불가리아 주요 경제뉴스 (1 – 8 July 2011)

 

BULGARIAN ECONOMIC TOP NEWS DIGEST

WEEKLY REPORT (1 – 8 July 2011)

 

Sections/headline briefs:

 

 

MACROECONOMY:

 

EC approves EUR 468.6mn financing for two infrastructure projects

Bulgaria to target EU, NATO markets for arms exports

Bulgaria has contracts for 90% of EU funds for railway infrastructure – report 

Bulgaria's Wine Export Markets Shift from West to East in 2011 Q1

Bulgaria's Industrial Sector Keeps Growing

 

 

INVESTMENTS:

 

Belgium's Kordeel To Invest 5.1 Mln Euro in Bulgarian Clothing Factory

Bulgaria to invest 3B leva in armed forces modernisation by 2020

Sisecam to Invest USD 60 M More in Its Glass Plants in Bulgaria

 

COMPANIES AND INDUSTRIES:

BAT, two Austrian firms file initial bids in Bulgartabac privatisation tender  

Atos targets 10% share of Bulgaria's system integration market

Toshiba To Conduct TPP Feasibility Study in Bulgaria

Bulgaria's 1st IKEA Store to Hire 130 Part-Time Workers  

Bulgaria's New Car Market Sees Tangible Recovery in 2011 H1, Q2

Portugal's Efacec еxpects 1.9 mln euro annual income from solar project in Bulgaria

 

 

Articles:

 

MACROECONOMY:

 

EC approves EUR 468.6mn financing for two infrastructure projects

The EC has approved the financing for the rehabilitation and modernisation of the railway between the country’s second largest city of Plovdiv and the Black Sea city of Burgas in southern Bulgaria and the extension of one line of the Sofia city underground transport, the transport ministry informs in a note on its website. The financing of the railroad project is valued at EUR 218.6mn under the country’s transport operational programme, of which up to EUR 174.9mn co-financing from the EU cohesion fund. We remind that in May, the consortium between Italy’s Generali Costruzioni Ferroviarie (GCF) and Bulgarian Trace and SK-13 and the state Railway Infrastructure started field works on the project. The Consortium signed the contract at the beginning of February and should complete the repair 165 weeks after the date the contract was signed. It offered the lowest price (BGN 380mn, EUR 194mn) in the tender for the reconstruction of the 290-km railroad stretch. The financing for the underground line in the capital city of Sofia is estimated at EUR 250mn under the transport operational programme, up to EUR 200mn of which will come from the EU cohesion fund.

 

Bulgaria to target EU, NATO markets for arms exports

Bulgaria plans to shift its arms exports to markets in the European Union and NATO, after decades concentrating on Asia and Africa, according to a new defence strategy presented Tuesday.
Currently, arms exports to EU and NATO countries do not exceed 10 percent of Bulgaria's annual defence sales abroad -- which stand at about 250 million leva (126 million euros, $185 million) -- said the document, which was drafted jointly by the economy and defence ministries. "Maintaining this tendency would hinder Bulgaria's integration and have a negative effect on the industry's competitiveness," it added. The strategy has yet to be approved by the government over the next few months. "This strategy is the first real effort on the part of any government since the fall of communism to offer a long-term development vision for the defence industry," Economy Minister Traicho Traikov said at the document's presentation Tuesday. Under communism, Bulgaria's arms and munitions industry employed 115,000 people and shipped abroad some 700 to 800 million dollars' worth of production. But the collapse of communism, the disbanding of the Warsaw Pact defence treaty, and a number of international arms sales embargoes to countries in Africa and the Arab world plunged the once booming industry into a deep crisis in the 1990s. The majority of production facilities were privatised but failure to attract foreign investors put them in the hands of small local buyers with limited potential for new investments. An industry source told AFP Tuesday that Bulgaria still managed to preserve some of its markets in the Middle East, India and Algeria.
The new strategy will aim to keep these traditional arms export partners by forming joint ventures and common research and development projects. Another major goal was to encourage the Bulgarian army to buy more local defence equipment by developing it to become fully compatible with NATO standards and also engage in collective alliance defence projects from 2018 on. Bulgaria's defence industry currently employs some 15,000 people and makes up 0.5 percent of the general industry share in the country's gross domestic product, according to the document.

 

 

Bulgaria has contracts for 90% of EU funds for railway infrastructure - report

Bulgaria has already contracted 90 per cent of the EU funds allocated for railway projects in the country after it signed an agreement to obtain financing for the upgrade of the Septemvri-Plovdiv railway section on July 5 2011, news agency Focus said. The budget allocated for the development of the country's railway infrastructure under the Transport operational programme has been fully contracted and even over-fulfilled, data by the information system for management and monitoring of EU funds shows. As of June 15, the country has negotiated 1.4 billion leva of the financing against a budget of 1.1 billion leva, while the amount of funds used is 113 million leva. The Septemvri-Plovdiv railway project costs 200 million leva and will be financed with money provided under the EU's cohesion fund and the state Budget. The overhaul of the section, which will take place between 2014 and 2020, will allow passengers trains' speed to reach 160 km/h.

Bulgaria's Wine Export Markets Shift from West to East in 2011 Q1

Bulgaria's wine exports registered a 6.6% increase in the first quarter of 2011 year-on-year, according to the Bulgarian Executive Agency on Vine and Wine. In the first three months of 2011, Bulgaria exported a total of 10.375 million liters ofwine, about 638 000 liters more than the 9.737 million liters in the first quarter of 2010. The data of the Executive Agency on Vine and Wine indicate a slight shift in Bulgaria's wine export markets from Western Europe to Russia and the Balkans. Thus, in January-March 2011 Bulgaria exported a total of 6.288 million liters of wineto Russia, an increase of 22.7%, or 1.162 million liters, compared with 2010 Q1 (5.126 million liters). Bulgaria's wine exports to Romania registered a tremendous growth of 223.4% year-on-year, as did the exports to the Czech Republic with an increase of 107.6%, and to Mongolia – up by 101%. Bulgaria's wine exports to some of its traditionally strong markets – Poland, theUK, and Germany – as well as Belgium, Latvia, and Lithuania – has declined. At the same time, Bulgaria's domestic market of wine has registered a massive increase in 2011 Q1 compared with the first quarter of 2010. A total of 25.854 million liters of wine were sold on Bulgaria's domestic market in the first three months of 2011 compared with only 15.479 million liters in 2010 Q1, an increase of 67%.

 

Bulgaria's Industrial Sector Keeps Growing

Bulgaria's industrial production increased by 7.8% in May 2011 year-on-year, according to fresh data from the National Statistical Institute. Bulgaria's extraction industry grew by 20.8% in May 2011 compared with May of last year, while the energy sector grew by 12.7%, and the processing industry(manufacturing) – by 5.9%. Compared with April 2011, the industrial production in Bulgaria is down 0.5%. The decrease, however, is primarily due to a decline in the energy output by 6%, while the extraction industry grew by 9.8% on a monthly basis, and the processingindustry, or manufacturing – by 1.9%. Certain sectors in the processing industry, however, saw a substantial growth in May. The production of plastic and rubber items grew by 13.7%, the machine-building sector – by 11.7%, and the chemical industry – by 10.7%. The repairs and installment of machinery and equipment is down by 15.7% in May on a monthly basis, the production of timber and related products excluding furniture – by 7.4%, and the production of tobacco products – by 6.7%.

 

 

INVESTMENTS:

 

Belgium's Kordeel To Invest 5.1 Mln Euro in Bulgarian Clothing Factory

Belgian company Kordeel will invest some 10 million levs ($7.4 million/5.1 million euro) in the construction of a clothing factory in Bulgaria, Bulgaria's regional development ministry said on Tuesday. The groundworks for the factory of Bulgarian men's wear company Top Man in Ruse, on the Danube, will be laid on Wednesday, the ministry said in a statement. The 20,000 square metre factory is expected to open within eight to ten months, Top Man's manager Martin Yordanov told SeeNews over the phone. The factory will have a capacity of 25,000-30,000 men's suits a month, Yordanov added. Its output will be exported to Western Europe. Ruse-based Top Man produces suites for top European brands.

Bulgaria to invest 3B leva in armed forces modernisation by 2020

The Bulgarian Defence Ministry is poised to spend up to three billion leva on several "priority projects," in an aim to modernise, boost and increase the capacity and effectiveness of the armed forces, deputy defence minister Valentin Radev said July 6 2011, quoted by Bulgarian news agency BTA. In all, there were 13 projects including the modernisation of the Mig-29 fighter fleet, the creation of an additional mechanised combat brigade, the overhaul of the E-71 frigates of the Bulgarian Navy, and supplying the Panther and Cougar helicopter squadrons with additional logistical and maintenance support, he said. Bulgaria will also need to invest one billion leva in the purchase of a new combat fighter jet, the report said. The Defence Ministry will aim to keep spending at no more than 1.5 per cent of gross domestic product over the "next few years in the future," Radev said. At the end of May, Defence Minister Anyo Angelov said that the country is contemplating the purchase of a new type of multi-function fighter aircraft. The reassessment of the country's financial resources will be made at the end of 2011 and if the "the balance of those resources over the next few years is positive, and depending on the price we are offered, we could purchase new multi-function fighter jets," he said at the time. During the Nato parliamentary assembly in Varna, Prime Minister Boiko Borissov said that the country would be cooperating with Romania, Croatia and Turkey for the possible "mutually beneficial purchase of fighter jets". Talking about the prospects for the Bulgarian defence ministry, Radev said that the ministry was progressively doing better in cutting down its debts to Bulgarian businesses, from 576 million leva in 2009 to 130 million leva in 2010, a figure that has now been reduced to 102 million leva.
Bulgaria had 45 army personnel for every 10 000 people – second in Europe only to Greece, which had 119. At the other end, Austria had 12 but was spending the most, 35 000 euro for every soldier annually, compared to Bulgaria spending just 5000 euro. Bulgaria should be emulating Austria with a less numerous but better equipped armed force, Radev said.

 

Sisecam to Invest USD 60 M More in Its Glass Plants in Bulgaria

Turkish industrial giant Sisecam is going to invest USD 60 M more in its production facility for household glass in Bulgaria's Targovishte through its subsidiary, Trakiya Glass Bulgaria. The new investment will expand the existing household glass production line launched in 2005, and will add a second production line in Sisecam's glass factories in Targovishte, which taken together are the largest glass plant in the Balkans. A total of 200 new jobs will be opened with the new investment, Trakiya GlassBulgaria HR head Krasimir Kanev said, as quoted by BTA. The news about Sisecam's new investment in Bulgaria comes after back in February 2011 the company opened the "Sisecam" factory for automobile glass in the northeastern city of Targovishte. Ahmet Kirman, CEO and chair of the board of Sisecam, pointed out back then that the investments of the Turkish company have turned the Bulgarian city of Targovishte into a center of glass production in the Balkans, and have provided direct employment to 1440 people, while also facilitating the creation of additional small and medium-sized enterprises working with the company on the local level. The automobile glass investment was estimated at USD 25 M and created 130 jobs. The automobile glass plant was the fifth manufacturing facility of the Turkish glass giant, after the factory for household glass, launched in 2005; for flat glass, launched in 2006; the mirror line and the line for appliance glass from 2007. More than 1 500 workers are already employed at the five facilities. Back in 2008, Turkish PM Recep Tayyip Erdogan visited to the Sisecam facilities in Bulgaria, saying that Sisecam could be expected to invest some USD 400 M more there. This was confirmed in February 2011 by Sisecam CEO Ahmet Kirman. Sisecam's total investment in Bulgaria's Targovishte through its subsidiary Trakiya Glass Bulgaria amounts to some USD 400 M as of the srping of 2011. Kirman and the other managers of the Turkish glass giant have made it clear that they plan to build four more plants or production lines in Targovishte worth another USD 400, and to have a total of 2 500 workers in the Bulgarian city if the Bulgarian government meets their requests for tax breaks.

 

 

COMPANIES AND INDUSTRIES:

 

BAT, two Austrian firms file initial bids in Bulgartabac privatisation tender

British American Tobacco (BAT) and Austrian-registered companies BT Invest and CB Family Office Services have lodged initial offers to take part in the privatisation of Bulgaria's tobacco group Bulgartabac, the Privatisation Agency said on July 4 2011. Earlier, as many as 10 companies purchased tender documents for the sale of the Government's 79.83 per cent stake in the group. As part of the deal, the future buyer will also gain control over Bulgartabac's cigarette factories in Sofia and Blagoevgrad, as well as its tobacco processing company Pleven BT. The Privatisation Agency is expected to certify by July 25 whether the bids put in by the three companies meet the tender criteria. The candidates that clear this hurdle will be invited to put in binding bids by August 29. Plvovdiv-based King's Tobacco, Japan Tobacco International, South Korean КТ&G Corp, Philip Morris and USA-based Science Capital Management, which earlier bought tender paper for the privatisation, have dropped out of the race for the asset. Tsvetan Vassilev, majority shareholder and board chairman of Bulgarian Corporate Commercial Bank (Corpbank), had also expressed interest in the transaction, but it is still unclear whether he is linked to any of the potential investors.

Atos targets 10% share of Bulgaria's system integration market

Atos, the newly set up partnership between French IT services provider Atos Origin and German Siemens' IT Solutions & Services division, will seek to capture a 10 per cent share on Bulgaria's systems integration market, Veska Davidova, manager of the company's Bulgarian unit, said on July 4 2011. The company will mainly focus on outsourcing, systems integration, IT consulting services and transaction services, Davidova told Dnevnik. According to analysts at CBN Panoff and Stoytchev, however, the country's system integration segment is facing difficulties because of delays in funding projects under EU programmes. Atos will aim to provide services to companies active in energy and utilities, finance, health and transport, telecommunications and media as well as the public sector. The company co-operates with some of the largest software and hardware manufacturers worldwide, including SAP, Oracle and IBM. The new business is the second-biggest European managed service provider, boasting an annual revenue of 4.5 billion euro, of which 70 million leva is generated in Bulgaria. Aton has a workforce of about 100 employees in Bulgaria.

Toshiba To Conduct TPP Feasibility Study in Bulgaria

Japan's Toshiba Corp said on Tuesday it has been chosen to conduct a feasibility study (FS) on the construction of a super critical coal-fired thermal power plant in Bulgaria. "The FS is based on the Japanese government's policy of promoting economic growth in Japan while reducing global emissions of CO2 by deploying Japan's leading energy and high efficiency technologies overseas, and will see Toshiba investigate the construction of a super critical coal-fired thermal power plant with carbon capture and storage (CCS) facilities in the Maritsa East thermal power plant complex in south-central Bulgaria," Toshiba said in a statement. The study will be carried out from July 2011 through to the end of March 2012. In Bulgaria, over 50% of total power generation capacity is supplied from thermal power. Since acceding to the European Union in January 2007 Bulgaria has promoted upgrades to existing thermal power plants to secure higher efficiency. Toward securing further reductions of greenhouse gases, Bulgaria is now also considering installing CCS facilities at new thermal power plants, the Japanese company said.

 

Bulgaria's 1st IKEA Store to Hire 130 Part-Time Workers

Several months before the opening of the first IKEA store in Bulgaria expected in the fall of 2011, the Fourlis Group, IKEA's franchisee for Bulgaria through its subsidiary House Market, announced the opening of 130 part-time jobs. IKEA's store in Sofia is seeking service and administrative employees that can work shifts of 4 to 6 hours a day, the company said in a statement, stressing that its new demand of flexible labor will boost the labor market in the Bulgarian market and will create good opportunities for university students and people seeking a second job. IKEA will enter the Bulgarian market in the fall of 2011 with the opening of the first of the two IKEA stores planned for the country. Fourlis's House Market SA already manages five IKEA stores in Greece and one in Cyprus. Bulgaria's first IKEA store will be opened in Sofia in the last quarter of 2011, announced George Alevizos, Finance Manage of the Greek group of companies Fourlis in an interview for the Greek Survey of Novinite.com (Sofia News Agency) in 2010. Alevizos told Novinite.com that Fourlis intended to open at least one more IKEAstore to be located near the Black Sea city of Varna, and might also consider opening a third store within the next 5 years. Fourlis is investing EUR 50 M in the construction of the first IKEA store in Bulgaria, which will employ about 350 people. The interview of Novinite.com (Sofia News Agency) with Fourlis Group Manager George Alevizos about IKEA’s entering of the Bulgarian market

Bulgaria's New Car Market Sees Tangible Recovery in 2011 H1, Q2

Bulgaria's sales of new cars grew by 21.3% in the first half of 2011 year-on-year, according to data of the Association of Car Importers. A total of 10 954 new vehicles were sold in Bulgaria in January-June 2011, including 10 287 new cars (an increase of 19.6% year-on-year), and 667 buses and trucks (an increase of 69% compared with 2010 H1). The increase in the number of sold buses and trucks is also boosted by Scania's inclusion as a member of the Association as Scania's sales were not recorded previously. A total of 2 160 new vehicles were sold in Bulgaria in June alone (1994 cars and 166 buses and trucks), compared with 1 883 in May 2011 (1 798 cars and 85 buses and trucks). Volkswagen is No. 1 in the sales of new cars in Bulgaria in 2011 H1 with a total of 1 221 sales. Ford is second with 950 sales, and Toyota is third with 821. In the second quarter of 2011, Bulgaria's market of new cars has started to recover faster as it saw the sales of 6 066 new vehicles, up from 4 888 new cars sold in Bulgaria in January-March 2011.

 

Portugal's Efacec еxpects 1.9 mln euro annual income from solar project in Bulgaria

The solar park in Bezmer has an output of 4.0 megawatts and the expected yearly production is 5,480 megawatthours. Portuguese energy company Efacec expects 3.8 million levs (1.9 million euro) annual income from a 13 million euro solar park it recently launched in Bulgaria, a senior company official said on Wednesday. The solar park in Bezmer, in southern Bulgaria, has an output of 4.0 megawatts and the expected yearly production is 5,480 megawatthours (MWh), Rui Cardoso, Efacec regional manager for Central Europe, told SeeNews in an e-mailed statement. Apart from the solar park in Bezmer, Efacec is developing near Kaolinovo, in the northern part of the country,  a wind project in partnership with a Bulgarian company and is finalising negotiation to acquire some photovoltaic projects, Cardoso also said. "Besides these, Efacec is also currently bidding for the construction of other photovoltaic projects to several investors," he added, without providing further details. Cardoso explained that the company has chosen Bulgaria for its projects as the geographical conditions in several areas in the country are quite favorable for developing solar and wind projects. "The fact that the lev is stable to the euro is also advantageous when we consider an investment where income is paid in levs but most of the equipments are paid in euro," Cardoso said. A third reason is the clear legal frame and the stable situation in the country, he added.

 

 

Reported by:

Georgi Iliev

KOTRA Sofia

Korea Trade-Investment Promotion Agency

Commercial Section of the Embassy of the Republic of Korea