불가리아 주요 경제뉴스 (15 - 22 June 2012)

BULGARIAN ECONOMIC TOP NEWS DIGEST

WEEKLY REPORT (15 - 22 June 2012)

 

Sections/headline briefs:

 

MACROECONOMY:

       Bulgaria May Lose EUR 300 M in EU Funds

       Labor Costs in Bulgaria Up 6% Q1 2012 Y/Y

       Share of informal economy in Bulgaria drops in 2011

       EC asks Bulgaria to adjust or withdraw from bilateral trade agreement with US

 

INVESTMENTS:

       Bulgaria Gets EUR 400 M in FDI in Jan-Apr 2012

       Chinese Business Threatens to Quit Bulgaria's Renewable Energy Sector

 

COMPANIES AND INDUSTRIES:

       New passenger car registrations in Bulgaria up 4% y/y in Jan-May

       Bulgarian Solar-Panel Maker to Halt Production

       Molson Coors Buys Bulgaria's Kamenitza, StarBev Breweries

       Organic Farming in Bulgaria Increased by 30% in 2011

       Lidl Bulgaria Opens New Store in Capital City

       Bulgaria Expects 10% Growth of Foreign Tourists Summer 2012

 

 

 

 

 

 

 

 

Articles:

 

 

MACROECONOMY

 

Bulgaria May Lose EUR 300 M in EU Funds

Bulgaria may lose up to 300 million euro in EU subsidies under the rural areas development program, experts told the Standart. The subsidies meant for funding organic agriculture and farming projects could hardly be absorbed by Sofia. The funds total roughly four hundred million euros allotted under the so-called Axis-2 of the Rural Areas Development Program. The money has to be allocated for the agro-ecological sector in the period of 2007-2013. To this day, however, the sum negotiated by the Agriculture Fund amounts to about 50 million euro According to experts of the National Revenue Agency, Bulgaria will be able to absorb another 50 million at the most because the candidates are too few. Although their number has grown in recent years currently there are only 2,500 bio-farms in Bulgaria, while the EU funds are envisioned for 40,000. 

Labor Costs in Bulgaria Up 6% Q1 2012 Y/Y

In the first quarter of 2012, the total hourly labor cost in Bulgaria rose by 6.2% compared to the first quarter of 2011. These flash figures were released Monday by the Bulgarian National Statistics Institute, NSI. The total hourly labor cost grew by 4.2% in the industrial sector, by 9.5% in the services one, and by 0.4% in construction. The breakdown by economic activities shows that the highest annual growths in total labor costs were recorded in 'Other Service Activities' - 17.1%, in 'Administrative and Support Service Activities' - 14.6% and 'Information and Communication' - 14.4%, while the lowest annual growths were registered in 'Construction' and 'Human Health and Social Work Activities' respectively 0.4% and 1.8%. Decrease in total labor costs was observed in 'Real Estate Activities' by 1.0% and 'Arts, Entertainment and Recreation' by 0.8%. The two main components of labor costs are wages & salaries and non-wage costs. In the structure of the total labor costs, wages and salaries costs per hour worked grew by 7.1% in comparison with the same period of 2011, while the other (non-wage) costs rose by 2.0%. Among the economic activities in the first quarter of 2012, compared to the first quarter of 2011, the growth rate of wages andsalaries component ranged from (-0.7%) in 'Real Estate Activities' to 18.9% in 'Other Service Activities'.

 

Share of informal economy in Bulgaria drops in 2011

The share of the shadow economy in Bulgaria has contracted in 2011, BTA News Agency reported, citing experts from the Bulgarian Industrial Capital Association and trade unions, evaluating the dynamics in the formal economy. The Composite Index "Business to the Rules" includes both statistical and sociological indicators. It has increased to 67.4 points in 2011 from 63.97 points in 2010, indicating a decline in country's informal economy. All components of the index have improved with the exception of VAT collection and trade with other EU countries. The services sector remains with the largest share of shadow economy in the country. 

 

EC asks Bulgaria to adjust or withdraw from bilateral trade agreement with US

The EC has asked Bulgaria to abolish the duty and tax relief provisions contained in the bilateral agreement with the US on technical assistance, signed prior to joining the EU, the Commission said in a statement. The agreement provides for duty and tax-free import of goods financed by the United States and for goods and services purchased on the Bulgarian market with the funds of the technical assistance programme. The agreement, however, does not comply with the EU legislation. Therefore, if Bulgaria does not adjusted the terms of the agreement or withdraw from it within two months, the EC may refer the matter to the EU Court of Justice. 

 

 

INVESTMENTS:

Bulgaria Gets EUR 400 M in FDI in Jan-Apr 2012

Bulgaria's FDI in the first four months of 2012 amounted to EUR 407 M, according to preliminary data, released Friday, June 15, 2012, by the Bulgarian National Bank. According to preliminary data, the foreign direct investment in Bulgaria for January - April 2012 amounted to exactly EUR 407.2 M (1% of GDP), compared to EUR 63.2 M (0.2% of GDP) for January – April 2011. Bulgaria's attracted Equity Capital (acquisition/disposal of shares and equities in cash and contributions in kind by non-residents in/from the capital and reserves of Bulgarian enterprises and receipts/payments from/for real estate deals in the country) for January - April 2012 amounted to EUR 288.1 M, which is an increase by EUR 67.4 M compared to that attracted in the same period of 2011 (EUR 220.6 M). Bulgaria's receipts from real estate investments of non-residents amounted to EUR 67.4 M, compared to EUR 52.6 M attracted in January - April 2011. The other capital, net (the change in the net liabilities of the direct investment enterprise to the direct investor on financial loans, suppliers' credits and debt securities) was positive, amounting to EUR 101.2 M in January - April 2011, compared to a negative other capital, net of EUR -189.6 M in January - April 2011. Based on preliminary data on profit/loss, the reinvested earnings (the share of non-residents in the undistributed earnings/ loss of the enterprise) in January - April 2012 were estimated at EUR 18 M, against EUR 32.1 M in the same period of 2011. By country, the largest direct investments in Bulgaria for the period January - April 2012 were those of the Netherlands (EUR 386.4 M) and Switzerland (EUR 105.6 M). Bulgaria's largest negative flows for the period were towards Germany (EUR -240.8 M), Greece (EUR -69.4 M) and UK (EUR -61.1 M) mainly due to net payments on intercompany credits in accordance with the loan repayment schedules of enterprises. According to preliminary data in January - April 2012, Bulgaria's direct investment abroad increased by EUR 39.1 M, compared to an increase of EUR 48.8 M in January - April 2011.

 

Chinese Business Threatens to Quit Bulgaria's Renewable Energy Sector

Chinese business might quit investing in renewable energy in Bulgaria because of the Bulgarian government's abrupt policy change on green energy, the Bulgarian-Chinese Chamber of Commerce and Industry declared in an open letter. At present the planned Chinese investments in renewable energy projects in Bulgaria are estimated at roughly BGN 220 M. Since 2012 Chinese company "Wiscom" has perfect a solar park near the Western Bulgarian town of Ihtiman. Another Chinese company - "Astroenergy" - has announced plans to invest over BGN 100 M in in Bulgarian green energy projects, reported Mediapool. Last week Bulgaria's State Commission for Energy and Water Regulation (DKEVR) made a controversial decision to reduce the purchasing rates for electricity produced from renewable energy sources (RES). The planned reduction is between 20 to 30% for wind power plants, and over 50% – for solar stations, the Commission's report stated. The new purchase rates are to come into force from the 1st of July. "DKEVR's report and the announced new preferential prices for electricity produced from renewable energy sources – wind and photovoltaic plants - provokes strong unrest and leads to definite economic unpredictability for investors from China, who have for years tried to adapt to our country", stated Viktor Azmanov, the head of the Bulgarian-Chinese Chamber of Commerce and Industry in the open letter sent Tuesday, and made available to the public on Wednesday. Azmanov also voiced his concerns that this abrupt change of conditions for doing business in Bulgaria comes in a moment when considerable resources have already been invested. "We are forced to voice our disappointment with the Bulgarian government's stance and the DKEVR's policy as the regulator and moderator of the government's economic will, which create an atmosphere of economic intolerance and investment unpredictability for companies from China, willing to do business in Bulgaria", the letter also stated. In the present situation, the affected Chinese companies will be forced to cease operations and hold the Bulgarian authorities responsible for the sustained damages, Azmanov threatened. The Bulgarian-Chinese Chamber of Commerce and Industry calls for theDKEVR report on the RES-energy purchasing prices for July 2012 – July 2013 to be amended according to the actual economic indicators and investment expenses ongreen energy development. The Bulgarian-Chinese Chamber of Commerce and Industry is a public platform, created in 2010, for developing active commercial and investing activity in Republic of Bulgaria and People's Republic of China. It currently has offices in Sofia and Shanghai and its members are companies from all economic sectors as well as public organisations in both Bulgaria and China. The Chamber also acts as an information system for the companies that wish to develop a business in both countries.

 

 

COMPANIES AND INDUSTRIES:

 

New passenger car registrations in Bulgaria up 4% y/y in Jan-May

New passenger car registrations in Bulgaria increased by 4% y/y to 7,635 units in Jan-May, the European Automobile Manufacturers’ Association said. At the same time, the number of the newly registered vehicles in all the EU 27 countries declined by 7.7% y/y to 5,442,326 units. In May alone, new passenger car registrations in Bulgaria surged 50.5% y/y to 2,398, compared to 8.7% annual decrease in EU-27. The market fell by 22.3% to 19,136 sold vehicles in 2011. 

 

Bulgarian Solar-Panel Maker to Halt Production

Silistra-based producer of solar panels Solarpro, the biggest solar panels manufacturer on the Balkans, has announced mass layoffs and a forthcoming halt in operations. A total of 156 people will lose their jobs and some 30 newly dismissed employees of the company have already registered with the local Labor Office, according to reports of TV channel Bulgaria on Air. The company explained the production halt with the need to restructure its operations. According to Solarpro, a key factor for the decision was the low purchase price of solar generated electricity set by Bulgaria's State Commission for Energy and Water Regulation (DKEVR). The company listed the shrinking market for photovoltaics as another major reason for the forthcoming production halt. In early-June, Bulgaria's energy watchdog announced that the new power tariffs entering into force in July would bring a reduction of 45-51% in prices of solar generated electricity, depending on the installed capacity. The Solarpro plant in the northeastern town of Silistra was launched in 2009 as the biggest solar panels manufacturing capacity in the Balkans. Investments in Solarpro have amounted to tens of millions of leva. Meanwhile, another company in the sphere, Varna-based Intersolar, became the first solar park operator to be listed on the Bulgarian Stock Exchange (BSE). The issue approved for listing in mid-May comprises 26 073 000 shares with a par value of BGN 1.

 

Molson Coors Buys Bulgaria's Kamenitza, StarBev Breweries

Denver-based Molson Coors said it has purchased StarBev and its nine breweries in central and eastern Europe, including Bulgaria, as it expands its operations further. The price of the deal is EUR 2.65 B (USD 3.54 B). Molson Coors, whose products include Coors Light and Molson Canadian, said Monday that the company will become one of its divisions and be renamed Molson Coors Central Europe. Mark Hunter, CEO of Molson Coors U.K. and Ireland, will serve as CEO of the new unit, whose flagship brand is Staropramen. The company previously announced thatStarBev's CEO, Alain Beyens, would leave the company once the deal was complete. The deal comes less than three years after Anheuser-Busch InBev, later renamedStarBev, completed the sale of its operations in Central Europe and the Balkans to private-equity firm CVC Capital Partners. The deal was valued at USD 2.23 B in cash, bonds and minority shares. StarBev had sales of about billion last year, brewing more than 11 million barrels of beer. The deal would help Molson Coors put its brands, such as Carling, into the hands of beer drinkers in central and Eastern Europe. Bulgaria is one of nine breweries in Central and Eastern Europe, where StarBev is divesting its operations. StarBev has 4,100 workers and brewing operations in the Czech Republic, Serbia, Croatia, Romania, Bulgaria, Hungary and Montenegro. StarBev, is also a distributor of brands such as Stella Artois, Beck's, Hoegaarden, Lowenbrau and Leffe, and sells in Slovakia and Bosnia-Herzegovina as well. Kamenitza AD, which was first privatized in 1995 by Belgium's Interbrew, later renamed to InBev after the merger of Interbrew and AmBev and then toStarBev, is the second biggest brewery in Bulgaria. Its diverse brand portfolio includes international Stella Artois, Staropramen and Becks and local Kamenitza, Astika, Burgasko, Pleven, Slavena.

 

Organic Farming in Bulgaria Increased by 30% in 2011

The total number of organic farmers registered with the Ministry of Agriculture and Food in 2011 stands at 1054, which is some 30 per cent more than in 2010, the Ministry's press service said Tuesday. After more than a two-fold increase in 2010, the organic farm areas under the system for control of organic farming, continue to grow, having reached 26,622 ha in 2011. Most of the produce is exported, since Bulgarian organic products are well received on the European and world market. An increase was registered in organic grain crops, industrial crops and perennial crops. The total area under these crops increased in 2011 compared to 2010, with a total area of 6,521 ha. Particularly large interest was observed in wallnut, hazelnut, almond and chestnut trees. An increase is seen in the areas planted with apple, plum and apricot trees in 2011, while a decrease was observed in areas under cherry trees. Areas planted with organic vegetables are 670 ha in 2011, which is around 240 ha more than in 2010. The increase is due to the fact that for the first time about 292 ha of artichokes were included in the system for control. The areas with cucumbers and tomatoes remain the same, while those with melons and water melons decreased in 2011. For the first time olive trees were included in the system for control in 2011. The certified ecologically clean areas from which wild fruits, herbs and mushrooms are gathered, total over 540 thousand ha in the past two years. A positive trend has been observed in organic livestock raising. The number of cattle raised organically in 2011 has grown by some two and a half times year-on-year, having reached 976. An organic farm with 200 bison was registered for the first time. The number of bee colonies has increased from some 46,000 in 2010 to almost 59,000 in 2011, or by 27 per cent. This is due to the demand for organic honey on the European market.

 

Lidl Bulgaria Opens New Store in Capital City

Discount retailer Lidl Bulgaria said on Thursday it added another supermarket to its network. The new store, that opened its doors today, is the companys 10th unit in Sofia, Lidl Bulgaria, part of German group Lidl, said in a statement. Lidl Bulgaria (www.lidl.bg), which began operations in November 2010, is present in 36 towns across the country of 7.3 million people.

 

Bulgaria Expects 10% Growth of Foreign Tourists Summer 2012

Bulgaria will see a 10% growth in the number of tourists visiting it this summer, according to Delyan Dobrev, Minister of Economy, Energy and Tourism. Dobrev is convinced that the growth will exceed the 5-7% initially expected. Commenting on the amendments to the Bulgarian tourism legislation that would affect the classification system for hotels and restaurants, the Minister told bTV that hotel and restaurant owners can now apply online for changing their star ratings. It was recently announced that Bulgaria is about to make changes to its hotel and restaurant classification system, limiting the validity of hotel and restaurant star rating to five years. Dobrev further stated that the much debated Forestry Act and the ban imposed on the use of hydraulic fracturing have to be scrutinized to make sure that environmental safety is guaranteed.

 

 

 

 

 

 

 

 

 

 

Reported by:

Georgi Iliev

KOTRA Sofia

Korea Trade-Investment Promotion Agency

Commercial Section of the Embassy of the Republic of Korea