2. State Agency for Information Technology and Communications ICT Development in Bulgaria – Prospects and Challenges after 1-st January 2007 Dimitar Stanchev Deputy Chairman New Delhi, 11 January 2007

3. State Agency for Information Technology and Communications 1.The impact of ICT on Growth and Jobs 2.ICT Sector in Bulgaria 3.Bulgarian ICT Priorities - prospects and challenges for Bulgaria in EU Outline of presentation

4. State Agency for Information Technology and Communications 1.The impact of ICT on Growth and Jobs

5. State Agency for Information Technology and Communications Macroeconomic Stability and Growth Sources: National Statistics Institute, Ministry of Finance, Eurostat GDP Growth & Inflation, avg. (2000 - 2005)

6. State Agency for Information Technology and Communications Economic Impact of Structural Reforms Product, labour and financial market reforms and increased emphasis on knowledge and innovation Increased competition and higher investment lead to productivity gains through greater efficiency Higher growth and more jobs

7. State Agency for Information Technology and Communications The Role of ICT in Economy ICT investments lead to an overall increase in capital and labour efficiency ICT stimulate the competitive environment and the opportunities for SMEs ICT raise the companies efficiency ICT contribute directly as well as indirectly to economic growth ICT are economically important because they facilitate the implementation of innovations and organizational changes in enterprises and change competitiveness and market structure ICT use ICT investment ICT production

8. State Agency for Information Technology and Communications 2. ICT Sector in Bulgaria

9. State Agency for Information Technology and Communications Achievements of Bulgaria Bulgaria – one of the best locations for high-tech investments in Europe in R&D, software development, telecom services Telecommunications sector – liberalized, modernized, competitive IT industry – skilled and competitive All Bulgarian universities and institutes of the Bulgarian Academy of Sciences are connected to the Pan-European Research Network

10. State Agency for Information Technology and Communications Bulgarian ICT Industry Source: European IT Observatory

11. State Agency for Information Technology and Communications Future Prospects for ICT in Bulgaria 2003-2007 (EUR M) Source: European IT Observatory

12. State Agency for Information Technology and Communications High-Tech Successful Stories in Bulgaria SAP Labs in Bulgaria - 100% SAP-owned Investor of the Year 2004 300 young people in Sofia office Tumbleweed US leading provider of secure Internet messaging software in Bulgaria EPIQ Electronic Assembly, Botevgrad (1997), property of EPIQ Group, Belgium Electronic assembly, module assembly, development and manufacture of plastic injection moulds & factory automation equipment 1,000 employees

13. State Agency for Information Technology and Communications 3. Bulgarian ICT Priorities - prospects and challenges for Bulgaria in EU

14. State Agency for Information Technology and Communications State Agency for IT and Communications In 2005 the Bulgarian government established a State Agency for IT and Communications in order to: Conduct the state management in the fields of IT, communications and Information Society in Bulgaria Synchronize and actively participate in ICT development in the public sector Coordinate Information Society activities Support the development of networks for national security and defence Facilitate the establishment of partnerships and encourage the development of business relationships between Bulgarian and foreign companies in the ICT sector Coordinate the promotion and marketing of the Bulgarian ICT brand

15. State Agency for Information Technology and Communications Development of ICT infrastructure for wide Public Access to Electronic Services Development of the National State Network (NSN) for communications between ministries, regional authorities, municipalities, etc.:  Building a high-speed fiber-optic ring with an initial transmission capacity of about 2.5 Gbps and with an option for further increase to 10 Gbps  Connecting 27 regional centers and the capital within the fiber-optic ring by the end of 2007  Providing national connectivity and integration of NSN with the other more or less developed networks of the state institutions after 2008

16. State Agency for Information Technology and Communications Prioritising ICT capacity for ICT skills acquisition All universities are connected to Internet and 80% of the students are on-line The National High-speed Research Network is connected to the European Research and Educational Network (GEANT) The majority of the universities provide wireless Internet access to their professors and students All schools are computerised and above 80% of their students use Internet PC density in elementary and high schools will be one PC per 12 pupils by the end of 2007

17. State Agency for Information Technology and Communications Critical Success Factors for Attracting Investments in ICT Government Private sector Educational Institutions

18. State Agency for Information Technology and Communications Investment Competitiveness FDI, % GDP Source: Economist Intelligence Unit Bulgaria is a leader among CEECs according to FDI as % of GDP Greenfield investment topped 2.3 bn Euro (2005) Foreign Direct Investment (FDI) for Jan-June 2006 was 1586 m Euro which is 886 m Euro more than for the same period of 2005

19. State Agency for Information Technology and Communications Investment Objective Investment in Fixed Capital, % GDP Objective – 25% of GDP Source: Economist Intelligence Unit

20. State Agency for Information Technology and Communications Investment Focus DELOTTE’S STUDY Main competitive advantages of Bulgaria:  Products for small market niches  Products and services with medium and high added value  In the short-term – investment in power engineering, transport and ICT infrastructure  In the medium and long term – greenfield investments, mergers and acquisitions Most perspective sectors attracting investment: ICT, outsourcing, electronics, machine-building and electrotechnical industries

21. State Agency for Information Technology and Communications Effective use of the European Structural Funds in 2007-2013 Active participation in the EU Community Programmes and initiatives (7-th Framework Programme, CIP and etc.) Investment in ICT R&D and wider ICT take-up in the public and private sector Building up a stable foundation for effective mobility of young researchers in ICT area Promotion of experts who are able to capitalise on past experience and new knowledge Strengthening innovation in ICT Better coordination and cooperation between more developed and less developed EU regions Key factors for ICT competitiveness - Challenges

22. State Agency for Information Technology and Communications Future Prospects for Growth in the ICT Sector Establishment of a venture capital fund targeted at SMEs with an ICT profile Establishment of regional, national and international ultra-high speed network infrastructure Improvement of the cooperation between academic institutions and the private sector Encouragement of applied research and development Greater efforts to develop and sustain human resources Make Bulgaria a centre for ICT entrepreneurial activities in the region

23. State Agency for Information Technology and Communications ICT State Policy Results – Failure is not an Option! More effective institutions (combat corruption, modernisation (e-Governance), value for money, etc.) Higher share of ICT investment within total investment Enhanced investments in R&D activities both within the whole economy and the ICT sector Successful PPP models Competitive, export-oriented ICT industry Well-developed ICT infrastructure From passive to active labour market

24. State Agency for Information Technology and Communications Thank you for your attention!