불가리아 주요 경제뉴스 (15 - 21 April 2011)

BULGARIAN ECONOMIC TOP NEWS DIGEST

WEEKLY REPORT (15 - 21 April 2011)

 

Sections/headline briefs:

 

MACROECONOMY:

Ø  Bulgaria's inflation third highest in EU in March - Eurostat

Ø  General budget posts small surplus in March 2011

Ø  WB forecasts 2.5% GDP growth in 2011

 

 

INVESTMENTS:

Ø  CEZ will invest EUR 40 million in RES projects

Ø  RES business will invest in the dark: The prices of the green energy will be clear only after the completion of the project 

Ø  Bulgarian Govt Expects Major Outsourcing, Offshoring Investments

 

COMPANIES AND INDUSTRIES:

Ø  Indian Drug Maker to Target EU Market through Bulgarian Subsidiary  

Ø  Bulgaria's Mining Industry Optimistic, Set to Boost Production   

Ø  Oger Telecom said to consider BTC acquisition - report

Ø  Cabinet grants 5-year inert material concession to Danube Bridge II builder

Ø  BULGARIA : Solyndra inks EPC with Interservice Uzunovi for 1 MW CIGS plant installation

Ø  Bulgarian Pharmaceutical Giant Sopharma to Expand across Eastern Europe

 

 

 

 

 

Articles:

 

MACROECONOMY:

Bulgaria's inflation third highest in EU in March - Eurostat

Bulgaria came third among European Union members with the highest annual inflation in March 2011, according to data by the bloc's statistics bureau Eurostat. The inflation in Bulgaria and Hungary stood at 4.6 per cent in the period, while the countries that registered the biggest rise in consumer prices were Romania and Estonia with eight per cent and 5.1 per cent, respectively. The lowest inflation rates were recorded by Ireland, Sweden and the Czech Republic. Euro zone inflation grew to 2.7 per cent in March from 2.5 per cent the previous month and 1.6 per cent in the same period of 2010, while the annual inflation in the EU countries stood at 3.1 per cent, up from 2.9 per cent in February. As many as 18 EU member states recorded a rise in consumer prices in March. The inflation rate remained unchanged in five states, while four experienced a decline.

 

General budget posts small surplus in March 2011

The finance ministry informed in a note posted on its website that the general consolidated budget has reported a small surplus in the amount of BGN 8.6mn (EUR 4.4mn) in March 2011 as compared to a deficit of BGN 271mn a year earlier, according to preliminary data. Thus the deficit has reached BGN 741.9mn since the beginning of the year or 0.96% of the projected full-year GDP as compared to 2.37% of GDP in Q1 2010. In annual terms, the gap has narrowed by 55.5% in Q1. The improvement was due to rising revenues than a year earlier (up by 6.9% y/y in Q1) on higher indirect taxes and social insurance contributions mainly but as well as to less expenditures (down by 8.7% y/y). only the social and the health insurance spending have increased but the ministry has not unveiled the amounts. The finance ministry is to publish revised data at the end of this month. Finance minister Simeon Dyankov expects the budget deficit to run below the set in the budget law target of 2.5% of GDP this year basing his expectations on accelerated recovery this and next year. The government is targeting gradual reduction of the budget deficit to 1.5% of GDP in 2012, 1% of GDP in 2013 and 0.5% of GDP in 2014 in the midterm budget framework for the period 2012-2014.

 
WB forecasts 2.5% GDP growth in 2011

The World Bank (WB) projects that the Bulgarian GDP will increase by 2.5% this year and will grow by 3.4% next year, according to the newly published EU-10 Regular Economic Report. In its previous report from November 2010, the Bank said that Bulgaria, alongside the Czech Republic, Hungary and Slovenia, was expected to register a GDP growth of up to 2% in 2010, as domestic demand will remain weak. At the same time, the EU-10 countries (Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, and Slovenia) are forecast to expand by 3.1% this year and 3.8% next year. The WB commented that this year the growth rate will improve the most in Bulgaria and Romania, where the crisis hit later than elsewhere, aside from Latvia and Lithuania. Also, the institution says that the country is on track with its efforts to cut the budget deficit below 3% of GDP this year. The Bulgarian government forecasts GDP to increase by 3.6% this year.

 

INVESTMENTS:

 

CEZ will invest EUR 40 million in RES projects

Sofia. CEZ Bulgarian Investments, CEZ green energy subsidiary, will invest a total of EUR 40 million over the next three years in renewable energy sources (RES). The first large investment of EUR 10 million will be made this year, details will be revealed in May, said CEZ Regional Manager Petr Dokladal. The subsidiary will invest in all types of “green energy” projects – photovoltaic and wind parks, biomass facilities, hydro-energy projects. CEZ Bulgarian Investment was established in the beginning of 2011 with registered capital of EUR 30 thousand, 100% of it owned by CEZ.

 

RES business will invest in the dark: The prices of the green energy will be clear only after the completion of the project

The owners of power plants that produce electricity from renewable energy sources (RES) will not know the purchase price of the energy they have produced and how they will return the loans for the installed capacities before they built them completely. This is the current situation of the renewable energy business with the latest provisions of the new RES law, which were adopted on second reading by the Parliament on Wednesday. The power plants will sell the electricity at prices that are current at the date of receiving Act 15 protocol, i.e immediately before placing the equipment in operation. The initial option of the Government provided the price to be defined when signing the preliminary contract with the Operator, but at the last moment CEDB proposed to change it. In addition to the unspecified preferential tariff, which was also approved by the parliament members, the experts in the sector say that yesterday’s decision makes it nearly impossible to obtain loans as banks seek predictability of the income in such power plants projects.

The Parliament instructed the State Energy and Water Regulatory Commission (SEWRC) to determine the tariffs according to types of sources, technologies and different production costs, but does not indicate a precise formula by which the pricing should be made. This will happen with an ordinance to the Energy Act, but so far the government has not announced publicly what will be the new methodology. Under the current legislation the tariff is also fixed at a later stage. ‘The price is one that is valid from the date of putting into operation, which is after Act 15. But under the current law we have clarity on the tariff - we know that it is X and at the end of the price period will be X plus or minus 5%’, said Nikola Gazdov, chairman of the Bulgarian photovoltaic association, for Dnevnik. Thus, banks and entrepreneurs know the formula by which the preferential tariff decline, and may draw conservative scenario of the reduction of the purchase price.

 

Latest Updates:

Deadlines for preferential purchase of EcoEnergy:
Solar and geothermal power plants - 20 years
Wind farms - 12 years
Biomass plants - 20 years

Deposit for connecting the power plants:
5 MW - 25 000 per megawatt
over 5 MW - 50 000 per megawatt

By: Georgi Jechev, Dnevnik Newspaper

Date: 20 April, 2011, 17:16

Bulgarian Govt Expects Major Outsourcing, Offshoring Investments

Some seven or eight new foreign companies have declared interest in startingoutsourcing and offshoring operations in Bulgaria, according to Borislav Stefanov, head of the InvestBulgaria Agency. Speaking at a conference on outsourcing in Sofia Wednesday, Stefanov cited data from a survey carried out by the McKinsey consultancy, which showed that in the past two years the number of people employed in the outsourcing sector inCentral and Eastern Europe grew from 220 000 to 250 000. Bulgaria’s outsourcing sector itself registered one of the highest growths in the region in terms of employee numbers even though the absolute figures are not that big – from about 8 000 two years ago to about 12-13 000 at present. According to Stefanov, these figures indicate that Bulgaria has a substantial potential to attract more outsourcing investments. In his words, outsourcing is one of the seven sectors of the Bulgarian economy which harbor the greatest potential to attract foreign direct investment, according to a recent analysis of the InvestBulgaria Agency. He said Bulgaria performs very well on the three key criteria for the outsourcingsector; namely, it has good financial stability, good economic and financial conditions, and its business environment is comparable to that of Central Europe and better than in many Asian countries. Stefanov pointed out that Bulgaria suffers from a lack of good image not just with respect to the outsourcing industries but in all economic sectors and stressed that the Agency is working on a series of projects to promote the country as an investment destination. According to other participants in the conference, Bulgaria has the potential to develop all three major kinds of outsourcing. At present, business processoutsourcing dominates the sector in Bulgaria. The development of the type with the second largest, IT outsourcing, requires more massive investments, which might turn out to be an obstacle. Knowledge process outsourcing probably harbors the greatest potential since it has the smallest share in the Bulgarian outsourcingsector at present. Public institutions are also expected to start to contribute to the expansion of the outsourcing in Bulgaria. While the capital Sofia at present attracts almost all of the outsourcing investment projects in Bulgaria, Experts have believe that smaller cities like Plovdiv, Ruse, Varna, Burgas, and Blagoevgrad harbor much untapped potential.

COMPANIES AND INDUSTRIES:

 

Indian Drug Maker to Target EU Market through Bulgarian Subsidiary

Drug maker Elder Pharmaceuticals based in Mumbai, India, will beef up the production of its Bulgarian subsidiary Elder Biomeda AD in order to target the European market. Elder Pharmaceuticals, ranked 28th among India's 300 largest companies, plans to start manufacturing up to six of its products at the facility of its Bulgarian arm ''Elder Biomeda AD'' to market them in Europe, PTI reported citing Alok Saxena, ElderPharmaceuticals Limited Director (International Business). "We are looking at building synergy between our Indian and Bulgarian operations to launch products from here in the European market," Saxena is quoted as saying. Elder Pharmaceuticals has identified at least six products, which includes women healthcare and nutritional supplements to be produced at Biomeda AD's plant, which is among the largest pharmaceutical production facilities in Bulgaria. The company also plans to launch its calcium supplement ''Shelcal'' on the Bulgarian market. "It (Shelcal) has already being launched in some of the other markets, especially Southeast Asia. Our target is to use the Bulgarian facility to launch this product into the European market," Saxena said. on plans of bringing products from the portfolio of recently acquired UK-based vitamins maker NeutraHealth to India, Saxena said it would happen later this fiscal year. "We will launch NeutraHealth products later this year as at the moment we are working on getting prerequisite licences," Saxena said. NeutraHealth focuses on the highly fragmented vitamins, minerals and supplements sector within the UK and Europe. It has three group companies - Biocare, Brunel Healthcare and Totally Nourish. Last year Elder Pharmaceuticals increased its stake in its Bulgarian subsidiary Elder Biomedia AD from 61% to 92.2% through its wholly owned Dubai subsidiary Elder International FZCO. Elder Biomedia makes ointments, capsules and tablets and employs about 300 people. Indian company Elder Pharmaceuticals first purchased a share, 51%, of Bulgarian company Biomeda 2000 Ltd in 2007, subsequently increasing its stake. Biomeda itself was started as a Bulgarian-German company for the manufacturing of herbal medicinal products in December 1989.

 

Bulgaria's Mining Industry Optimistic, Set to Boost Production

The corporate members of the Bulgarian Chamber of Mining and Geology are primarily optimistic about the country's mining industry, a survey of the Chamber indicated. About 63% of the members of the Bulgarian Chamber of Mining and Geology have declared their positive expectations for 2011, while fewer than 25% have expressed pessimism. Exactly one fifth of the mining businesses in Bulgaria have decided to increase their output in 2011, 18% are going to expand their investment program, while 13% intend to hire new workers. Almost half, 45%, of the Bulgarian mining companies saw 2010 as more successful than 2009, while 35% it declared it was basically the same. About 18% of the mining firms laid off personnel in 2010, and downsized their production programs. At the same time, 5% created new jobs, and 15% increased their investments. The greatest problems for the Bulgarian mining sector are the lingering effects of the economic crisis, the inefficiency and bureaucracy in state institutions, unfair competition, and flawed legislation. 95% have assessed highly the work of their branch organization, the Chamber ofMining and Geology, in defending their interests. The survey included all sub-sectors involved in the Chamber – geology, metal ore extraction, coal mining, mining of industrial non-metal materials, extraction of oil and natural gas, and extraction of construction materials. Bulgaria's mining industry accounts for about 5% of the country's GDP, employs directly 30 000 people, and indirectly supports the employment of another 120 000.

Oger Telecom said to consider BTC acquisition – report

Lebanese company Oger Telecom is expected to take over the management of former state incumbent fixed-line operator BTC in the short term, daily Trud reported on Sunday, citing unnamed sources. According to the insiders, Oger will acquire a 25% interest in BTC and take over its operation, securing the option to bring its stake to a majority within a year. "The deal is very complex and its completion is expected within a month," sources close to the negotiations said. The potential buyer is not expected pay big money for BTC's shares, but to repay its bank loans instead, which amount to over EUR 1.3 billion (USD 1.88bn). Bulgaria's prime minister Boiko Borissov is familiar with the future deal and no political obstacles are expected, the sources added.

 

 

Cabinet grants 5-year inert material concession to Danube Bridge II builder

The cabinet has granted a 5-year concession for inert material extraction to the Spanish FCC Construccion, which is building the Danube Bridge II between the Bulgarian city of Vidin and Calafat in Romania, Mediapool.bg reported. The company will invest BGN 110,000 (EUR 56,242) for the concession period to extract some 432,000 tons annually. FCC and the economy ministry are to sign officially the contract in days. About a year ago, FCC informed that the construction works may be delayed by 2-3 years and the price may go up due to problems with the supply of 1.5mn cubic metres of inert materials. The project is financed by the pre-accession programme ISPA and should have been finished by the end of 2010. The EC conditioned the extension of the financial memorandum for the project on granting such concession.

 

BULGARIA : Solyndra inks EPC with Interservice Uzunovi for 1 MW CIGS plant installation

Interservice Uzunovi will deploy 1 MW Solyndra CIGS plant, which comprises around 6,000 Solyndra solar panels with the capacity to generate more than 30,000 MWh of electricity, in Bulgaria. An engineering, procurement and construction (EPC) agreement has been inked by Solyndra, and Interservice Uzunovi solar division on this regard. The solar installation will be made at the rooftops of Biomet Co., a leading Bulgarian logistics company in Sevlievo, Bulgaria. The installation will bring down CO2 emissions by more than 140,000 tons over the next 25 years. Solyndra s proven and bankable technology allowed us to complete the planning process in a very short time. We were looking for a solution that was designed to partner with the roof, and Solyndra s performance on flat rooftops combined with the lightweight, non-penetrating design proved to be the ideal choice, said Ralitza Uzunova, General Manager of Interservice Uzunovi. We are pleased to have been selected for this important showcase project in Bulgaria. This logistics company rooftop is a perfect application for our product and demonstrates Biomet s commitment to the environment as well as the strong government support for distributed power in the region. said Clemens Jargon, President of Solyndra International AG.

 

Bulgarian Pharmaceutical Giant Sopharma to Expand across Eastern Europe

Bulgaria's largest pharmaceutical producer Sopharma, which registered record profit in 2010, plans to boost its presence in key Eastern European markets. Sopharma owner and CEO Ognyan Donev has made clear his expectations thatSopharma will expand its business operations in the Baltic states, Poland,Belarus, Ukraine, Serbia, and Turkey, and will be watching closely the market situation in Greece. "My dream is to see Sopharma develop as successfully as it has in the past two years," Donev told Sopharma investors as cited by Finance5. In his words, in 2011,Sopharma plans to launch six new medical products of its own. In 2010, Sopharma's total sales grew by 12.2%, and its profit rose by 21% compared with 2009; its total profit reached the record BGN 40.5 M. Sopharma's 2010 revenues amounted to BGN 238.5 M. 30% of Sopharma's sales in 2010 were on Bulgaria's domestic market but the major factor for its revenue growth was itsexport to foreign markets which grew 19% compared with 2009. This led the company to announce a flat salary increase of BGN 60 as of April 1, 2011, for all of its 1 830 employees in Bulgaria, on top of any individual raises and bonuses. Sopharma's 2010 gross expenditures amounted to BGN 193 M, an increase of 10% year-on-year. Sopharma's own capital is BGN 296 M, which is a 16.6% increase in 2010 year-on-year. In 2010, Sopharma started building an EUR 8 plant in Serbia, and a larger EUR 35 M (BGN 70 M) production facility in Bulgaria's Sofia; in addition to these projects, in 2011 the company plans to complete the modernization of its facilities in Ukraine. In 2011 so far, Sopharma made two acquisitions of pharmacy chains in Belarus. Last week Sopharma acquired Belorussian pharmacy chain Tabina through itsLatvia-based subsidiary Briz, it said on April 13 2011 in a statement to the Bulgarian Stock Exchange. Sopharma bought 99% of Tabina's capital, which has 14 pharmacies operating under the Doctor Do brand. Tabina, with a staff of 75, registered a turnover of EUR 3.78 M in 2010. In January 2011, Sopharma's subsidiary Briz bought another Belorussian pharmacy chain, Interfarm, which runs 19 pharmacies. The Sopharma statement made it clear Briz now has a portfolio of 33 pharmacies in Eastern Europe with an annual turnover of EUR 7.5 M, which has made it the third largest pharmacy chain inBelarus.

 

 

Reported by:

Georgi Iliev

KOTRA Sofia

Korea Trade-Investment Promotion Agency

Commercial Section of the Embassy of the Republic of Korea