BULGARIAN ECONOMIC TOP NEWS DIGEST
WEEKLY REPORT ( 4 – 11 JUNE 2010 )
Sections/headline briefs:
MACROECONOMY:
· Bulgaria opens bids for Trakiya motorway last section
· Businesses flock to Bulgaria's 'Trakiya' highway
· Car battery maker Monbat buys majority stake in LED producer
· Bulgaria loses honey markets to Chinese and South American produce
· Bulgaria and China's Zhejiang province to boost economic ties
· Bloomberg: Greece, Bulgaria, Serbia, Syria may get 10 BCM of Azeri gas
· Bulgaria needs new nuclear capacity to avoid imports
· Bulgarian-German consortium likely builder of Sofia waste plant
· Dow Jones: Czech CEZ mulls sale of Bulgarian thermal power plant
INVESTMENTS:
· Polish GTC builds 3 shopping malls in Bulgaria
· Israel wants to import grain from Bulgaria
· Bulgaria lures more foreign investors despite net FDI outflow
· Sofia attractive for foreign investors
· Knauf Bulgaria to open EUR 61.4 М drywall plant next week
· WIIW forecasts 50% FDI drop for Bulgaria in 2010
· German diplomat in Bulgaria: Criticism toward foreign investors raises fears
· German magazine slams Bulgaria's foreign investment policy
· InvestBulgaria Agency to lure foreign investors with proactive marketing
· Bulgarian mayor ecstatic over revenues from wind energy
· Pernik rivals Sofia with Bulgaria's newest industrial zone
COMPANIES:
· Lufthansa celebrates 40 years in Bulgaria
· World largest iStyle mall store opens in Sofia
THE CRISIS:
· Bulgaria's economy contracts 3.6% Y/Y in Q1
· New car sales fall 42.4% y/y in Jan-May
MACROECONOMY:
Bulgaria opens bids for Trakiya motorway last section
Bulgaria will open on Tuesday the bids for the construction of a 47.7km section of Trakiya motorway, which will link the towns of Yambol and Karnobat.Thirteen companies filed bids in the tender for the construction of the stretch, which is projected to cost about EUR 146 M.Construction works of what is the last stretch of the highway are scheduled to start in September.Though still under construction Trakiya 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.Bulgaria’s tie-in "Unified Highway Trace" won the tender for the construction of the 32-kilometer-long section of the Trakiya Highway, linking the city of Stara Zagora and the town of Nova Zagora, at the end of February and a month later signed a contract with the Bulgarian Road Infrastructure Agency.The Bulgarian consortium submitted the lowest bid - BGN 137,86 M – in competition with three other approved applicants. 4 000 jobs will be created by the project in the Stara Zagora region.Construction works are scheduled to be completed in 25 months. The price of the construction is estimated at about BGN 138 M, 30-35 % of the funds will be made available by the end of the year.Greece's Aktor placed the lowest price offer of EUR 111.6 M in a tender for the construction of 35.7 kilometres of Bulgaria's Trakiya motorway, that would link the towns of Nova Zagora and Yambol, in southern Bulgaria.Construction of the second stretch of the Trakiya Highway is scheduled to begin no later than August 2010.
Businesses flock to Bulgaria's 'Trakiya' highway
The Bulgarian “Road Infrastructure” Agency (API) reports increased interest on the part of businesses wishing to supervise the construction of Lot 3 of the “Trakiya” highway.12 companies have submitted offers for the section linking the town of Nova Zagora with the city of Yambol. The offers were officially opened Monday.In the previous public tender, for Lot 2, between the city of Stara Zagora and Nova Zagora, 8 companies submitted proposals.Bozhidar Yotov, Chair of API Managing Board, said the completion of the highway is on time and on schedule, adding the builder for Lot 3 will sign the contract by the end of July and the groundbreaking will be held in the beginning of August. The Greek company “Aktor” submitted the lowest bid of EUR 1.9 M per kilometer.At the end of May, API and Put Invest Engineering JSC company signed a contract for supervising the construction of Lot 2 of the Trakiya Highway.Bulgaria’s tie-in "Unified Highway Trace" won the tender for the construction of the 32-kilometer-long section between Stara Zagora and Nova Zagora at the end of February and a month later signed a contract with API.The Bulgarian consortium submitted the lowest bid - BGN 137,86 M – in competition with three other approved applicants. 4 000 jobs will be created by the project in the Stara Zagora region.The project will be funded entirely by the state budget until Brussels approves funding under the Operational ‘Transport’ Program.
Car battery maker Monbat buys majority stake in LED producer
Bulgaria's largest car battery producer Monbat informed through a note on the local stock exchange that it bought 51% (25,500 shares) in LED producer Octa Light Bulgaria from Octagon International. The price of the deal was BGN 2.35mn (EUR 1.2mn). Also, Monbat will take part in a capital hike of Octa Light and will take over 2.32mn more shares with a unit price of BGN 1, while keeping its stake in the LED producer. Octa Light Bulgaria owns its own know-how and is intending to build a high-power LED assembling line, which will be the first on the territory of the EU. Monbat posted a net profit of BGN 17.09mn last year, down by 30% y/y, which is to be transferred to the reserve accounts. Sales dropped by 30% to BGN 125.9mn in 2009. In Jan-Apr, net sales and pre-tax profit rose 77.7% y/y to BGN 57.6mn and 44% y/y to BGN 7.2mn, respectively. Monbat said it expected to improve its net profit by 56.8% y/y to BGN 12.4mn for full 2010. The sales and the earnings before interest, taxes, depreciation, and amortisation (EBITDA) are expected to increase by 31.6% y/y to BGN 77.4mn and by 40.2% y/y to BGN 17.1mn, respectively.
Bulgaria loses honey markets to Chinese and South American produce
Bulgaria exports honey mainly to Germany, Austria, Italy and a very small amount to the U.S. The country is losing more and more European markets due to honey coming from China, Argentina, Brazil, Colombia, Chile, Plamen Ivanov, Chairman of the National Beekeepers' Union, told FOCUS News Agency. He says it is high time that the government understood a sector perishes if it is not subsidies. The number of beekeepers falls, because the young quickly find out that the business is not profitable. In Bulgaria the share of professional beekeepers is very small. Most beekeepers have few hives and breed bees just as a hobby, he said.
Bulgaria and China's Zhejiang province to boost economic ties
The Bulgarian government approved a draft memorandum Wednesday to encourage economic and trade cooperation with China's Zhejiang province.According to the memorandum, a mechanism for exchanging economic information between Bulgaria and Zhejiang will be implemented. Both sides also will encourage business contacts and Zhejiang companies' investments in Bulgarian industrial zones.Zhejiang is one of the most economically vibrant provinces in China.Chinese investment in Bulgaria has been relatively small: about 20 million US dollars in the production of communications equipment. However, Chinese automaker Great Wall Motor Co. is planning to build a 133-million-dollar plant in the Bulgarian city of Lovech.
Bloomberg: Greece, Bulgaria, Serbia, Syria may get 10 BCM of Azeri gas per year
Greece, Bulgaria, Serbia and Syria, among other gas consumers, may get combined 10 billion cubic metres of Azeri gas annually after Azerbaijan and Turkey signed a trade agreement on gas transit and supplies, Bloomberg reported on Monday.Azerbaijan aims to sell gas from its Shah Deniz field to Europe after agreeing on transit through Turkey as well as supplies to the country, its largest customer, Bloomberg quoted Azeri Energy Minister Natig Aliyev as saying after a meeting with his Turkish counterpart. The prices for gas supplies to Turkey and transit were not disclosed.Turkey plans to buy two billion cu m of gas in 2017 from the second phase of British Petroleum and Statoil-led Shah Deniz, which may rise to six billion cu m in 2019, Turkish Energy Minister Taner Yildiz said after the meeting.The second stage of the Shah Deniz project may provide 16 billion cu m of gas a year after starting in about 2016, according to the State Oil Company of Azerbaijan, Socar, a partner in the project, Bloomberg said.This agreement will trigger other major energy projects in the region," Yildiz aws quoted as saying, adding that Turkey will get the right to re-export gas from Shah Deniz- 2.However, according to Socar vice president Elshad Nassirov, re-exporting gas from Shah Deniz-2 was not discussed.European energy companies are vying for supplies from the $20 billion second stage of Shah Deniz as they plan pipelines from the region. Europe has been trying to reduce its dependence on Russian gas after disputes between Gazprom and Ukraine left much of Europe without gas in 2006 and 2009.The Nabucco pipeline is vying with smaller volume projects such as the Interconnector Turkey-Greece-Italy, or ITGI, led by Edison and Depa and Statoil and Elektrizitaets-Gesellschaft Laufenburg -led Trans Adriatic Pipeline, or TAP, to ship Caspian gas to Europe.This opens the door for the Shah Deniz consortium to start negotiations with customers and look at the different transportation solutions for gas to Europe," Bloomberg quoted Statoil spokeswoman Kjersti Morstoel as saying.Settling the commercial aspects of the agreement may take another six to eight months, Murat Heydarov, adviser to the head of Socar, said in Baku last week.Bloomberg quoted Yildiz as saying the price for Azeri gas supplies is in line" with market levels such as those from Russia. The deal lessens Turkey's liability to take-or-pay contracts, and the country will now revise all" such accords, Yildiz said. Turkey is Russia's second largest gas consumer under such contracts outside the former Soviet Union, following Germany, according to Gazprom.
Bulgaria needs new nuclear capacity to avoid imports
Bulgaria should install new nuclear power capacity in order to avoid the need for electricity imports and maintain its energy independence, nuclear power experts said on Wednesday. This will improve not only the country's energy balance but its overall trade balance as well," Georgi Halev from consultancy firm Risk Engineering told an international nuclear energy conference organised by local lobby group Bulatom that is underway at Bulgaria's Riviera Black Sea resort.The construction of new power generation capacities after 2015 is a necessity," Mityu Hristozov, head of the Central Dispatch Authority with Bulgaria's Electricity System Operator, told the three-day conference.This capacity should comprise fourth generation reactors, he added.If the country fails to see through the project for a second power plant at Belene, it will be forced to import electricity after 2017-2018, Halev said.Bulgaria has put on hold the 2,000 megawatt project over lack of funding and following the withdrawal of Germany's RWE which was picked as a strategic investor in the project.Belene is expected to help Bulgaria restore its position as leading energy exporter in Southeastern Europe which it lost after closing down four Soviet-made reactors of 440 MW each at its sole nuclear power plant Kozloduy earlier this decade under pressure from the European Commission.Kozloduy now operates its two remaining Soviet-made reactors of 1,000 MW each.
Bulgarian-German consortium likely builder of Sofia waste plant
The consortium between the Bulgarian “Stanilov” company and the German “Heilit” is the likely winner of the public tender to build the waste treatment plant in Bulgaria's capital Sofia.The consortium has submitted an offer with the lowest construction price and operational costs.The price offers for the Sofia City Hall's largest public tender were opened Wednesday with only 2 of the 10 bidders reaching the final stage - “Stanilov-Heilit,” and the joint offer of the Greek “Helektor” and the German “Hochtief .”“Stanilov-Heilit's” price offer is BGN 208 808 700 while the cost for maintenance of the equipment is BGN 9 427 949 per year. The Greek-German consortium is offering BGN 240 614 029 and BGN 9 828 899 respectively.The final ranking and the winning bidder will be announced on June 15, after the City Hall verifies the price offers for mistakes.The signing of the contract and the groundbreaking might be delayed by 2 to 3 months over some of the bidders who have already announced they will appeal the procedure. The construction deadline is 2 years from the date of the signing of the contract. The plant will be located near the village of Yana, adjacent to Sofia.
Dow Jones: Czech CEZ mulls sale of Bulgarian thermal power plant
Czech power group CEZ said on Thursday it was considering selling its coal-fired thermal power plant in Bulgaria, news agency Dow Jones reported.CEZ "has preliminarily asked potential buyers how much they'd pay" for the 1,260 megawatt coal-fired power plant in Varna, Dow Jones reported, quoting Tomas Pleskac, the Czech company's deputy chairman who heads CEZ's international division.CEZ had received some indicative offers, but everything has been undertaken on a strictly informative basis and no sale is imminent, Pleskac told the news agency.CEZ is frustrated with developments in Bulgaria because the regulatory environment there is highly unpredictable and strict price regulations on electricity distribution and power pricing have yet to be eased, Dow Jones quoted Pleskac as saying.That comes despite the Bulgarian government having indicated in past years that it would eventually ease regulations and price controls for power companies that were willing to invest in the country's utility infrastructure.In Bulgaria, CEZ also runs an electricity distribution business after it purchased a 67% stake in three distribution companies in 2005.The group acquired the Varna power plant, which is the largest coal-fired power plant in CEZ's portfolio, in 2006.
INVESTMENTS:
Polish GTC builds 3 shopping malls in Bulgaria
The Polish company GTC (Globe Trade Centre SA) investment program for Bulgaria amounts to EUR 350 M, the company's management announced Monday.GTC is building 3 shopping malls and has purchased terrains for the construction of residential and office buildings.From the 3 malls called “Galeria” (Gallery), the one in the southern city of Stara Zagora is in the most advanced stage and will open during the third quarter of 2010 with 50% of the stores already rented. The mall will introduce for the first time in the city the Inditex group with its brands Zara, Bershka, Stradivarius, and Pull & Bear, along with the House, Cropptown, Deichmann brands. The Slovenian Mercator and Cinema City are among the key mall tenants. The investment amount is estimated at EUR 50 M.The “Galeria” in the Black Sea city of Varna was started first, but it is currently behind schedule over stronger competition and the economic crisis. Its planned deadline is the second quarter of 2011.GTC presented Monday their latest mall project to open in the other Black Sea city of Burgas, also in 2011. The center will have 130 stores and a movie theater with 9 salons. Reserved, House, Cropptown, and Mercator have already signed rent contracts. The investment amount is estimated at EUR 75 M.The company has purchased a terrain to build a mall in the Danube city of Ruse, but is holding on on the groundbreaking over the large number of mall projects there.GTC has land plots in the capital Sofia, and in 2007 announced plans to build large apartment and office complexes.
Israel wants to import grain from Bulgaria
Bulgaria may soon start exporting large quantities of grain for Israel, according to the Bulgarian Association of Agricultural Producers (BAAP).The news comes in the wake of a visit to Israel by the BAAP Chair Hristo Tsvetanov and Secretary Ivaylo Todorov, who accompanied a delegation led by Bulgarian Agriculture Minister Miroslav Naydenov.The BAAP leadership with representatives of Israeli agricultural producers’ organizations, and the possibility for exporting Bulgarian grain to the Middle Eastern country was among the major business cooperation opportunities that were discussed.The BAAP points out that Israel produces only about 10% of its grain, and imports the rest from countries such as the USA, Russia, and Ukraine; at the same time Bulgaria exports about 1 million tons of grain annually, mostly to other EU states. As a result, there is “an enormous interest” on part of Israeli businesses and business organizations.During its visit to Tel Aviv, the delegation of the Bulgarian Agriculture Ministry has studied Israel’s experience with milk production, irrigation, and greenhouse crops, as well as the emphasis that Israeli farmers place on organic products. The BAAP has pointed out that thanks to the innovative techniques in its agriculture, Israel meets 100% of its own demand for fruits and vegetables.The association also announced that Hishtil, one of the largest nurseries cooperation in Israel, is interested in investing in vegetable production in Bulgaria.Bulgarian Agriculture Minister Naydenov has vowed to provide state-owned land to Israeli investors if they bring know-how and expertise to Bulgaria. The BAAP head Tsvetanov has committed to providing up-to-date information about the business conditions in Bulgaria to potential Israeli investors.
Bulgaria lures more foreign investors despite net FDI outflow
Even though Bulgaria registered a negative balance of foreign direct investments in the first quarter of 2010, an increasing number of foreign investors are arriving to the country.In January-March 2010, Bulgaria had a negative FDI growth of minus EUR 22 M compared to a positive growth of EUR 926 M in the first quarter of 2009.The data was announced by Bulgaria’s Economy Minister, Traicho Traikov, in Parliament Friday.Traikov did point out that the number of foreign firms investing in Bulgaria was on the rise in the first quarter – 214 companies in January, 340 in February, and 424 in March - and that the increase is the first clearly positive trend since the end of 2008 when the economic crisis kicked in. Thus, a total of about 1 000 foreign firms invested in the Bulgarian economy n the first three months of the year.At the same time, the number of foreign companies withdrawing their investments from Bulgaria was about 120-130 each month.According to data of Bulgarian National Bank cited by Traikov, Bulgaria had a positive FDI balance of EUR 53 M in January, and EUR 94 M in February, while in March the FDI balance was a negative EUR 170 MThe sharp net outflow of investments in March is due to four transactions of foreign companies which transferred about EUR 200 M from their Bulgarian offices to their branches other countries, Traikov explained while refusing to specify the investors.“Independent analysts actually say that investors’ expectations for the business climate in Bulgaria indicate an improvement. I will abstain from providing the names of the specific investors but in the last two weeks I talked to two foreign companies, and the InvestBulgaria Agency is talking to them the entire time. one of the companies is planning to invest EUR 30 M in expanding its production, and the other one is mulling a green field investment of EUR 15 M. Both investments will be in manufacturing industries,” Minister Traikov explained.In his words, the BNB data indicating a net negative balance of FDI in the first quarter do not indicate a trend, while what matters is the increase of the number of foreign firms and physical persons investing in Bulgaria.Data of the National Statistical Institute released earlier during the week, which was not discussed by Economy Minister Traikov, shows that Bulgaria registered a 412% growth year-on-year of foreign direct investments in the non-financial sectors in the first quarter of 2010.Thus, a total of EUR 513 M are estimated to have been invested in the non-financial sectors in Bulgaria in the first three months of the year, which means that some EUR 535 M must have been withdrawn from the country in the same period by investors for Bulgaria to have a negative FDI balance of EUR 22 M in the first quarter.This conclusion is confirmed by BNB data made public at the end of May indicating that the total amount of money owned by Bulgarian banks to foreign or parent companies declined by EUR 505 M since the beginning of the year.Minister Traikov was severely criticized in Parliament by his predecessor Bulgaria’s former Economy Minister Petar Dimitrov, who occupied the post in the Stanishev government in 2005-2007,Dimitrov believes that the planned revision of the 2010 state budget (to be voted by the Parliament after June 15) is going to shatter any trust that foreign investors may still for Bulgaria.He pointed to an article by The Financial Times Deutschland which explores “a conflict” between Bulgarian Prime Minister Borisov and foreign investors such as Siemens and Bulgaria’s three power utilities – CEZ, AVN, and E.ON.“Every instance of brutal rhetoric is chasing foreign investors away from Bulgaria,” Dimitrov declared apparently referring to the accusations for Siemens and the electricity providers made by Borisov that in Bulgaria the foreign companies do not employ the Western business standards that they stick to in their home states.
Sofia attractive for foreign investors
Sofia is an attractive place for foreign investors, they form the basis for the development of the city's economy, representatives of the Municipality said.The budget of Sofia Municipality for 2010 is 1,200 million leva, half of which is earmarked for investments, Deputy Mayor Minko Gerdjikov said at the 8th Banks, Investments, Money International Financial Expo and Conference.Last year the municipality planned 20 anti-crisis measures. It has prepared projects and will apply for financing under the EU programmes, Gerdjikov said.In 2009, 38 per cent of the country's GDP was generated in Sofia. Last year the per capita GDP generated in Sofia was 92 per cent of the average GDP per EU resident, and is expected to reach 100 per cent in 2012, with Sofia becoming an average European city.The private sector generates 94 per cent of Sofia's GDP. The capital has a working-age population of 700,000, and unemployment did not top 3 per cent. Sofia has 20 higher educational establishments with 100,000 students, who can be of great use to foreign investors, Gerdjikov said.In 2008, Sofia got 4,600 million euro in foreign direct investment (FDI), 67 per cent of a total of 6,690 million euro invested in the country. In 2009, FDI in Bulgaria dropped to 3,215 million euro due to the economic crisis, but Sofia still got a large amount of them at 2,200 million euro.The municipal government prioritizes the alleviation of traffic congestion, construction of kindergartens and schools, a household waste plant, a landfill for secondary waste disposal and the water and sewerage infrastructure of the Gorna Banya and Ovcha Koupel residential districts.The Expo's organizer, Emil Popov, said at the opening of the forum that the Bulgarian financial system is one of the most stable in the world. The Exposition is designed to give an impetus to banks to enhance the competitiveness of the economy.
Knauf Bulgaria to open EUR 61.4 М drywall plant next week
Knauf Bulgaria, the local unit of Austrian construction material producer Knauf, will start production at its gypsum drywall manufacturing plant in the village of Mednikarovo near the Maritsa East mine complex in southern Bulgaria, on June 17, newswire Investor.bg reported. The investment in the facility reached BGN 120mn (EUR 61.4mn). Construction works started in August 2007. The plant will produce 30mn sqm of gypsum drywall panels a year out of more than 350 tonnes of REA or FGD gypsum, which is a synthetic product derived from flue gas desulfurization (FGD) systems at power plants. In 2007 Knauf said that it had signed a 25-year contract for supply of gypsum with coal-fired power plant Maritsa East III, located in the vicinity. The company operates another gypsum plant in the north-western city of Vidin.
WIIW forecasts 50% FDI drop for Bulgaria in 2010
Bulgaria may see a 2010 foreign direct investments decline similar to the one it registered in 2009, according to a forecast of the Vienna Institute for International Economic Studies.The combined FDI in 20 Central, East and Southeast European countries fell to EUR 58.5 B in 2009, down from EUR 111.5 B in 2008, said the Vienna-based Institute (WIIW) in a statement Tuesday.It does forecast the region’s combined FDI to rise to EUR 66.6 B in 2010; however, it is not certain that Bulgaria will be among the beneficiaries of this modest increase.WIIW points out that in 2009 the FDI inflow declined the most in the ten new EU member states (NMS) that it surveys compared to the countries in Southeast Europe (i.e. the Western Balkans), and the four CIS states Russia, Ukraine, Belarus, and Moldova. However, this is largely due to the fact that the NMS had registered a greater growth of foreign investments in the last few years.Thus, in 2009, as a result of the global economic crisis, FDI in the new EU states dropped down to the 2003 levels, while the other two regions saw theirs collapse to the 2005 levels. Slovakia and Slovenia registered negative FDI inflows, while Poland and Estonia performed suffered least of all, shows the WIIW data.The Vienna Institute points to positive equity investments in the CEEC.“Continuous high equity inflows of EUR 2 billion or more to Bulgaria, Hungary, Poland and Romania prove that these countries maintained their attractiveness for new investments. In most NMS reinvested earnings fell strongly as investors’ incomes declined,“ reads the analysis.The WIIW stresses one positive effect of the economic crisis on Bulgaria with respect to its current account deficit.It says that in 2009, the current account turned positive in four NMS and ran significantly smaller deficits in the others.“This was particularly advantageous for countries where the current account was in deficit and external financing constrained such as in Bulgaria and Romania. In six out of ten NMS more FDI-related income is taken out of the country than the amount of new FDI inflow. Still, the negative effects of the repatriation of FDI-related income can be balanced by other positions in the balance of payments. A positive foreign trade balance became the rule under the pressure of the crisis,“ conclude the Vienna analysts.Based on global trends and the first quarter of 2010, the WIIW forecasts “FDI inflows to modestly increase in the region as a whole“. Poland and Russia together with as the Czech Republic, Hungary, Slovakia and Ukraine are expected to contribute to the revival of FDI in the region.However, Bulgaria and Romania among the NMS and the Western Balkans states might receive smaller FDI inflows, says the WIIW.According to its data, in 2009 Bulgaria’s FDI dropped by more than 50% - EUR 3.2 B compared to EUR 6.7 B in 2008, and will drop another 50% in 2010 year-on-year down to about EUR 1.5 B.
German diplomat in Bulgaria: Criticism toward foreign investors raises fears
Publicly voiced criticism against foreign investors in Bulgaria has raised considerable fears among them, said Wolfgang Wendel, director of the economic department at the German embassy in Sofia. In an official meeting with German investors in May, Bulgarian PM Borisov admonished them to work “like they do in Germany” and not to slacken their standards.Earlier in April he had ordered an investigation into the price formation for electricity on the part of supply utilities, German E.ON, Austrian EVN and Czech CEZ.The intended audience for this criticism is the Bulgarian public, but the criticism was also reported in influential German papers, said Wendel talking during a visit in the northeastern Bulgarian town of Shumen, reports vesti.bg.Those publications raised subtle doubts regarding the investment climate in Bulgaria and provoked doubts whether it is worth it to invest in the country, said the German diplomat.This statement comes in the wake of publication by German magazine Ost-West-Contact Monday criticizing the Bulgarian government's policy on foreign investment.
German magazine slams Bulgaria's foreign investment policy
The economic situation in Bulgaria has been steadily worsening during the term of present center-right government, wrote leading German economics magazine Ost-West-Contact.The magazine discussed Monday the situation for foreign investments in the country in an analytical piece that is sharply critical of the economic policy of the GERB government, headed by Boyko Borisov.The article reports on the drastic slowdown of foreign investment in Bulgaria that has marked the beginning of 2010.It recommends more state support and funding to boost investment inflow and restore the trust of investors.It further slams Finance Minister Simeon Djankov's tactics of delaying payments to companies in order to reduce the budget deficit. This is claimed to have led to a “darkening of the economic climate”.The Ost-West-Contact article draws attention to criticism against the government's swiftly proposed and then withdrawn anti-crisis measures.Ex-PM and opposition socialist leader Sergey Stanishev is quoted as stating that the dire economic situation is not “inherited” from the preceding government, as Borisov often claims, but created by Borisov's own policies.Recent “verbal attacks” on the part of Borisov against electricity distribution companies E.ON, CEZ and EVN did not help the situation, either, according to the piece.In May Borisov, in an official meeting with German investors, admonished them to work “like they do in Germany” and not to slacken their standards. Earlier in April he had ordered an investigation into the price formation for electricity on the part of the above utilities.The article further relates that successful former head of InvestBulgaria (the official investment agency of the country) Stoyan Stalev resigned in April just three days after voicing the opinion that investment policy should become more flexible and diversified.
InvestBulgaria Agency to lure foreign investors with proactive marketing
The InvestBulgaria Agency is starting a project for proactive international marketing and is putting forth legislative changes in order to attract foreign investors, its new director, Borislav Stefanov told Novinite.com (Sofia News Agency) in an exclusive interview.Stefanov spoke with Novinite.com during the recent “Banks Investment Money” forum in Sofia, only two weeks after he was appointed in charge of the Agency, which is Bulgaria’s main governmental body in charge of facilitating relations with foreign investors.He announced that an EU-funded project is going to allow the InvestBulgaria Agency to become proactive by targeting prospective investors in certain foreign countries rather that just answer to inquiries by foreign companies that care to contact the institution.The new director told Novinite.com that the first tenders for selecting consultants for economic research and marketing strategies were going to take place within several weeks.“Government tenders take about three months by law, after which we plan to have a list of industries with a great potential for development and for attracting investments in Bulgaria in another three months. This does not necessarily mean the industries that are currently forming the backbone of the Bulgarian economy, they cold be industries which do not even exist in Bulgaria yet, but show great potential. Our goal is to identify the ones where we can attract foreign capital quickly and efficiently,” Stefanov explained adding that the essence of the project will be realized in 2011-2013 with media advertising campaigns and investment forums in selected target countries around the world.“One of the things that I am going to emphasize in the work of the InvestBulgaria Agency will be focusing relatively quickly on proactive marketing,” he stated while making it clear that the institution will need some time in order to recruit and/or develop the staff with the necessary skills for cold calling foreign companies.In his words, one of the new ways to promote Bulgaria as an investment destination is to expand the Agency’s work by reaching out to medium-sized companies from abroad.Stefanov also explained his institution was putting forth amendments to Bulgaria’s Investment Encouragement Act in order to expand and improve the benefits currently offered by the Bulgarian state to foreign investors.“We have proposed the introduction of a new category of investment projects. These so called “priority projects” will be investments, which create a significant number of new jobs and result in the inflow of a large amount of foreign direct investment to the country... At the same time, state support for these projects will be more substantial – there will be a number of new measures, one of which envisions direct financial support for priority projects,” said the Agency director.Commenting on the recently announced data that Bulgaria had a negative FDI balance in the first quarter of 2010, Stefanov said the net investment outflow was the result of company operations that led to the transfer of money abroad. He pointed out that this development was appeared only in March, and does not appear to represent a trend. At the same time, he noted that an increasing number of foreign companies contributed with positive investment balances to the Bulgarian economy since the beginning of the year.“The other positive indicator is that capital stock investments are increasing, and this is the most “classic” form of investment. This is when a foreign company opens a Bulgarian branch and invests money in equity. These investments are more traditional and easier to forecast; if we started to see an outflow of capital stock investments in Bulgaria, we would be a lot more worried,” stated the InvestBulgaria Agency director.He emphasized the fact that the Bulgarian government wanted to attract industries with high surplus value but is also determined to welcome any kinds of foreign investments as it could not afford to be picky in that respect over the effects of the economic crisis. Stefanov was appointed the Executive Director of the InvestBulgaria Agency on May 24, 2010, after his predecessor Stoyan Stalev quit the job.
Bulgarian mayor ecstatic over revenues from wind energy
Investments in wind power generators are a great way to support smaller municipalities around Bulgaria, according to Tsonko Tsonev, mayor of the Black Sea town of Kavarna.“The operation of the wind power parks in the Kavarna Municipalities creates employment, produces environment-friendly energy, and on top of everything else contributes revenue that we then use for social projects,” Tsonev stated during a seminar dedicated to the reform of the Common Agricultural Policy of the EU in the northeastern city of Dobrich.The establishment of wind power parks along Bulgaria’s Black Sea coast in the northeastern part of the country over the last 3-4 years has been both welcomed by businessmen and local authorities, and severely criticized by environmentalists and even tourist operators over allegedly generating higher radiation levels and hurting migrating birds.Tsonev, however, is convinced of the benefits of the large-scale wind energy parks. He pointed out that so far in 2010 one of the companies operating such a park in the Kavarna Municipality gave BGN 120 000 to the local authorities as a grant, while another one contributed BGN 156 000. The Mayor vowed to spend some of the aid to buy an x-ray for the local hospital.“We have received up to BGN 400 000 per year from aid provided by wind park operators. We expect to raise BGN 300 000 in 2010 only from the local taxes of the these companies. Last year we generated BGN 3 M with one single deal for the construction a wind park,” Tsonev said pointing to Spain and other countries as examples about the many benefits of developing renewable energy sources.
Pernik rivals Sofia with Bulgaria's newest industrial zone
A day after the Bulgarian government approved a new industrial zone outside the capital Sofia, the closely-located city of Pernik has presented a similar project of its own.The Pernik Municipality together with the Greek-own company Data Concept Bulgaria have unveiled formally their plan to set up a new industrial zone in the city quarter called Karamanitsa.The municipality is going to provide 35 hectares for the establishment of the future industrial park, which is supposed to become the spot for greenfield investments in manufacturing and logistics facilities.The local authorities have already constructed a road to the site but all the other basic infrastructure of the future industrial zone will have to be development from scratch.According to the Pernik Municipality and Data Concept Bulgaria, the site is really suitable for industrial production and logistics because of its proximity to major road and railway transport routes to Greece, Serbia, and Macedonia, and to the Sofia International Airport.The city of Pernik is located 30 to the southwest of Sofia, and has a total population of about 80 000 people.Another major advantage of the new industrial zone there is supposed to become the fact that the properties will be cheaper compared with the ones around the capital Sofia.The municipality is offering beneficial conditions to the future investors such as simpler ownership procedures and taking caring of all administrative services that the companies are supposed to go through with the central government and the local authorities when investing in the future industrial zone.Despite its smaller size, the future industrial zone near Pernik may emerge as a serious competitor to the Bozhurishte industrial zone for which on Wednesday the Defense Ministry agreed to grant more than 190 hectares of land.It remains to be seen whether the proximity of the latter to the capital (the town ofBozhurishte is just 3 km from the administrative border of the Sofia City District) will trump the expected advantages of the future industrial park near Pernik.
COMPANIES:
Lufthansa celebrates 40 years in Bulgaria
Bulgaria's Transport Minister, Aleksander Tsvetkov, attended Tuesday the official ceremony marking the 40th anniversary of the presence of the German flag carrier Lufthansa in Bulgaria.The event was held at the Sofia Airport where a crew in retro uniforms met the passengers from flight LH 3484, arriving from Frankfurt.In the last 40 years, Lufthansa became one of the leading airlines operating in Bulgaria. The company has also made significant investments, estimated at BGN 20 M, in Lufthansa Technic, its company for maintenance and repair of aircraft. It is located near the airport and is the only one on the Balkans having the capacity for repairing Airbus and Boeing craft.Tsvetkov wished the management another 40 successful years in Bulgaria and bestowed them with an album with pictures from the fist Lufthansa flight in the country.
World largest iStyle mall store opens in Sofia
The store chain iStyle, a premium reseller of Apple in Bulgaria, opens its largest mall store in the country and the world Saturday, pari.bg reports, citing the company’s manager, Yordan Kisimov.The store will be the second one in Bulgaria after the one of “Rakovski” street in downtown Sofia. The company also has a kiosk in the “City Center” shopping mall.The new Apple store is located in the “Serdika Center” mall on an area of 110 square meters, making it the largest Apple mall store in Southeastern Europe and the largest iStyle store globally, according to Kisimov, who further points out the kiosk inside the “City Center” will be open until the end of June and will be later transferred to a partner of the company.In 2009, the sales of the Apple distributor for Bulgaria, have shrunk by 15% to about EUR 2.7 M, but the outcome is more optimistic for 2010 with April being the best month so far, the management informs.
THE CRISIS:
Bulgaria's economy contracts 3.6% Y/Y in Q1
Bulgaria's gross domestic product (GDP) fell by a real 3.6% year-on-year in the first quarter of 2010, compared to a 3.5% drop recorded in the same period a year ago, according to data of the National Statistics Office (NSI) released on Wednesday.NSI flash estimate data released last month put at 4.0% the contraction of the country's economy in the first three months of this year.Bulgaria's economy shrank by 5.9% in the fourth quarter of last year.The country's GDP totalled 14.050 billion levs ($8.831 billion/7.184 billion euro) in current prices in the quarter through March, NSI said in a statement. The GDP equalled 1.862 levs per capita over the quarter.The value added of the Bulgarian economy totalled 11.990 billion levs in current prices.Industry accounted for 29.9% of the value added, down from 31.1% in the first quarter of 2009. The share of services in the value added rose by a real 1.8%, generating 66.7% of the value added. Production in the agricultural sector contracted by a real 0.6% on the year to 3.4% of the value added.Bulgaria's economy contracted by a real 5.0% last year, compared to a growth of a real 6.0% in 2008.
New car sales fall 42.4% y/y in Jan-May
The number of new cars sold on the local market by members of the local car importer association fell by 42.4% y/y to 7,165 in Jan-May, association data showed. The decline narrowed from 44.3% y/y in Jan-Apr and also from the 53.7% y/y contraction in 2009. The number of passenger cars sold reached 6,891, down by 42.4% y/y. Toyota moved to the leading position with a market share of 10.1% in Jan-May, followed by last month's best-selling brand Peugeot (9.8%) and Ford (9.6%). The car dealers sold 274 buses and trucks in Jan-May, down by 40.9% y/y, in an improvement compared to the drops of 46% y/y in Jan-Apr and the more than 73% y/y in 2009. Iveco claimed a market share of 40.5%, followed by Mercedes (33.9%) and Mann (12.4%). The sales of motorcycles declined by 42.7% y/y to 114, almost 44% of which were Peugeot.