new volumes of privatization in bulgaria · a newspaper publication or television expose on...

A m e r i c a n C h a m b e r o f C o m m e r c e i n B u l g a r i a

h o m e p a g e : w w w . a m c h a m . b g e - m a i l : a m c h a m @a m c h a m . b gBus in e s s Pa rk So f i a , M lados t 4 A re a , Bu i l d ing 2 , F lo o r 6 , 1 7 6 6 So f i a

Te l . : ( 3 5 9 2 ) 97 4 2 7 4 3 Fax : ( 3 5 9 2 ) 97 4 2 7 41

i s s u e 8 7m a r c h 2 0 0 8

New Volumes of Privatization in Bulgaria

Events:AmCham Ski Tournament 2008

Analysis:Stanishev Sur vives Again

Kosovo’s Independence Day

New Volumes of Privatization in Bulgaria

I am restraining myself from following the recent fad in

Bulgarian media and writing an anti-corruption commen-

tary brimming with indignation. I may want to do this, but

it has been exactly what most newspapers in Sofia are

doing daily. The media are criticizing the government on

the grounds that it is not providing the optimal conditions

for Bulgaria to receive various EU program funds.

AmCham Bulgaria Magazine has a clear position on this

issue. We do not think that the Bulgarian business should

suffer by being cut off investments from the EU because

of corruption or poor preparation of the authorities.

All the same, we believe that no matter how much noise

the media create, it is not going to change the status quo

much. I have a 17-year-long practice as a journalist, and cannot recall a single instance when

a newspaper publication or television expose on corruption issues has brought down Cabinet

members or stimulated a true institutional reorganization.

The reason for this low effectiveness is that the media do not go much further than stating

the obvious: a) corruption exists in Bulgaria, and b) it is bad. We all know that - but so what?

Media rarely if ever provided solutions to this pervasive problem. I should admit that our own

reporting team is not ready to propose much in this respect, either. A serious investigation

with pertinent solutions requires some serious investigative work, long time, inside informa-

tion from government sources, who would agree to speak on the record, too. Some jour-

nalists may even need to go "under cover."

All that is an impossibly complex task, which goes well outside the mandate that AmCham

Bulgaria Magazine has - to inform the members of the American Chamber of Commerce

about the business opportunities and conditions in our country. We have always believed that

this magazine should be an honest broker for the business relations in Bulgaria. Even more,

AmCham Bulgaria Magazine has usually tried to find the positive aspects of any event we

have covered. That way, managers and owners of member companies can take care of their

business without the deluge of negative news, which are the domain of most other media. I

am certain that our readers know all too well about the problems in the country.

So I think we are doing well in this respect. At least, we have never wasted your time with

lengthy stories containing corruption insinuations, which end with a short commentary to the

tune, "This is really, really bad."

As usual though, this issue has numerous interesting and valuable materials. Please, enjoy.

Milen Marchev

Editor-in-Chief

1p a g e

Am

Cham

B

ulg

aria M

agazin

e M

arch 2008

e d i t o r i a l

Dear Reader,

c o n t e n t s

2

Am

Cham

B

ulg

aria M

agazin

e M

arch 2008

Publisher

American Chamber of Commerce in Bulgaria

Business Park Sofia, Mladost 4 Area

Building 2, Floor 6, Sofia 1766, Bulgaria

Tel.: +359 (2) 9742 743

Fax: +359 (2) 9742 741

e-mail: [email protected]

www.amcham.bg

Editor-in-Chief

Milen Marchev

Deputy Editor-in-Chief:

Christopher Karadjov

Senior Editor:

Irina Bacheva

ISSN 1312-935X

Writers:

Boyko Vassilev, Marina Tzvetkova,

Mina Georgieva, Panayot Angarev,

Yuliana Boncheva

Advertising

AmCham Bulgaria:

Nadejda Vakareeva, [email protected]

AmCham Bulgaria Magazine:

Milen Marchev, [email protected]

The AmCham Bulgaria Magazine reaches a broad audience

of AmCham members, leading US, Bulgarian and internation-

al companies, US and Bulgarian decision-makers, all

AmChams around the world.

Subscription is free of charge. If you would like to subscribe

to AmCham Bulgaria publications, please contact the

AmCham Bulgaria office.

i s s u e 8 7m a r c h 2 0 0 8

AmCham Bulgaria Magazine is a primary forum for political and economic analyses, news, viewpoints as well as for the presentation of new business oppor-

tunities. The articles in the AmCham Bulgaria Magazine express the opinions of the authors and do not necessarily reflect the position of the American

Chamber of Commerce in Bulgaria.

iF YOUR ADWERE pLACED HERE,

• WOULD BE CONVEYED TO THE LEADING US, INTERNATIONAL AND

BULGARIAN COMPANIES OPERATING WITHIN BULGARIA;

• WOULD REACH THE DESKS OF SENIOR EXECUTIVES AND DECISION-MAKERS

WHO DEMAND HIGH QUALITY PRODUCTS AND SERVICES;

• WOULD TRAVEL ACROSS THE EUROPEAN CONTINENT AS WELL AS THE

UNITED STATES, TAKING FULL ADVANTAGE OF THE INTERNATIONAL NET-WORK OF AMERICAN CHAMBERS OF COMMERCE;

• WOULD SERVE AS AN IDEAL NETWORKING OPPORTUNITY FOR POTENTIAL

FOREIGN INVESTORS AND BUSINESSMEN VISITING BULGARIA.

AMCHAMADVERTISING RATES

BACK COVER . . . . . . . . . . . . . . . . . . . . 1330 BGN

SECOND COVER . . . . . . . . . . . . . . . . 1220 BGN

THIRD COVER . . . . . . . . . . . . . . . . . . 1180 BGN

TWO PAGES SPREAD . . . . . . . . . . . . 1440 BGN

FULL PAGE . . . . . . . . . . . . . . . . . . . . . . . . 960 BGN

HALF PAGE . . . . . . . . . . . . . . . . . . . . . . . . 780 BGN

QUARTER PAGE . . . . . . . . . . . . . . . . . . . . 580 BGN

LOGO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 350 BGN

INSERT . . . . . . . . . . . . . . . . . . . . . . . . . . . . 840 BGN

DISCOUNTS:

AMCHAM MEMBERS . . . . . . . . . . . . . . . . . . 20%ADVERTISING AGENCIES . . . . . . . . . . . . . . 15%MAX VOLUME DISCOUNT . . . . . . . . . . . . 10%

For more details please contact:

AmCham Bulgaria Office – Nadia Vakareeva, phone: 974 27 43/4, e-mail: [email protected] AmCham Bulgaria Magazine – Milen Marchev, phone: 846 88 32, e-mail: [email protected]

YOUR MESSAGE

THE RIGHT MESSAGE TO THE RIGHT AUDIENCE.

3p a g e

Am

Cham

B

ulg

aria M

agazin

e M

arch 2008

a m c h a m b u l g a r i a

3M (East) AG . AA KRES EOOD . ABB Bulgaria EOOD . Abbott Laboratories S.A. . AbCRO - Bulgaria .Accor Services Bulgaria . ACO Building Elements Ltd. . ACSIOR Ltd. . ADIS Ltd. . Advance InternationalTransport (Balkan) EAD . AES Corporation . AFA OOD . AIG Bulgaria Insurance & Reinsurance CompanyEAD . AIG Life Bulgaria . AIMS Human Capital . Alcoa Packaging Bulgaria . Alexander Hughes BulgariaOOD . ALEXANDROV GROUP CORPORATION . Alfred C.Toepfer International . Alliance One TobaccoBulgaria . Allied Pickfords Bulgaria . Alter Ego Company OOD . American College of Sofia . AmericanEnglish Academy . American Resarch Center in Sofia . American University in Bulgaria (AUBG) . Anglo-American School of Sofia . Anton Preslavski, Liebert Hiross . APIS - BULGARIA Ltd. . APOLO Ltd. . AriesCommerce . Ashtrom International Ltd. . Association Integra-BDS . Astra Zeneca UK Ltd. . Astral HolidaysAD . AT Engineering 2000 Ltd. . Auditing Company Versi and Partners Ltd. . AVON Cosmetics Bulgaria Ltd.. BAE Systems International Ltd. . Balkan Accession Fund . Balkan News Corporation Plc. . Balkan StarAutomotive EOOD . Baxter AG . Bayer Bulgaria EOOD . BC Serdon . Berlitz Schools of Languages .BG Radio . BMG Ltd. . Bodyguard-Fire-K Ltd. . Borislav Boyanov & Co. . Braykov's Legal Office .British American Tobacco . Brown Forman Beverages Worldwide Sofia Branch LLC . Bulgaria Platinum GroupEAD . Bulgarian American Enterprise Fund . Bulgarian Charities Aid Foundation (BCAF) . Bulgarian LandDevelopment EAD . Bulgarian Telecommunications Company AD . Business Media Group . Business ParkSofia EOOD . CallPoint New Europe AD . Candole Partners EOOD . Car Rental Bulgaria Ltd. . CarlsbergBulgaria AD . Cefin Bulgaria EOOD (IVECO dealer) . Center for the Study of Democracy . CENTURY 21Bulgaria . Chelopech Mining EAD . Chris Thompson, Independent Consultant . Cisco Systems Bulgaria .Citibank N.A.- Sofia Branch . City University of Seattle . Cleves EOOD . CMS Cameron McKenna EOOD. Coca-Cola HBC Bulgaria AD . Coface Bulgaria Credit Management Services EOOD . Colgate-PalmoliveAdria . COLLIERS International . ConsulTeam Recruitment and Selection Ltd. . Cook Communications .Corstjens Worlwide Movers Group . CPM Consultancy Sllc . Curtis / Balkan Ltd. . D&IC (Dun and BradstreetRepresentative) . DeConi International . Deloitte Bulgaria OOD . DENIMAR Ltd. . Devin AD . DHLExpress Bulgaria Ltd. . Diageo Bulgaria Ltd . Diamed Ltd. . Dimitrov, Petrov & Co. . Djingov, Gouginski,Kyutchukov, & Velichkov . DLA Piper Weiss-Tessbach Branch Sofia . Dobrev, Kinkin & Lyutskanov Law Firm .Domaine Boyar International AD . Dr. Emil Benatov & Partners . Dr. I.S. Greenberg Medical Center, Ellen RuthGreenberg, Ph.D. . DuPont de Nemours International S.A. . DynCorp International LLC . Economedia AD .Effekten Und Finanz - Sofia AD . Ekotoi - Service Ltd. . Electron Progress EAD . Eli Lilly and Company .Elido (Lamel Ltd.) . Elmec Sport Bulgaria EOOD . Elta consult AD associated partner of CB Richard Ellis forBulgaria . Emerson Process Management AG . Emporiki Bank Bulgaria EAD . Encouragement Bank AD .Enel Maritza East 3 AD . Enemona SA . Engineeringservice Sofia Ltd. . Environmental Quality Management,Inc. . Epsilon Interactive International . Equest EAD . ERATO HOLDING Plc . Ernst & Young Bulgaria .European Bank for Reconstruction and Development (EBRD) . Flying Cargo Bulgaria Ltd. - Licensee of FedEx .Force Delta Ltd. . Forem Consulting Bulgaria . Fortel Engineering LTD. . Forton International JSCo . FosterWheeler Energia Polska, Branch Office Bulgaria . Foundation for Local Government Reform . G4S SecurityServices Bulgaria JSC . General Electric International . General Security ltd. . Genmark Automation BulgariaPlc. . GlaxoSmithKline . Global Benefits Group GBGI CEE LLC Representrative Office . Goodyear DunlopTires Romania . Grand Hotel Sofia . Grenville Bulgaria . Grey Worldwide Bulgaria EOOD . Hewlett-Packard Bulgaria Ltd. . Hilton Sofia . Holiday Inn Sofia . Honeywell EOOD . Hotel Yastrebets Wellness& SPA . IBM Bulgaria . IBS Bulgaria Ltd. . Ideal Standard Bulgaria . Immo Industry Bulgaria . In TimeLtd. . Industrial Holding Bulgaria . ING Bank Sofia Branch . Interbrands Marketing & Distribution Inc. OOD. Interdean . International University College . Investbank Plc. . IP Consulting Ltd. . ISI EmergingMarkets (Internet Securities, Inc.) . Johnson & Johnson Doo. . Johnson Controls Electronics Bulgaria . JuniorAchievement Bulgaria . Kaliakra AD . Kamenitza AD . Kamor Auto EOOD . Katilin Popov EnforcementOfficers . Kempinski Hotel Grand Arena Bansko . Kimimpex Trade and Leasing Ltd. (2be) . Kolbis InternationalTransfer Corporation . KPMG Bulgaria . Kraft Foods Bulgaria . LANDMARK Property Bulgaria . LeximSofia Ltd. . Lindner Immobilien Management EOOD . Lirex BG Ltd. . Lowe Swing Communications . M& M Air Cargo Service Bulgaria Ltd. . M3 Communications Group, Inc. A Hill & Knowlton Associate . MagneticHead Technologies . Maria Vranovska, MD, MBA . Marsh EOOD . MARTERN EOOD . Mathnasium(Rossimat Ltd.) . MBL Ltd. . McDonald's Bulgaria Ltd. . Mellon Bulgaria EAD . Merck Sharp & DohmeBulgaria . Mercurius-Sofia . Microsoft Bulgaria . Miltech Ltd. . Mmd, Corporate, Public Affairs & PublicRelations Consultants . Mobiltel EAD . Monbat Plc. . Moody International Ltd. . Moten Sport . Moto-Pfohe Ltd. . Motorola Bulgaria EAD . National DISTRIBUTORS . NATO Defense College Anciens' Association. NDT Equipment Supplies Ltd. . Neochimiki Bulgaria S.A. . Neterra Communications . NeumannInternational AG . New Europe Corporate Advisory . New Europe Directories Bulgaria . Nexcom BulgariaEAD . On Bulgaria Ltd. . Opet/Aygaz Bulgaria EAD . Oracle East Central Europe Limited - Branch Bulgaria. Orbit Ltd. . Orkikem Ltd. . OSG Records Management . Outsource Partners International . OzoneLaboratories Bulgaria . PANDA - IP Ltd. . Penev & Partners Law Offices . Penkov, Markov & Partners OOD. Pfizer Luxembourg SARL, Representation Office Bulgaria . Philip Morris Bulgaria EOOD . Pioneer SemenaBulgaria EOOD . Piraeus Bank Bulgaria AD . Plesio Computers Jsc . Popov Legal Office . Postbank(Eurobank EFG Bulgaria AD) . PostPath . Praktiker EOOD . Pratt & Whitney . PricewaterhouseCoopers. Procter & Gamble Bulgaria . ProSoft . PSG Payroll Services Ltd. . Radisson SAS Grand Hotel .Reader's Digest EOOD . Regus Bulgaria Ltd. . Renault Nissan Bulgaria SRL . Rising Force Co., Ltd. .Rockwell/Intelpack . S&T Bulgaria . Sanofi - Aventis Bulgaria EOOD . Scandinavia Motors Ltd. . SchenkerEOOD . Schering - Plough Central East - Bulgaria . SEAF Management Bulgaria EOOD . Sheraton SofiaHotel Balkan . Sherita M Ltd. . Siemens EOOD . Sienit Ltd. . SigmaBleyzer Investment Group LLC -Representative Office . SKE Bulgaria EOOD . Sofstroy AD . Soravia Bulgaria Ltd. . Stanton ChaseInternational Bulgaria . Stefan Dimitrov, Norman Realestate Co. Ltd. . Symix Bulgaria OOD . TechnoLogicaEOOD . TeleLink EAD . The Coca-Cola Company Bulgaria . Tishman Management Company Ltd. . TissueBank Osteocenter Bulgaria EAD . TMF . Totema Engineering . Trans Company Ltd. .TravelStoreMaker.com . Tumbleweed ® Communications Corporation EOOD . UniCredit Bulbank . UnimastersLogistics Plc . Unique Estates . Unisys Bulgaria Branch . United Bulgarian Bank . United Consulting Ltd.. United Healthcare Bulgaria Group of Companies . United Medical Communications . Vaptsarov Holding AD. Vector Management Bulgaria EOOD . Videolux Holding / Technopolis . VIP Security Ltd. . VISA Europe. VM Finance Group . VSK Kentavar Ltd. . Welcome to Bulgaria . Westinghouse Energy Systems BulgariaBranch . World Courier Bulgaria . WorleyParsons Europe Energy Services Ltd. . Wrigley Bulgaria EOOD .Xerox Bulgaria Ltd. . Yavlena EOOD . Zlati Dinev Studio in partnership with Outerbridge/Morgan .

Board of Directors

of the American Chamber of Commerce in Bulgaria

President Mr. Borislav Boyanov Borislav Boyanov & Co.

First Vice President Mr. Anthony Hassiotis Bulgarian PostBank

Vice President Mr. Kenneth M. Lefkowitz New Europe Corporate Advisory

Treasurer Tanya Kosseva-Boshova Landmark Property Bulgaria

Members Ms. Olga Borissova Ellief Center, AUBG

Mr. George Georgiev Motorola Bulgaria

Mr. Thomas Higgins Balkan Accession Fund

Mr. Andon Ichev General Electric

Mr. Stefan Ivanov Citibank N.A.

Ms. Dana Leff AbCRO Bulgaria

Mr. Chris Thompson Bearing Point, CLRP

Ms. Elitsa Tsaneva Ideal Standard Bulgaria

Ex-Officio Member Mr. James Rigassio US Senior Commercial Attache

Executive Director Valentin Georgiev

Contentsp o l i t i c s

The Stanishev Cabinet Preparing

For Another Term . . . . . . . . . . . . . . . . . . . . . . .4

By Marina Tsvetkova

e c o n o m y

New Wave in Privatization? . . . . . . . . . . . . . . . .12

By Yuliana Boncheva

n e w s

Bulgaria and the United States

Sign Eleven Agreements on Bases . . . . . . . . . . .18

By Panayot Angarev

t h e b a l k a n s

Kosovo's Independence Day and Serbia's

Day of Sorrow . . . . . . . . . . . . . . . . . . . . . . . .20

By Boyko Vassilev

m a r k e t

Wireless Telecom Market in Bulgaria -

Really Impressive Figures . . . . . . . . . . . . . . . . .24

a n a l y s i s

The Textile Industry - Myths and Realities . . . . . .26

By Mina Georgieva

a m c h a m e v e n t s

Record Number of Skiers

Vie for AmCham Trophy . . . . . . . . . . . . . . . . . .32

Astral Holidays Teams Up

With BCD Travel . . . . . . . . . . . . . . . . . . . . . . .36

Private Security Firms Demand

Law on Detectives . . . . . . . . . . . . . . . . . . . . .38

n e w m e m b e r s . . . . . . . . . . . . . . . . . . . .38

Kimimpex Ltd.

ACO

Emporiki Bank

Fortel Engineering

m e m b e r n e w s

ESCADRA Offers the Latest

from Mercedes-Benz . . . . . . . . . . . . . . . . . . . .39

Ten Major Risks for Global

Businesses Identified . . . . . . . . . . . . . . . . . . . .40

Ideal Standard Recognizes

Most Beautiful Baths . . . . . . . . . . . . . . . . . . . .44

Microsoft Bets on Interoperability . . . . . . . . . . . .45

c o r p o r a t e s o c i a l r e s p o n s i b i l i t y

AAS to award 780,000 Leva to

Academically Talented Bulgarian Children . . . . . . .46

By Maria Mihailova, Community Affairs and Development Manager

Devin and Bulgarian Children

Campaign for Road Safety . . . . . . . . . . . . . . . .47

m o r e t h a n m u s i c

The Stratocaster at the

Top of the World . . . . . . . . . . . . . . . . . . . . . .48

"If you do not know where you are goingto, then you will get somewhere else," awise man once said. Obviously, the cab-inet of the tripartite coalition between theBulgarian Socialist Party (BSP), theNational Movement Simeon II (NMS) andthe Movement for Rights and Freedoms(MRF) has taken notice of this proverb,as it has been openly claiming a desireto clinch a second mandate over the lastseveral months.

The ruling parties launched in one voicea heap of promises they put in specific

words exactly at the time, when theopposition asked for a fourth no-confi-dence vote, while the EuropeanCommission (EC) froze some of thefunds for Bulgaria. From the politicalpoint of view such a situation is perfect-ly normal. The so-called StanishevCabinet remained for three years firmlyat the helm of the executive, and the timehas come to start looking forward to thenext elections. At the same time, theopposition is closely watching for anyfalse step in order to claim some divi-dends - nominally for the society at large,

but mostly for its own political ambitions.

BSP, NMS and MRF have the politicalwill, the capability and the self-confi-dence to mark targets for implementationuntil 2013, Vice Premier Ivailo Kalfin saidabout a month ago. The welfare of everysingle Bulgarian has increased by onethird since the start of the mandate ofthe incumbents, the ruling coalitionclaimed.

Gross domestic product (GDP) rose by35 percent. All social incomes have been

p o l i t i c s

4

Am

Cham

B

ulg

aria M

agazin

e M

arch 2008

The Stanishev Cabinet Preparing For Another TermThe government survived after a fourth no-confidence vote. The ruling coalition

made its claim to a second mandate with promises for higher incomes and

major infrastructure projects By Marina Tsvetkova

For the first time in the last 4 years all the Bulgarian opposition parties joined forces in a protest actions against the current ruling coalition.

rising steeply, with some of the incomeitems increasing several times over.Bulgaria's economic growth rate isamong the highest in the EU, while directforeign investment for the last three yearsstood at 12.5 billion Euro, which accountsfor 70 percent of all foreign investmentsfor the last 19 years.

The restructuring of the social securitysystem and the insurance burden aresubject to a pending debate. The coali-tion council has already discussed vari-ous options for reducing social insuranceinstalments and for placing all partici-pants in the social security system on anequal footing. The ultimate objective is toprovide further incentives for the socialsecurity system in order to force insur-ance instalments fro the grey sector outin the open.

"By updating our government program,we aim to make a

clear claim for a second

mandate

in the same format," ministers in theStanishev Cabinet announced at theirmeeting held in early February at theHisarya Spa Resort. The prime objectiveis to raise income and quality of life, thesecond objective is related to improvingthe business climate, followed by thedevelopment of education and of aknowledge-based economy, and byimproving the healthcare system.

The ministers went as far as explainingexactly how Bulgarians will get richer -by improving the social security system.However, before any specific changes

are made, the various options and cabi-net proposals will be discussed immedi-ately after a working session of the tri-partite coalition cabinet with the employ-ers' organizations and the syndicates.One of the objectives of the changes inthe social security system is related toraising the motivation for participating in itby explaining where the funds come fromand how they are being distributed. Theincumbents admitted that the state willcontinue to play a major role in socialinsurance and that the grey sector inBulgaria is still very strong. That is whythey will seek for a scheme to bring thegrey sector into the open by shifting

social insurance towards the so calledcapital pillar.

One of the options provides for theemployees and employers paying equalparts of the due social insurance instal-ments. The incumbents were adamant,however, that no further reductions ofsocial security instalments are possible.

"We have the common feeling that thehealthcare system must be overhauled,"Kalfin said. He added that all cabinetministers will participate in implementingthe objectives of the undated program ofgovernment, thus responding to a ques-

5p a g e

Am

Cham

B

ulg

aria M

agazin

e M

arch 2008

p o l i t i c s

Salaries rose by 22 percent in a yearThe average monthly salaries rose by 22 percent in 2007, year-on-year, accord-

ing to the latest data distributed by the National Institute of Statistics. The aver-

age monthly salary in November 2006 stood at 388 Leva, compared to 474 Leva

in November 2007. The cumulative inflation for the same period stood at 11.6

percent. Employees in two economic sectors were drawing four-digit salaries last

year - workers in coke production, oil refineries and nuclear fuel were paid 1,856

Leva per month, and the employees in financial brokerage were paid 1,129 Leva.

The average salary in the public sector stood at 608 Leva, which is equivalent

to a 105 Leva increase. Salaries in the private sector rose by close to 24 per-

cent.

Employees and workers in the textile sector, in agriculture, hotels and restaurant

still receive less than 230 Leva in the average. The average salaries in health-

care at 491 Leva per month - respectively at 331 Leva in private medical facil-

ities, and 519 Leva in the state-run hospitals. The reverse situation was record-

ed in education - the balance is in favour of the private schools, which report an

average monthly salary of 622 Leva for December last year. The average salary

in the state-run sector of the education stood at 559 Leva. The increase of

salaries on an annual basis was estimated at 27.3 percent, according to avail-

able statistics. The number of the employed at the end of last year stood at 2.3

million, with the largest number - 384,000 - engaged in trade. Another 184,000

people are employed in education, and 171,000 in building construction.

p o l i t i c s

6

Am

Cham

B

ulg

aria M

agazin

e M

arch 2008

tion whether there will be any changesmade in the cabinet. Kalfin announcedalso that the updated program of govern-ment aims to match EU priorities in fullby 2013.

For a ninth year in a row, Bulgaria's GDPgrowth rate has been among the highestin the EU, while labour efficiency is ris-ing at a double rate.

The choir of discontent

among the opposition

The parties outside the cabinet coalitionresponded by claims that corruption hassoaked all spheres - it is at the top tiersof power, the judiciary, local administra-tions, in education, and healthcare. At thesame time, the opposition claims, thereare pathetic, harmless and irrelevantefforts to launch measures against cor-ruption. The opposition moved, on Feb.14 its fourth no-confidence vote againstthe cabinet of the BSP-NMS-MRF tripar-tite coalition. The no-confidence votewas motivated by the corruption at the

top tiers of power and by the failure ofthe cabinet in the combat against orga-nized crime. The vote was supported by79 parliamentary deputies, out of a totalof 240.

Initially, the major motive for the vote wasthe corruption scandal in the RepublicanRoad Infrastructure Fund. The motivesread: "The report of the EuropeanCommission verifies the opposition

claims that there are no results from thecombat against high-level corruption andagainst organized crime. No person wassanctioned, and none were sentenced incourt. The cabinet has exposed its ownfailures. Immediately after the EC sanc-tions cabinet ministers have tried to con-vince Brussels that there are no cases ofabuse with the funds of European tax-payers but the eloquent response wasthat is does not actually matter whether

"The failure of the opposition with this vote should not lure us into complacency, as the citizens of this state expect much more from the ruling coalition. I do hope that

the vote will end a trying 6-month period of repeated attempts at destabilization and precipitation of early elections," said Prime Minister Stanishev.

Chronology of survivalThe tripartite BSP - NMS - MRF ruling coalition has already survived three no-

confidence votes. The first was in April 2006, and was motivated by the inabili-

ty of the government to cope with the disastrous situation in Bulgaria after the

floods in the summer of 2005 and the spring of 2006. The second no-confidence

vote was in March 2007 and was motivated by the failure of the healthcare pol-

icy of the cabinet. The third vote came in October 2007 - "for the collapse of

the state policy in the sphere of education" - and was debated in parliament dur-

ing the apogee of the largest ever strike of school teachers in Bulgaria. However,

it was only the school teachers who went on strike and they were not support-

ed, as they expected, by the broad public. On the contrary, towards the end of

the protests the school teachers' guild became aware of the emerging negative

attitude of civil society, while the syndicates were openly accused of waging their

own game of interests.

p o l i t i c s

8

Am

Cham

B

ulg

aria M

agazin

e M

arch 2008

the funds are European, Bulgarian ofeven municipal."

In this case, the criticism of the opposi-tion was creative and it would be onlynatural for the cabinet to embark on aserious study of the problem and comeup with an efficient solution. It is anentirely different issue whether the no-confidence vote was the proper formatfor solving a serious and important prob-lem like corruption.

"The failure of the opposition with thisvote should not lure us into complacen-cy, as the citizens of this state expectmuch more from the ruling coalition. I dohope that the vote will end a trying 6-month period of repeated attempts atdestabilization and precipitation of earlyelections," said Prime Minister Stanishev.

Regarding the claims made by the oppo-sition that Bulgaria is slow in utilizing theallotted EU structural funds, the primeminister said during the parliamentarydebates: "Let us take a look from thefinancial perspective of 2007- 2013. Howmuch money and what percentage have

utilized even the most developed statesin the EU? Bulgaria has successfullynegotiated the first stage. Bulgaria is atthe top in terms of approved applications.And it is now that the opportunities for acomprehensive utilization are opening up.Compare Bulgaria with the rest of the EUmember states, try to judge whether weare at the front or at the tail in this strate-gic framework."

"We have entered the most importantstage in terms of utilizing Europeanfunds - and not only of the 7 billion Euroallocated to operative programs, but alsothe funds within the Program for thedevelopment of the rural regions - thisyear some 1 billion Euro will be pouredinto Bulgaria's agriculture," Stanishevadded.

The infrastructure hopes of

the government

The cabinet admitted in the third year ofits mandate that the major transport,energy and environment projects withbudgets amounting to several billioneuros have been seriously delayed, along

with the utilization of related financingfrom European funds. "Project proce-dures must be accelerated, that is whythe State Property Act, the ConcessionsAct and the Black Sea Shore Act mustbe amended in order to support the intro-duction of public-private partnerships andcreate incentives for the investors", PrimeMinister Sergei Stanishev said.

He added: "A total of 3.429 billion Euro,or 320 per cent of the planned infra-structure projects, have been allocated,and I am sure that there will be a sub-stantial additional financing in 2008 aswell as a result of the work completedwithin the framework of the EU operativeprograms." Stanishev also said that atotal of 188 infrastructure projects worth11 billion Euro were in progress in 2007,and that 48 of these projects were com-pleted.

Some 83 percent of the EU and budgetfunds allocated to infrastructure projectswere utilized last year, which, accordingto the prime minister, is a really goodachievement. The major problems, heclaimed, are related to insufficient admin-

istrative capacities and the poor qualityof some engineering projects. For the fisttime ever, "such a large amount of moneyhave been invested in public-private part-nerships" in major infrastructure projects.

The options for such a partnership will befacilitated by the amendments proposedto the State Property Act, theConcessions Act and the Black SeaShore Act, the major objective being toallow state-owned companies to negoti-ate with private companies under specif-ic conditions and in response to specificpublic interest.

For instance, state-owned companiessuch as Railway Infrastructure, whichhave attractive real estate like railway sta-tions, shall be able to enter into partner-ships with private companies for projectsprofitable for both parties.

In order to avoid leaving the Black Seasand beaches without concessionaires inthe summer, the concession contractswill be extended until the end of the yearwhile at the same time the proceduresfor new concessions will be launched.

It is expected that the construction ofDanube Bridge Two between Vidin andCalafat will start in April, said TransportMinister Petar Mutafchiev. All existingobstacles to staring actual constructionworks have been eliminated. Drilling, con-struction camps location and the place-ment of building machines and equip-ment has been coordinated. There aresix privately owned land lots, which stillhave to be acquired, but the actual rea-son for the delay is the low price that is

offered.

Minister of Environment and WatersCevdet Chakarov said his ministry has noplans to reallocate funds for the Sofiawaste treatment facility to other regions,while at the same time it is prepared toprovide additional financing for the facili-ty as well as for the water and sewerageproject in the capital city, for which 58million Euro have already been ear-marked within the ISPA program.

The report of the inter-agency Council forcoordination and implementation of infra-structure projects proposed to be accel-

erated, on a priority basis, the projectsfinanced by the ISPA program, whoseterms expire before 2010. The projectsthat have been delayed most are theconstruction of the Lyulin highway, thesection Lyubimets - Harmanly of theMaritsa highway, the modernization of thePlovdiv - Svilengrad railway line, the con-struction of the second bridge across theDanube at Vidin, the construction ofwaste water treatment facilities in StaraZagora, Dimitrovgrad, Haskovo,Blagoevgrad, Pazardjik, Sozopol andBourgas, and the household waste dis-posal depots in Montana, Silistra,Sozopol, Zlatitsa, Smolyan and Harmanly.According to the government report, themodernization of the Maritsa Iztok 2 ther-mal power station the construction of sul-phur treatment installations there, therehabilitation of Maritsa Iztok 3 thermalpower station and the construction of anew generating facility there have alsobee substantially delayed.

Clumsy expropriation procedures, thepoor quality of pre-project studies and oftender documentation, as well as poorsupervision of all procedures have beenhighlighted as having caused the delays.The most serious criticism is directed atthe projects managed by the Transportand Regional Development ministries.According to Minister Assen Gagauzov,however, the Lyulin highway project isadvancing at a very good rate; a supple-

9p a g e

Am

Cham

B

ulg

aria M

agazin

e M

arch 2008

p o l i t i c s

Bulgarians are getting richer...People are buying less bread, butter-dripping burecks and buns, and eat more

meat, fruit and vegetables, according to the Ministry of Social Affairs data. This

trend was attributed to the rise of household income to an average 845 Leva per

month in 2007, which is equivalent to a 24 percent increase compared to 2006.

A four-member household expenditure stood at 770 Leva per month in 2007, with

650 Leva spent on food. Bulgarian households have increased their savings by

44 percent. The poverty threshold for 2008 was set at 166 Leva.

The income policy of the Ministry of Social Affairs is aimed at gradually closing

the gaps to the salaries level in the EU. Wages in Bulgaria rose by 65 percent

in 2007, compared to 2000. The agreed recommended index of salary increase

in 2007 stood at 14.7 percent in the real sector. The index will most probably be

set at 15 percent in 2008. The average wage for 2008 is set at 500 Leva per

month, and the minimum wage - at 220 Leva, with expectations that the intro-

duction of the flat 10-percent income tax rate will bring most of the real income

in the open.

The number of the employed female Bulgarians is by 194,000 smaller than the

number of the employed men. A token 4.3 percent of the unemployed have quit

their jobs because of family reasons, with the women in this group being two

time more than the men. Some 17.5 percent of the unemployed women are will-

ing to find a job but are unable to, because of personal or family reasons. The

percentage of this group among men is as low as 6.6 percent.

Minister of Social Affairs Emiliya Maslarova announced that the cabinet will release 2 billion Leva for pen-

sions and another 90 million Leva for social care establishments.

p o l i t i c s

10

Am

Cham

B

ulg

aria M

agazin

e M

arch 2008

mentary agreement with the contractor isbeing drafted, with the objective to havethe section completed by mid 2009. Bythe same time, the section betweenStara Zagora and Karnobat on theTrakiya highway will also be completed,the regional development ministerannounced.

The transport minister boasted with theconcession contracts for the airports inVarna and Bourgas, and for the Lesportand Svishtov ports, and claimed that theinvestors in the port of Lom and in theairports in Rousse and GornaOryahovitsa are currently being selected.

Environmental Minister Cevdet Chakarovhas also announced that his ministry isready to accept projects worth 500 mil-lion Euro for waste water and wastetreatment facilities. He promised thatwaste water treatment plants will be builtalong the Black Sea coast in order tomatch the ongoing construction boom.The money for these projects have beenallocated, we are waiting for the munici-palities to submit their projects, Chakarovsaid, and did not miss the opportunity tosay again that Sofia may miss some 48million Euro allocated for water and sew-erage projects. He added that Bulgariamay lose another 70 million Euro fromISPA earmarked for sulphur treatmentinstallations at the Maritsa Iztok 2 ther-mal power station, where a second pro-cedure for awarding a construction con-tract was launched.

The cabinet untied its

purse

The cabinet will release 2 billion Leva forpensions and another 90 million Leva forsocial care establishments, Minister ofSocial Affairs Emiliya Maslarovaannounced. In practical terms this meansthat every pensioner in Bulgaria willreceive an additional four average month-ly pensions this year. Any family, in whicha child with deformities is born, willreceive 100 Leva. These families are get-ting also 100 Leva for child care, as wellas a double child allowance, and 165Leva will be allocated per year for balne-ological treatment. The retirement age willnot be raised before the end of theincumbent cabinet's term in 2009.Minister Maslarova, however, announcedthat the state will create incentives forwomen above the age of 60 and for menabove the age of 63 to continue working.A year of employment above the retire-ment age will be counted for three forpension purposes. Currently, there are 40pensioners for every 100 employees andworkers, experts explained at the Hisaryaseminar. As of July, the average pensionin Bulgaria will rise to 198 Leva, and theminimum - to 112 Leva.

The National Consultative Council on thePension Reform will be launched soon.The bill for the so-called Silver Fund willalso be ready in the nearest future.Bulgaria has to establish such an institu-tion, which will be similar to the Silver

Fund in Belgium and to the Buffer Fund inPortugal. The fund will accumulate all sur-pluses from social insurance instalmentsand from the state budget as well as rev-enues from privatization and concessions.Currently, 211 million Leva from privatiza-tion and budget surpluses has been allo-cated to the Silver Fund. These funds willbe placed at the disposal of the pensionreform program. A new investment pro-gram will be developed for financing thefund, with 25 percent of the revenuescoming from privatization, and another 10percent from budget surpluses, this year.

The Silver Fund bill will be ready by theend of the year, but even if it is enactedas of the beginning of 2009, it will bepractically unusable over the next 10years, as it will have to accumulate suffi-cient funds. Minister Maslarova said alsothat the administration of the social affairsministry will be streamlined. Currently,some 10,000 are employed by theMinistry nationwide. Maslarova added thatthe number of employees will be reducedby the compulsory 12 percent.

The bulk of the common budget for 2008will be spent by the Cabinet in socialsecurity - 31.7 percent, which is equiva-lent to 12.3 percent of the GDP,Maslarova stressed. And, like many of hercolleagues, reiterated the standing posi-tion of the government that the incomerise in order to close the income gapcompared to other EU states remains atop priority. ■

Nearly 2000 attended the rally against the current government in front of the National Assembly building on February 21, while the MP's were voting for the future

of Stanishev's cabinet.

e c o n o m y

12

Am

Cham

B

ulg

aria M

agazin

e M

arch 2008

The ruling coalition in Bulgaria has started giving signals it isabout to make a radical shift in the course of privatization. Ifit fails to do this, the cabinet will remain in history with twothings - the revolutionary introduction of a flat 10-percent taxon personal and company income and with an almost totallyblocked privatization. While the tax reform is an exceptionallypositive step, the lack of privatization deals is emerging as amajor negative for the incumbents.

About 20 companies were acquired by private owners duringthe last two years in Bulgaria. Many of the expected deals -like the sale of the cigarette holding Bulgartabac or the BobovDol Thermal Power Station - simply did not materialize. ThePrivatization Agency (PA) dealt mainly with the sale of minori-ty packages, residual shares and detached parts of enterpris-es. That is why it was hardly a surprise that the total revenuefrom privatization in 2007 stood at a token 311 million Leva.This revenue is simply negligible compared to the 5.7 billionEuro in direct foreign investments last year - mainly in realestate, building construction and trade.

Prime Minister Stanishev and his ministers have embarked ona series of initiatives, which indicate they are resolute in theirgoal to break the privatization deadlock. After discussions and

consultations that went on for months at the ministries, at theend of 2007 the cabinet announced that it is proposing amend-ments to the privatization legislation and that it is even readyto remove the moratorium, imposed years ago, on the privati-zation of hospitals. The minister of economy and energy wentas far as to say that the tasks for the Privatization Agency willbe exhausted after a year or two and that the PA shall haveto be closed down.

The PA itself is giving some signals of recuperation. Maybe thePA team, headed by Todor Nikolov, has found a new confi-dence in the perspective for a good deal for the BulgarianMaritime Shipping (BMS) company. BMS has been on the pri-vatization counter for quite a long time as its sale strategy wasdelayed and was finally approved last year. The PA moved intoa higher gear during the last several months and it now lookslike the end game is coming closer. And although the expec-tations for a rough ride were proven unrealistic - the Agencyadmitted to the final track only one candidate - it was madeknown last month that the sole candidate has offered a goodprice - more than 400 million Leva for 70 percent of the cap-ital. Together with future investments, the financial impact ofthe sale of the Bourgas-based company will exceed 1 billionLeva. A fair price for a shipping company, whose vessels are

New Wave inPrivatization?Bulgaria's cabinet announced it will let investors into arms manufacturing enter-

prises, hospitals and Bulgartabac holding

By Yuliana Boncheva

Chairman of the Bulgarian Privtisation Agency Todor Nikolov (first from left), the MP in charge Tsveta Kamenova (second from left) and the Bulgarian Minister of

Transport Peter Mutafchiev (third from left) presented to the public the idea of privatizing Bulgarian Maritime Shipping.

13p a g e

Am

Cham

B

ulg

aria M

agazin

e M

arch 2008

e c o n o m y

all more than 26 years old on average.

Only days ago the PA launched the sale of one more attrac-tive enterprise - the NITI research and development company,feeding avant-garde designs to Bulgaria's former military-industrial complex, and engaged also in producing specializedequipment. NITI will be sold by using a straight-forward andtransparent auction procedure. The starting price was set at6.1 million Euro. Bidding will take place in the summer, with theonly condition set for potential contenders being that they mustnot be companies with an off-shore registration.

The PA internet site contains freely accessible informationabout the state-owned companies prepared for privatization(see the list "Projects Under Drafting").

Many companies will be added to that list soon, as theParliament is expected to approve the cabinet proposal forserious amendments to the effective legislation aimed atderegulating the whole process.

The previous shift

in the course of privatization was made way back in 2001. TheParliament, then dominated by the National Movement SimeonII (NMS) and the Movement for Rights and Freedoms (MRF)set a new course and announced that all state-owned com-panies are free for privatization - with the exception of twogroups of specific companies.

The first group included companies temporarily banned for pri-vate shareholders. The list of the "banned" companies includ-ed more than 100 enterprises. They were closed for privateaccess for as number of reasons - for instance large receiv-ables from abroad (like the Technostryexport company, whichwas owed hundreds of millions of dollars by Libya for com-pleted but unpaid for projects). The Bulgarian Posts was slat-ed as a "sacred cow" because of the specific services it per-forms' the water and sewerage companies, where private andforeign investors are welcomed only as concessionaires. The

list included also large state-owned monopolies like the natur-al gas supplier Bulgargas, the Bulgarian State Railways, andthe National Electricity Company.

LB Bulgaricum, which - besides producing milk, white and yel-low cheese - is considered a guardian of the national treasures.It holds the title on the unique Bacillus Bulgaricum, which givesthe priceless qualities of Bulgarian yoghourt, and has in store900 lacto-bacteria, which are unique and exist only in Bulgaria.

The second group included large state-owned enterprises,

Privatization projects under draftingAGENCY FOR REAL ESTATE LEASING TO THE DIPLOMATIC CORPS IN BULGARIA - ADIS EADAGROHIM -YUG EOODAGROPLASMENT I TARGOVIYA EАDAKDEMIKA SPORT EOODARSENAL AD - 35,80 % share packageBALKANCAR ERMA ADBALKANCAR - ZP "TODOR PETROV" АDBALKANCAR - ZPDEA "G. KOSTOV" ADBALKANCAR GEORGI MYCHAILOV ADBALKANCAR HOLDING (in insolvency)BALKANCAR ISKAR ADBALKANCAR ZFI ADBIC EKOMEDBIO EADBULGARGEOMIN EADBULGARPLOD EOOD PESHTERABULGARPLOD-EXPORT OODBULGARTABAK HOLDING ADCESI INVEST EOODCITAS EOOD, SofiaDISTRICT HEATING PLANT PERNIKDISTRICT HEATING PLANT - SHOUMEN EADHOPROMAGS EOODHOSTEL N 6 AND CANTEEN, town of Karlovo, detachedpart of VMZ EADHYDRO POWER PLANT (HPP) MALA TSARKVAHYDRO POWER PLANT (HPP) TUZHAHYDRO POWER PLANT (HPP) USTOVOHYDRO POWER PLANT (HPP) VIDIMAHYDRO POWER PLANT (HPP) LUKOVITHYDRO POWER PLANT (HPP) SIMEONOVOHYDRO POWER PLANT (HPP) BELI ISKARINSTITUTE FOR MARKETINGKINTEX EADMINES BOBOV DOL ЕADNATIONAL CONSTANT OPERATING EXHIBITION EOODNITI EADOVCHA KUPEL EOODREST HOUSE "BIALA REKA" , Kalofer, detached part ofVMZ EADSLANCHEV BRYAG ADSORTOVI SEMENA - ELIT EADSTATPRINT EOODTERATON EADTHERMO - ELECTRIC POWER PLANT (TPP) BOBOVDOL, EADVAZOVSKI MASHINOSTROITELNI ZAVODI (VMZ) EADVMT ORBITA ADUCHEBNO KONSULTANTSKI KOMPLEKS EOOD

A worker in one of the tobacco factories of Bulgartabac Holding Plc. The Cabinet

is proposing now to remove this company from the list of the companies, which

are subject to privatization only with the approval of the Parliament.

which were considered as being especially important forBulgaria's economy and which might be privatized but only bya proposal of the cabinet and with the sale strategy, statingexplicitly the terms and the conditions for the eventual changeof ownership, approved by Parliament.

This group includes the seven electricity distributing utilities,the Bulgartabac Holding, the Bulgarian River Shipping, theBulgarian Telecommunications Company (BTC), the nationalflag carrier Bulgaria Air, and others. Most of these companieshave already been privatized, with private entities holdingmajority or even 100-percent stakes - for instance BTC, theBulgarian River Shipping, the electricity distribution utilities,and Bulgaria Air etc. The last strategic companies whichremained state-owned are the weapons trading companiesKintex and Teraton, for which the Parliament has still notapproved strategies for attracting foreign investors. The fate ofthe Bulgartabac Holding was also left undecided.

It must be noted that the incumbent government is the thirdsuccessive cabinet failing to privatize the cigarette holding.The strategy approved five years ago stated that private own-ers of all the daughter companies in the holding must be foundfirst - these ate the tobacco processing enterprises, the ciga-rette making companies, and the filter and packaging manu-facturers. Only after that the procedure could move on to sell-ing the holding company, which owns all Bulgarian cigarettetrademarks. Most of the daughter companies have alreadybeen privatized. However, the four largest cigarette factories -in Blagoevgrad, Sofia, Stara Zagora and Plovdiv - are stillstate-owned.

The most complex phase of this process is still to come. TheCabinet announced recently it plans to close down the ciga-rette factories in Plovdiv and Stara Zagora, and concentrateproduction into the other two companies in Blagoevgrad andSofia, which will be offered to a single buyer. The ruling coali-tion partners however are still arguing about this plan. Thereare contradictions also on how the two cigarette factories willbe sold - regardless of whether they will be four, three or two- through the Stock Exchange or by other procedures. Theintentions of the incumbents regarding the holding are evenless clear.

A short time after the New Year's, the Cabinet adopted a pro-posal for

major amendments

to the Privatization Act, including to the contents of the twolists - the "forbidden" and the "strategic" companies. The ideais to release for privatization as many companies as possible.

The members of Parliament became strongly agitated at thefirst reading of the bill by the cabinet proposal the privatizationof the state and municipal-owned hospitals, which had beenjealously guarded until then. The cabinet plan was to removefrom the "forbidden" list the free economic zone, sports facili-ties included in the assets of the National Sports Base, theconstruction holdings Montazhi [Building Structures] andPromishleno Stroitelstvo [Industrial Construction], and scores ofother companies.

Intentions, of course bear no guarantee that we shall soon bewitnessing an avalanche of privatization deals. It is sufficient toremind that the ruling coalition has been promising, since2005, to sell the Bulgartabac Holding "quickly," "soon" and"before the end of the year."

The Cabinet is proposing now to remove the BulgartabacHolding from the list of the companies, which are subject to

e c o n o m y

14

Am

Cham

B

ulg

aria M

agazin

e M

arch 2008

The Big Deal

The successful sale of the BMS (Bulgarian Maritime

Shipping) before the end of the year will, alone, improve

the 2007 performance record of the PA. The sole candi-

date, "KG Maritime Shipping", has offered to pay 400.1

million Leva for a 70-percent share of the state-owned

shipping operation.

PA experts have completed a preliminary assessment of

the BMS assets, according to which the price tag for 100

percent of the capital was set at 600 million Leva. The

official estimate made by the Bulgarian-German consor-

tium KG Maritime Shipping is almost the same - 628 mil-

lion Leva.

The potential buyer has assumed the commitment to

invest 780 million Leva in the company over the next 10

years. If the investment program is running on schedule,

the state will sell after five years the remaining 30 percent

to KG Maritime Shipping. The consortium has pledged to

invest a total of 1.42 billion Leva in the acquisition and

upgrading the BMS for 10 years.

PA's Todor Nikolov claims that the proposed investments

could transform BMS into one of the most modern com-

mercial fleets in Europe, by raising the average age of the

vessels to less than 10 years. Currently, leading European

states have fleets at an average age of 12-13 years. The

sailing staff of the company will be reduced by 421 per-

sons, according to the offer deposited by KG Maritime

Shipping. Currently, BMS employs a total of 2,851.

The Cabinet will have to approve the major parameters of

the deal before it could be moved to completion.

Chairman of the Transport and Communications Committee Yordan

Mrchev (right) and capitan Hristo Donev - the CEO of Bulgarian Maritime

Shipping (left) during an official presentation of the privatization strategy on

BMS in the city of Varna. Several thousand citizens of Varna are employed

by BMS, and their families depend on future of the company.

A crisis in 2008 that shall be less severe than in 2001

Drawing on its experience with corporate payments in itscountries of presence, Coface underlines the differencesbetween the current situation and the crisis in 2001 wherepayment defaults jumped 30% just before the bubble burstwhile world growth was under 2% at the time.

In 2007 and 2008 households rather than companies arethe victims of over indebtedness. Companies are not cen-tral to the crisis. But an economic shock and more difficultaccess to financing could nonetheless affect them.

And even with much slower world growth emerging coun-tries should moreover hold up well. They are much strongertoday with their growth increasingly driven by domesticdemand and with their financial situations generallyhealthy. Their contribution to world GDP is much largertoday increasing from 24% in 2001 to 34% in 2008. TheUnited States, in sharp contrast, saw its contribution declinefrom 32% of world GDP in 2001 to just 26% today.

A new business environment rating

Have the risks associated with emerging countriesnonetheless disappeared? Their excellent financial healthcannot be allowed to mask recurring deficiencies in thebusiness framework that stoke credit risk on companies.That is why on the occasion of the 2008 conference,Coface is making public for the first time a specific systemfor rating the business environment in 155 countries.Complementary to Country@ratings, a new rating is thusavailable that reflects business environment quality bycountry.

Coface is thus making available to everyone via the newrating system its longstanding and thorough experiencewith the reality of the business climate to improve theapproach to credit risk on companies. In assessing credit

risks it is indeed equally important to know whether a com-pany's accounts faithfully reflect its actual financial situa-tion and whether the legal system can provide fair and effi-cient recourse in case of payment default.

Coface drew on the experience with risk underwriting,business information, and receivables managementgained through its worldwide network of local operationsto develop the BusinessEnvironment@rating system. LikeCountry@ratings, the new ratings fall on a scale with sevenlevels in increasing order of risk, A1, A2, A3, A4, B, C, and D,where A1 represents least risk.

The so-called BRIC countries - Brazil, Russia, India, andChina - provide a good case in point. The Country@ratingfor China in particular is A3 reflecting an acceptable levelof corporate default probability. TheBusinessEnvironment@rating for China is, however, only B, amediocre rating two levels below its overall country rating.

The business environment is naturally included among theparameters that determine overall country ratings.

About Coface

Coface, rated AA by Fitch, AA by S&P and Aa3 by Moody's,is a subsidiary of Natixis whose share capital was 11.6 billioneuros end June 2007. Coface's mission is to facilitate globalbusiness-to-business trade by offering its 120.000 customersfour product lines to fully or partly outsource trade relation-ship management and to finance and protect their receiv-ables: credit insurance, company information and ratings,receivables management and factoring. Thanks to theworldwide local service delivered by 6,000 staff in 65 coun-tries, over 45% of the world's 500 largest corporate groupsare already customers of Coface.

Coface Bulgaria is established in 1994 and is the marketleader of information services in CEE.

Coface unveils itsBusinessEnviroment@rating system,

founded on its experience in worldwidecompanies and established

for 155 countriesFebruary 2008

On the occasion of its annual country risk conference, Coface forecasts slower world growth in 2008 but stillabove three per cent. A credit crunch as severe as in 2001 seems unlikely at this juncture. Among the major risksthat will bear watching, Coface points to contagion spreading from the American slowdown to the UnitedKingdom, Spain, and Ireland and warns that the good performance of emerging countries should not obscurespeculative bubble risks or business environment weaknesses.

e c o n o m y

16

Am

Cham

B

ulg

aria M

agazin

e M

arch 2008

privatization only with the approval of Parliament. This isindicative of the intentions of the Cabinet to aim at a quickdeal without erecting any barriers and setting conditions for thepotential buyers. It is still unclear whether the NationalAssembly will accept such a liberal approach. It would be nosurprise if the MRF decides to block the deal again, as it did4 years ago, when it compromised the sale of the most prof-itable cigarette manufacturing companies a couple of hoursbefore the contract was about to be signed.

It is indicative that while waiting for its own privatization strat-egy, Teraton - a company, which was a well known trader indefence production - lost its markets, its personnel and itsfame. That is why the government now proposes to sell thiscompany without any plans and strategies.

It is symptomatic also that the issue of selling the state-ownedstake of the Bulgarian Stock Exchange has silently fadedaway. The Ministry of Finance is holding a notch above 40 per-cent of the stock trading company, and even the previous gov-ernment planned to offer this share for sale. Representativesof the Vienna and Athens stock exchanges, of Deutsche Borseand of the Scandinavian OMX have visited Sofia for talks.Sofia Stock Exchange managers have silently imposed theattitude that it would be better to upgrade the company andlaunch a new trading platform, and then to start looking forpartners. The government obviously supports this approachand does not plan to sell its shares in the Bulgarian StockExchange at this stage.

The Bulgargas Holding is also the focus of volatile attitudes onthe part of the incumbents. The company's CEO, LyubomirDenchev, announced recently that there is a plan to list

between 20 and 30 percent of the shares of Bulgargas on theBulgarian Stock Exchange in 2008. The holding has evenmade assessment how much it would be able to collect bysuch a move - between 4 and 6 billion Euro. According toDeputy Minister of Economy and Energy Galina Tosheva, how-ever, the actual plan is different and stipulates to set up aBulgarian Energy Holding first - a powerful company with theparticipation of Bulgargas, NEC, the future Belene nuclearpower plant, and others - and then to have the individual com-panies start preparations for emerging on the stock exchange.According to Tosheva, the incorporation of the new energyholding is scheduled for the middle of 2008. However, havingin mind that former economy minister Roumen Ovcharov wasalso speaking about the holding in the present tense, theschedule for its incorporation may emerge as unrealistic.

It is interesting also to follow the developments aroundBulgaria's No. 1 weapons trader, Kintex. This company hasalso patiently waited for years for the government to come upwith a strategy for attracting investors. The long-postponed pri-vatization of the Military Machine Building Company in Sopotis another challenge for the incumbents. This one of thelargest manufacturer of defence related equipment and prod-ucts, is still considered as a prime "morsel," despite the majortremors that have shattered the former military industrial com-plex as a whole.

U-turn

The cabinet has embarked on a "more privatization" course,and at the same time it intends to propose some companiesto be locked in the freezer. According to cabinet ministers, theADIS company, which is managing all diplomatic properties,should by no means fall into the hands of foreign investors.The previous cabinet headed by the HMS made an attempt toprivatize the attractive company, but the deal failed after a par-ticipant in the procedure started throwing corruption accusa-tions.

It is becoming clear also that the privatization on the health-care front will nor be total and comprehensive. A list hasalready been compiled of some 70 large state-owned hospi-tals, which may not be privatized. The list was drafted by thegovernment and includes the largest medical establishments -with national and regional importance and university centres.For the time being the representatives of the ruling majority inParliament are deeply in disagreement both on the list of hos-pitals, which are not subject to privatization, and on thescheme for the sale of the rest of the hospitals. It is not clearalso whether the medical staff should be granted some pref-erences, or entrepreneurial medical doctors will be able tocompete on an equal footing with other potential candidates.

The actual start of the privatization of hospitals will be mostprobably postponed, as the majority of the members ofParliament are of the opinion that this specific matter may notbe regulated by the general privatization legislation and henceit must be specified in details in the Medical EstablishmentsAct.

This means after all that the expected New Wave in privatiza-tion may not rise, at least not this year. ■

Headquarters of Bulgartabac Holding, downtown Sofia. Whoever buys

Bulgartabac, gets this 10 storey building with a perfect location in the heart of

the Bulgarian capital.

n e w s

18

Am

Cham

B

ulg

aria M

agazin

e M

arch 2008

Bulgaria and the United States signed11 supplementary agreements, whichpractically launched the constructionand the joint use of military facilities inthis country. The agreements supple-ment the intergovernmental agreementon defense cooperation betweenBulgaria and the United States, whichwas signed by Foreign Minister IvayloKalfin and Secretary of StateCondoleezza Rice on April 28, 2006.The agreement gave the green light tothe joint use of the Novo Selo firingrange, Bezmer and Graf Ignatievo airforce bases, and a storage facility nearthe town of Aytos.

The 11 agreements, dealing with thetechnical aspects of the joint use of themilitary facilities regulate the issues,related the joint use, security, propertyownership, claims, tax relief, contractualprocedures, operations, customs issues,labor, criminal liability and environment.A 12th supplementary agreement, deal-ing with logistics, is still being drafted.

The instruments were signed on Feb. 28by the Deputy Chairman of the GeneralStaff of the Bulgarian Armed Forces Lt.General Galimir Pehlivanov, and by theDeputy Commander in Chief of the U.S.European Command Navy Vice AdmiralRichard Gallagher. The ceremony wasattended by the U.S. Ambassador toSofia John Beyrle and by Bulgaria'sMinister of Defense Vesselin Bliznakov.

"We shall apply these supplementaryagreements to the military exercisesplanned for next September andOctober in the region of Novo Selo,"Ambassador Beyrle said. "The U.S.Congress has allocated more than $60million for construction in the region ofNovo Selo," he added. A tender proce-dure will be launched soon to appointthe relevant contractors, Beyrle went onto say. The ambassador emphasized

that the joint facilities are located at theBulgarian military bases under theBulgarian flag and Bulgarian command.He added that all nine contracts, relat-ed to the joint military exercises heldlast year were contracted to Bulgariancompanies. Beyrle also said that U.S.military personnel have provided assis-tance to the local community, and havereplaced the woodwork at the seniorpersons facility in the town of Slivenand have repaired a kindergarten in thevillage of Mokren. Assistance to thelocal communities will be extended inthe future as well, Ambassador Beyrlesaid.

The first of the supplementary agree-ments provides for the establishment ofa joint commission, as stipulated by theprovisions of the agreement betweenthe Republic of Bulgaria and the U.S.government. The commission will be

the venue for consultations and willissue instructions on the application ofthe framework agreement. It will be co-chaired by representatives of the twogovernments and decisions will betaken by consensus. The joint commis-sion will develop operational proceduresand create auxiliary structures, and willset the schedule of its sessions. It willhave the prerogatives to establish sub-committee on various issues related tothe implementation of the frameworkagreement.

The application agreement on opera-tions of planning of military exercisesregulates the appointment of the com-mand organs and the functional links,and on training of Army and Air Forceunits. The application agreement onsecurity regulates the obligations of theparties regarding the security at thejoint facilities and installations, and of

Bulgaria and the UnitedStates Sign Eleven Agreements on Bases

By Panayot Angarev

(Form right to left) The Deputy Chairman of the General Staff of the Bulgarian Armed Forces Lt. General

Galimir Pehlivanov, Bulgaria's Minister of Defense Vesselin Bliznakov, U.S. Ambassador to Sofia John Beyrle

and the Deputy Commander in Chief of the U.S. European Command Navy Vice Admiral Richard Gallaghe

19p a g e

Am

Cham

B

ulg

aria M

agazin

e M

arch 2008

n e w s

the transit of US military units.

The application agreement regardingstate acquisitions, contractual proce-dures and the status of the contractorsprovides for the access of Bulgarianentrepreneurs - natural persons andjuristic entities - to competitive tendersfor the provision of products and ser-vices, including building constructionengineering, which will be financed bythe U.S. government in favor of thearmed forces of both states on the ter-ritory of Bulgaria.

Regarding real estate transactions andmanagement, the relevant applicationagreement allows U.S. forces to draftprojects and engage in construction incompliance with the effective Bulgarianlegislation and standards, and to draftand maintain on their account generaldevelopment plans for the installationsand facilities, subject to the defensecooperation agreement.

The supplementary application agree-ment regarding claims procedures regu-lates the relations between the two par-

ties related to liability for damages,caused by the U.S. military units onBulgarian territory. It was agreed thatthe settlement of claims will be subjectto the effective Bulgarian material andprocedural legislation.

The application agreement regardinghiring local labor recognizes the respon-sibility of the U.S. armed forces as alocal employer. The employment termsfor local workers will comply with theprovisions of the effective Bulgarianlegislation. The number, the responsibil-ities, the required qualification and thecapabilities of the persons to be hiredshall be specified by the US armedforces.

The application agreement regardingthe environment reiterates the impor-tance of environment preservation inthe course of the joint use of militaryinstallations and facilities. Both partiesagree on their common objective toguarantee a high level of safety for theenvironment and the health of the peo-ple, living or working at, or close to, thefacilities and installations as specified

in the framework agreement, with theU.S. forces obliged to perform periodicassessments of the environment char-acteristics.

The issues related to the customs con-trol and clearance on the import andthe export of products for personal andofficial use shall be governed by anagreement on the application of cus-toms procedures. The applicationagreement regarding tax exemptionsand relief exempts the deliveries for thepurposes of the U.S. forces stationedon the territory of Bulgaria from taxes.The United States will duly authorize anentity, which shall be in charge of reim-bursing personnel and families with theamount of VAT paid for the acquisitionof products.

The agreement on the proceduresapplicable to the execution of punitivejurisdiction stipulates that the U.S. partyshall be obliged to notify the Ministry ofJustice of all and any crimes pursuantto Bulgaria's Penal Code perpetrated byU.S. military personnel on the territoryof Bulgaria. ■

t h e b a l k a n s

20

Am

Cham

B

ulg

aria M

agazin

e M

arch 2008

"Thee do the angels praise. Save us,Virgin!" Young people standing hand in hand infront of the Cathedral of Saint Sava inBelgrade, singing a sorrowful hymn tothe Mother of God. Meanwhile, 350 kmto the south, other young people arealready chilling champagne and prepar-ing flags: tomorrow Kosovo celebratesits Independence Day.

A snow storm is starting in Belgrade;the weather in Kosovo is cold butclear. Future historians will note thesemeteorological prophecies. As well asthe words, the flood of words: "Todayis a day of sorrow in Serbia," the rad-icals' leader, Tomislav Nikolic, says tome.

At the same time the Albanians arereading the words on the portrait of the

founder of the Kosovo Liberation Army,Adem Jashari, who died in a fight withthe Serbian police in 1998: "Uncle, it isdone."

Serbian premier Vojislav Kostunica isrepeating, again and again, "a phonystate." While Hashim Thaci, the first pre-mier of the new state, is watchingproudly the protocol girl, who is busywith the ceremony. The storm inBelgrade is over and the people inPristina are already uncorking the cham-pagne and firing weapons.

Kosovo is living its Day One, Serbia issaying farewell to its national myth. Twoevents in one. Actually, two worlds.

One year after the plan of MartiAhtisaari, nine years after NATO'sbombings, 17 years after the indepen-

dence referendum, 27 years after thefirst demonstrations and

96 years after its annexa-

tion by Serbia

(and then by the Kingdom of Serbs,Croats and Slovenes), Kosovo is now astate recognized by the main powers ofthe West.

As a matter of fact, Serbia has neverbeen lucky with this region. It is true thatin 1912 the royal army conquered it eas-ily, since the main Ottoman forces werefighting with the Bulgarians in Thrace.But once conquered, Kosovo was neversubjugated. The Albanian paramilitaryforces retreated in the mountain ofDrenica, then once again in 1916-18,and again in 1941-47, and again in1998-99. The Serbian monasteries were

Kosovo's IndependenceDay and Serbia's Day ofSorrow

By Boyko Vassilev

Serbs carrying a banner that reads "It

will remain ours", referring to the break-

away province of Kosovo.

21p a g e

Am

Cham

B

ulg

aria M

agazin

e M

arch 2008

t h e b a l k a n s

there, but the home of the League ofPrizren, the Albanian national revivalmovement, was also there. And sincethe Kosovo Albanians did not want tolive in one and the same state with theSerbs, some kind of autonomy had tobe found for them: narrow in 1948-74,wide in 1974-89, and the narrowest oneafter 1989, when Milosevic told the fewKosovo Serbs: "No one will dare touchyou."

"The Kosovo Albanians are one of the26 recognized minorities in Serbia. Whyshould only they have the right to sepa-rate?" asks Branislava Alendar, deputyminister for Kosovo and Metohija in theSerbian government. "Why should theydivide a sovereign state, a founder of theUN?"

"Because the Kosovo Albanians havealways had an autonomous status,because state pressure was exertedagainst them, because 90 percent ofthem want it, because the Balkan domi-no theory is nonsense," replies ArbenXhaferi, the most clever Albanian politi-cian in the Balkans. "Because Kosovo isa precedent, sui generis, of its ownkind," adds the West.

It is pointless to argue here.International law experts are alreadywriting heavy volumes on the Kosovo

case. So let us just say why

a mutually acceptable solu-

tion was impossible.

The reasons are two. Firstly, you can-not forbid anything to two millionKosovars, let alone to live in a statethey do not want. Secondly, you cannottwist the arms of international law somuch as to make it admit: "Serbia hasno legal rights on Kosovo." Therefore,you take the sword and cut the Gordianknot like Alexander the Great. "TheKosovo knot has to be cut," IvanStambolic, a former Serbian president,a patron to Milosevic and later his vic-tim, told me back in 1996. That is whatthe West did, more particularly theUnited States.

Was it a mistake? It is early to say. Thebiggest threat may come in 10 years orso if another Albanian army appears forliberation of something - Presevo,Bujanovac, Medveda, Montenegro (Plavand Gusinje), North Greece (Cameria),West Macedonia. Did you rememberthese names? I will be happy if youhave no reason to remember them.These are not the borders of GreatAlbania (the Albanian project is rather"Great Kosovo"); nor is it the dominoeffect. I am simply afraid that the radi-cal Albanians will not listen to the West

(which claims it has reached agreementwith them), but will look for new oppor-tunities.

Here I will get off the point in order toinstruct western politicians on howagreements are kept in the Balkans.Vladimir Dedijer, a prominent figure inpre-1992 Yugoslavia, once told the storyof how he had sworn solemnly but insin-cerely to some western official. "Hesurely knew that even the most solemnoath is invalid if while taking it you aresecretly making a fig sign in your pock-et." How many times, dear internationalrepresentatives, has it seemed to youthat the Balkan national in front of youis making a fig sign in his pocket?

More dangers. Kosovo may become anentirely criminal state: a center of pros-titution, drugs and human trafficking. Itmay turn into a multiethnic state, drivingaway the few remaining Serbs, harass-ing Roma, Gorani and Turks. It may alsobecome

a precedent state -

Catalonia, Basque Country, Kurdistan,Transylvania are waiting for their turn tocome, while Russia is rubbing its handsat Abkhazia and South Ossetia.

Bad things may happen to Serbia, too.

Serbs wave national f lags while protesting against Kosovo's independence in the ethnically divided town of Kosovska Mitrovica in Kosovo.

The depressed Serbian elite may aban-don European integration as an uselessluxury. Nikolic's radicals may assumepower (despite the strange remark Iheard from him, "I am at the end of mycareer and probably of my life"). Serbiamay become what it used to be: evil andsuspicious. Its internal cohesion maycrack even further: I already mentionedPresevo Valley, but how about theMuslims (the Bosniaks) in Sandjak, theHungarians in Vojvodina, and why not theBulgarians in eastern Serbia (the west-ern outlying territories)? The last conjec-ture was made by Tomislav Nikolic, not bydesperate Bulgarian revisionists.

But the biggest threat for Serbia is tosink into Kosovo. To believe politicianslike premier Kostunica and radicals'leader Nikolic, who talk of nothing else.Every manager knows that the only waynever to solve a problem is to think onlyof it. On the other hand, every populistpolitician knows that it is better to talkabout painful things in strong words thanbury yourself in the "boring" privatization,integration, renationalization and all suchunpopular but important "ation" things.

How about the world? Each countryreacts in its own way to these dangersand sees in them its own ghosts. TheUnited States and the largest in the EUsay: "Independent Kosovo - this is theonly response to Albanian radicalism;this is the only way for Serbia to breakup with the spirit of the past. Wepromised it and we are now fulfilling ourpromise." To Russia and China it isanother chance to question theAmerican leadership and morals. Ialready mentioned those trembling at

the prophesy of their own disintegration.Thus Kosovo is a story through whicheverybody tells their own stories.

Therefore to a certain extent it was asurprise that Serbia's initial reaction was

rather soft and pragmatic.

In the first days it did not impose anembargo or trade blockage on Kosovo.The ambassadors of the countries thatrecognized Pristina were recalled "forconsultations," which is a much moremoderate measure than lowering thelevel of the diplomatic relations, not tomention their termination. That is in asharp contrast with the expectations ofsome observers, who predicted some-thing in between a deadly offense and amilitary response.

Politicians and commentators are show-ing understanding to Bulgaria, despitesome predictions that Belgrade will lay itshatred on its neighbors. That is probablyalso supported by the fact that Sofia didnot rush to recognize Kosovo. This is thebest that can be done with the hope thatin a month the passions will subside orescalate into another direction.

The only people that did not show mod-eration were the extreme guys ofBelgrade's streets. The young nationalistsof Obraz and the fan groups of CrvenaZvezda and Partizan scored another owngoal, against the Serbian media image.Between the shots of the peaceful rally,with Kosturica and Kostunica on the ros-trum, and the shots of the burningembassies, television offices, including ofSerbian channels, they chose the latter.

That surprises nobody who has ever hadanything to do with the media.

I personally continue to be amazed by ascene I have been watching for 10 yearsalready: the Serbs first complain of

the media war

against them, and then they themselvescreate the weapons for the war to bewaged. Such is now the case, too: noadequate police measures, unguardedembassies, nobody arrested on the firstevening of the riots. Rumor has it inBelgrade that this is all a set-up organizedby the radical elements in the governmentand the opposition. But I, having lived forthe past 15 years on the Balkans, firmlybelieve not in set-ups, but in the humanfolly and lack of organization.

On my leaving, the radical Nikolic says tome: "If not I, if not my children, then thechildren of my children will restore Kosovoto Serbia." I go back to the hotel andswitch the TV on: Kosovo Albanians aredancing around the flag, girls and boys arehugging each other in the square. Nikolic'sprediction is not just 350 km away fromthe world of Pristina's young people: no,the distance is at least 35,000 km.

So, this is how a state is borne: somepeople sing, others cry. I turn the TV offand tell myself that in the next sixmonths nothing reasonable can be saidabout Kosovo. It will be buried in emo-tions and drowned in crying and songs.

Only then the time will come for think-ing what exactly was born on Feb. 17,2008. ■

t h e b a l k a n s

22

Am

Cham

B

ulg

aria M

agazin

e M

arch 2008

Serbian riot police clash with protesters in front of the Serbian government building in Belgrade, Serbia, 17 February 2008. Several hundred protesters threw stones

and f lares at riot police protecting the US embassy in Belgrade after Kosovo's declaration of independence.

m a r k e t

24

Am

Cham

B

ulg

aria M

agazin

e M

arch 2008

The wireless telecom market grew byroughly 17% in nominal value terms tomore than EUR 1.1bn in 2007, accordingto the financial reports of the three cell-phone operators in the sector. In volumeterms, the growth rate was even moreimpressive despite the high-basereached in 2006. The cell-phone pene-tration rate thus advanced to one of thehighest levels in Europe in terms ofactive SIM cards per capita. The figureis estimated at 132.8% as of end-December compared to 105.9% a yearearlier, according to data presented bymarket leader MobilTel, member ofAustria's mobilkom group. This is thehighest cell-phone usage ratio in Centraland Eastern Europe and it stands signif-icantly above the average for all EUmember states. In fact, the steepestmarket expansion is reported in minutesof voice traffic last year, as all operatorshave reduced the average price chargesin fight for bigger market shares. Thereis still a big potential for price cuts giventhat the profit margins in the sectorremain quite high, safe for the latestentrant vivatel, owned by the dominantlandline telecom BTC. Vivatel is not ableto reach the break-even point yet due toits early phase of development but is thefastest growing competitor in salesterms. The second biggest cell-phoneoperator Globul, owned by GreekCosmote, has significantly improved itsposition over the past several years froma market share of 26% in terms of SIMcards at the end of 2002 to roughly 40%as of end-2007. MobilTel and vivatel ser-vice about 50% and 10% of the SIMcards, respectively. All three competitorshave already launched 3G services andare expanding towards various multime-dia and internet applications. MobilTeland GloBul are also promoting combinedfixed-line and wireless packages ofvoice, internet and TV service that willchallenge the business of landline oper-

ators. The wireless telecom sector isalready generating much bigger revenuesthan traditional landline business. Whilethe two market segments generatedroughly equal sale values in 2003, thewireless business surged to more thanEUR 1.1bn in 2007 against some EUR500mn for BTC, which controls morethan 90% of the landline telecom salesin the country.

Cell-phone operators sign

number portability rules

The three wireless telecom operators inthe country signed on Feb 25, 2008 thelong-debated number portability rule-book that will allow customers to keepcell-phone numbers, including the three-digit prefix, after changing theirproviders. Each operator should publishdetailed terms and conditions of theservice up to two weeks after the sign-ing of the agreement. The rules shouldbe enforced by mid-April at latest butthe real start of number transfers willmost likely take place on Jul 1, 2008,when the three cell-phone operatorshave to activate a centralized database

of customers in accordance with thefunctional specifications approved bythe state telecoms regulator. The cen-tralized database has to provide asmooth transition of customers to newoperators, regular reports on numbertransfers, and fair billing terms. Thefunctional specifications impose cus-tomer friendly terms for change ofoperators under conditions of a one-stop service administered by the recipi-ent company only and an optional one-off fee for the customer that is alsodecided by the recipient company. Asfar as it is in the interest of the recipi-ent operator to attract a new customer,the fee for transfer of numbers will beeither zero or very low. The donor oper-ator may charge a cost-oriented fee tothe recipient operator but the latter isnot forced to transfer the bill to the cus-tomer. All transfers should be complet-ed within a 10-day period and refusalsby the donor company are acceptedonly in exceptional cases of unpaid billsor incorrect declarations on the side ofthe customer. The new operator is evenallowed to cover outstanding claims andcosts billed during the transfer window

This article is based on extracts from ISI Emerging MarketsIntelliNews publications: Bulgaria This Week and BulgariaCountry Report. For more detailed information please contactISI Emerging Markets office in Sofia at +359 2 8160404 or [email protected]

Wireless Telecom Market in Bulgaria -Really Impressive FiguresCell-phone usage in Bulgaria surges to one of highest ratios in Europe

25p a g e

Am

Cham

B

ulg

aria M

agazin

e M

arch 2008

m a r k e t

so that the customer will have fullaccess to telecom services in the tran-sition period and will not have to contactthe donor operator.

The start of the number portability ser-vice in the wireless telecom sector isexpected to step up further the compe-tition among the three operators. The

practice in other EU countries showsthat the share of number transfers isquite significant when the cost of theservice is low and the rules are draftedin favour of the customers. The condi-tions set by the functional specificationsare fully supporting this model and themarket players, especially the third cell-phone operator vivatel, are likely to start

a very aggressive campaign for attract-ing customers of competitors. Given thehigh penetration rate on the market, thecell-phone operators will certainly haveto adjust their market strategies to thenew threats and opportunities arisingfrom the number portability agreement.The overall quality and price terms forcustomers should improve and the roleof club benefits aimed at attracting orretaining customers should increase. Theimportance of the number of portabilityis also indicated by the long negotiationsheld before the final agreement. Thethree cell-phone operators were expect-ed to introduce number transfers as ofthe beginning of 2007 but MobilTelrefused to sign the draft common rulesclaiming that they reflected only theinterests of the other two competitorsGloBul and vivatel. On the other hand,GloBul and vivatel claimed that the mar-ket leader was deliberately slowing theprocess in fight for its dominant salesposition. The European Commission hascriticized the country on the issue butsanctions are not imposed by now, asthe missed deadline is violating onlynational regulations. ■

a n a l y s i s

26

Am

Cham

B

ulg

aria M

agazin

e M

arch 2008

Bulgaria's textile industry has managedto negotiate the ups and downs of thetransition period and to survive. Unlikemachine-building enterprises - whichwere, once, the pride of the Socialist-style industry - the fashion companiespreserved their market positions and,today, is among the largest employers inBulgaria's economy.

However, this manufacturing branch isalready on the edge, experts from therespectable Textiles Intelligence agencyclaim. The agency's report on the tex-tile sector in Bulgaria claims that itneeds still more investments in order topreserve positive rates of development.Between 2000 and 2006, the textilesector in Bulgaria raised the volume ofits production by 152 percent, and theready-made clothes sector - by 109percent, while at the same time the tex-tile production in the European Unionfell by 21 percent, and of clothes - by32 percent. That is why it is reasonableto ask whether now the Bulgarian man-ufacturers, acting on an equal footingwith the rest on the European market,

will follow their Western counterparts onthe way downwards or will manage togain the upper hand in the race to thetop slot in the sector.

The textile and clothes has gained overthe last several years a decisive posi-tion in Bulgaria's economy. There aremore than 2500 companies in thisbranch, with a total of close to 160,000employees. The Bulgarian Associationof the Textile and ClothesManufacturers and Exports (BATCME)claims in an expert assessment thatBulgaria's textile industry preserves itstendency of positive rates of develop-ment and growth.

Bulgarian textile companies are facingnot only the strong competition ofcheap Chinese and Turkish products,but also of the European fashion trade-marks. The Bulgarian companies relyon specialization and targeting of spe-cific market niches by offering higher-quality products in order to maintaintheir competitiveness and resist thepressure of cheaper imports. Bulgarian

companies have followed for severalyears a strategy to acquire more expen-sive state-of-the-art technologies andmachines. Development is spearheadedby the desire of the companies toupgrade production, raise efficiency,match European requirements and off-set the effects of one of the majorproblems in the sector - the lack ofskilled labour.

Besides the deficit of labor (forinstances seamstresses, technologistsand even traders), Bulgarian companiesface the challenge of finding local sup-pliers of quality and diverse production.Bulgarian textile industry needs, andhas the potential to, increase the pro-duction of raw materials - textile cloth-ing, fabrics, accessories etc., in order toreduce costs and shorten the terms forfinishing order contracts. This wouldboost the competitiveness of the com-panies in the branch. Bulgarian compa-nies have the advantage of being closeto Western markets, but they shall haveto respond extremely quickly to ordersand establish more of their trademarks

Women checking fabrics in a clothing factory

near the town of Malko Turnovo right next to

the Turkish border in South-East of Bulgaria.

This company exports clothes to the USA as

well as to EU countries.

TT hh ee TT ee xx tt ii ll ee II nn dd uu ss tt rr yy --MM yy tt hh ss aa nn dd RR ee aa ll ii tt ii ee ss

More than 3,000 Bulgarian enterprises export their production to EU

By Mina Georgieva

27p a g e

Am

Cham

B

ulg

aria M

agazin

e M

arch 2008

a n a l y s i s

on the market.

Several Bulgarian textile

companies are listed at

the Bulgarian Stock

Exchange

including some of the largest compa-nies in the sector - the socks manu-facturer Phasan, the Sliven-based car-pet maker Decotex, the yarn makerKatex, and others. Their aggregate cap-italization is estimated at about 60 mil-lion Leva. Textile sector companies arecharacterized by small scales and lowliquidity. Stock exchange statistics indi-cate that a total of 2,470 transactionsworth 6.6 million Leva were made intextile companies' shares last year.

Hazards

Some 160,000 people are employed byclothes and textile companies, but thisnumber is falling as some of the work-ers emirate in search of a better pay.The Bulgarian textile companies mightsolve the qualified personnel issue by

employing Vietnamese workers, with thefirst 60 workers expected to arrive inMay.

The number of the employed by clothesmanufacturers and textile companiesfell by 2.5 percent in the first half of2007, compared to the same period ofthe preceding year, according to datareleased by BATCME. The low efficien-cy of labour in Bulgaria and the emi-gration of qualified personnel havealready resulted in the deficit of labour."Skilled workers can make much morein Western Europe and do not hesitateto leave the country", BATCME wrote.According to Association's estimates,the average salary in the sector stoodat 450 Leva in 2007. Official statisticsset the average salary at 265.50 Leva.The difference in the data is attributedto the high percentage of grey-sectoroperations, which is not covered by sta-tistics. The top workers in the textilesector make some 800-900 Leva permonth. The wages in the branch roseby 16.9 percent in 2007, year-on-year,which is however not attributed to

improved efficiency. The gross addedvalue per employee is set at 3,930 Levafor last year, which indicates that theefficiency in Bulgaria is very low.

Textile industry suffers also from thelack of mid-level management person-nel - technologists, plant managers andorganizers. BATCME hopes that thisproblem will be overcome as a result ofthe development of the whole branch.

Statistics reported

a decrease in textile

exports in 2007,

however experts claim that this is nottrue. The difference is attributed to achange in the system used to collectdata. Before Bulgaria's accession to theEU, data collection was performed bythe customs authorities. With the liftingthe economic borders the companieswere obliged to submit data to"Interstat", with come of the companiesrelieved of this obligation, hence theincorrect final snapshot of the industry.BATCME will present the real data onexports in April.

The textiles and clothes branch gener-ate a major portion of foreign currencyrevenue, as 88.6 percent of their prod-ucts are exported to the EU, accordingto BATCME data.

There are some 3,000

companies in the sector,

90 percent of which are small andmedium-sized, with personnel between100 and 300. One of the problems forthe local clothes industry is that they donot market their own trademark. "Thecompanies here do not have thecourage to launch their own trade-marks, which is regrettable", branchexperts claim. This country needs a lotof marketing and sales knowledge andexperience. The hopes of this branchare to enter into new partnerships forsharing know-how and business solu-tions.

The major advantages of the Bulgariantextile industry are related mainly to

enterprise size

Small and medium-size companies, withpersonnel of up to 250, account for 65

The state helped "E. Miroglio" AD with its investment project in Yambol with

2,093,194 Leva. The funds were used for the construction of a municipal road

within the industrial zone of the municipality.

"E. Miroglio" AD is the Bulgarian affiliate company of "Miroglio S. P. A." - one of

the largest manufacturers of textiles and clothes in Europe. The Italian compa-

ny has invested 180 million Euro so far in five manufacturing enterprises and two

trading companies in Bulgaria. Close to 93 million Leva were invested in the new

spinning and dying facility with storages and a water treatment plant near the

town of Yambol, which was commissioned in April 2007. The enterprise employs

600 persons, which is by 71 more than the initial; estimates.

The number of employees is expected to rise to 660 by the end of 2008. The

enterprise includes a wool and cotton spinning plant, a dying plant, a storage

facility for raw materials and completed products, and waste water treatment

installation.

After all the manufacturing capacities of the Yambol enterprise are commis-

sioned, the spinning plant will produce about 5.5 tons per day of wool and 4 tons

of cotton. "Miroglio S. P. A." has opened five enterprises in Bulgaria since 1998

and currently employs more than 1,800 persons.

The manufacturing facilities in the town of Sliven are three - for woollen textile,

for viscous and for polyester fabrics, and for spinning of wool yarn. The Italian

company has spinning factories also in Nova Zagora, and a stamping factory in

Elin Pelin.

"Miroglio S. P. A." employs about 7000 persons, and its annual revenue is esti-

mated at 750 million Euro. Its production capacities are estimated at 36 million

kilograms or yarn, 100 million meters of fabrics and 11 million garments.

Investments

to 95 percent of the total number ofoperations. They are able to quicklyrespond to market changes, to assureshort-term deliveries and are very flex-ible. Twenty-two textile companies arelisted on the Bulgarian Stock Exchange.

The companies working with materialsprovided by the customer are larger -like Veni Style, which has its own facil-ity with 150 employees. About half ofthe output is manufactured for the MaxMara fashion trademark. The compa-ny's own trademark Ether accounts forthe rest of the output.

Geographical location

Being in Europe, but on the border withAsia, Bulgaria can expand its marketsin both continents. Being an outer EUborder, Bulgaria has the advantage oftransport delivery schedules than Indiaor China. Almost 90 percent of theready-made clothes exports in 2006went to EU states, including Romania.The quality is good and the prices arecompetitive for the region.

Low pay

Weavers and seamstresses are amongthe lowest-pay workers in Bulgaria.According to National Statistics Institute(NSI) data, the lowest average wagesare reported in the production of tex-tiles and clothes (270 Leva) and inhostelry and restaurants (280 Leva)per month.

The average annual salary in the textilesector stood at 2,728 Leva, which wasby 11.03 percent more than in 2005(according to NSI data). Despite thisincrease, the average salary in Bulgariaremains the lowest among all EU mem-ber states.

The elimination of customs

duties

The trade between Bulgaria and the EUis relieved from customs duties. Theobstacles encountered at the bordershave also been removed. All thesedevelopments accelerated deliveries tothe EU and reduced logistics cost. Theremoval of customs duties was to theadvantage mainly of the small-sizecompanies. Companies like Ether andMarkam already have already openedtheir representative offices abroad.

Despite the good ratings from Europeantextile experts,

local manufacturers are

facing serious challenges.

One of the major problems is related tothe lack of skilled personnel. Bulgarianseamstresses have been for years treat-ed at "working for somebody else". Theindustry has failed until now to create abetter image for this type of work.BATCME statistics reveal a worrisometrend: the personnel at the clothes fac-tories fell by 2.5 percent in the first halfof last year.

Experts expect that it is the number oflower-level employees, usually at theage of above 40, will continue todecrease. At the same time, however,the potential at the medium-level man-agement personnel is growing. Theproblem with working with materialssupplied by clients is that the profit isbetween seven and 10 times lower thanthe profit from own trademark products.Besides, this scheme places the manu-facturers in a unilateral dependence onforeign investors.

Skilled and highly qualified personnel,speaking foreign languages, prefer tolook abroad for a job bringing a highersalary. This has forced some compa-nies to import workers from Macedonia,Moldova or Vietnam. Moving the pro-duction facilities to regions with lowerwages is an alternative, which wasexploited back in the early 1990s by anumber of foreign pseudo-investors.

Currently the cost of labor defines atoken 3 to 4 percent of the actual priceof clothes. Design plays a much moreimportant role and generates 10 percentof the value of the product.

About 10 percent of the total volume ofclothes is offered on the domestic mar-ket. The largest fabrics manufacturer inBulgaria, Miroglio, allocates less than 5percent of its output to the domesticmarket.

There is a potential in the so called fastfashion - small series of clothes, man-ufactured within a short period of timeand intended to respond to demand ona dynamic market. Bulgaria cannotcompete with China in manufacturing T-shirts, youth and sports everyday wear

- products that can be stuffed in 100sor 1000s in a box. But Bulgaria doeshave the potential in ready-madeclothes which has to be delivered toEurope "on the hanger" - suits, jackets,formal dresses.

Many facts indicate that Bulgaria's tex-tile and fashion industry is about toenter a specific phase of its develop-ment. A Bulgarian seamstress is beingpaid as much as her counterpart inEgypt, Mexico and in some parts ofChina and Ukraine, which much belowwhat her counterparts elsewhere inEurope are paid. European membershipmay encourage large-scale investments.This will lead to an increase of effi-ciency, new jobs and the creation ofhigh-value export products.

The EU member states

are the major trading part-

ners of Bulgarian textile

enterprises

These states accounted for 85 percentof the export and for a notch above 70percent of the import in 2007. Thesefigures indicate a distinctively territorialpattern of trade concentration. The restof the regions have a stronger influenceon the import structure. Balkan states,excluding Greece and Slovenia,account for about 16 percent, and Asia- for 7 percent, of imports.

More than 70 percent of the productionin all commodities groups, with theexception of silk, stamped syntheticfibres and clothes different fromknitwear, is sold in EU member states.The largest regional markets areGreece, Italy, Germany and France,which account for about two thirds ofthe exported products. Bulgaria exportsto Greece mainly knitwear (41 percentof total exports) and clothes differentfrom knitwear. We supply the market inItaly with clothes and textile materials.Actually, Bulgarian textile products areexported mainly to Italy - about 70 per-cent of the wool, more than 60 percentof plant fibbers and cellulose yarn,about 50 percent of the knitwear, 40percent of the cotton and synthetic fib-bers. The share of the export ofclothes to Italy is estimated at about 13percent.

The market in Germany demands the

a n a l y s i s

28

Am

Cham

B

ulg

aria M

agazin

e M

arch 2008

a n a l y s i s

30

Am

Cham

B

ulg

aria M

agazin

e M

arch 2008

largest share of clothes different fromknitwear un-knitted clothes (more than25 percent), and some 10 percent ofthe knitwear. Bulgaria exports to Francemainly clothes different from knitwear -some 85 percent of all textile exports tothis country.

A major increase in the sales of textileand textile products is recorded inSpain (more than 6 times), Turkey(more than five times) and in GreatBritain (more than three times).Romania is also emerging as a stablepartner, ranked after Greece andTurkey, among the Balkan states.

The regional import struc-

ture

is much more dynamic than the export.There is a tendency towards an intensi-fication of the competition on the worldtextile and clothes markets, which hasresulted in the emergence of new stateson the import list. China is one of themost impressive examples. Imports fromChina increased ten times over the lastfive years, and its share rose from 0.9to 5,6 percent. China operates mainlyon the clothes market, with some rawmaterials like silk, plant textile fibbersand synthetic and artificial fibbersadded to the import mix. The tendencytowards a growing influence of Chinesetextile products on the international mar-ket will most probably accelerate.

This process will inevitably lead to ten-sions on the market and, respectively,to changes in the market strategies ofboth the importing and of the exportingcountries. Bulgaria should not be anexception and shall be obliged to takeinto consideration the competitive pres-sure not only of China, but also of anumber of other Asian states.

Regardless of the increased imports ofChinese textile products, majorimporters on the Bulgarian market arestill some of the EU member states -Italy, Greece, Germany and France.They account for 57 to 64 percent ofthe import demand for textile products inBulgaria. It must be noted, however, thatthere is a tendency towards decreasingthe presence of these states. This isattributed to the steep rise in theimports from Turkey and China. Importsof Turkish products increased more thanfour times after 2000, which boosted

them to the third place in the territorialstructure after Italy and Greece.

The share of Bulgaria's southern neigh-bour rose by 5.9 percentage points to a13.9 percent peak. Turkey left Germanyand France behind, as their share ofthe domestic market is gradually dimin-ishing and equalled the share Turkeyhad five years ago. The expandingpresence of Bulgaria's southern neigh-bour on the international textiles marketis attributed to the extraordinary invest-ments made in textile production.Turkey is now, together with the leadingcountries in Asia, in the ten largestexporters in the world of both textileraw materials and of textile products.

These structural shifts are determinedby the different dynamics of the importsfrom the individual states. Imports fromGermany rose by 35 percent only dur-ing the last five years, compared to a75 percent increase of the imports fromFrance. If the current trend in theimports of textile products from thesefour states persists, there may well beeven more serious changes in theimport structure in terms of country oforigin over the next two or three years.

Bulgaria imports from Turkey mainlycotton, staple synthetic or artificial fib-bers, knitwear fabrics and knitwearproducts. Italy is offering wool, cotton,staple synthetic or artificial fibbers, andclothes. Greece dominates the clothes

imports. It accounts for more than 60percent of the knitwear sales and forabout 25 percent of the sales ofclothes, different from knitwear.

The specific form of trade in textiles andclothes defines not only its dynamics andstructure but also the trends in the devel-opment of the trade balance. Its is general-ly positive, with a slight domination ofexports over imports and is due exclusive-ly to the positive balance with the Europeanstates. Bulgaria's largest positive trade bal-ance is registered in its trade with Germany- $240 million. Trade with the rest of theEuropean states is almost balanced. Turkeyand China, with which Bulgaria has regis-tered the largest trade deficits, are on theother extremity, as imports are severaltimes higher than exports. Imports in 2005stood at $158.3 million, compared to $68.9million worth of exports.

Minimum differences in the textileexport volumes, the competitive pres-sure exerted by China and Turkey, andin the future - perhaps also by otherstates, and the comparatively moderaterate of growth of exports to otherEuropean states, considered as majormarkets for Bulgarian products, doesnot the exclude the chance that thelines of export and import might inter-sect, and the trade balance to shiftfrom the green to the red. Such adevelopment would remove Bulgarianproducts from the growingly dynamicand strained world textile market. ■

The Director of the Bulgarian General Labour Inspectorate Totyo Mladenov (in the background) is checking

the work safety environment at a dressmaking factory in Vratza - a town 100 kilometers North from Sofia.

More than 160 000 Bulgarians work in the 2500 clothing and textile companies all over Bulgaria.


32

Am

Cham

B

ulg

aria M

agazin

e M

arch 2008

A record number of 118 participants registered for the FourthAmCham Ski Tournament on Feb. 24, with 103 of them activelyinvolved in the race in the vicinity of Aleko on Vitosha. AmChammembers, students and journalists competed in two disciplines -giant slalom ski and giant slalom snowboard, and in four cate-gories: men, women, children and team.

All the contestants had to show their best on a downhill coursein one run only. Moten Sport provided the technical assistanceand running commentary. The ski show was covered by BNTnews, featuring the anchor Irina Tzoneva as a keen skier at thechamber's tournament. Among the other journalists she compet-ed with, were Desislava Kulelieva, 24 Chassa daily, and VassilenaChonova from Top Sport Newspaper. The best results among thewomen showed Ralitza Ivanova, 3M, who finished first. EvgeniaStoichkova, Coca Cola Bulgaria, came in second, and VelinaSavova, Pain D'or placed third. Except in the BNT news, the high-ly emotional race was covered in 24 Chassa daily, Top SportNewspaper, and The Sofia Echo newspaper.

The competition in the men's category was stiff, where 50 partic-ipants run neck-and-neck in the single run. Alexander Savov, PainD'Or, placed first among men, followed by Deyan Apostolov,Johnson Controls Electronics, and Hristo Babev, Allianz BulgariaCommercial Bank who placed third. Among the first 10 came also

the skiers of Hilton, Ericsson Telecommunications, Motorola, andAT Engineering.

All places in the children category were taken by competitorsfrom the American College: Viktor Kerezov placed first, followedby Vesselin Hadjistefanov and Assen Kostadinov. The AmericanCollege students participated with a large group, almost taking thefirst 10 places together with Pain D'or.

Verifying once again the popularity of the snowboard, quite a biggroup of 19 people registered for the AmCham race. MomchilVelev, Renault Nissan Bulgaria won the snowboard race, followedby Evgeni Batinkov, Fox Life International TV, and AlexanderNikolov, ProCredit Bank.

In the team category Pain D'or took the first place, followed byEricsson Telecommunications, and Coca Cola.

AmCham extends its gratitude to Nissan for the sponsorship, andMoten Sport for the perfect organization. We also thank compa-nies who supported the event and provided prizes: AlliedPickfords, Coca-Cola, Hilton Sofia, Hotel Yastrebets, Wellness andSPA, Kempinski Hotel Grand Arena Bansko, Microsoft Bulgaria,Motorola Bulgaria, Nivea Lip Care, Pain D'or, Radisson SAS GrandHotel, and Rossignol SLS. ■

Record Number of Skiers Vie for AmCham Trophy

T H E W A R M I N G U P

A Halloween mask to scare the competition?

103 participants ready to start for the AmCham Ski cups

Lets' refuel with Nissan

33p a g e

Am

Cham

B

ulg

aria M

agazin

e M

arch 2008


T H E R A C E

The ski run

Winter Elegance And Heavy Breaks

The final countdown

Irina Tzoneva, BNT - Tough competition, high emotions, great tournament


34

Am

Cham

B

ulg

aria M

agazin

e M

arch 2008

T H E R A C E

Some show for our supporters and friends

On the glorious way to the final

35p a g e

Am

Cham

B

ulg

aria M

agazin

e M

arch 2008


T H E W I N N E R S

All winners family picture

Viktor Kerezov, ACS - Who else but me can be the winner!

Ralitza Ivnova - The jewel of 3 M team Momchil Velev, Renault Nissan - The undisputable snowboard man

Alexander Savov, Pain d'Or with his brand new 10 months coach

The American College team - the new ski generation


36

Am

Cham

B

ulg

aria M

agazin

e M

arch 2008

BCD Travel enters the Bulgarian touristmarket in a partnership with theBulgarian tourist company AstralHolidays. BCD Travel in Bulgaria willoffer to corporate clients a whole ser-vicing package to the company'semployees, said Hristo Galbachev, man-aging director of Astral Holidays. Thenew partnership between the two com-panies was announced during a busi-ness-after-hours cocktail of theAmCham Bulgaria on Feb. 26 at theGrand Hotel Sofia.

Some 80 AmCham members andguests attended the event with a specialfocus on the modern business traveland its philosophy explained. Guestspeaker was Paul Tracy, vice president,Growth & Emerging Markets of BCDTravel. He talked on the main differ-ences between the travel managementcompany, on the one hand, and a travelagency, on the other. The travel man-agement company manages booking,ticketing, travel, invoice, and post travel.A travel agency deals only with the firstthree things: booking, ticketing, and trav-el. For its corporate clients BCD Travelin Bulgaria will arrange hotel booking,airplane tickets, rent-a-car, and all otherdetails of a business journey.

"The main principle in the company is tothink globally and to react globally inproviding corporate global travel ser-vices," Galbachev said.

He added that BCD Travel shares phi-losophy of Astral Holidays team forgrowth and success, not only inBulgaria, but throughout Central andEastern Europe. BCD Travel - Bulgariahas 12 offices with key locations suchas Sofia, Plovdiv, Varna, Bourgas, SunnyBeach. In addition to strong nationalcoverage, BCD Travel in Bulgaria willdevelop regional business opportunitiesworking closely with other BCD Traveloffices across the region, includingRomania, Greece, Turkey and Hungaryto expand local customized solutions forclients, supported by BCD Travel's glob-al technology and infrastructure.Moreover, in Bulgaria there are 50 com-

Astral Holidays TeamsUp With BCD Travel

The performance of the women quartet Elfi created special atmosphere at the cocktail.

Among the guests, were representatives of Motorola, Osteocentre EAD, Rising Force, Business Media Group.

From Left: Paul Tracy, vice president, Growth&Emerging Markets of BCD Travel, Tanya Kosseva-Boshova,

Executive Director Landmark Property Bulgaria, and Hristo Galbachev, Managing Director of Astral

Holidays.

37p a g e

Am

Cham

B

ulg

aria M

agazin

e M

arch 2008


panies that have concluded global con-tracts with BCD Travel, and now theywould be serviced by BCD Travel officein Bulgaria, said Galbachev.

"We are excited by the decision to furtherdevelop our strategic partnership withBCD Travel for corporate travel manage-ment solutions in Bulgaria. We will contin-ue to service our existing clients withevery attention to detail and will worktogether to foster new business develop-ment growth and enhance our overall ser-vice offering," Galbachev added.

Among the corporate clients of AstralHolidays now are Ideal Standard, Vidima,BOSCH, Tishman InternationalTransTelecom, Demax, IDC, Liebherr,Schneider Electric, Mondi Packaging,Devnya Cement, Readers Digest,Dunapack Rodina.

BCD Travel is able to offer an extendedsuite of solutions customized to eachclient's specific requirements. Mostnotable of these is DecisionSource, BCDTravel's management information solutionsuite delivering clients with detailed post-trip information enabling tighter control ontravel expenditure and increased leveragewith travel suppliers. In addition,DecisionSource Security Manager takespre and on-trip data and makes this avail-able to clients online to enable travelerlocation in the event of an emergency,

and offers other traveler risk managementtools, contributing significantly to manycompanies' Corporate SocialResponsibility (CSR) initiatives.

Looking into the future, Paul Tracy saidthat higher passenger loads and con-trolled capacity will continue to push air-fare higher in 2008. "However, we expectcompetitive market conditions, the contin-ued penetration of low-cost carriers andthe impact of Open Skies in March 2008

to hold airfare increases to a level lowerthan previous years," he added. The pas-senger traffic outlook through 2010 showsit would reach 222 million passengerswithin Asia, and 106 million in Europe,according to IATA industry prognosis.

BCD Travel operates in more than 90countries on five continents, with $12 bil-lion in total sales. BCD Travel is a BCDHoldings N.V. company, a Dutch family-owned company founded in 1975. ■

Kaloyan Vangelov, Director Sales & Account Management of BCD Travel speaks on the advantages the part-

nership will provide.

Some 80 guests came to the business after hours party, the perfect place for making new contacts, or just relaxing after long busy day.


38

Am

Cham

B

ulg

aria M

agazin

e M

arch 2008

Experts, businessmen and representatives of NGOs discussed

practices in the fight against crime and corruption at the sec-

ond international forum on combating organized crime and

corruption held in Sofia on Feb. 29. The forum was organized

by Bodyguard-Fire-K Company together with the Bulgarian

Business Leaders Forum (BBLF) and supported by the

American Chamber of Commerce in Bulgaria. Bulgarian

experts and representatives of security firms from the

Netherlands and Macedonia shared their experience in provid-

ing transport security and coping with drug and human traf-

ficking and prostitution.

The conference focused on the prospects and possibilities of

regulating the detective activities in Bulgaria, and cooperation

with legal authorities for protecting children under 16. The

president of BFK Dimitar Kutzarov said that the lack of a spe-

cial law on the detective activities in Bulgaria is hampering the

work of police and detectives.

There is no doubt the detectives are needed to help police in

its investigations, he said. Kutzarov mentioned two cases when

BFK supported the police and helped find two missing per-

sons.

"There is a very thin line that we currently rely upon - and this

is the cooperation with the state owned guarding firm SOT, but

it is not enough," Kutzarov said. At present there are about

100,000 people working in security companies in Bulgaria and

the legalization of their businesses is highly recommended.

Stamen Tasev, executive director of Bulgarian Business

Leaders Forum again suggested to limit cash payments above

10,000 Leva. At present, large cash payments are the perfect

prerequisite for corruption. The origin of the money in such

payments is not known and it is necessary that the payments

are made via bank transactions. Tasev said there is 140-per-

cent increase of the cash payments of more than 30,000 Leva.

BBLF proposed establishment of a fund Journalists Against

Corruption, which will stimulate reporters' investigations on cor-

ruption cases. ■

Private Securit y FirmsDemand Law onDetectives

n e w m e m b e r s

Kimimpex Ltd. (2be) is an entirelyBulgarian company with an 11 year history.Currently 2be is the leading retail chain formobile technologies owning 110 stores in 56locations across Bulgaria. 2be is the only

retail chain in Bulgaria cooperating with all Bulgarian telecoms- MTel, GLOBUL and vivatel, as well as BTC and the WiMAXoperator Max Telecom.

2be offers the full range of telecommunication services includ-ing subscriber's programs and plans, start packages andvouchers for prepaid communication and various special pro-motions. In the stores of the chain the bills to GLOBUL, viva-tel and BTC can also be paid.

2be is the first company to offer on the market the latest tech-nologies and consumers electronics. In 2be stores consumerscan find the latest models of GSM phones of the leading glob-al brands, accessories, hands-free, Bluetooth and chargingdevices, as well as a great variety of consumer's electronics -notebooks, digital photo-cameras, cameras, MP3 players. 2bepays special attention to the high quality of services in itsstores. The company uses the best practices in the recruitmentand the training of its personnel and offers the best after-salemaintenance in authorized services.

Contacts:CEOs: Stanislava Arnaudova and Teodora Mihailova

Address: 361 Tsarigradsko Chousse Blvd., Sofia 1138Tel. (+359) 2 9421 300Fax: (+359) 2 9421 169

e-mail: [email protected]: www.2be.bg

We are the company with three red columnsin our logo. Our name is internationally syn-onymous for surface drainage systems. ACO

products are found in countless placesaround the world - at traffic intersections, airports and shop-ping centers.

We are also a company with intelligent solutions for civil engi-neering and construction, building services and environmentaltechnology, landscaping and industrial buildings.

For more information about our products and solutions, pleasego to www.aco.com / www.aco.bg

Contacts:George Dimov, Managing Director

Tel: 831 0057Fax: 832 4053

E-mail: [email protected]: 119, Iliyanci Blvd.

1220 Sofia

39p a g e

Am

Cham

B

ulg

aria M

agazin

e M

arch 2008

m e m b e r n e w s

Emporiki Bank - Bulgaria is aUniversal Bank member of CreditAgricole Group: Retail BankingCorporate, Investment Banking and

Project FinanceCross border business development with CA subsidiariesThe Bank is acting also as an investment intermediaryHistory: Established in 1994 under the name BulgarianInvestment Bank1998: Emporiki Bank of Greece acquired 100% of shares2006: Credit Agricole acquired the majority of shares ofEmporiki Bank, Greece5 years plan: Implementation of worldwide recognized highlyspecialized Core Banking SystemContinued Network developmentProducts and services developmentEstablishment of specialized Business CentersIntroduction of VIP customers' services and productsParticipation in specialized transactions

Contacts:Mr. Athanasios Petropoulos, Chief Executive Director

Mrs. Roumiana Gramatikova, Executive Director, Retail BankingMr. Kalin Klisarov, Executive Director, Wholesale Banking

Mr. Teodor Palev, Executive Director, OperationsTel: 9171 116, 9171 715

Fax: 9171 156E-mail: [email protected]

Fortel Engineering offers solu-tions for your communicationinfrastructure, for your offices,buildings, company sites and

your network of branch offices. Fortel Engineering designs andbuilds networks for data, voice and video. Our main goal is todesign an integral structure for your communications. Our pro-jects are dedicated to meet your current needs, to assist inrealization of your future intentions and to contribute to yourdevelopment. Our team consists of experts who have over 12years of experience in management and project realization. Ithas the resources and skill to design and assemble a com-plete turnkey telecommunication system, a system componentor to collaborate with customer's internal staff on any part ofa system.

Contacts:Lyubomir Velkov, CEO

Tel: + 359 2 945 53 44Fax: + 359 2 945 53 44

E-mail: [email protected]: 260, Botevgradsko Shausse Blvd., fl. 4

1839 Sofia, Bulgaria

ESCADRA is the name of the recently opened car sales andlease center in Sofia, offering the newest models of Mercedes-Benz. At present, its clients can choose among 10 models of theGerman manufacturer. Additionally, ESCADRA offers car acces-sories and original spare parts, accessories and products of themost renowned brands, such as Michelin, Dunlop, Goodyear, OZRacing, Fondmetal, AMG, Carlsson, Mobil and Thule. The showroom has an exclusive and easily accessible location onTsarigradsko Shausse, just before the crossroad to the SofiaAirport. A team of professionals will assist, advice and satisfy theclients requirements in terms of car model, flexible leasing framesor even VIP limousine service for you or your demanding guests.

The new show room is owned by Car Rental Bulgaria, followingthe company expansion in the automobile, car rental and leasebusiness. After more than 15 successful years in the car rentaland limousine services, Car Rental Bulgaria now owns more than120 vehicles and is the exclusive logistics partner for numerousGovernmental delegations, such as the U.S. President GeorgeBush; the Russian President Vladimir Putin; presidents ofGermany, Turkey, Italy; UNDP; UNICEF; U.S. Army and officialNATO partner for the last five years in the military trainings suchas Cooperative Key, Blue Lightning and many more. Car RentalBulgaria is proud member of AmCham and AHK.

For the last few years the company tops the car rental marketin the country. The main focus now is the operational leasing

- Car Rental Bulgaria offers long term rent of vehicles of alltypes and makes, tailored to your needs and requirements. Thecompanies that sign agreements for operational leasing withus, will be provided with personal Fleet Manager, who will befully responsible for the management and maintenance of thehired vehicles. The main aim of the operational leasing is tofacilitate your main business activities, instead of blocking sub-stantial amount or money in cars, their maintenance and man-agement.

Special volume discounts are available for AmCham membersfor car accessories, tires and wheels. ■

ESCADRA Offers the Latest fromMercedes-Benz

m e m b e r n e w s

40

Am

Cham

B

ulg

aria M

agazin

e M

arch 2008

Ernst&Young in collaboration with Oxford Analytica published astudy "Strategic Business Risk 2008 - The Top 10 Risks forBusiness". Ernst &Young has been engaged in significant globalactivity to clarify stakeholder perspectives, map managementactivities and identify leading practice from which all can bene-fit. Likewise, many companies have invested significant resourcesglobally in risk and compliance initiatives.

Financial risk and regulatory risk have been the focus of muchof the study effort. In both cases, there are externally determinedrules and frameworks with which companies need to comply andemerging best practice guidance on processes and controls thatcan help. The annalists worked with many companies who havefound that the challenge of compliance can lead to opportunitiesfor performance improvement through improved processes andenhanced communication. Some companies are now lookingmore closely at their operational risks, prioritizing these and think-ing about how they can manage and monitor these in a coordi-nated way, the result of which can again be opportunities for per-formance improvement. What is clear is that to gain further busi-ness advantage, companies must increasingly look at the extend-ed risk universe, from finance and compliance risk - to opera-tional and finally, strategic risk.

The study explores the area of strategic risk from a different per-spective. It is focused on the strategic risks facing 12 of theworld's most important sectors: asset management, automotive,banking & capital markets, biotechnology, consumer products,insurance, media & entertainment, oil & gas, pharmaceuticals,real estate, telecommunications and utilities. These sector stud-ies served as the primary source for the overall comparativereport findings.

More than 70 analysts from around the world and from over 20disciplines were interviewed that shape the business environ-ment, including law, finance, the sciences, business strategy,geopolitics, regulation, medicine, economics and demographics.

It rapidly became clear that not all strategic business risks arethe same in nature. The radar was divided into three broad sec-tions: (1) macro threats that emerge from the general geopoliti-cal and macroeconomic environment in which we all operate; (2)sector threats that emerge from trends or uncertainties that arere-shaping the specific industry; and (3) operational threats thathave become so intense that they may impact the strategic per-formance of leading firms.

Identifying the Global Top 10

By consolidating and aggregating the findings of 12 sector stud-ies, it is possible to form a view of the 10 most important strate-gic risks across the sectors - concerns that will be common toleading firms in many industries.

The table below shows the weighting of the top 10 strategic busi-

ness risks across the 12 sectors that were studied. While manyrisks were unique to a sector, a few key challenges had a highor critical impact for many, or even all of the sectors. Hence therisks at the top of the chart are those that, according to the ana-lysts we interviewed, will do the most to influence markets anddrive corporate performance in 2008 and beyond.

The analysis would suggest that the sectors that broadly havethe greatest exposure to the top 10 strategic business risks areautomotive and asset management, with four critical strategicbusiness risks each. Insurance and real estate follow with threeof the top 10 risks rated critical within their sectors. At the otherend of the spectrum, for telecoms, none of the top 10 strategicbusiness risks were marked as critical. This cannot, however, beused to definitively conclude that one sector is more or less riskythan another. It may be that the unique sector-specific factorsare in themselves more high risk than these 10. However, we caninfer that, compared with what we believe are the most commonstrategic business risks, some sectors are more exposed thanothers.

As the greatest strategic challenge facing leading global busi-nesses in 2008, the industry analysts polled selected Regulatoryand Compliance Risk. This is being driven by an escalating reg-ulatory burden in many markets, as well as numerous compli-ance challenges as companies extend their value chains wellbeyond Europe, North America, and the BRICs (Brazil, Russia,India and China).

The analysts acknowledged that few sectors would escape theimpact of major Global Financial Shocks. Biotech and utilitiesfirms, for example, would have trouble raising capital; banking,asset management, and insurance companies would be likely tosuffer direct losses from market movements; and after makinghigh-cost exploration investments - oil & gas companies mightsuddenly find themselves facing low prices if the global econo-my moves into sudden recession.

An increasing strategic risk for the majority of industries is thethreat posed by workforce and consumer aging. Sectors such as

Ten Major Risks for Global BusinessesIdentifiedMore Than 70 Analysts from Around the World Were Interviewed

m e m b e r n e w s

42

Am

Cham

B

ulg

aria M

agazin

e M

arch 2008

asset management and insurance are experiencing dramaticshifts in demand and competitive battles are being fought for sav-ings products that will appeal to the growing group of older con-sumers. Other firms, for example, those in the auto sector, arefacing severe competitive challenges as a result of their agingworkforces.

The findings of the survey Risk Management in EmergingMarkets 2007 reveal that, while many companies have been inthese markets for some time, emerging markets remain dynam-ic for developed market (DM) companies. Over 60% of DM com-panies have been in these countries for less than 10 years, andalmost 20% less than two years. In most cases, global firms arecompeting with other global players for opportunities in thesemarkets, although in several sectors, emerging markets firms arethemselves entering the global stage. Often companies are beingdriven to these markets by the saturation of existing markets. Ananalyst in consumer products commented, "Over the next fewyears nearly all of the increase in world population will take placein the developing countries. In the meantime, other establishedmarkets will reach maturity." Similarly, in real estate, "Intensecompetition for a limited pool of desirable assets, combined withyield compression in most global markets, has resulted in realestate funds needing to broaden their geographic search foropportunities. This has created an increased number of compet-itive variables in real estate markets."

Commenting on the ways the insurers capitalize on new oppor-tunities, Chris Raham, Ernst&Young, says that to be successful,insurers must change their approach to the competition and takea broader view of the market. For years, they have been focus-ing on competition among themselves. In the US, for example,insurance companies have only a small share of the US savingsmarket. Their true competition is represented by other providersof savings products, in particular, mutual fund entities. Insurersmust become as aggressive as other institutions competing forthe same dollar.

Industry Consolidation/Transition

Part of the consolidation phenomenon has been driven by theglobal M&A boom, which several analysts believe may slow inyears ahead. However the majority of sector analysts we polledbelieved that industry transition would continue to pose a keystrategic challenge in 2008.

This continued transition will be driven, in most sectors, by under-lying structural trends. One analyst, commenting on the auto sec-tor noted, "Population growth and GDP growth are highest out-side of the US, EU, and Japan, resulting in a global misalignmentin the location of industry capacity and the location of demand.The industry, especially in the US market, is in transition includ-ing consolidation, restructurings and spin-offs."

Energy Shocks

Fluctuations in energy prices and access to supplies pose aclear challenge to the energy sector, including utilities and oil &gas. In utilities, for example, loss of access to competitivelypriced long-term fuel supplies is the top strategic risk. One ana-lyst noted, "The impact on the business is the need to acquireshort-term supplies to meet demand obligations and can lead to

a huge loss of profitability, hence the need for skilled hedging ofsources, types and timing of fuel supplies."

Execution of Strategic Transactions

Strategic risks often result from an attempt to take advantageof major opportunities. Nowhere is this more evident than in thearea of transactions. Too often a move that seeks to quicklyand significantly respond to an opportunity, becomes an expen-sive and long-term risk in its own right. There is a major riskthat transactions undertaken in response to industry consolida-tion may fail to deliver, not because they are poorly conceived,but because of a failure to meet operational challenges. Thiswas perceived as a high risk by analysts in a number of sec-tors including auto, asset management, media and telecoms. Abanking panelist wrote, "Stakeholders expect M&A to veryquickly have a positive effect on the bottom line and createsynergies between the acquirer and the target. Required inte-gration

may challenge the people, process, and technology of the com-bined entity. Stakeholder expectations may not be met or thedeal may ultimately need to be unwound."

Cost Inflation

We have been operating in a low inflation global economy forsome time. Our analysts believe that the return of high inflationis a major risk. Cost Inflation, though the result of various drivers,is a significant operational threat for all sectors. In oil & gas, forexample, the problem extends from exploration all the waythrough the value chain, impacting everything from refinery buildcosts to pipeline construction costs. One sector analyst com-mented, "The impact on oil & gas companies is increased pres-sure on operating margins, higher risk investment profile,increased asset portfolio optimization, consolidation, and risksharing arrangements. Companies with high cost reserves couldbe at risk of failure."

Radical Greening

Radical greening is a strategic risk, partly driven by the consumerand regulatory responses to climate change, and also by theweather events resulting from climate change. A specialist in sci-ence and international affairs wrote, "Current climate predictionsare based on models and, naturally, the scenarios communicat-ed to the policy world are the scientifically conservative scenar-ios (i.e., those which most scientists agree are likely). Yet scien-tifically conservative scenarios are not necessarily what will hap-pen; it is possible that the hazard is actually more imminent thanis commonly understood. In this case, we may see physical cli-mate surprises as well as an increased policy response that ismore abrupt than most firms are currently planning for."

Consumer Demand Shifts

The final strategic risk for business in 2008 is the failure to antic-ipate and respond to Consumer Demand Shifts. There are anumber of examples of such shifts, perhaps the most obviousbeing the demand for 'green' products or services. Other trendshave already been mentioned, including those driven by demo-graphic shifts, such as growing consumer aging. ■

m e m b e r n e w s

44

Am

Cham

B

ulg

aria M

agazin

e M

arch 2008

The Ideal Standard Bath of the Yearcompetition has been running for fouryears already. The most beautiful fam-ily and hotel baths were awarded at aspecial ceremony held on 28 Februaryat the Central Army Club in Sofia. Inthe presence of about 400 guests -leading architects and musicians, theproject of architect Tsvetan Gergov,named "Opened," received the prizefor the Family Bath category. Theaward in the other category - Hoteland Business Bath - was given to theModus Hotel. Traditionally, the winnersin both categories receive a holiday toan exotic tourist destination, and thisyear the destination is the Maldives.

There were awards for the favorites ofthe audience. The internet voting atthe site of www.banianagodinata.comawarded the projects of BozhanaProdanova in the Family Bath catego-ry and once again the Modus Hotel inthe Hotel and Business Bath category.

After the ceremony, there was a newchallenge for architects, designers andcustomers of the products bearing theIdeal Standard trade mark in respectof the fifth jubilee edition of the com-petition.

The 2008 winners will have thechance to visit Singapore andMalaysia. The participants this yearwill be challenged also by the newproduct collections bearing the presti-gious trade mark and the ambition tointroduce the digital era into the bath-room.

Ideal Standard relies on the imagina-tion of designers and consumers alike- professional or amateur - so that theproducts of the leading trade markcan find their proper place, their prop-er home. With the intention to encour-age the drive to create a place reflect-ing the internal world of the owners, tocreate some space where people canfeel fabulously, Ideal Standard everyawards the most beautiful baths everyyear. ■

Ideal Standard Recognizes MostBeautiful Baths

In the category Family Bathroom the jury awarded the bathroom project of the architects Tsvetan Gergov,

Elizabeth Vassileva, and Darina Tacheva.

In the category Hotel and Business bathroom the jury had chosen hotel Modus in Varna. The award received

the hotel owner Mr. Tanchev.

Master of the ceremony Ms. Silvia Lulcheva introduced Vassil Kanev, Vice President of Ideal Standard

International for Central Europe.

45p a g e

Am

Cham

B

ulg

aria M

agazin

e M

arch 2008

m e m b e r n e w s

Microsoft Corp. announced in February aset of broad-reaching changes to its tech-nology and business practices to increasethe openness of its products and drivegreater interoperability, opportunity andchoice for developers, partners, cus-tomers and competitors.

Specifically, Microsoft is implementingfour new interoperability principles andcorresponding actions across its high-vol-ume business products: (1) ensuringopen connections; (2) promoting dataportability; (3) enhancing support forindustry standards; and (4) fostering moreopen engagement with customers and theindustry, including open source communi-ties.

"These steps represent an important stepand significant change in how we shareinformation about our products and tech-nologies," said Microsoft's CEO SteveBallmer. "For the past 33 years, we haveshared a lot of information with hundredsof thousands of partners around theworld and helped build the industry, butthe latest announcement represents asignificant expansion toward even greatertransparency. Our goal is to promotegreater interoperability, opportunity andchoice for customers and developersthroughout the industry by making ourproducts more open and by sharing evenmore information about our technologies."

The interoperability principles and

actions apply to the following high-vol-ume Microsoft products: WindowsVista (including the .NET Framework),Windows Server 2008, SQL Server2008, Office 2007, Exchange Server2007, and Office SharePoint Server2007, and future versions of all theseproducts. The company highlightedthe specific actions it would imple-ment:

- Ensuring open connections toMicrosoft's high-volume products. Toenhance connections with third-partyproducts, Microsoft will publish on itsWeb site documentation for all appli-cation programming interfaces (APIs)and communications protocols in itshigh-volume products that are used byother Microsoft products. Developersdo not need to take a license or paya royalty or other fee to access thisinformation. Open access to this doc-umentation will ensure that third-partydevelopers can connect to Microsoft'shigh-volume products just asMicrosoft's other products do.

Microsoft openly published on MSDNover 30,000 pages of documentation forWindows client and server protocols thatwere previously available only under atrade secret license through the MicrosoftWork Group Server Protocol Program(WSPP) and the MicrosoftCommunication Protocol Program(MCPP).

- Documenting how Microsoft supportsindustry standards and extensions. Toincrease transparency and promote inter-operability, when Microsoft supports astandard in a high-volume product, it willwork with other major implementers ofthe standard toward achieving robust,consistent and interoperable implementa-tions across a broad range of widelydeployed products.

- Enhancing Office 2007 to providegreater flexibility of document formats. Topromote user choice among documentformats, Microsoft will design new APIsfor the Word, Excel and PowerPoint appli-cations in Office 2007 to enable develop-ers to plug in additional document for-mats and to enable users to set theseformats as their default for saving docu-ments.

Launching the Open SourceInteroperability Initiative. To promote andenable more interoperability betweencommercial and community-based opensource technologies and Microsoft prod-ucts, this initiative will provide resources,facilities and events, including labs, plugfests, technical content and opportunitiesfor ongoing cooperative development.

- Expanding industry outreach and dia-logue. An ongoing dialogue with cus-tomers, developers and open sourcecommunities will be created through anonline Interoperability Forum. ■

Microsoft Bets on Interoperability

From left: Brad Smith, senior vice president and general counsel, Steve Ballmer, Chief Executive Officer and Ray Ozzie, Chief Software Architect, announce a set of

changes to Microsoft's technology and business practices to increase the openness of its products and drive greater interoperability, opportunity and choice for developers,

partners, customers and competitors. Redmond, Wash., Feb. 21, 2008


46

Am

Cham

B

ulg

aria M

agazin

e M

arch 2008

The Anglo American School of Sofia(AAS) again invites academically talent-ed Bulgarian students to apply for fullthree- and four-year scholarships, start-ing 2008-2009 school year. Last yearAAS awarded full high school scholar-ships to six Bulgarian students. Theinvestment for their full high school edu-cation was 680,000 Leva. This initiativeis part of the school 's commitment tosupport Bulgaria. AAS has over 12 yearsof community service experience sup-porting needy places throughout thecountry. The school hopes to become aCSR leader in investing in youngBulgarians. AAS strongly believes thatnow is the right time for dignified com-panies to invest in talented youngBulgarians as they will be their futureemployees, determining the success oftheir business.

Below are the thoughts of a few of theAAS current scholars. They share howthey have benefited academically andwhat their future plans are.

Mira, Grade 9, coming from the

American College of Sofia:

Winning the scholarship was one of thehighest achievements in my life

I am glad that I am one of the few thatgot the chance to be an active memberof the diverse AAS community. If youask me to look back and evaluate thechanges in my life after my acceptance,I may say they are mainly positive. To behonest, on the first day of school I wassurprised by what I met. The curriculumand the schedule were so much differ-ent from what I expected. Having peri-ods from 65 minutes seemed too muchfor me, but I did not need much time torealize that it actually was just enough.In my previous school, our lessons werescheduled to 40 minutes, but often thattime was not enough for my teachersand they took time from our breaks inorder to complete their work. We havenow the time to ask many questions anddiscuss topics that are not very clear inclass.

I find the way we are taught very effi-cient. I really like the teachers becausethey are passionate about their subjectsand they try to make us interested in thematerial we cover. I like the fact that weare often asked to think and bother withdifferent topics. Unlike my old schoolwhere memorizing was the major part ofbeing successful, here the individualthoughts and understandings play biggerrole. In my opinion, it is great that westart preparing ourselves for the IB pro-gram. What I like about the school is notjust the curricular. It is also the fact thatan English-speaking environment sur-rounds us. Meeting so many people thatinherit so many different cultures enrich-es your life and teaches you to beopen-minded. It is inexplicable how peo-ple from so many cultures live together,give each other support, and are friendswith each other.

Rayana, Grade 10, coming from the

Math and Science School in Sofia

AAS is a lifestyle of success.

It now has been almost six months since

I have had my first class at the AAS andI have never been more confident aboutthe fact that I made the right decision.

AAS gives all its students the chance toreceive the internationally recognizeddiploma and here teachers try to helpus understand and follow its specificfeatures. I especially like the curriculumas it is organized in a very appropriateway. We have each subject three timesa week while in Bulgarian schools weused to have Math more often thansports, for example. At AAS we knowthat each specific class has importantrole in our daily life so we pay equalattention to all of them which I like a lot.Moreover, the thing that I have noticed isthat all the new Bulgarian children herewere supported not only by the teach-ers, but also by all of the internationalstudents.

Nasko, Grade 10, coming from the

Math and Science Gymnasium in Stara

Zagora. Nasko is a Silver medalist in

the International Math Olympiad 2005

in Turkey, strongly interested in astron-

omy and community service

AAS to award 780,000 Leva toAcademically Talented BulgarianChildren By Maria Mihailova,

Community Affairs and Development Manager

After a preliminary selection, more that 50 students were invited to sit the entrance exams at AAS last year.

47p a g e

Am

Cham

B

ulg

aria M

agazin

e M

arch 2008


For me the AAS Scholarship is anOpportunity of a Lifetime

All the Bulgarian teenagers who nowread this - I'm sure that you've

dreamed of a school with a gorgeousbrand-new building, of a school withan 8,000-volume library, of a schoolwith top-notch science and ICT labswith brand new equipment and com-

puters, of a school with gym andequipment for more than 10 sports, ofa school providing a worldwide recog-nized diploma times better than theBulgarian ones.

Here is the place where staff - teachers,directors, parents - work for the sake ofstudents. A school where teachers arerather your friends than your enemies.Where there is freedom, not only limita-tions. A school that teaches you theprinciples of successful life rather thanuseless facts and formulas.

Now, most of you think that the schoolwill never choose them. Well, just abouta year ago I thought the same thing. Iam happier than ever - with endlessfuture opportunities, with a lot of friends.So, when applying for a full scholarshipat AAS keep in mind that the schooldoes not necessarily look for geniuses.AAS is searching for interesting and wellrounded personalities who are going tocontribute to the diversity and atmos-phere in the school. In other words- weare looking for you! ■

Alex Karagiannis, AAS chairperson (left) and Eric Larson, school director, award the full scholarship to one

of the six successful Bulgarian students.

The biggest company on the bottledwater market in Bulgaria together with agroup of Bulgarian children appealed tomore than 1,000,000 Bulgarians for theadoption of responsible behavior on theroad. The company distributed children'spictures with messages on its big fami-ly bottles of mineral and spring waterthroughout food stores in the country.

The campaign aims to draw the atten-tion of the Bulgarian citizens to the waron the road that annually takes morethan 1,000 human lives. The message isformulated through a question, whichshould not be answered negatively, saidfrom the company. Every bottle isnecked with a message-picture of chil-dren crossing the roads and asking fortheir lives to be saved.

The initiative of Devin AD is a part ofthe company's commitment to theEuropean Road Safety Charter, whichDevin signed at an official ceremony inBrussels at the end of 2007. The aim ofthe Charter is to unite the efforts ofbusiness, society, governments and

NGOs in each of the 27 EU-membercountries for the achievement of a com-mon goal - to decrease the deathcaused by road accidents by 50 percentuntil 2010. The fulfillment of this missionequals to saving 25,000 lives. After sign-

ing the charter the company hasdeclared its intention to send a messageto their consumers for a responsiblebehavior on the road, to paint pedestri-an walks around schools with high traf-fic concentrations, and also to startclasses for the students on the topic of"road safety."

"Our country usually takes the firstplaces of death statistics in the roadaccidents within the EU. As a socialresponsible company, we want tochange this trend and we are ready todevote time, efforts and resources for thecause. I believe that we have enoughpower and possibilities to work effective-ly in that direction," said Valentin Ignatov,executive director of Devin AD.

At the end of 2007 in Bulgaria were reg-istered 18,011 serious road accidents,as a result of which 1,006 people diedand 9,809 were injured. Even though theblack statistics has slightly decreasedcompared to the same time period of2006, our country is still among the EUleaders in road deaths. ■

Devin and Bulgarian Children Campaignfor Road Safety

Valentin Ignatov, Executive Director of Devin signing

the charter in Brussels.

m o r e t h a n m u s i c

48

Am

Cham

B

ulg

aria M

agazin

e M

arch 2008

U.K. teacher and musician Ben McDonnell left England inAugust 2007 to embark on a mission to promote jazz in oneof the most remote and majestic areas of the world. In far-away Asia, he spent the next several weeks teaching at amusic school in the Mongolian capital, Ulan Bator, and trav-elling to other remote corners of the continent-including thetop of the world, Mount Everest-with his FenderStratocaster® guitar at his side. Here, in his own words, isMcDonnell's story:

After a fine send-off party, I found myself standing bleary-eyed in the departures lounge of London Heathrow Airport,bag in one hand and guitar in the other, wondering what toexpect on the other side of the world.

If you're as much of a diehard guitar geek as I am, youmight be wondering which guitar I decided to take. I decid-ed that my mission required something versatile and aboveall indestructible-my Stratocaster guitar. It's one of theMexico-built models, and I love it. The neck is great. I'vereplaced the pickups numerous times; finally settling onFender SCN Stratocaster pickups because they let meteach, record and practice near the computer and becausethey give me the tonal versatility I want for the pickup gigsI'm asked to do.

I've had the guitar nine years, in which time I've had end-less fret dresses, screwed the bridge down and put fivesprings in the back, worn the electronics out, replacedthem and worn the lacquer from the neck and given itmore abuse than I should. In short, it may not be the bestguitar in the world, but it is my guitar and it feels likehome-just the thing when I'm 7,000 kilometers from my gui-tar tech!

My time in Mongolia was amazing, Ganbat, Enkhbat, Bujee,Jim and the others from the "Giant Steppes of Jazz" NGOwere amazing hosts and among the friendliest and mostopen people I've met in the world. They organized radiospots on "hi-fi radio" and several newspaper interviews thatallowed me to promote my concerts and teaching, also turn-ing me into a semi-celebrity in Ulan Bator!

Highlights of my time in Ulan Bator included meeting andplaying with local musicians, some of whom joined me formy concert at the city's Cultural Central Palace, and record-ing with Mongolian singer Naran for her forthcoming album.Despite my poor grasp of the Mongolian language, it was anamazing experience to communicate with musicians just asone would at home; it goes to show that whether you aredoing a gig in London or playing on the steppes, musicianshave a similar mindset the world over.

After I'd finished my work in Ulan Bator, I decided to seesome more of Asia. My route took me around the GobiDesert into China; to Beijing and Chengdu. From there, Iwent to Tibet, the Mount Everest base camp in Nepal, andfinally back to the U.K. Needless to say, the Strat came withme. It survived lofty altitudes, huge temperature fluctuations,nosey border control soldiers, busy baggage handlers andtorrential rains.

Despite the hassle of travelling with a guitar, it was absolute-ly worth it. Entertaining travellers in my hostel until 5 a.m. inBeijing; playing "Satisfaction" to Tibetan villagers; and ofcourse being photographed at Mount Everest base camp(5,200 meters altitude) are all priceless experiences!

My advice, if you are planning on taking a trip, is to takeyour guitar. You never know who you'll meet, the experi-ences it will help you in and where it might lead you! ■

The Stratocaster at theTop of the WorldU.K. musician Ben McDonnell takes his Fender on a sky-high Himalayan

odyssey

McDonnell rocks his Strat 17,000 feet up Mount Everest. Photo by Jitske Hagens

new volumes of privatization in bulgaria · a newspaper publication or television expose on...

Documents