general political and economic information investment opportunities in bulgaria
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Bulgaria Investment review The 10 th CIFIT, Xiamen, P.R. China, September 2006 Dr. Stoyan Stalev Executive Director. Main topics. General political and economic information Investment opportunities in Bulgaria Chinese - Bulgarian Cooperation Investment Encouragement Law Case studies - PowerPoint PPT PresentationTRANSCRIPT
InvestBulgaria Agencywww.investbg.government.bg
Bulgaria Investment reviewThe 10th CIFIT, Xiamen, P.R. China, September 2006
Dr. Stoyan StalevExecutive Director
InvestBulgaria Agencywww.investbg.government.bg
General political and economic information
Investment opportunities in Bulgaria
Chinese - Bulgarian Cooperation
Investment Encouragement Law
Case studies
InvestBulgaria Agency – your partner in Bulgaria
Main topics
InvestBulgaria Agencywww.investbg.government.bg
Reasons to invest in Bulgaria?
Highly-skilled, multilingual workforce at Europe’s most competitive wages
Stable and predictable business and political environment
The lowest operational costs and tax rates in a European market economy
Industrial goods traded duty free between Bulgaria and EU, EFTA, CEFTA and Turkey
EU membership on January 1, 2007 gives access to markets of over 500 million consumers
Seamless administrative services through InvestBulgaria Agency
Excellent climate, natural scenery, food and hospitality
InvestBulgaria Agencywww.investbg.government.bg
Predictable business environment
4.9%
4.1%4.5%
5.7%
5.5%
5.5%5.0%
7.2%6.1%
2.3%
5.8%
7.4%
2001 2002 2003 2004 2005 2006F
GDP growth Inflation, avg
Budget balance (2000 - 2006E)
Real GDP growth & Inflation, avg (2000 - 2006E)
Sources: National Statistics Institute, Ministry of Finance, AEAF
-1.01% -0.87%-0.65%
0.00%
1.71%
3.18%3.00%
2000 2001 2002 2003 2004 2005 2006F
InvestBulgaria Agencywww.investbg.government.bg
Others 33.1%
UK 4.3%
Hungary 4.3%
Italy 6.2%
Germany 7.7%
Greece 9.7%
Austria 19.5%
USA 4.6%
Sw itzerland 4.4%
Netherlands 6.1%
Manufacturing19%
Trade13%
Tourism & real estate
8%
Other21%
Electricity, gas & water supply
8%Telecommunic
ations13%
Finance18%
FDI inflow in Bulgaria 1999-2005P, USD m
Sources: BNB, InvestBulgaria Agency, EIU
FDI stock by sector, 1998 – 2005P
FDI stock by country, 1992 – 2005P
FDI to GDP
Record inflow of non-privatization FDI in 2004, continuing in 2005
9708131,102819
0500
100015002000250030003500
1999 2000 2001 2002 2003 2004 2005P
Greenfield investment, reinvestment, additional investment Privatisation
3,443
2,2232,097
8.3%
6.5%
8.5%
6.0%5.3%
4.8%
3.1%3.4%3.9%
10.1%
Bulgaria Czech Rep Slovakia Hungary Romania
2005E 2006-2007F, avg
InvestBulgaria Agencywww.investbg.government.bg
Investor Sector
1 Solvey (Belgium) Chemistry
2 Lukoil (Russia, Netherlands) Refinery & Petrochemicals production
3 American Standard (USA, Netherlands) Sanitary fixtures and fittings
4 Umicore (Belgium, Netherlands) Copper smelting
5 Miroglio (Italy, Germany) Textile
6 Sise Cam (Turkey) Glass Industry
7 Heidelberger Zement (Germany) Cement Industry
8 Bareck Overseas (Cyprus) Glass Industry
9 Viohalco (Greece) Metal products
10 Carlsberg (Denmark) Brewery
Top foreign manufacturing investors (between $24 & $580 m)
InvestBulgaria Agencywww.investbg.government.bg
Top foreign manufacturing companies in Bulgaria
Ciments Francais, France
Wabo, Germany
Brandtex, Denmark SKF, Sweden
E.Walters, UK
Hyundai, Korea Curtis, USA Coca Cola, Greece
Swedish Match
Chipita, Greece Miroglio, Italy
Heidelberger Zement Kuhn, Germany
ABB, Sweden
DRS Ahed Technology, USA
Carlsberg, Denmark
Videoton, Hungary Brewinvest, Greece
Brandtex, Denmark
Miroglio, Italy
Menderes, Turkey
Arkomat, Turkey
Miroglio, Italy Raumer, Italy Simest, Italy
Actavis, Iceland Holdex, Netherlands
New Mode, Italy
Rollmann, Germany Frana, Switzerland
IPS, Netherlands
Knauf, Austria
Dewavrin, France
Acid & Fertilizer, Belgium Solvay, Belgium Italcementi
Holcim, Switzerland
Palfinger, Austria
Luxcraft, Israel
Actavis, Iceland
Grammer, Germany
Sparky, Germany American Standard, USA Hamberger, Germany Provimi, Netherlands ABB, Sweden
Planzee Tizit, Austria
Ruse Shipyard, Germany Sparky, Germany Lifton, Sweden
Roca, Spain
Actavis, Iceland Amylum, Belgium
Shell Gas, UK Linde, Germany
Liebherr, Germany
Dundee Precious Metals, Canada Umikore, Belgium
Interbrew, Belgium mining
metal production
construction materials
machine building
electrical engineering
chemical industry
textile and apparel
food processing
wood processing & paper industry
EPIQ, Belgium
Safil, Italy Fererro, Germany
Interbrew, Belgium
Lukoil, Russia Kronospan, Austria Interbrew, Belgium
Delta, Greece Petreco, UK Hayat, Turkey
Dundee Precious Metals, Canada
Schneider Electric, France
Bramac, Austria
Provimi, Netherlands
Alfa Wood, Greece Netherlands
FAF Metal, Turkey Carlsberg, Denmark
Sisecam, Turkey
Mayr Melnhof, Slovenia
Atusa, Spain
Sizas, Italy Siemens, Germany
Festo, Germany Viohalco, Greece
Danone, France Nestle, Switzerland
Kraft Foods, USA
Montex, Italy
Wabo, Germany
S&B Holding, Germany
Dino Nobel, Norway
InvestBulgaria Agencywww.investbg.government.bg
Business sectors of highest potential for foreign investors?
Sector Competitive advantages Opportunities
Manufacturing:
1. Electrical engineering
2. Mechanical engineering
3. Electronics
4. Automotive parts manufacturing
Traditions
Availability of skilled personnel - 7% of the workforce with engineering university degree
Reasonable labor cost - $1.13 total hourly compensation for manufacturing workers (2005)
Availability of suppliers
Greenfield operations targeting the EU market
Acquisition of existing companies
Contract manufacturing for electromechanical assembly, machining and EMS
BPO Reliable telecom infrastructure
Talent pool of qualified multilingual IT and F/A professionals
Reasonable office prices
IT support centers
F/A shared service centers
InvestBulgaria Agencywww.investbg.government.bg
Investment opportunities and projects for potential investors (1)
Environment
Chemical and biological treating of wastewater
Installations for reducing heavy metals and pollutingorganic emissions
Reconstruction of the existing installation capacities in metallurgy
Recycling of scraps and garbage
Modernization of central heating system
Power engineering
Modernization of existing TPPs
Building of new HPPs and privatization of the existing ones
Building of the NPP Belene
Biomass and biofuel
Wind parks
Transport and logistic
Logistic centers
Modernization of autoparks in the country
Development of private transport companies
Modernization and concession of ports in Varna, Bourgasand along the Danube river
Privatization of Bulgarian marine forces
Privatization of Bulgaria Air
Infrastructure
Highway "Hemus" (concession)
Highway "Cherno More" (concession)
Modernization of railway infrastructure
InvestBulgaria Agencywww.investbg.government.bg
Investment opportunities and projects for potential investors (2)
Utility services
Health services
Information technologies
Administrative information networks
Wireless Internet access
Tourism
Construction of luxury hotels
Development of winter resorts
Development of balneology and SPA tourism
Development of rural and alternative tourism
Golf tourism
Real estate
Development of trade centers
Industry
Privatization of Bulgartabac JSC
Digital mechanics
Production of spare parts
Production automation
Defense
Modernization of textile and clothing factories
Modernization of food processing industry
Building of industrial zones
Construction of parking lots in Sofia
InvestBulgaria Agencywww.investbg.government.bg
Chinese Investment in Bulgaria
Total FDI stock as of Q1 2006 – USD 8.7 m
FDI inflow in 2005 amounts to USD 1.1 million
China ranks 30th in the FDI per country ranking
263 Chinese companies are registered in Bulgaria
China is the 11th largest trading partner of Bulgaria worldwide and the largest among Asian countries
Strong bilateral trade relations - 55% growth in trade exchange volumes marked in 2005
Reciprocal encouragement and protection of investments agreement, dated 1989
Protocol amending and supplementing the Agreement on Avoiding Double Taxation, dated 1989
InvestBulgaria Agencywww.investbg.government.bg
Flat rolled products of iron and non-alloyed
steel, 43%Refined copper, 22%
Copper craps, 9%
Copper stone , 4%Aluminum craps,
5%
Leading commodity groups in the trade between Bulgaria and China
Radio apparatus , 8%
Air Conditioners , 3.2%
Shoes , 2.9%El. boilers, 2.6%
Information equipment, 11%
Export to China Import from China
Strong bilateral trade relations – trade exchange volume for 2005 amounts to USD 779.9 m marking growth of 55%. Export to China rose by 95% for the same period
Sources: MEE
InvestBulgaria Agencywww.investbg.government.bg
Date InvestorBulgarian company
ActivityInvestment,
USD mJobs Location
Feb.2004
Huawei Technologies Co ltd
Huawei Bulgaria EOOD
Telecom n.a 108 Sofia
Mar. 2004
Chongqing Lifan Weili Appliances
Levee Electric Appliances JSCo
Air Conditioners manufacturing
11 280Town of Pravetz
Oct. 2003
SVA Group Co ltd SVA BG ltdTV sets and DVD players manufacturing
1.4 40Town of Veliko
Tarnovo
2001ZTE Corporation Co ltd
ZTE Corporation Bulgaria ltd
Telecom n.a 13 Sofia
Top Chinese Investors in Bulgaria
Sources: MEE, InvestBulgaria Agency
InvestBulgaria Agencywww.investbg.government.bg
Investment incentives in Bulgaria
15% corporate income tax (expected to be decreased to 12% as of 1 Jan 07);
0% for manufacturing companies in areas with high unemployment
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
7% withholding tax on dividends and liquidation quotas (0% for EU tax
residents holding at least 20% of the Bulgarian company)
24% highest bracket for personal income tax (monthly income over € 300)
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 Agencywww.investbg.government.bg
Investment Encouragement Law
Equal treatment of Bulgarian and foreign investors
Preferential treatment for larger manufacturing or service providing investment projects, implemented within 3 years
3 classes investments according to project value:
1st class - over BGN 70 million (€ 36 m)
2nd class – between BGN 40 - 70 million (€ 20 - 36 m)
3rd class - between BGN 10 - 40 million (€ 5 - 20 m)
All classes benefit from faster administrative service as well as information service
Individual administrative services for 2nd and 1st class investors
Infrastructure support to the borders of the investment project site together with facilitated land acquisition for 1st class investors
InvestBulgaria Agencywww.investbg.government.bg
EPIQ Electronic Assembly, Botevgrad (1997), property of EPIQ Group, Belgium
12,500 sq.m manufacturing facility 2,000 employees (2006) Electronic assembly, module assembly, development and manufacture
of plastic injection moulds & factory automation equipment Automotive market served:
Electronic modules for Delphi and Valeo
Sensors for waste gases temperature measurement for SAAB, FIAT, BMW and Mac
Infrared sensors for compartment temperature control Consumer electronics market served: Tefal, Rowenta, De Longhi Strong revenues growth: from € 14 million in 2001 to € 61 in 2005 75% of R&D EPIQ Group’s task force is located in Bulgaria
Case study: EPIQ Electronic Assembly
InvestBulgaria Agencywww.investbg.government.bg
SVA Group is among the top 10 leading Chinese companies in the electronics and IT industry
SVA Group investment to Bulgaria is the very first investment of the company in Europe
In Oct 2003 the Bulgarian company SVA-BG was registered
In 2005 started the construction of a factory for CRT TVs, LCD monitors and LCD TVs, DVD players, Plasma TVs and Home theaters under the brand SVA near the town of Veliko Tarnovo
Operations started in June 2006
The company has invested USD 1.2 m in 1 assembly line with total installed capacity of 100,000 units per class per year
Plan to purchase another 2 assembly lines with total installed capacity of 200,000 units per year
Case study: SVA Group
InvestBulgaria Agencywww.investbg.government.bg
Huawei Technologies develops the core of the 3rd GSM network in Bulgaria, licensed to the Bulgarian Telecommunications Company
60% of the base stations in the system
100% core networks
100% intelligent networks
Won BTC national fixed-line network optimization project
Won a pilot project of BTC for New Generation Networks
Won the tender of GLOBUL UMTS project for UTRAN part, and phase 1 project is under construction.
Spare Part Centre, established in 2005, servicing the whole Central East European Region
New R&D center and a professional training center is to be established
Revenues are expected to increase from USD 35 m in 2005 to USD 45 m in 2006
Expected investments for 2006 – USD 6 m
Jobs – 40 Chinese and 68 Bulgarian employees
An Asian hi tech success story: Huawei in Bulgaria.
InvestBulgaria Agencywww.investbg.government.bg
IBA: an “OEM” to investors
IBA services:
Macroeconomic data on Bulgaria
Comparative macroeconomic information
Legal advice
Data on operational costs
Regional information related to unemployment data, availability of skilled labor force, education level, infrastructure, foreign investors, industrial zones, free premises
Identification of potential suppliers, contract manufacturing or joint venture partners
Creating linkages with local university / school community
Creating linkages with central and local governments
InvestBulgaria Agency
1000 Sofia, Bulgaria, 31, Aksakov Str.
Tel: (+359 2) 985 5500
Fax: (+359 2) 980 1320
E-mail: [email protected]
Web: www.investbg.government.bg