January 2010, official data shows.Among the member states for which data are available, industrial production rose in seven, fell in thirteen and remained stable in France and Italy.The highest increases were registered in Slovenia (+6.4%), Luxembourg (+3.6%) and Denmark (+1.8%), and the largest falls in Bulgaria (-5.7%), Latvia (-3.0%) and Greece (-2.9%), the European Union's statistics agency Eurostat reported.Industrial production in the 16 countries that use the euro remained upbeat in February, with the annual measure of output rising at the fastest pace in almost two years, data showed Wednesday.According to figures released by the European Union's statistics agency Eurostat, industrial production rose 0.9% from January and gained 4.1% from a year earlier—the sharpest year-on-year increase since a 4.7% jump in April 2008.
