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Bulgaria – your investment decision “UBCCE Third Business Forum” 12-13 November 2009 Dr. Stoyan Stalev Executive Director InvestBulgaria Agency www.investbg.government.bg Structure of the Presentation Strategic location Why Bulgaria Macroeconomic Indicators FDI Inflow Highly Skilled Labor Force Comparison between Bulgaria and Europe Business Sectors of Highest Potential for Investors Our achievements in figures Investment Promotion Act Investment Incentives in Bulgaria InvestBulgaria Agency Pan-European Transport Corridors 9 4 7 10 8 Market access Why Bulgaria EU membership and NATO membership Currency board EU’s most favourable taxes: • 10% corporate income tax rate • 0% in high-unemployment areas • 10% flat tax rate on personal income Europe’s most competitive operational costs Well-educated and highly-skilled labour force 45,000 Bulgarian students in Europe Government financial support for priority investment projects Linking Europe and Asia Excellent climate, natural scenery, food and hospitality GDP (annual real growth rate,%), 2002-2009 6.6 4.5 6.2 6.3 6.2 5.0 6.0 2009* 2002 2003 2004 2005 2006 2007 2008 * January - June 2009 -4.9 Source: Bulgarian National Bank Inflation, (annual change, %), 2004 - 2009 12.5 6.5 7.8 6.5 4.0 0.2* 2004 2005 2006 2007 2008 2009 * January - September 2009 Source: Bulgarian National Bank Unemployment rate (%), 2003 - 2009 13.5 12.2 10.7 9.1 2003 2004 2005 2006 8.0* 6.9 6.3 2007 2008 2009 * January - September 2009 Source: Bulgarian National Bank Record FDI inflow in 2006 – 2008, EUR m Greenfield+Expansion 8 596 6 549* 6 222 2 736 3 152 1 952** 1 851 866 1 103 903 980 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 * Preliminary Data, ** January – August Source: BNB, IBA Bulgaria leads CEE countries in terms of FDI to GDP indicator FDI to GDP, %, 2007 – 2008 29.7 19.2 6.0 6.8 4.9 3.4 5.8 6.6 6.1 5.8 6.2 5.4 5.4 3.3 3.0 CZECH REP HUNGARY 3.4 2.5 0.8 BULGARIA 4.4 2.5 -0.8 0.7 LATVIA POLAND ROMANIA UKRAINE 2007 SERBIA SLOVAKIA SLOVENIA TURKEY 2008 Source: BNB, Bank Austria Creditanstalt FDI stock by sector, 1998 – 2008, %, EUR m Real estate 7469.9 6477.5 Finance 6274.3 Manufacturing 5509.0 Trade Construction Electricity, gas and water 2247.5 1931.2 Telecom 1766.6 Other 1886.9 22% 19% 19% 16% 7% 6% 5% 6% Quelle: BNB, IBA FDI stock by country,1996 – 2008, %, EUR m Austria the Netherlands Greece Un. Kingdom Germany 16% 12% 9% 8% 7% 5367.7 4145.7 3074.4 2710.0 2229.4 Belgium & Cyprus Luxemburg USA Hungary Italy 5% 5% 4% 3% 3% 1726.2 1612.0 1285.8 1171.3 1105.4 Source: BNB, IBA Greece investments in Bulgaria Treaty for avoidance of double taxation between Bulgaria and Greece Treaty for encouragement and reciprocal protection of investments Greece investments (1996-2008) 3074.4 EUR m The biggest investments are in Finance and Telecom Greece investment stock by years, EUR million, 2004 - 2008 802.3 533.5 395.4 324.2 179.6 2004 2005 2006 2007 2008 Greece investment stock in Bulgaria as of end of 2008 amounts to EURO 3074.4 million, According to the FDI Stock by countries Greece is ranked 3rd Source: BNB Trade between Bulgaria and Greece The trade between Bulgaria and Greece for 2008 amounts EUR 2676 m 1508 1230 1073 891 794 668 2004 1126 1168 967 735 2005 2006 Export to Greece 2007 2008 Import from Greece Source: BNB Language education in upper secondary general schools by city, 2008/2009 132869 English 61262 39594 23764 10307 10124 German French Spanish Italian Russian 8253 4901 4175 12005 528 493 Sofia Plovdiv Varna 2862 262 681 25022 14288 12992 Source: National Statistics Institute Students enrolment in vocational schools & technical universities for 2008/2009 3592 4323 Rousse Varna Sofia Gabrovo 4924 Plovdiv 16995 4132 ~ 39,000 – Total number of students enrolled in IT and Engineering related programs Comparison between Bulgaria and Europe Strong Fiscal Policy and Stable Currency General Government Balance, % 3.5% Hungary Romania Slovakia 3.0% Czech Republic Bulgaria -2.2% -2.2% -2.3% -3.8% -1.6% -2.0% -3.4% *0% Forecast for 2009 -5.7% 2007 2008 E Source: Economist Intelligence Unit, IBA Comparison between Bulgaria and Europe Average monthly wages, Q2 2008, EUR 945 744 790 463 261 Bulgaria Romania Slovakia Hungary Czech Republic Source: Economist Intelligence Unit Comparison between Bulgaria and Europe Corporate income tax rate, 2009 16% 16% Rom ania Hungary 19% 20% 20% Slovakia Czech Republic Turkey 10% Bulgaria * 0% for manufacturing companies in areas with high unemployment Source: IBA Price level indices for all consumer goods and services, 2008, (EU27=100) 100 99 104 105 111 83 69 70 70 72 62 Fr an ce Ita ly ul ga ria R om an ia Po la nd H un ga ry Sl ov C ze ak ch ia R ep ub lic Sl ov U ni en te ia d K in gd om G er m an y B EU 27 51 Source: EUROSTAT Manufacturing Attractive sectors Electrical engineering Mechanical engineering Electronics Automotive parts manufacturing Chemical Industry Competitive advantages Export oriented sectors The lowest operational cost in EU Highly skilled labour force • 7% with engineering degree • EUR 280 total average monthly compensation (Q4 2008) Major investors supported by InvestBulgaria Agency Solvay (Belgium) Aurubis (Germany) Liebherr (Germany) Lufthansa Technik (Germany) Montupet (France) Italcementi (Italy) Sise Cam (Turkey) Stomana Industry (Greece) Miroglio (Italy) Knauf (Austria) Ixetic (Germany) Schneider Electric (France) Energy Sector Opportunities Wind parks Solar plants New nuclear PP Modernization and construction of new TPPs Biomass Biofuel Major projects supported by InvestBulgaria Agency 7 wind park projects 3 projects for modernization and construction of new TPPs 2 Biomass projects 3 Biofuel projects Competitive advantages Skilled labour force Availability of natural resources Favorable climate conditions Harmonized legislation with the EU’s RES electricity production to double (from 6% to 12%) by 2010 Administrative and economic incentives for RES energy production IT & BPO Opportunities Software development IT support centers F/A shared service centers Contact centers Competitive advantages Skills availability Strong traditions in IT development Reliable telecom infrastructure Europe's most competitive wages Reasonable office prices 9.71% share of the GDP for 2008 (second fastest growing sector in the country) Main Players in Bulgaria IT • Software AG (Germany) • Microsoft (USA) • Hewlett Packard (USA) • IBM (USA) • Nemetschek (Germany) • Johnson Controls (USA) • SAP Labs Bulgaria (Germany) • CISCO (USA) BPO • 60K (UK) • Sutherland (USA) • IBM (USA) • OPI Global (USA) • Hewlett Packard (USA) • C3i (USA) Real estate & Tourism Opportunities Development of • trade centers • business parks • residential parks • convention centers • winter resorts • balneology and SPA tourism • rural and alternative tourism Golf tourism Construction of luxury hotels Major projects supported by InvestBulgaria Agency 23 trade centers projects 6 business park projects 9 golf projects 5 winter resort projects 5 balneology and SPA tourism Competitive advantages Real Estate is the fastest growing sector in the country FDI inflow in Real Estate amounts to EUR 1900 mln. in 2008 (EUR 7409 mln. (22%) for the period 1998 – 2008) Our achievements in figures August 2004 – September 2009 We are assisting 121 certified investment projects EURO 9.8 bln planned investments 53 800 new jobs will be created Source: IBA Investment Promotion Act Promotion for initial investment in the following sectors Manufacturing industry Production of electricity from renewable sources Computer technologies Research and development Education Human health care Investment classifications under the investment promotion act, (€ Million) Investment classes A and B depending on the value, region and sector allocation of the investment Region or Sector Class B Class A 8 - 16 >16 In municipalities with unemployment rate equal or more than the country average 4-8 >8 In high-tech activities in the manufacturing industry for the whole country 4-8 >8 2.8 – 5.6 >5.6 General In high-tech activities in the services, computer technologies and R&D sectors for the whole country Incentives under the Investment Promotion Act All classes (A&B) Information services and shortened administrative services Preferential treatment upon acquisition of a right of ownership and limited real rights over real estate – private state or private municipal property Financial support for vocational training of employees for the needs of the investment project A class Individual administrative services Infrastructure support to the borders of the investment project site Priority Investment Projects No sector restrictions Council of Minister decision Conditions: investment more than 50 Million Euro or investment in depressed regions or investment in High-Tech or investment in industrial zone construction Incentives VIP treatment Special Incentive Package Investment incentives in Bulgaria 10% corporate income tax; 0% for manufacturing companies in areas with high unemployment 10% personal income tax, flat rate Opportunity for R&D expenditure write-off Depreciation of 2 years for computers and new manufacturing equipment 2-year VAT exemption for imports of equipment for investment projects over € 5 million, creating at least 50 jobs 5% withholding tax on dividends and liquidation quotas (0% for EU tax residents) Up to 1 year minimum salary and reimbursement of social/health care security for employing young people and disadvantaged people through the Employment Agency InvestBulgaria Agency InvestBulgaria Agency is the Government investment promotion arm, part of the Ministry of Economy and Energy. IBA services: Macroeconomic data on Bulgaria Legal advice Data on operational costs Regional information: industrial zones and infrastructure, data on unemployment, skilled labour force and level of education Recommendation of investment project sites Identification of potential suppliers, contract manufacturers and joint-venture partners Personalized administrative servicing Liaison with central and local governments Liaison with branch chambers and NGOs InvestBulgaria Agency Sofia 1000, 31 Aksakov Str. Phone: (+359 2) 985 5500 Fax: (+359 2) 980 1320 E-mail: [email protected] Web: www.investbg.government.bg