Transcript Bulgaria – your investment decision general ENG

Bulgaria – your gateway to EU
Bulgaria-Korea business forum,
14. December 2010, Sofia
Dimitar Nikolov
Marketing Director
InvestBulgaria Agency
www.investbg.government.bg
Structure of the Presentation
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Strategic location
Why Bulgaria
Macroeconomic Indicators
FDI Inflow
Korean Investments in Bulgaria
Highly Skilled Labor Force
Comparison between Bulgaria and
Europe
Business Sectors of Highest
Potential for Investors
Investment Promotion Act
Investment Incentives in Bulgaria
InvestBulgaria Agency
Pan-European Transport Corridors
9
4
7
10
8
Bulgaria – strategically located as a bridge
between Europe and Asia
Strategic geographic location
Major transport corridors passing
through Bulgaria
Why Bulgaria
 EU membership and NATO membership
 Currency board
 EU’s most favourable taxes:
• 10% corporate income tax rate
• 0% in high-unemployment areas
• 10% flat tax rate on personal income
 Europe’s most competitive operational costs
 Well-educated and highly-skilled labour force
 45,000 Bulgarian students in Europe
 Government financial support for priority investment
projects
 Linking Europe and Asia
 Excellent climate, natural scenery, food and hospitality
Bulgaria at a glance
GDP Growth, %
Inflation, %
12,5
6,6
4,5
6,2
6,3
6,2
5,0
6.0
6,5
7,8
6,5
3,9*
4,0
0,6
2009
2004
2005
2006
2002 2003 2004 2005 2006 2007 2008
2007
2008
2009
2010
* October 2010
Greenfield+Expansion
Unemployment, %
-4,9
FDI inflow, EUR Mio.
9 052
12,2
6 686*
6 222
10,7
9,1
9,1
6,9
9
6,3
2 736
3 282*
3 152
1 851
2004
2005
2006
2007
2008
* October 2010
2009
2010
866
1 103
903
980
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
* Preliminary Data
Source: Bulgarian National Bank
Remarkable government financial indicators on
regional and even on a pan-European scale
Bulgarian government debt is 3rd lowest in Europe
Estonia
Bulgaria
7%
Budget surplus / deficit has consistently
outperformed regional and European averages
3%
2%
15%
1%
Romania
Czech Republic
24%
0%
-1%
35%
-2%
UK
Germany
68%
-3%
Bulgaria
-4%
73%
-5%
Hungary
78%
-6%
Euro area
Greece
79%
Euro Area
-7%
115%
-8%
2005
2006
2007
2008
CEE average
2009
Source: Eurostat
Credit rating
Foreign currency
Agency
Japan Credit
Rating Agency
Fitch
Standard&
Poor’s
Moody’s
Date
Local currency
Longterm
Shortterm
Outlook
Longterm
Shortterm
Outlook
BBB
-
Stable
BBB+
-
Stable
30 April
2009
BBB-
F3
Negative
BBB
-
Stable
1 Dec
2009
BBB
A-3
Stable
BBB
A-3
Stable
Baa3
-
Positive
Baa3
-
Positive
22 Oct
2010
31
August
2010
Source: Ministry of Finance
Record FDI inflow in 2006 – 2008, EUR m
Greenfield+Expansion
9 052
6 686
6 222
2 736
3 282*
3 152
1 851
866
1 103
903
980
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
* Preliminary Data
Source: BNB, IBA
Decreasing FDI inflow in 2009-not a
Bulgarian phenomenon
SEE level
Global level
FDI decrease.%
FDI decrease,%
Bulgaria
Romania
Russia
41
55
45
53
36
France
63
Ukraine
57
Japan
54
Czech
Serbia
USA
52
Brazil
China
India
50
3
19
Source: UNCTAD
Bulgaria leads CEE countries in terms of
FDI to GDP indicator
FDI to GDP, %, 2008 – 2009
19,6
9,5
6,6
5,3 4,8
BULGARIA SERBIA
5,8
4,1
5,0
3,8
ROMANIA UKRAINE
3,0
2,3
POLAND
2,2
CZECH
REP
2008
3,0
2,0
2,5
1,8
3,0
2,5
1,3
1,2
HUNGARY SLOVAKIA TURKEY
LATVIA
1,0 -1,7
SLOVENIA
2009
Source: BNB, Bank Austria Creditanstalt
FDI stock by country,1996 – 2009, %, EUR m
Austria
the Netherlands
Greece
Un. Kingdom
Germany
16%
12%
9%
8%
7%
5903.8
4642.7
3419.7
3036.7
2526.3
Cyprus
USA
Hungary
Italy
Russia
5%
3%
3%
3%
3%
1921.1
1310.2
1276.4
1170.0
1088.1
Source: BNB, IBA
FDI stock by sector, 1996 – 2009, %, EUR m
Real estate
8252.7
7272.6
Finance
6762.5
Manufacturing
6319.0
Trade
Construction
Electricity, gas and water
Telecom
Other
2480.9
2172.0
1728.6
2390.7
22%
19%
18%
17%
7%
6%
5%
6%
Source: BNB, IBA
Korean investments in Bulgaria
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Korean Investments (1996 – Q3 2010) - 34.3 EUR Million;
according to the FDI Stock by countries Korea is ranked
52th
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The biggest Investments in Electrical Engeneering,
Renewable Energy, Trade

Bilateral Treaty on encouragement and reciprocal
protection of investments between Bulgaria and Korea

Convention for the avoidance of double taxation
between the two countries
Trade between Bulgaria and Korea
(BGN m)
169*
148
144
80
64
53
84*
31
2007
2008
2009
Export to Korea
2010
Import from Korea
* October 2010
Source: NSI
Hyundai Heavy Industries Co.
 1997 Hyundai Heavy Industries Korea privatized Bulgarian wellknown manufacturer of Power Transformers and Tap Changers
“Elprom Trafo”
 Manufacturer of electrical components: power transformers, tap
changers, equipment for photovoltaic power stations
 80% export of the production, mainly to Russia, Romania, USA
etc.
 About 650 employees
 2009 the company won a project granted by European Funds for
improvement of competitiveness of large enterprises
Educated and skilled workforce – one of the
key advantages of Bulgaria
Almost 60,000 students graduate every year from
over 50 universities
Bulgaria has one of the highest proportions of
students abroad from all European countries
Iceland
Business
17.8%
19,480
Ireland
Social sciences
14.2%
8,372
Slovakia
Engineering
10.2%
7,178
Bulgaria
Education
8.3%
3,677
Greece
Health
Law
3,166
1,553
Architecture
833
Agriculture
860
Other
Austria
12,684
5.8%
4.7%
Germany
3.1%
EU-27 average
2.8%
Romania
2.2%
Czech Republic
2.1%
Source: NSI
Language education in upper secondary
general schools by city, 2008/2009
132869
English
61262
39594
23764
10307
10124
German
French
Spanish
Italian
Russian
8253
4901
4175
12005
528
493
Sofia
Plovdiv
Varna
2862
262
681
25022
14288
12992
Source: National Statistics Institute
Comparison between Bulgaria and Europe
Corporate income tax rate, 2010
19%
19%
19%
20%
Czech
Republic
Turkey
16%
10%
Bulgaria Rom ania Hungary Slovakia
* 0% for manufacturing companies in areas with high unemployment
Source: IBA
Comparison between Bulgaria and Europe
Average monthly wages, Q2 2010, EUR
1099
705
730
Slovakia
Hungary
456
327
Bulgaria
Romania
Czech
Republic
Source: CEIC, Eurostat
Bulgaria has one of the lowest business
costs in Europe
Bulgarian cost of electricity for industrial
users is 67% of the European average
Office rents in Bulgaria are among the lowest
in Europe
€/kWh, 2009
Estonia
Bulgaria
Romania
EU average
Germany
0.059
Sofia
Zagreb
0.064
0.081
Hungary
Slovakia
200
Bucharest
234
Budapest
240
Prague
252
0.095
0.098
Warsaw
Czech Rep
€ / sq. m / year,
Q1 2010
177
0.106
Istanbul
0.122
0.142
Athens
Moscow
276
355
396
629
Source: CB Richard Ellis, Eurostat
Manufacturing
Attractive sectors
 Electrical engineering
 Mechanical engineering
 Electronics
 Automotive parts manufacturing
 Chemical Industry
Competitive advantages
 Export oriented sectors
 The lowest operational cost in EU
 Highly skilled labour force
• 7% with engineering degree
• EUR 336 total average monthly
compensation (Q4 2009)
Major investors supported by
InvestBulgaria Agency
 Solvay (Belgium)
 Aurubis (Germany)
 Liebherr (Germany)
 Lufthansa Technik (Germany)
 Montupet (France)
 Italcementi (Italy)
 Sise Cam (Turkey)
 Stomana Industry (Greece)
 Miroglio (Italy)
 Knauf (Austria)
 Ixetic (Germany)
 Schneider Electric (France)
Focus on innovations
Opportunities
Competitive advantages
 Electronic devices and technologies  Highly-skilled workforce available
 Electrical engines, incl.
electromobiles
 Strong traditions in IT
 Waste treatment facilities
development and in pharmacy
 LED lights
Europe's most competitive wages
Government measures
 Increasing of R&D expenses from
0,5 to 2% from GDP until 2020
 Adopting an Innovation Act (in
process)
 Establishing venture capital funds
(EU Program JEREMIE - € 200 Mio.)
 Stimuli for R&D investment in the
Investment Promotion Act
 Harmonized legislation with EU’s
 High productivity rate and strong
GVA growth
 Export oriented sectors
Energy Sector
Opportunities
Major projects supported by
InvestBulgaria Agency

Wind parks

11 wind park projects

Solar plants

3 solar park projects

New nuclear PP

Modernization and construction of
new TPPs


Biomass and Biofuel
3 projects for modernization and
construction of new TPPs

2 Biomass projects

3 Biofuel projects
Competitive advantages

Skilled labour force
 Availability
of natural resources

Favorable climate conditions

Harmonized legislation with the EU’s
RES electricity production to
double (from 10% to 20%) by 2020

 Administrative
and economic
incentives for RES energy
production
ICT & BPO
Opportunities
 Software development
 IT support centers
 F/A shared service centers
 Contact centers
Competitive advantages
 Skills availability
 Strong traditions in IT development
 Reliable telecom infrastructure
 Europe's most competitive wages
 Reasonable office prices
 11-12% ICT share of the GDP for
2009
Main Players in Bulgaria
 IT
• Software AG (Germany)
• Microsoft (USA)
• Hewlett Packard (USA)
• IBM (USA)
• Nemetschek (Germany)
• Johnson Controls (USA)
• SAP Labs Bulgaria (Germany)
• CISCO (USA)
 BPO
• 60K (UK)
• Sutherland (USA)
• IBM (USA)
• OPI Global (USA)
• Hewlett Packard (USA)
• C3i (USA)
Investment Promotion Act
Promotion for initial investment in the following
sectors:
 From industrial sector:
• Manufacturing
 From the sector of services:
• Computer programming, consultancy & information
services activities
• Scientific R & D and activities of head offices
• Education
• Human health care activities
• Warehousing and support activities for
transportation
Investment classifications under the
investment promotion act, (€ Million)
Investment classes A and B depending on the value, region and
sector allocation of the investment
Region or Sector
Class B
Class A
General
5 - 10
>10
In municipalities with unemployment rate
equal or more than the country average
2 – 3.5
>3.5
2 – 3.5
>3.5
1–2
>2
In high-tech activities in the manufacturing
industry for the whole country
In high-tech activities in the services,
computer technologies and R&D sectors
for the whole country
Incentives under the Investment Promotion
Act
 All classes (A&B)
• Information services and shortened administrative
services
• Preferential treatment upon acquisition of a right of
ownership and limited real rights over real estate – private
state or private municipal property
• Financial support for vocational training of employees for
the needs of the investment project
 A class
• Individual administrative services
• Infrastructure support to the borders of the investment
project site
Priority Investment Projects
 All sectors of the economy, with
the exception of the restrictions
imposed by EU Regulation 800/2008
 Council of Ministers approval
 Conditions – priority status
depending on the value, jobs created
and region allocation of the investment
Criteria for classification of the priority
investment projects
Investment
value
(Euro m)
Jobs
General
50
200
In industrial zone construction and its development
into industrial park
35
100
In municipalities with unemployment rate equal or
more than the country average
25
100
In high-tech activities in the manufacturing
industry for the whole country
25
100
15
50
10
50
Region or Sector of the investment
In construction of a technological park
In education, human healthcare, IT and R&D
activities, professional activities, culture
Priority investment projects – incentives
 All the incentives for class A and B
 Special Incentives for priority investment projects:
•
Institutional support
•
Financial grants up to 50% for R&D and high-tech
services and up to 10% for manufacturing projects
•
State tax exemption for changing the land zoning
•
Possibility for acquisition of real estate private state or private municipal
property without a tender and at a price, not lower than the tax assessment
of the property
•
Possibility for public-private partnership with municipalities, universities and
public companies
Investment incentives in Bulgaria
 10% corporate income tax;
• 0% for manufacturing companies in areas with high
unemployment
 10% personal income tax, flat rate
 Opportunity for R&D expenditure write-off
 Depreciation of 2 years for computers and new manufacturing
equipment
 2-year VAT exemption for imports of equipment for investment
projects over € 5 million, creating at least 50 jobs
 5% withholding tax on dividends and liquidation quotas (0% for EU
tax residents)
 Up to 1 year minimum salary and reimbursement of social/health
care security for employing young people and disadvantaged
people through the Employment Agency
InvestBulgaria Agency
InvestBulgaria Agency is a Government investment promotion arm,
part of the Ministry of Economy, Energy and Tourism.
IBA services:
 Macroeconomic data on Bulgaria
 Legal advice
 Data on operational costs
 Regional information: industrial zones and infrastructure, data on
unemployment, skilled labour force and level of education
 Recommendation of investment project sites
 Identification of potential suppliers, contract manufacturers and
joint-venture partners
 Personalized administrative servicing
 Liaison with central and local governments
 Liaison with branch chambers and NGOs
InvestBulgaria Agency
Sofia 1000, 31 Aksakov Str.
Phone: (+359 2) 985 5500
Fax: (+359 2) 980 1320
E-mail: [email protected]
Web: www.investbg.government.bg