불가리아 주요경제뉴스 (15 – 22 July 2011)

BULGARIAN ECONOMIC TOP NEWS DIGEST

WEEKLY REPORT (15 – 22 July 2011)

 

Sections/headline briefs:

 

 

MACROECONOMY:

• Bulgaria's Budget gap shrinks 65% Y/Y in H1 2011
• Bulgaria's construction output decline is third steepest in EU in May
• Bulgaria's 2010 Arms Exports Amounted to EUR 260 M

 

INVESTMENTS:

• Investments Expected to Grow by 8%

 

COMPANIES AND INDUSTRIES:

·         Bulgaria Set for Boom in Electric Cars, Converted Vehicles Industry    

·         Bulgaria's new car sales rise fourth-fastest in EU in June     

·         10 % growth of incomes from tourism expected in 2011  

·         Bulgaria's Sopharma Trading sales grow 17.4% Y/Y in H1 2011    

·         Austria's EVN officially joins Gorna Arda hydropower project   

·         EVN Bulgaria Opens 5.1 Mln Euro Solar Park     

·         Russia's Lukoil to build $4m solar park near Bourgas

• Bulgaria to restart sale of 36% of Arsenal
• Bulgaria's Ideal Standard-Vidima to boost production in 2011

 

 

 

 

 

Articles:

 

MACROECONOMY:

 

Bulgaria's Budget gap shrinks 65% Y/Y in H1 2011

Bulgaria's Budget deficit shrank 65 per cent year-on-year to 652.1 million leva in the first half of 2011, according to Finance Ministry preliminary data on July 18 2011. The amount is 0.9 per cent of the country's gross domestic product (GDP) expected in 2011, down from 2.2 per cent recorded the previous year. Total revenue rose by 7.6 per cent in annual terms to 12 billion leva in the six-month period, or 45.9 per cent of the planned amount for the year. The growth was attributed to the higher proceeds from indirect taxes, which went up by 638 million leva. Revenue from indirect taxes also increased. Total spending, including transfers to the EU budget, came in at 12.7 billion leva, about 45.1 per cent of the Government's target. The fiscal reserve was 5.2 billion leva as of June 30.

 

Bulgaria's construction output decline is third steepest in EU in May

Bulgaria's construction output fell by 16.5 per cent on the year in May 2011, which was the third-sharpest annual drop among the European Union members in the period, data by the bloc's statistics bureau Eurostat showed. The countries that performed worse than Bulgaria in May were Spain and Slovenia, which recorded annual declines of 17.3 per cent and 30.1 per cent, respectively. Euro zone members registered an average annual decrease of 1.9 per cent in May, while construction output in the EU overall edged down one per cent. The biggest rise of 24.7 per cent was recorded by Poland, followed by Sweden with 11.2 per cent and Germany with eight per cent. Among the countries which had provided construction data to Eurostat, nine recorded a decline, while a further five states registered an increase in output.

 

Bulgaria's 2010 Arms Exports Amounted to EUR 260 M

Bulgaria exported arms and munitions worth over EUR 259 M in 2010, according to a Bulgarian government report. The 2010 of the Inter-institution Commission for Export Control and Non-proliferation of Weapons of Mass Destruction of the Bulgarian Economy Ministry was adopted by the Cabinet on Wednesday, and will be presented to the Parliament. It shows that in 2010 the arms commission issued a total of 614 permits, of which 339 were for the exports of arms and transfer of weapons out of Bulgaria's territory. The largest number of permits were issued for arms exports and transfers destined for India, the USA, Egypt, and the Czech Republic. The report further indicates that the specialized institution refused two arms export permits in 2010. The weapons imported and transferred into Bulgaria in 2010 were worth EUR 55.5 M, according to government figures. The inter-institutional commission issued 275 permits for the import and transfer of weapons into Bulgaria. The highest number of these were for imports from the USA, Germany, Serbia, the Czech Republic, and Ukraine. However, the highest worth of arms imports into Bulgaria came from France, the Czech Republic, Serbia, Ukraine, and the Netherlands. The better part of the arms import was destined for the modernization of the Bulgarian armed forces but some of the import refers to weapons sold on the consumer market, and munitions and arms destined to be destroyed. In 2010, the governmental commission gave 21 permits for the transit of weapons through Bulgaria's territory, and 25 permits for the export and transfer of dual-use goods. Once the reported is presented to the Parliament, it is to be published by the Ministry of Economy, Energy, and Tourism. The Council of Ministers has pointed out in a statement that in accordance with its international commitments Bulgaria provides annual information about its exports and imports of conventional weapons under the UN Register of Conventional Arms, and under the Organization for Security and Cooperation in Europe's Wassenaar Arrangement on the Control of Brokering in Small Arms and Light Weaponry. Of the large-scale Bulgarian military-industrial complex, whose total exports reached more than USD 1 B in the mid 1980s, Bulgaria's military industry today has 5 major military plants, four of which are private-owned, and one - VMZ Sopot - is about to be privatized.

 

 

INVESTMENTS:

 

Investments Expected to Grow by 8%

Investments to Bulgarian economy will grow by 6 or 7% in the post-crisis period, expect the economic experts team of Unicredit Bulbank. Investments will be the fastest growing component of the GDP as seen from the perspective of the final consumption. Despite these positive forecasts we cannot expect the investment growth to reach the levels of 15 or 20% as it did in the years of home demand boom. Consumption in Bulgaria will also increase and it is expected to enlarge by 3 or 3.5% a year. 

 

 

COMPANIES AND INDUSTRIES:

 

Bulgaria Set for Boom in Electric Cars, Converted Vehicles Industry

The large-scale industrial conversion of conventional cars into electric vehicles is expected to become Bulgaria's new major industry, a special report of Novinite.com (Sofia News Agency) has found. The development of Bulgaria's electric vehicle industry is expected to experience a boom in 2012, Iliya Levkov, Chair of Bulgaria's Electric Vehicles Industrial Cluster(EVIC), has told Novinite.com (Sofia News Agency) in an exclusive interview. EVIC, a 100% Bulgarian NGO designed to spur cooperation and coordination between various actors in order to help initiate the industrial production of electric cars in Bulgaria, was formed in November 2009, when a number of industrial manufacturers from the machine building sector, communications and oil industry, and top universities and research institutions came together. The Bulgarian Electric Vehicles Industrial Cluster has just reached an agreement with Avtomotor Korporatsiya, the official importer of Citroen, for the industrial conversion in Bulgaria of two Citroen models – Berlingo and Jumper – into electric vehicles – a deal described by Cluster Secretary Ivan Kostov as "revolutionary." According to EVIC, only a handful of countries in the world in addition to Bulgaria, such as the USA and Italy, have the experience and capacities for the industrial conversion of conventional cars into electric vehicles. "Bulgaria had extremely good positions in the electric vehicles production, and the best part is that we have preserved part of the specialists, not to mention the fact that many of the Bulgarian industrial projects for electric forklifts are still available. A forklift is a precursor to electric cars. I love saying that the new electric cars are actually "tuned forklifts." Their principles of operation are basically the same," explainsIliya Levkov, Chair of Bulgaria's Electric Vehicles Industrial Cluster. Levkov points out that one of the cluster members, the Di-Ven company based in the Danube town of Lom, has already produced a new electric light truck (unveiled in 2010). "The analogies with the old electric vehicle platforms are very close. Yes, this is the same thing. Let's not hide it; after all this is something that survived from Bulgaria's older industries. This vehicle is the first manifestation of the rising phoenix of Bulgaria's electric vehicle industry. It is 100% Bulgarian-made so let's give it a chance. It hasn't been tuned, and it doesn't boast futuristic forms but this can be done quite easily, even by students from the Sofia Technical University," Levkov says. He has stressed that in this field Bulgaria has an enormous lead before the other countries because it has some of the best producers of electric engines and lead batteries. "We are aiming at the low segment of the market because the lithium-ion batteries are still very expensive, which is why the price of the new electric cars is so high," the Cluster Chair explains. He emphasizes that while a brand-new electric vehicle costs about EUR 35 000, the conversion of a gas-fueled car into an electric one will cost about EUR 10 000, and Bulgarian companies are already well on the way to launch the industrial conversion of gas-fueled cars. With a number of initiatives in an early stage, EVIC Chair Iliya Levkov expects decent results from Bulgaria's electric car industry in the near future – some 15 000 conventional cars are supposed to be converted by the end of 2012, in addition to hundreds of new electric vehicles. This will still be a small number out of 3 million registered cars in Bulgaria but a snowball effect is expected to follow once industrial conversion is introduced in Bulgaria. "There will be a boom of converted vehicles in Bulgaria in 2012. I am convinced of that because parallel to our production talks, we have also negotiated with business clients ready to buy them. These are, first and foremost, delivery, shipping, and logistics companies," Levkov reveals. Nikola Gazdov, the managing director of Renergy, a Bulgarian company, a member of EVIC which has launched a project to build charging stations around the country in partnership with Siemens, RWE, and one of the Bulgarian power utilities, has told Novinite.com (Sofia News Agency) that at least 50 converted and 50 new electric cars will be in use in Bulgaria by the end of 2011. A few other factors are also boding bright days for the electric car industry in Bulgaria. UK electric car company Zero Carbon 2020 Ltd is starting an assembly line for electric vehicles in Bulgaria's Stara Zagora with an initial capacity of 100 cars, to reach 5 000 in 2015. "This industry is just emerging, and has an enormous potential, with high added value, investments and highly-skilled labor, it can uplift Bulgaria's economy. This sector should be the number one priority in government economic policies because we have the chance to make it happen right here, right now," EVIC Chair Levkov states with optimism.

Bulgaria's new car sales rise fourth-fastest in EU in June

Bulgaria was among the eight EU states which registered a rise in new car sales in June, European Automobile Manufacturer's Association (ACEA) data showed on July 15. The country's sales of new cars grew 25.6 per cent year-on-year to 1823 units, the fourth-largest growth in the EU in the period. Lithuania, Estonia and Ireland were the best performers in terms of car sales among EU states, recording annual increases of 102.7 per cent, 62.6 per cent and 31.3 per cent, respectively. EU countries saw an overall 8.1 per cent drop in car sales in June to 1.234 million vehicles. A total 7.12 million cars were sold in the first six months of the year, down 2.1 per cent. In monthly terms, Germany recorded a 0.3 per cent fall in car sales, Italy witnessed a decline of 1.7 per cent, while the UK and France suffered drops of 6.2 per cent and 12.6 per cent, respectively. Greece saw the sharpest decline in new car sales in June, of 34.1 per cent.

 

10 % growth of incomes from tourism expected in 2011

The Bulgarian Tourist Chamber expects 10% growth in incomes from tourism in 2011 compared to last year, Chairman of the chamber Tsvetan Tonchev told FOCUS News Agency. In 2009 the incomes amounted around BGN 2.58 billion and this year’s expectations are for BGN 2.8-2.9 billion. Besides holidays on the seaside many people also choose mountain resorts for their vacation. Mountain resorts such as Borovets and Bansko have been full at 30% at least. According to Tonchev number of Russian tourists would be higher than last year.

Bulgaria's Sopharma Trading sales grow 17.4% Y/Y in H1 2011

Bulgarian drug distributor Sopharma Trading, part of pharmaceuticals group Sopharma, reported a 17.36 per cent annual increase in sales to 217 million leva in the first half of 2011. Its pre-tax profit increased by 54 per cent on an annual basis to 3.15 million leva in H1 2011, the company said on July 19. Sales were 35.9 million leva in June alone, 13.8 per cent higher than in June 2010. Sopharma Trading emerged as the top pharmaceutical company in terms of turnover in the Kapital 100 annual ranking drawn up by business weekly Kapital. The company retained its top position for 2010, ending the year with a turnover of more than 400 million leva. Sopharma Trading's market capitalisation is estimated at slightly more than 62.5 million leva. Since the start of 2011, its stock has gained 8.38 per cent to 1.90 leva a share.

 

Austria's EVN officially joins Gorna Arda hydropower project

Austria's utility EVN has agreed to team up with Bulgaria's power grid operator NEK in building the Gorna Arda hydropower complex, the companies said on July 20 2011. EVN owns a 30 per cent stake in the entity in charge of the project, Hydropower Company Gorna Arda, which was bought from Turkey's CCG Insaat Sanayi Ve Turizm. Currently EVN holds 30 per cent of the company, while NEK owns the remainder. EVN, however, plans to boost its holding in the project to 70 per cent through a capital hike approved on July 20 2011 by the project company's shareholders. According to Trade Registry data, Hydropower Company Gorna Arda will issue additional shares to raise its capital to 2.33 million leva from one million leva currently. Bulgaria revived plans to proceed with the Gorna Arda project in autumn 2009, when EVN and Austria's group Alpine Bau agreed to buy out Turkish Ceylan's 30 per cent stake in the facility. In early 2010, however, Alpine Bau decided to give up its participation in Gorna Arda, leaving EVN with a 30 per cent stake.

EVN Bulgaria Opens 5.1 Mln Euro Solar Park

Power distribution company EVN Bulgaria opened on Thursday 10 million levs ($7.2 million/5.1 million euro) solar park in southeastern Bulgaria. The solar park, located near the village of Trastikovo, not far from the Black Sea city of Burgas, spreads on 80,000 square metres and will have a planned capacity of 2,000 kilowatt-peak (kWp), EVN Bulgaria said in a statement. The solar park in Trastikovo is the second one the company launches in Bulgaria. Last year it completed a 836.7 kWp solar park near the southeastern city of Sliven, following a 6.0 million levs investment. EVN Bulgaria (www.evn.bg) is the power distributor for Plovdiv city and the region of southeastern Bulgaria, supplying electricity to some 1.6 million customers.

 

Russia's Lukoil to build $4m solar park near Bourgas

Russia's oil major Lukoil will invest $4 million in the construction of a photovoltaic park near the Black Sea city of Bourgas, the company said. The power plant will be built on an area of 2.5 hectares and will have a capacity of 1.25 MW. The expected annual output of the solar facility is 1500 MWh of power, which will be sold on the free market. Lukoil expects to put the plant on stream in October 2011. Its construction will be managed by Lukoil Ecoenergo, a unit of the Russian company registered in 2011 to run its renewable energy projects. Apart from the solar plant, Lukoil also plans to build wind parks in Bulgaria, as well as in Romania.

Bulgaria to restart sale of 36% of Arsenal

Bulgaria will again try to sell its minority stake of 36% in local military plant Arsenal - Kazanluk, the economy ministry said. However, the stake has so far lured no investors, while negotiations with the plant's majority shareholder, Arsenal 2000, have failed because of the unsatisfactory price the company was prepared to pay for the interest, Economy Minister Traicho Traikov said. Arsenal 2000 has proposed to buy the stake at a price three times lower than its market value, Traikov said without revealing the sum. The state may decide to call a tender for the stake sale, with the Privatisation Agency expected to announce the procedure next week, deputy economy minister Evgeni Angelov said. Should the country decide to proceed with the transaction, it would be its second attempt to dispose of its shareholding in Arsenal. In 2005, Bulgaria placed the stake at an indicative price of BGN 55 million (USD 40.3m/EUR 28.1m), but the tender fell through because no bidders came forward. The plant is 64%-owned by Arsenal 2000, which is in turn controlled by offshore companies registered on the Virgin and Cayman Islands. According to economy ministry officials, the company has performed well in recent years, exporting products to Africa, the Middle East, Latin America, the United States and Asia.

 

Bulgaria's Ideal Standard-Vidima to boost production in 2011

Bulgarian sanitary fittings and ceramics manufacturer Ideal Standard-Vidima plans to increase its ceramic products output by 18% and to enhance productivity by 10% by the end of 2011, the company said on Wednesday. "It's not an entirely new investment, but a technological renovation of existing equipment," Vassil Kunev, vice president of Ideal Standard for eastern Europe, told Dnevnik. The company plans no further investments in its Bulgarian unit this year and will focus on the development of its ceramics and fittings facilities, he said. Ideal Standard-Vidima, controlled by Belgium-based bathroom equipment manufacturer Ideal Standard International, is in charge of the group's product supply and trade activities in Eastern Europe. The Bulgarian division currently employs more than 3000 people, while 80 per cent of its production is sold abroad, with Western Europe and Russia being some of its major markets.

 

 

 

 

 

 

 

 

 

 

 

 

Reported by:

Georgi Iliev

KOTRA Sofia

Korea Trade-Investment Promotion Agency

Commercial Section of the Embassy of the Republic of Korea