불가리아 주요 경제뉴스 (24 - 31 August 2012)

BULGARIAN ECONOMIC TOP NEWS DIGEST WEEKLY REPORT(24 - 31 August 2012)

 

Sections/headline briefs:

 

MACROECONOMY:

Ø  Bulgaria’s export to China on the rise in last 2 years

Ø  Bulgaria Sees 5% Increase in Foreign Tourists July 2012 Y/Y

Ø  Bulgaria's Business Climate Down 3.3% Aug 2012 M/M

Ø  Greek Crisis Brings Down Bulgaria's Electricity Exports

Ø  Bulgaria Registers Economic Slowdown in August

Ø  Bulgaria's 2012 concession revenues exceed initial estimates

 

INVESTMENTS:

Ø  3 Major Car Companies Ready to Invest in Bulgaria – EconMin

Ø  Bulgarian economy minister reveals eight new foreign investments

Ø  FDI in Bulgaria down 2.2% y/y in 2011 - statistics office

 

COMPANIES AND INDUSTRIES:

Ø  Four investors show interest in full stake of Sopot military plant

Ø  Bulgarian govt to sign natural gas exploration contract with Total

Ø  Sofia New Metro to Ease Traffic Jams by 20%

Ø  China Plans to Sell Electric Buses to Bulgaria

Ø  Energy companies are looking for loans

Ø  Bulgarian energy regulator prepares further cut in green energy purchase price

Ø  Bulgaria to Grant Port Lom, Port Nessebar on Concessions

Ø  Bulgaria’s tobacco company reports more than BGN 27mln profit

Ø  EVN launches eight wind turbines of Kavarna wind park in Bulgaria

 

 

 

 

 

 

Articles:

 

MACROECONOMY

Bulgaria’s export to China on the rise in last 2 years

Bulgaria considers development of relations with China a priority, deputy minister of economy, energy and tourism Ivo Marinov. "The data shows that Bulgaria’s export to China has increased over the last couple of years. The bilateral merchandise exchange has reached a record level of USD 1.346 billion, as the Bulgarian export to China is estimated at USD 403 million. I am glad to report that Bulgaria’s export to China has increased by 61% compared with 2010," Bulgarian deputy minister of economy, energy and tourism Ivo Marinov said at the signing of a memorandum of understanding on economic cooperation between Bulgaria’s Ministry of economy, energy and tourism (MEET) and the Department of foreign trade and economic cooperation of Guangdong Province (GDDOFTEC), press office of MEET informs, quoted by FOCUS News Agency. "In times of economic crisis Bulgaria preserved its economic stability, we have very good macro-economic indices," the minister said further. Liang Guixuan, Counsellor with GDDOFTEC, on the other hand, said the following: "The political and investment climate is improving. In 2010 the two countries reached full agreement on stimulating even further the development of the foreign relations. The Guangdong Province has a huge industrial potential. In the process of overcoming the international financial crisis the province is turning more and more to the international market, including Bulgaria. Guangdong takes part, as executor, in projects worth USD 13.79 million. There is a great potential for cooperation. The signing of the memorandum gives a good platform for trade and economic cooperation. We encourage the Chinese businessmen to invest in Bulgarian industrial zones." "By traditions the relations between Bulgaria and China are brotherly and Bulgaria appreciates highly these relations. Bulgaria considers a priority the development of the ties with China, which is a country with great economic potential and our traditional partner in Asia," minister Ivo Marinov said. "With regard to the huge potential of the Chinese economy and the opportunity for cooperation our efforts are focused on the development of partnership not only on central level but also with the different Chinese provinces. We expect the Memorandum to contribute to the improvement of the cooperation and the realisation of concrete projects," Marinov remarked. In Marinov’s words, China is Bulgaria’s biggest trade partner in Asia.

 

Bulgaria Sees 5% Increase in Foreign Tourists July 2012 Y/Y

Bulgaria registered a 5.0% year on year increase in its number of tourist visitors from abroad in July 2012, according to Bulgaria's National Statistical Institute. As Economy Minister Delyan Dobrev declared on Friday, the country is confident that it would see an increase in its inflow of foreign tourists in 2012. In July, the total number of arrivals of visitors from abroad to Bulgaria increased by 4.5% year on year, the statistics also shows. The visits of EU citizens composed the greatest relative share of the total number of foreigners visited Bulgaria in July - 64.1%, followed by these from the other European countries - 28.3%. In comparison with the same month of the previous year, the arrivals of visitorsfrom EU member states increased by 0.2%. A significant increase was observed in the visits of the citizens from Greece - by 10.5%, Italy - by 6.8% and France - by 5.2%. However a drop in the visits from Denmark - by 7.9%, Slovakia - by 4.7% and United Kingdom - by 4.5% was registered.

 

Bulgaria's Business Climate Down 3.3% Aug 2012 M/M

In August 2012 the total business climate indicator in Bulgaria decreases by 3.3 percentage points, compared to its July level. The data was released Tuesday by the country's National Statistical Institute, NSI. The decline is attributed to the more unfavorable business climate in all of the observed sectors - industry, construction, retail trade and service sector. The composite indicator "business climate in industry" decreases by 2.8 percentage points in comparison with the previous month, which is due to the worsening managers' assessments about the present business situation of the enterprises. The inquiry also registers a decrease of production assurance about orders from abroad which is associated with reduced expectations about the activity of the enterprises over the next 3 months. The uncertain economic environment and insufficient domestic demand continue to be the main factors outlined by the industrial entrepreneurs as an obstacle for the development of their business. Regarding selling prices, the expectations are that they will preserve their level over the next 3 months. In comparison with July, the composite indicator "business climate inconstruction" drops by 6.9 percentage points, mainly due to the increased pessimism in the construction entrepreneurs' expectations about the business situation of the enterprises over the next 6 months, along with more unfavorable expectations about construction activity over the next 3 months. Regarding employment in the branch, the forecasts are also in the direction of decrease. The uncertain economic environment and financial problems remain the main factors limiting the activity of the enterprises in the branch, as in August the negative influence of the factor "insufficient demand" strengthens. Regarding selling prices in the branch, the prevailing managers' expectations are for preservation of their levels over the next 3 months. The composite indicator "business climate in retail trade" decreases by 1.7 percentage points in comparison with the previous month, which is due to the more moderate retailers' assessments about the business situation of the enterprise. However, their expectations for the next 6 months are more favorable. A slight optimism is noticed in the forecast about orders placed with suppliers and the volume of sales. The factors limiting with the most extent the activity of the enterprises continue to be the uncertain economic environment, the insufficient demand and the competition in the branch. Regarding selling prices, the managers do not expect an increase over the next 3 months. In August, the composite indicator "business climate in service sector" decreases by 2.0 percentage points in comparison with July, due to shifting of the managers' expectations about the business situation of the enterprises over next 6 months from "better" towards preserving "the same." However, their expectations regarding demand for services over the next 3 months are more favorable, but without additional hiring of personnel. The uncertain economic environment and competition in the branch remain the main factors limiting the development of business in the branch. Regarding selling prices in the service sector, the inquiry does not register expectations for an increase over the next 3 months.

 

Greek Crisis Brings Down Bulgaria's Electricity Exports

Bulgaria has registered a 21.8% drop in its electricity exports since the beginning of 2012, according to Ivan Yotov, CEO of Bulgaria's Electricity System Operator. Between January 1 and August 20, the Balkan country exported 1500 GWh less than it did in the same period of 2011. The considerable decrease is mainly due to the deepening financial crisis and the situation in Greece in particular, Yotov has explained in an interview for Capital Daily. He revealed that Bulgaria's s electricity transmission system has experienced some problems recently due to the incorporation of numerous small renewable energyplants (mostly photovoltaic.) Bulgaria is currently developing a 10-year plan to enhance electricity transmission system by 2022, Yotov also said.

 

Bulgaria Registers Economic Slowdown in August

Bulgaria's economy has registered a drop in August, shows the data of the National Statistical Institute (NSI). The total business climate index in Bulgaria in August has decreased by 3.3 points compared to July 2012. Despite that it remains at a better level compared to the beginning of 2012. The construction sector registers the biggest slump in August - 6.9% and the prospect is not optimistic. Industry also registers a drop by 2.8%. In both sectors managers expect difficulties in the 3rd trimester of 2012 due to the low demand, unstable economic environment and financial instability in Europe. The business climate index in the sphere of services is also slightly down. The situation in trade also slightly declines - down by 1.7%, but the prospects are for an improvement.

 

Bulgaria's 2012 concession revenues exceed initial estimates

Bulgarian economy ministry will post three times higher concession revenue inflows than planned by the end of the year, economy minister Delyan Dobrev said, as quoted by BTA. Total inflow is estimated to reach BGN 180mn by year-end, up from BGN 63mn initially projected. A large part of the revenue will come from the concession contract for oil and gas exploration in Bulgarian offshore territories with Total, OMV and Repsol that was signed yesterday, Aug 29. Total won the exploration contract concerning the offshore Khan Asparuh license and paid a one-off EUR 40mn bonus to the state budget that will not be deducted from further revenue associated with the block. 

 

INVESTMENTS:

 

3 Major Car Companies Ready to Invest in Bulgaria - EconMin

Three major car manufacturers are ready to invest in Bulgaria by the end of 2012, according to the country's Economy Minister, Delyan Dobrev. The companies are to produce high-tech vehicle equipment in the Balkan country, including airbags and air-conditioners, the Minister clarified in an interview for the Bulgarian National Television. Dobrev pointed out that the new amendments to the Bulgarian Investment Promotion Act that are to be voted by the Council of Ministers on Wednesday would help the country attract a considerably larger deal of foreign investments. Five key investment projects have been already prepared since the beginning of 2012, as compared with only four in 2011, he added. Dobrev revealed that two platforms have been constructed to host the new investments – one in the Southern city of Plovdiv and one in the Northern city of Pleven.

 

Bulgarian economy minister reveals eight new foreign investments

Economy minister Delyan Dobrev announced that eight first class investment projects in the country are expected to start by the end of 2012, while introducing the changes to the law on investments in an interview with national TV BNT. Three of the projects are related to the automotive industry and should have higher value added than existing projects, minister Dobrev added giving air conditioning and airbags as two examples. The changes to the law on stimulating investments envision benefits to large companies with investment projects over EUR 10mn. Such employers will be exempt from paying social security contributions on newly created jobs if they can guarantee long term employment of at least 5 years. According to the ministry’s calculations this measure will both attract investments and have a net positive effect on the budget. FDI flows in Bulgaria marked a significant improvement, rising to EUR 221.4mn in H1, up from EUR 63.2mn a year earlier, on the back of strong increase in equity capital flows (29% of which are invested in real estate properties. 

 

FDI in Bulgaria down 2.2% y/y in 2011 - statistics office

FDI in Bulgaria's non-financial sector fell by 2.2% y/y to EUR 21.6bn in 2011, according to preliminary data of the statistics office. The largest part of the inflow (some 60%) was invested in the country's industrial sector and services sectors (including retail, wholesale and vehicles repair) - EUR 8.7bn and EUR 4.1bn, respectively. The construction sector, however saw a 40% drop in investments compared to 2010 (to EUR 775mn). Figures on investments in tangible fixed assets point to intensified capital investment in 2011 - totally EUR 17.4bn was the volume of investment in tangible fixed assets (up by 9.5%) and again most of it was allocated to the industry sector. Although investment in buildings and construction equipment continued to constitute the largest share (45.4%), they dropped by 2.1pps compared to 2010, while investment in land rose by 1.8pps to 8.5% of total investment. We note that there is difference in data on FDI provided by the central bank and the statistics office due to different methodologies used. According to central bank data, which is also reflected in the balance of payments, FDI stocks in Bulgaria amounted to around EUR 36bn in 2011. 

 

 

COMPANIES AND INDUSTRIES:

Four investors show interest in full stake of Sopot military plant

Three local and one foreign investor have bought documents for participation in the tender for the sale of the full stake in one of the country's largest military plants in Sopot, the privatisation agency informed. The companies that bought tender documents are Bulgarian arms trader Sage Consultance, arms producers EMCO and Dunarit. The foreign investor is yet unknown and participates through a legal representative. The country has been trying to sell the arms producer since 2005. The latest procedure was launched in July 2012. Eligible bidders were strategic investors with licence to export, import and transfer arms and with sales of at least BGN 120mn in the last three years. 

 

Bulgarian govt to sign natural gas exploration contract with Total

The government is expected to sign in a few days the agreement with the consortium comprising French oil company Total, OMV and Repsol, regarding the exploration for natural gas in Bulgarian offshore territories, PM Boyko Borissov said as quoted by investor.bg. In August, Total won the competition for natural gas exploration licences over an area of 14,440 square metres in Bulgarian Black sea, located close to the territory of Romania where sizable natural gas deposits were discovered. Bulgaria hopes to diversify its natural gas resources and thus lower its dependence on Russian gas imports. Drilling is expected to start in late 2013. 

 

Sofia New Metro to Ease Traffic Jams by 20%

The launch of the second metro diameter in the Bulgarian capital Sofia is expected to reduce traffic in the city by 20%. The second line of the subway in Sofia will be officially launched on August 31, in the presence of the President of the European Commission, Jose Manuel Barroso. The largest, private TV channel bTV reports Monday that the last finishing touches are underway, while the test runs of the new subway trains have started several days ago. The second line will have 11 stations and will connect the districts of Obelya and Lozenets. The line has a capacity of 130 000 passengers a day. It will be served by 11 new energy saving metro trains. The CEO of the municipal Metropolitan company, Stoyan Bratoev, says that the new line will save Sofia residents and visitors 65 000 hours of travel time every day. The subway will also reduce air pollution. Several stations will have parking lots with hundreds of parking spaces.

 

China Plans to Sell Electric Buses to Bulgaria

Yongping Chen, the Europe Manager of the Chinese company Build Your Dreams(BYD) has visited Bulgaria on the invitation of the Electric Vehicles Industrial Cluster (IKEM) to discuss potential use of such vehicles in the country. Chen held working meetings on the issue with members of the IKEM Managing Board, IKEM informs. IKEM representatives and the Chinese guest have also visited the municipality ofBozhurishte near Sofia on the invitation of its Mayor, who had outlined plans for the construction of a technology park there. The Mayor also presented achievements in improving local infrastructure and declared readiness for partnership with BYD. There has been a meeting with Slav Monov, CEO of the municipal Capital Auto Transportation company of Sofia. The talks have focused on information about the capacity of the city's public transportation and opportunities to decrease cost by the use of electric buses. The information will become the basis of a business model for a test run of such buses. Preliminary data shows that savings from the use of these buses could pay off one electric bus in 4-5 years. A BYD bus can run for 10 years on the same batteries, meaning it could be used for over 5 years without paying for fuel, in addition to preserving the environment. BYD is based in China and has exclusive rights on the import of Nokia, Motorola, and Samsung, all while it holds half of the global market of cell phone batteries, and manufactures electric vehicles and buses. Mogul Warren Buffet has investments and shares in BYD. Current interests of the company include European markets such as the UK, the Netherlands, Hungary, and Switzerland among others.

 

Energy companies are looking for loans

The Bulgarian Energy Holding is ready to launch bond emission for USD 300 million next year. The Holding manages the large state-run energy companies. Financing will be used to stabilize the subsidiaries of the Holding. NEC is the company with the worst financial problems at the moment. BEH has already extended the company low-interest rate loan. Bulgargaz also needs support. A week ago another company, part of BEH - Maritza Iztok II TPP, announced it was looking for a bank that would grant a loan for BGN 15 million. Private energy companies also need financing. Electricity distribution company in Western Bulgaria - CEZ, is looking for a total of BGN 100 million, according to announcement in the public procurement register. Trud daily informs.

 

Bulgarian energy regulator prepares further cut in green energy purchase price

Bulgarian energy regulator will reduce the purchase price of electricity produced by renewable sources by up 40% as of Sep 1, the head of the regulator said. The cut reflects lower prices of equipment used in generation on the market. The regulator has already lowered the purchase price of green energy once this year in the beginning of July when it was decreased by almost 50%. The new price will result in a drop of profitability for the producers of solar energy to 7% from 20% at present, according to estimates of industry representatives. The move risks to discourage investment in renewable energy sources in the country due to the low yield. Investors also warn that a new decrease will have a detrimental effect on the sector, depriving some 7,000 employees of their jobs. On a related note, Angel Semerdzhiev, head of the state energy commission, said that National Electric Company (NEK) will not connect new renewable energy plants to the power grid as there is no capacity for new photovoltaic parks after the maximum power from such installations was cut from 12,000 to 4000 MW - a quota that has already been reached after the signing of preliminary agreements. 

 

Bulgaria to Grant Port Lom, Port Nessebar on Concessions

Bulgaria's Cabinet has initiated procedures to grant on concessions the DanubePort of Lom, and the port terminal in the Black Sea resort of Nessebar. Both concessions are for a period of 35 years, with the concessionaires said to be picked through open tenders. The concessionaires are expected to offer port services, management, maintenance, and to perfomr some construction. The future concessionaire of the port terminal in the popular Bulgarian Black Searesort of Nessebar will be required to invest at least BGN 680 000 in the first 10 years of the concession period, and at least BGN 2.18 M for the entire concessionperiod. The future concessionaire of the Danube port of Lom, one of the largest Bulgarian river ports, will be expected to invest at least BGN 6.375 M in the first four years of the concession, including in the purchase of new machinery and assets for the Lom Port Complex Jsc. Between the 5th and the 35th year of the concession, the future concessionaireof Port Lom will be expected over BGN 16 M. "The granting of the concessions will create conditions for efficient maintenance, modernization, and development of the transport infrastructure, integration of the Bulgarian transport system in the European one, transparent and harmonized conditions for competition on the transport market, and securing a good business environment as well as employment for the local population," states the grandiloquent decision of the Bulgarian Cabinet to grant the ports in Lom andNessebar on concession.

 

Bulgaria’s tobacco company reports more than BGN 27mln profit

Bulgartabac is leader in cigarette sales at the internal market with a 33.8% share. Bulgaria’s Bulgartabac Holding Group reported more than BGN 27 million net profit for the first half of the year, shows the data of the interim consolidated financial report of the company, the company said, quoted by FOCUS News Agency. The group reports a net profit from activities amounting to BGN 27,186,000, which is BGN 23,971,000 more compared to the same period last year. The consolidated incomes from cigarettes sale for H1 2012 report around 46% growth against 2011, as the share of the export volumes continues to keep high level – 82%. Apart from the good export positions, Bulgartabac is also leader in cigarette sales at the internal market with a 33.8% share.

 

 

EVN launches eight wind turbines of Kavarna wind park in Bulgaria

Austrian electricity company EVN said eight wind turbines of its wind park in Kavarna, in Bulgaria's northeast, came on stream at the end of June. The turbines have a combined capacity of 16 megawatts, EVN said in a statement posted on its website.

 

 

 

Reported by:

GeorgiIliev

KOTRA Sofia

Korea Trade-Investment Promotion Agency

Commercial Section of the Embassy of the Republic of Korea