불가리아 주요 경제뉴스 (22 – 28 June 2012)

BULGARIAN ECONOMIC TOP NEWS DIGEST

WEEKLY REPORT (22 – 28 June 2012)

 

Sections/headline briefs:

 

MACROECONOMY:

       Bulgaria's 2011 price levels lowest in EU

       Bad Credits in Bulgaria Reach 23,6%

       Bulgaria Needs 5 Years to Overcome Crisis

       Bulgaria’s economy to post modest growth of 0.6% in 2012 - World Bank

 

INVESTMENTS:

       Bulgaria expects EUR 0.51bn investment inflow from concession contracts

       Five Big Investors Expected to Set Foot in Bulgaria

       World Industrial Producers Move Operations to Bulgaria

 

 

COMPANIES AND INDUSTRIES:

       Greek OTE mulls selling Bulgarian units to fund debt – report

       Bulgarian IT Industry's Revenues Down, Jobs Up in 2011

       Bulgarian Farmers Frowning at EUR 777 M for Organic Agriculture

       Bulgaria, Qatar, Turkey to form joint company for motorway construction in Oct

       Russian Railways reportedly interested in cargo unit of Bulgaria's BDZ

       Yazaki Starts Business in Yambol and Sliven

       Bulgaria's Organic Honey Ouput Reaches 1 200 t/y

 

 

 

 

 

Articles:

 

MACROECONOMY

Bulgaria's 2011 price levels lowest in EU

In 2011, Bulgaria had the lowest price levels in the EU, Eurostat data showed. Prices for consumer goods and services in the country were at 51% of the EU average. The largest discount can be found in prices of restaurants and hotels that were at 45% of the average for EU27. Consumer electronics and personal transport equipment prices were closest to the EU average levels. Price levels in Bulgaria were 9 points below those in Romania (60% of the EU average). When compared to the rest of its neighbours, consumer goods and services found in Bulgaria are only cheaper in Macedonia. 

 

Bad Credits in Bulgaria Reach 23,6%

The share of bad and restructured credits in Bulgaria reached 23,6% from the general credit portfolio of the banks in Bulgaria end-May, shows the data of the Bulgarian National Bank (BNB). End-March, the share of the delayed by 90 days credit payments reached 16,2% or 9 billion levs with an own capital of the banking system in Bulgaria 10,5 billion levs and assets worth 78 billion levs at the end of first trimester of 2012. The size of bad and restructured credits in May increased by 161 million levs and by 1,990 billion levs on an annual basis. 

 

Bulgaria Needs 5 Years to Overcome Crisis

The Bulgarian economy will need another 4-5 years to catch up with the level it measured in 2008 before the onset of the crisis, said Prof. Stati Statev, member of the managing board of the Bulgarian National Bank and Rector of the University for World and National Economy at a conference themed “Prerequisites and Prospects for Sustainable Development in Bulgaria and Europe.” According to him, the Bulgarians’ impoverishment in the period after 1989 has been checked by 2005 but the financial stagnation that hit Europe has again sent the economy to the bottom. It will take Bulgaria even longer to restore the foreign investments rates to the level of 2008. In the opinion of Statev this may happen not earlier than in 2020. President Rossen Plevneliev was a special guest at the conference. In his opening speech he said that “it is good to be financially stable but it is not sufficient,” adding that economic growth may be achieved through stimulation of small and medium-size business oriented towards innovative technology and competitive produce. “It is an illusion that rich people create many jobs, in Bulgaria 99 percent of small and medium-sized companies provide two-thirds of the jobs,” the President said.

 

Bulgaria’s economy to post modest growth of 0.6% in 2012 - World Bank

Bulgaria’s GDP will expand by 0.6% this year after growing by 1.7% in 2011, the World Bank said in the latest issue of its EU11 Regular Economic Report published on June 27, 2012. In 2013, economic growth is expected to accelerate to 2.5%. Besides Bulgaria, the EU11 countries are the Czech Republic, Croatia, Hungary, Estonia, Latvia, Lithuania, Poland, Romania, Slovenia and Slovakia. The average GDP growth for the EU11 countries this year is forecast at 1.5% with Poland topping the list with a 2.9% expansion. Bulgarian economy will perform under the EU 11 average in 2012, while in 2013, its economic growth will equal the EU 11 average. The World Bank’s forecasts assume that the euro zone avoids a major crisis. 

 

INVESTMENTS:

Bulgaria expects EUR 0.51bn investment inflow from concession contracts

Bulgaria expects investment inflow amounting to BGN 1bn (EUR 0.51bn) from infrastructure project, BTA News Agency reported, citing transport minister Ivaylo Moskovski. Facilities currently under concession include the airports at the seaside towns of Varna and Bourgas. Concession procedures are also under preparation for Sofia Airport, the airports at Plovdiv, Rousse and Gorna Oryahovitsa, several railway stations in the country and the ports of Varna, Bourgas, Vidin, Rousse and Lom. on a separate note, Bulgaria's economy minister Delyan Dorbev, said that investment in the country has doubled on the year in the period from Jan till Apr and the figure is expected to rise further as at least five companies will enter the country as Class A investors. 

 

Five Big Investors Expected to Set Foot in Bulgaria

"At least five or six big companies are expected to set foot on the Bulgarian market by the end of 2012 and will certainly be certified as Class A investors," Economy Minister Delyan Dobrev said. The direct foreign investors to Bulgaria in the period January-April 2012 total 407 million euros, which is almost seven times more than they were a year ago. Plastchim-T AD, the seated in the town of Tervel manufacturer of big plastic packages, received a Class A Investor Certificate from Economy Minister Delyan Dobrev, yesterday, for its investment of 35 million levs, which is expected to create 32 new job positions.

 

World Industrial Producers Move Operations to Bulgaria

World industrial producers have started moving operations to Bulgaria, "Standard News" daily reports in a story published Wednesday on its Website. An increasing number of companies from Japan, Germany and Italy pick Bulgaria for its low taxes and qualified labour. Employees now enjoy Japanese-level wages in the south-central towns of Sliven and Yambol where over 4,000 local people work at an Yazaki plant making wiring systems for some of the world's best knowns car makes. After it has opened the factory in Yambol, Yazaki plans to have a second one in Sliven. 2,000 are employed at the Yambol factory but the number goes over 2,500 in peak periods. Sliven Mayor Kolyo Milev told "Standard News" that the production hall is ready and engineers are now preparing the individual work stations. Earlier this year the Mayor said that the future Yazaki factory will open 500 jobs. Between the meetings with the Yazaki people, the Sliven Mayor has a meeting with representatives of a US company planning an investment in an airbag factory. The company has a factory in Italy. In Kurdjali, Southern Bulgaria, thousands found a job in a factory of the Turkish concern Teklas makes rubber fittings for the cooling and heating systems of Volkwagen, BMW, Volvo and Fiat, among other makes. Plant CEO Metin Deniz says that they have a promising business in Bulgaria and that the annual turnover reaches 35-40 million euro. The Kurdjali factory makes 15 products. Workers there boast excellent working conditions and perks ranging from a free canteen, a gym, a stadium and various incentives under the Employee of the Month programme. 350 are employees at the Teklas factory and their number is expected to double by the end of 2012. In another part of this country, Plovdiv, 400 people will be employed by Behr-Hella Thermocontrol GmbH (BHTC) which is seeking a location to build a factory for air conditioners for the automotive industry. Bulgarian Economy Minister Delyan Dobrev personally recommended Plovdiv and they are now considering several locations in what used to be an industrial zone in the southeastern part of the city. The future factory will make air conditioning systems for Bentley and Lamborghini. A final decision is expected within the next couple of weeks. In Maritsa Municipality in the outskirts of Plovdiv, German white electronics producer Liebherr has a fridge plant. The company has invested 50 million euro in this project. Nearby, Shell and Ferrero have factories, too. Maritsa Municipality has emerged as this country's champion with the foreign investments it has attracted over the years: it has factories of more companies from Italy, the Netherlands, Greece and the US. In the territory of the village of Radinovo, Soccotab of the US has its biggest production facility outside the US. The project was worth 30 million euro. The Ferrero chocolatier has a factory there,too. Textile producer Bulsafil has an administrative centre in Plovdiv and a factory in Maritsa Municipality. Recently, the ribbon was cut for a new factory manufacturing leather car seats in the nearby village of Mousachevo. The owner, Automitive Leather Company of South Africa is a contractor of BMW and also has a facility in Germany. The Mousachevo factory has 500 staff and the number is likely to double of the investor introduces a new operation at the factory as planned. 

 

 

COMPANIES AND INDUSTRIES:

 

Greek OTE mulls selling Bulgarian units to fund debt - report

Greek telecom group OTE (Hellenic Telecommunications Organization) may sell its units in Bulgaria to refinance EUR 3.4bn debt, maturing in next two years, Capital daily reported, citing a statement by OTE's press office. Turkey's cell-phone operator Turkcell may be interested in buying OTE's assets in the country, according to the daily. Turkcell has been eyeing the local telecom market for some time now and in March 2012, it filed a bid to purchase the 94% stake in Bulgaria's telecom operator BTC, which has been on the market for sale since 2011. Other potential buyers of OTE's assets in the country are British Vodafone and France's Orange, according to the report. In Bulgaria, OTE holds the full stake in the country's second-largest wireless telecom operator GloBul through its cell-phone arm Cosmote. 

 

Bulgarian IT Industry's Revenues Down, Jobs Up in 2011

Bulgaria's IT industry declined for a third consecutive year in 2011, according to preliminary data from a report of Bulgarian consultancy CBN - Pannoff, Stoytcheff & Co. Thus, according to the preliminary data from the Bulgaria IT Survey 2011 Report, which is based on the balance sheets of 150 Bulgarian IT companies making up over 60% of the industry, the total revenues of the Bulgarian IT industry declined by 7% in 2011 year-on-year. The report examines the Bulgarian IT industry as consisting of 10 sectors, 2 of which are export-oriented, while the others target Bulgaria's domestic market. CBN notes that the situation with the profits of the Bulgarian IT industry is even worse than the decline of the revenues, with 2011 expected to register the greatest decline in revenues in the past 12 years. At the same time, however, the consultancy stresses that the good news from the Bulgarian IT companies are in the employment field. Thus, in 2011, Bulgaria's IT industry added 15% more jobs year-on-year, an "incredible rate", in the wording of the report "which makes the technology sector one of the few industries in Bulgaria boosting the labor market." The consultancy says the data from its report is part of its CBN Top-100 Bulgaria 2012 project which was started in April 2012 and is to be completed in October 2012.

Bulgarian Farmers Frowning at EUR 777 M for Organic Agriculture

The farmers in Bulgaria are eligible to apply for a total of 777 million euros in EU subsidies for the development of organic agriculture under the so-called Axis 2 of the Rural Areas Development Program. The financing is to be negotiated by the end of 2013. Of the abovementioned subsidies, 435 million euros is meant for funding organic farmers and the rest is for supporting farmers in barren regions, where the crop is generally poor. According to the State Fund for Agriculture, however, only fifty million euros has been absorbed so far. It is expected that the funds absorbed by the end of the program period will not exceed 100 million euros. So, Bulgaria must find a way to redirect and absorb a remainder of some 300 million euros. Farmers maintain that there’s only one way to do it – to mainstream the application procedures for eco-projects under the Rural Areas Development program. However, Brussels has to give a blessing for it. This is a time-consuming process and we are pressed for time as the program period is expiring. That is why currently farming experts and the Payments Agency are working out a plan that will help save these funds for Bulgaria, sources of both institutions told The Standart. The stumbling block is the fact that there are too few organic farms in Bulgaria – instead of 40,000 (funds are allocated for this number of farms) the country has only 2,500. To put it in a nutshell, there is money but the problem is that there are not enough farmers to absorb it and, of course, Brussels will be only happy to take it back.

Bulgaria, Qatar, Turkey to form joint company for motorway construction in Oct

Bulgaria will set up a joint project company with Qatar and Turkey, which will be in charge of the construction of the motorway between the northern town of Ruse and the southern town of Svilengrad, Bulgarian regional development minister Lilyana Pavlova said. The entity is expected to be established in October. It will commission the feasibility study for construction of the road and also define the motorway route. The motorway with expected length of 300 kilometres will link Turkey with Romania and will be built under public-private partnership. 

 

Russian Railways reportedly interested in cargo unit of Bulgaria's BDZ

Bulgaria's privatisation agency confirmed for investor.bg that the sale of 100% of the cargo unit of state-owned railway operator BDZ has attracted investor interest thus refuting earlier released information about lack of interest to buy the unit. The deadline to participate in the tender is July 5 and so far one of the companies that is said to have bought the tender documents is the Russian Railways. Transport minister Ivailo Moskovski added that Turkish and Chinese investors are also expected to participate. Bulgaria's privatisation agency launched a tender to sell the cargo unit of BDZ in the beginning of June. Strategic investors are required to have been operating in the rail freight sector in the last 10 years and had an annual turnover of at least EUR 400mn in each of the last three years. Financial investors are required to have had an equity capital of at least EUR 20mn and manage assets or have had equity holdings of EUR 1bn in each of the last three years. 

 

Yazaki Starts Business in Yambol and Sliven

World industrial giants have started to move some of their production lines to Bulgaria motivated by low taxes and low-cost workforce. An increasing number of companies from Japan, Germany and Italy set foot in Bulgaria. Newly hired workers in Sliven and Yambol are happy with their Japanese-standard wages. Over 4000 workers from the region will manufacture wiring for world’s most popular cars. Japanese Yazaki, which has recently opened a factory in Yambol, is now preparing to cut the ribbon of a new plant in Sliven. Mayor of the town informed that the new industrial ventures will create jobs for at least 500 workers. The factory of Yazaki in Yambol provided jobs for 2000. Meanwhile it transpired that the local municipality is in negotiations with an US company that is also planning to invest in the region and open a factory for airbags. 

Bulgaria's Organic Honey Ouput Reaches 1 200 t/y

Bulgaria makes over 1200 tons of organic honey per year but the largest share of it is exported, according to Plamen Ivanov, Chair of the National Beekeepers' Union. In a Wednesday statement cited by Darik Radio, he explained that the organichoney volumes that remained in Bulgaria were sold at double the price of conventionally produced honey. Ivanov announced that a kilogram of organic honey had a price tag of BGN 25-26 on average on the Bulgarian market. He noted that the main problem of beekeepers in Bulgaria was the high bee mortality rate over the past three years. Ivanov highlighted that Bulgaria's main export destination for organic honey was Germany, while smaller quantities were also exported to Austria, Italy and the Scandinavian countries. "There has been a growing interest in organic bee products due to the better realization and the better revenues beekeepers get," the Chair of the National Beekeepers' Union explained. He said that the major obstacle producers faced was the lack of state assistance. He explained that the sector needed assistance badly because of the climate in Bulgaria in the past few years and the fact that thousands of bee families had died from diseases, poisoning and agricultural spraying.

 

 

 

 

 

 

 

 

Reported by:

Georgi Iliev

KOTRA Sofia

Korea Trade-Investment Promotion Agency

Commercial Section of the Embassy of the Republic of Korea