불가리아 주요 경제뉴스 (26 – 30 September 2011)

BULGARIAN ECONOMIC TOP NEWS DIGEST

WEEKLY REPORT (26 – 30 September 2011)

 

Sections/headline briefs:

 

 

MACROECONOMY:

Ø  Foreign debt falls 2.2% y/y to EUR 36.2bn at end-July 2011

Ø  Business sentiment flattens m/m in September 2011

Ø  Bulgaria's GDP to grow by 2.2% in 2011 and 2.6% in 2012, Ernst & Young Predicts

 

 

INVESTMENTS:

Ø  South Korean PM Vows Business Partnership with Bulgaria

Ø  Premier Power to build 16.2 MW solar power plants in Dimitrovgrad

Ø  Bulgaria to Pour EUR 50 M from EU into Sofia Hi-Tech Park

Ø  Saudi Arabia interested in investing in grain crop production in Bulgaria

Ø  Investment projects in e-government are worth BGN 100 Mln

 

 

COMPANIES AND INDUSTRIES:

Ø  MKM Product signs EUR 185mn contracts with Russian entities

Ø  Bulgaria's Sopharma to open new plant in Serbia

Ø  Bulgaria starts building 8 km stretch of Hemus Motorway

Ø  Bulgarian Lead, Zinc Complex to Pay Fine for Environmental Breaches

Ø  Battery producer Monbat’s sales up 12.5% y/y in Jan-Aug 2011

 

 

 

 

 

Articles:

 

MACROECONOMY:

Foreign debt falls 2.2% y/y to EUR 36.2bn at end-July 2011

The gross external debt declined by 2.2% y/y and 0.4% in a month to EUR 36.2bn as of end-July, according to preliminary data of the central bank. The foreign liabilities of the public sector fell at the same rate like the total (2.2% y/y). The private sector reduced its foreign debt by 2.3% y/y again as a result of the activity of the banking sector (contraction of the short-term deposits of foreigners and the short-term loans of the local banking system). The total foreign debt accounted for 91.8% of the full-year GDP projection as compared to 102.7% of GDP a year earlier. The short-term debt, covering liabilities with original maturity of one and less than one year, went up to 30% of the total as compared to 29.9% a month earlier but down from 31% a year earlier. The credits on demand accounted for 24.3% of the total external debt (up from 24.1% a month earlier but down from 24.9% in annual comparison) and 61.3% of them were reported as inter-company loans. The share of total inter-company loans, which are not included in the short-term debt statistics, accounted for 40.3% of the total external debt, up by 0.3pps in a month but down by 0.2pps in annual comparison. The ratio of foreign reserves to short-term debt rose to 115.1% at the end of July as compared to revised 113.6% a month earlier and 107.5% at the end of July last year. It is still weaker compared to more than 120% at end-2007 and about 300% in 2002-2004.

 

Business sentiment flattens m/m in September 2011

The composite business sentiment indicator remained unchanged at 17.83 in August as compared to a month earlier, the monthly survey of the national statistics institute showed. The annual increase accelerated to 6.5pps as compared to 5.3pps a month earlier. The indicator improved in the industry and the services, deteriorated in the construction and flattened in the retail trade. The industrial managers report more orders from abroad, which they plan to meet with inventories reduction and do not intend to increase the activity of the companies in the next three months. The deterioration of the business climate in the construction sector reflects higher share of managers who expect the activity to remain the same rather than improve. The number of the client with delayed payments to construction companies has increased in September. The share of retailers with financial problems rose significantly to 45.2% of total in September from 15.3% in August. The improvement of the sentiments in the services is due to the current situation only and therefore the managers do not plan to hire more workers. None of the surveyed sectors share inflationary expectations in the next months.

 
Bulgaria's GDP to grow by 2.2% in 2011 and 2.6% in 2012, Ernst & Young Predicts

The firm has lowered its GDP growth prediction for Bulgaria for 2011

The Bulgarian economy will grow by 2.2 per cent in 2011 and 2.6 per cent in 2012, the Ernst & Young professional services firm says in its September 2011 Eurozone Forecast. The firm has lowered its GDP growth prediction for Bulgaria for 2011, given the sharp deterioration in prospects for the EU, Bulgaria's main export market, as well as continued weakness of consumer spending and the high level of uncertainty facing businesses. Bulgarian exports performed strongly in 2010, but given the problems in the EU the pace is expected to slow to under 10 per cent this year and then to only 5.5 per cent in 2012, below import growth, so net exports are likely to deduct from growth next year, the report further says. On the domestic side, the modest recovery has been jobless so far and high inflation at the beginning of the year squeezed Bulgarian household budgets further. As a result, consumer spending is expected to grow just 1.2 per cent in 2011 as a whole. Lagged effects from the recession continue to weigh on household spending and consumer confidence is no better than the levels of mid-2010, well down on those seen before the global crisis. High inflation, which peaked at 5.6 per cent in March and was still 4.1 per cent in August, has put additional pressure on consumer spending in Bulgaria. But unless the external environment becomes really dismal, employment should start to rise soon and inflation should continue to decline gradually. As a result, this could lift household spending growth to over 3 per cent in 2012, after an expected rise of just under 1 per cent this year. Together with increased infrastructure spending, this could drive GDP growth of 2.6 per cent in 2012, Ernst & Young says.

INVESTMENTS:

South Korean PM Vows Business Partnership with Bulgaria

A Bulgarian-South Korean business forum was held Tuesday in the capital Sofia in the frame of the official visit of South Korea's Prime Minister Kim Hwang-sik to the country. The forum was also attended by Bulgarian Prime Minister, Boyko Borisov. Presentations at the forum included economic and investment climate in Bulgariafrom the Bulgarian Investment Agency; construction and infrastructure projects from the Road Infrastructure Agency, and a review of the policies of the Ministry of Transport, IT, and Communications on the future online government. The Korean Trade-Investment Promotion Agency (KOTRA) director, Lee Kwan-seok, presented his country's construction activities abroad, saying contractors from the Middle East have achieved a volume of USD 275 B, which is 61% of the global market share. Korean construction businesses build abroad mainly public and industrial buildings and industrial equipments such as an artificial river in Libya, an industrial complex in Mexico, a highway in Pakistan and the highest building in the world in Dubai. Since the beginning of 2011, a Korean company is building a housing complex in Bulgaria. Kwan-seok also presented projects of Korean builders across Europe. The number of projects across the world exceed 8 000. He assessed perspectives for partnershipwith Bulgaria as very strong, saying they would include cooperation in water purification, energy, housing and public buildings construction. Four contracts between Bulgarian and Korean companies were signed during the forum. Prime Minister Kim Hwang-sik addressed the forum, stressing on Bulgaria's reputation as producer of yogurt and as grower of the famous Bulgarian rose. "The agreement on free trade between the two countries will boast their relations," he said. The PM pointed out Hyundai Industries and the solar panels in the village of Somovodene in central Bulgaria as an example of successful investment in the country, noting Korean entrepreneurs are convinced Bulgaria has attractive conditions for doing business. He listed as key sectors for partnership IT, renewable energy sources, and infrastructure construction. His Bulgarian counterpart Borisov also addressed the forum, saying the fact Hwang-sik's visit to the European Union begins in Bulgaria, is indicative of the importance of the partnership between the two countries. Borisov informed that topics of the negotiations included partnership in the online government, export of grain to Korea, cultural tourism, innovations, education, and infrastructure projects such as the building of a cargo terminal in the southern city of Stara Zagora. The two countries signed Tuesday an agreement for mutual recognition of drivers licenses.

The PM reiterated the fact Bulgaria offers excellent conditions for doing business such as stability, the strive to use ecologically clean activities in order to preserve the environment, and the key geographical location between Europe and Asia. The two country leaders officially closed the event.

Premier Power to build 16.2 MW solar power plants in Dimitrovgrad

Premier Power plans to build four photovoltaic plants with total production capacity of 16.2 MW in the southern town of Dimitrovgrad, according to information of Market Watch. Each solar installation will have capacity of 3 to 5 MW. The project, a joint venture with EPC firm Plaan Czech, s.r.o., will be funded through a private investment company based in the Czech Republic. The installation of the plants will start this month and should be completed by the end of this year. The investment value has not been unveiled so far. Bulgaria’s total solar power production capacity has been reported at some 21 MW at the beginning of this year. Premier Power is a leading global installer of small to large-scale solar power systems, delivering unmatched quality to commercial, agricultural and residential customers, according to information from the website of the company. 

Bulgaria to Pour EUR 50 M from EU into Sofia Hi-Tech Park

Bulgaria's government will invest EUR 50 M from EU Operational Program "Competitiveness" into the planned hi-tech park in Sofia, Deputy Economy MinisterEvgeni Angelov said. Angelov presented Thursday the government's concept about what will technically become the first Bulgarian hi-tech park at the first annual conference entitled "Forum Sofia – Sustainability: More Than Green", an event organized by the Bulgarian Green Building Council, a NGO. The future Sofia hi-tech park was announced in November 2010 by Kiril Nikolov, CEO of the Bulgaria's State Company "Industrial Zones" in an interview for Novinite.com (Sofia News Agency); the hi-tech park is intended to be built within the future industrial zone in Bozhurishte near Sofia, to be managed jointly by the governments of Bulgaria and China's Zhejiang Province. Deputy Minister of Economy, Energy, and Tourism Angelov explained Thursday that an altered approach to the EU funds in question, i.e. switching from considering various competitive projects to investment into one pilot project, will boost the chances of the Sofia hi-tech park for success. The hi-tech park in question is supposed to provide at one location all necessary infrastructure in order to guarantee the successful creation and implementation of technological solutions with business applications, Angelov said. "The future hi-tech park will focus precisely on the implementation of innovative products," he explained. He added that five major areas that correspond to the government priorities in Bulgaria's industrial development will be featured by the Sofia hi-tech park, namely: information and communication technologies (ICT), "green" technologies, healthcare and medicine, agriculture and foods, and industrial production technologies. Some of the EU funding in question will be invested into specific projects to be realized within the future hi-tech park. In addition to the ground for the development of innovative ideas, the park will feature various business services – financial, legal, accounting, mediation, management, training, etc., Angelov said. "Sofia has been selected as the spot of the park because it concentrates in one location various business activities, scientific potential, good logistics, and communication infrastructure. Subsequently, such projects can be realized elsewhere in the country," Angelov said in his presentation. In his words, the construction of the Sofia hi-tech park should kick off in the first half of 2012.

Saudi Arabia interested in investing in grain crop production in Bulgaria

An agreement was reached to form working groups from both countries, which will carry out the communication and coordination Agriculture and Food Minister, Miroslav Naydenov, and Saudi Arabia Minister of Agriculture, Fahd bin Abdulrahman bin Sulaiman Balghunaim, officially unveiled Thursday a business forum of representatives related to investment in the agricultural sector of the two countries, Naydenov's ministry said. An agreement was reached to form working groups from both countries, which will carry out the communication and coordination of the interested parties. According to the press release, the representatives of Saudi Arabia showed interest in investing in the production of grain crops which require large resources of water. In addition to the favourable natural conditions, part of the criteria of the representatives of the Arab state are abidance by legal order, transparency in business relations and the absence of corruption environment.

 

Investment projects in e-government are worth BGN 100 Mln

The objectives include enabling Bulgarians to work and study, receive health care services via Internet. Investment projects in the field of e-government are worth 100 million leva, mainly European funding, Transport, Information Technology and Communications Minister Ivailo Moskovski said at Monday's opening of a seminar on the subject of a programme in the field of digital technologies for Europe, Moskovski's ministry said. The participants in the seminar, in the North Central city of Pleven, were addressed by Florin Lupescu, Principal Adviser at the Information Society and Media Directorate-General with the European Commission. The objectives of the ministry include enabling Bulgarians to work and study, receive health care services via Internet, regardless of where they are, as well as to lift administrative encumbrance from business. To achieve progress - not only empty promises - the ministry has focused in two directions - modern electronic communication networks across the country (not only in the cities), as well as accessible and secure electronic services, Moskovski said. The minister quoted the recent electronic census of the population in Europe (nearly half of the households) as a tangible result in the field of digital technology. Companies have begun to submit annual financial statements at one place, not at three as until now and 75 per cent submit tax statements online. By 2012 the systems developed at the individual institutions - regions, municipalities, health care, tax administration, police - which relate to services for the population will begin to communicate with each other, Moskovski added. The seminar is organised by the Permanent Representation of the European Commission in Bulgaria, Moskovski's ministry and the administration of Pleven Region.

 

 

COMPANIES AND INDUSTRIES:

 

MKM Product signs EUR 185mn contracts with Russian entities

Local company MKM Product has signed contracts with Russian entities amounting to a total of EUR 185mn during the autumn fair in the country’s second largest city of Plovdiv, the Fair informed on its website. The projects comprise building of bio gas systems to produce electricity and steam plants, recycling installations, greenhouses, livestock farms and timber processing plants (EUR 100mn), homes construction and waste-processing-plant (EUR 25mn) as well as preliminary construction contract for its technology at the amount of EUR 60mn. The company’s invention helps to reduce energy consumption by 10% compared to conventional houses, at about 4-times lower price than similar models in Western Europe. 

 

Bulgaria's Sopharma to open new plant in Serbia

Bulgaria's pharmaceutical group Sopharma will officially open a new plant that will make medicines in tablet form near Serbia's capital Belgrade on September 28, the company said on September 26 2011. The plant, construction of which started a year ago, was developed jointly with Belgrade-based sector player Ivancic i Sinovi. The facility is worth eight million euro and will create 120 jobs. The launch of the new plant is a major step in Sopharma's strategy to become a "significant regional player on the pharmaceutical market," the statement said. In late 2010, Sopharma started the construction of a solid dosage form plant in Sofia, which is expected to be completed in mid-2012. Investments in the facility, which will employ 420, are estimated at 70 million leva.

 

Bulgaria starts building 8 km stretch of Hemus Motorway

Bulgaria's prime minister Boiko Borissov attended on Monday a ground-breaking ceremony for the construction of an 8.46-kilometre (5.257 miles) extension of the Hemus Motorway, which will connect it to Sofia's Ring Road. The stretch, costing BGN 47.7 million (USD 33.2m/EUR 24.4m), is expected to be completed in 22 months. The project will be financed under the EU's Transport operational programme, with 80% of the sum to come from the programme, while the remainder will be provided from the state budget. The section will be built by a consortium led by Trace Group Hold, which is also constructing parts of the Trakiya Motorway and Sofia's underground system.

 

Bulgarian Lead, Zinc Complex to Pay Fine for Environmental Breaches

The Administrative Court in Kardzhali has confirmed a fine of BGN 60 000 imposed on Bulgarian lead and zinc smelter, OTZK, over its noncompliance with the integrated environmental permit. Viktor Atanasov, head of the administrative court in the Southeastern Bulgarian town, announced Monday that this was the biggest penalty upheld so far in the region. Among the breaches committed by OTZK-Kardzhali are the uncontrolled release of harmful gas emissions as part of the production process and the impermissible content of dust and sulfur dioxide around the chimneys of the plant. The company owned by Valentin Zahariev's Intertrust Holding explained its failure to observe the environmental standards with the insufficient time it had been given to select an external contractor to build a cleaning facility and the inability of the company to allocate money for such programs due to intercompany indebtedness and the financial crisis. Kardzhali's Administrative Court, however, did not accept the motives, stating that OTZK had had plenty of time to ensure compliance, given that the Ministry of Environment and Water issued the permit back in 2006. The fine was imposed after a check of the Haskovo Regional Inspectorate of Environment and Water carried out after multiple reports of industrial air pollution. In 2010, OTZK broke air pollution norms 88 times, and in 2009 it breached legal limits 203 times, compared to the EU cap of 24 instances of pollution per spot per year. The serious environmental violations exposed Bulgaria to the threat of a newinfringement procedure launched by the European Commission. As a result, OTZK announced a halt of lead production in April 2011. The Kardzhali-based lead and zinc smelter is to unveil a new lead plant. Valentin Zahariev has threatened to sue Bulgaria for missed profits amounting to BGN 46 M due to the excessively delayed procedures for evaluating environmental impact. The company has already lodged a claim for BGN 7 M with the Administrative Court in Kardzhali.

Battery producer Monbat’s sales up 12.5% y/y in Jan-Aug 2011

The net consolidated sales of the country's largest car battery producer Monbat increased by 12.5% y/y to BGN 134.7mn (EUR 68.9mn) in Jan-Aug decelerating from 22.3% y/y in Jan-Jul, according to information posted on the website of the local stock exchange. In August alone, sales declined by 23.8% y/y to BGN 19.4mn after increasing by 31.7% y/y to BGN 16.6mn in July. The increase of the pre-tax profit of the company sped to 1.9% y/y to BGN 14.7mn in Jan-Aug as the indicator added 5.6% y/y to BGN 2mn in August after plunging by 61.7% y/y to BGN 712,000 in July. Monbat projects net sales in the amount of BGN 176.3mn, net profit of BGN 21.7mn and EBITDA of BGN 34mn this year. Monbat raised its consolidated net profit by 5.1% y/y to BGN 19.9mn in 2010 while consolidated net income from sales rose by 50% y/y to BGN 188.9mn, respectively. The consolidated results comprise those of Monbat and its unit Monbat Recycling. In April 2010, Monbat decided to spin off its recycling operations in order to improve its efficiency and make its activities more attractive to potential foreign investors. 

 

Reported by:

Georgi Iliev

KOTRA Sofia

Korea Trade-Investment Promotion Agency

Commercial Section of the Embassy of the Republic of Korea