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Bulgaria – Investment and Business Opportunities July 2011.

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Presentation on theme: "Bulgaria – Investment and Business Opportunities July 2011."— Presentation transcript:

1 Bulgaria – Investment and Business Opportunities July 2011

2 Bulgaria offers the best of both worlds – a key strategic location, bridging Europe and Asia, low corporate tax and political and economic stability and the lowest business operational costs in the EU Bulgaria has a strategic geographic location. Its position on the European continent allows investors to reach the entire market of the European Union and the markets of central and eastern Europe, which represent a total population of 853 million. With its parliamentary republican political system, the political situation in Bulgaria is stable and the legislature, the executive and the judiciary are independent of the parliament. As of Jan1, 2007, Bulgaria is a part of the European Union and has harmonized its legal system in line with the EU requirements. In April 2004, the country became member of NATO. Foreign investment in Bulgaria has never been so dynamic and so massive. During recent years, a significant number of international companies have opened offices in Bulgaria - Solvay, Umocore, Italcemente Group, Liebherr, Kraft, Nestle, American Standard, Philip Morris, Metro, Lindner, Praktiker and SAP to name but a few. As a result of a liberal financial policy and continuous economic growth, Bulgaria has become very attractive to foreign investments. In addition, local companies are also increasing their share of business in Bulgaria and abroad. Page 2

3 Page 3 Macroeconomic indicators show consistent growth in the years leading up to the global financial crisis Real GDP GrowthInflation Unemployment FDI Inflow € mln. Source: Bulgarian National Bank, Eurostat % EU EU-27 * April 2011 * Q EU-27 * April % % %

4 Despite the global ecnomic downturn, Bulgaria’s investment climate is good and the countries economic performance indicators are positive. Macroeconomic and financial stability: Real GDP growth rate % (2009) Inflation Rate, annual change - 0.6% (2009) Unemployment Rate - 9.1% (2009) No currency risk, local currency is pegged to Euro Budget surplus for the previous 5 years (-3.9% for 2009) Investment grade credit rating by major rating agencies Local and International Agreements to safeguard FDIs Government and EU funding for many industries Page 4

5 Visible signs exist that the Bulgarian economy is emerging rapidly from the crisis 4,500 4,000 3,500 3, % Q4 2010Q3 2010Q2 2010Q1 2010Q4 2009Q3 2009Q2 2009Q1 2009Q4 2008Q3 2008Q2 2008Q % +6% Exports (€ mln.) Q3 2008Q % Q % Q1 2011Q2 2009Q4 2009Q % Q % Q3 2009Q % Q % -3.3% Q3 2010Q Real GDP growth (% annual basis) Source: National Institute of Statistics, Bulgaria

6 Role of Bulgaria as FDI location has grown significantly for the last 10 years Czech Republic Romania Hungary Bulgaria Slovakia Croatia 0 1,000 10,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 Inward FDI per country (€ mln.)

7 Page 7 FDI in Bulgaria comes mostly from EU countries and is concentrated in four main sectors Source: Bulgarian National Bank FDI by host country, (€ mln.)FDI flows by industry, (€ mln.) Telecom1,955 Energy2,492 Construction2,608 Trade6,425 Manufacturing6,552 Finance7,422 Real Estate8,419 Other2,376 (10) Italy1,221 (9) Russia1,229 (8) USA1,337 (7) Hungary1,362 (6) Cyprus2,229 (5) Germany2,646 (4) UK2,948 (3) Greece3,763 (2) Austria5,183 (1) Netherlands5,740

8 Page 8 Why invest in Bulgaria? Political and business stability –EU and NATO member –Currency board –Low budget deficit and government debt Low cost of doing business –10% corporate tax rate –Lowest cost of labor within EU Access to markets –European Union / EFTA –Russia –Turkey / Middle East Educated and skilled workforce Government incentives

9 Page 9 Bulgaria enjoys one of the most stable political and economic environments in Southeastern Europe Bulgaria is a member of some of the most prestigious political organizations –European Union member since 2007 –NATO member since 2004 –WTO member since 1996 Strong commitment to political reform and transparency has earned praise from leading media and experts worldwide Stable currency –Bulgarian Lev has been pegged to the Euro since the adoption of the currency in 2002 –Currency board backed by IMF ”the culture of impunity that once plagued Bulgaria has largely gone“ May 27, 2010 “The Bulgarian economy looks to be stabilizing after weathering the recent financial crisis better than most of its neighbors” “the government has earned accolades from Western economists” July 20, 2010

10 Page 10 Government financial indicators are remarkable not only in the region, but on a pan-European scale Budget surplus / deficit has consistently outperformed regional and European averages Source: Eurostat Bulgaria Euro Area CEE average Bulgarian government debt is 3 rd lowest in Europe 7%Estonia 68%UK 78%Hungary 24%Romania 115% 79% Greece Euro area 73%Germany 35%Czech Republic Bulgaria15% Government debt, % of GDP

11 Page 11 Bulgaria has one of the lowest business costs in Europe (1) Taxes and Labor Costs Lowest corporate income tax rate in Central / Eastern Europe * 0% tax rate for manufacturing companies in regions with low employment Most competitive cost of labor in Central / Eastern Europe Average wage, € / month Oct 2010 Source: Eurostat; CEIC 10%Bulgaria (*) 16%Romania 19%Hungary 19% Turkey20% Czech Rep20% Slovakia Croatia 445 Czech Republic 713 Poland 772 Slovakia 806 Hungary 1,044 Serbia 1,022 Romania Bulgaria Slovenia 1,

12 Page 12 Bulgaria has one of the lowest business costs in Europe (2) Energy costs and Prime Location Office Rent Bulgarian cost of electricity for industrial users is 67% of the European average Source: Eurostat, CB Richard Ellis Estonia Bulgaria Romania EU average Germany Czech Rep Hungary Slovakia €/kWh, 2009 Office rents in Bulgaria are among the lowest in Europe Moscow Istanbul Bucharest Warsaw Budapest Athens Zagreb Prague Sofia € / sq. m / year, Q1 2010

13 Page 13 Bulgaria is only 3 hours flight from all major destinations in Europe, Russia and the Mediterranean region Strategic geographic locationMajor transport corridors passing through Bulgaria EU and EFTA Russia and CIS Turkey and Middle East

14 The role of the European Union as a trade partner for Bulgaria has been growing consistently Other Asia Balkans EU % % % % Share of EU-27 exports has grown by 50 percentage points since 1995 € mln 9,000 6,000 5,000 4,000 3,000 8,000 2,000 10,000 1, , in absolute terms EU-27 exports have grown approximately 5 times Page 14

15 Page 15 An educated and skilled workforce is among the main advantages of Bulgaria Almost 60,000 students graduate every year from over 50 universities Source: National Institute of Statistics, Bulgaria 12,684Other 19,480Business 8,372Social sciences 7,178Engineering 3,677Education 3,166Health 1,553Law Architecture Agriculture Bulgaria has one of the highest proportions of students abroad from all European countries 17.8%Iceland 14.2%Ireland 10.2%Slovakia Bulgaria Greece Austria Germany EU-27 average Romania Czech Republic Students in another EU / EEA country, % of all

16 The government supports specific industries under the Investment Promotion Act (IPA) Derelli Company Ltd can help you make the most of this Page 16 Investments must be related to the following sectors: –Manufacturing –Research & development –Education –Healthcare –High-tech services –Warehousing and logistics Minimum investment amounts must exceed €10m –€3.5 in regions with high unemployment and €2m for investment projects in high-tech services Benefits for certified investors include: –Shortened administrative procedures –Preferential acquisition of state or municipal land –Financial support for professional training / education –Infrastructure subsidies –Individual administrative services

17 Biggest investors are supported through a priority investment scheme Priority projects can be related to all sectors of the economy, which do not contradict regulation 800/2008 of the European Commission –Subsidies not allowed in mining, primary agriculture production, and shipbuilding Priority projects should exceed €50m and create at least 200 new working places for a 3-year period –€ working places for certain manufacturing projects –€10m + 50 working places for high-tech services and R&D Priority projects receive all benefits for certified investors, as well as the following: –Lowest possible costs for the acquisition of government and municipal land + waived taxes for land status changes –Working group for project support is assigned by the Council of Ministers –Financial grant scheme for up to 10% of the investment project cost (50% for R&D) Page 17

18 Page 18 Source: Deloitte Consulting; United Nations (UNCTAD) Services: –Information technology –Public Sector –Transport and tourism Industry: –Electronic and electrical equipment –Machine building –Metal processing –Chemical Industry Resources: –Mining –Oil –Alternative energy Attractive FDI sectors

19 Leading global investors have chosen Bulgaria as an FDI destination IT & BPO (Business Process Outsourcing) Mechanical and Electrical Engineering Construction Materials Telecom and Media EnergyFinance

20 Our Consultancy Services: Macroeconomic data on Bulgaria and the Bulgarian Security Industry – all aspects from manufacturing and sales to guarding and identification of key business opportunities Legal and Tax Advice – everything you need to know about setting up a business here –we’ll advise you on and undertake on your behalf Business Intelligence and Statistical Data Recommendation and evaluation of investment projects Identification of potential suppliers, contract manufacturers and joint-venture partners Personalized admin,tax,legal servicing and practical assistance from local and international experts Liaison with central and local governments Liaison with branch chambers and NGOs, liaison with the Government investment promotion Agency, part of the Ministry of Economy, Energy and Tourism Derelli Company Ltd

21 DERELLI Company Ltd. Sofia 1202, 21 Rodopi Str. Phone: (+359 2) Fax: (+359 2)

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