1. Bulgarian Foreign Investment Agency Sofia, March 2003 Attracting Foreign Investment Annex 3

2. Our focus today 1.FDI in Bulgaria : track record and issues 2.Role of BFIA in improving FDI climate 3.Current BFIA projects for improving FDI

3. Source: Bulgarian Foreign Investment Agency; KPMG 34 102 211 163 256 636 620 819 1001 694 500 Drivers of FDI into Bulgaria Factors positivenegative Emerging market Skilled labour Customer base in the region Geographic location Lack of competition EU membership prospects Former business contacts NATO membership Purchasing power Corruption Legal system Bureaucracy Crime Investment risk Inexperienced managerial staff Lack of infrastructure FDI in Bulgaria (USD m 1992-2002E)

4. Source: Bulgarian Foreign Investment Agency FDI underperformance relative to C&EE FDI by country (USD m, 1992-2002 ) FDI per capita (USD m, 1992-2001 )

5. Economic development: the Big Picture ChallengesAchievements Political stability –EU, NATO Macroeconomic stability –GDP growth Fiscal stability –Inflation –Forex reserves –Debt management Unemployment Trade deficit Bureaucracy –Administrative barriers –Start-up procedures –Time-to-market Image of Bulgaria abroad

6. BFIA role in improving economic development BFIA PROPOSALSWHAT INVESTORS WANT Less bureaucracy: –Less red tape –Fewer administration institutions to deal with Minimize chances for corruption Simpler business legislation –Presently 16 laws regulating investment Fair competition One-stop-shop for investors: –Minimize contacts between investors / administration –Act as a Development Agency Consolidate laws related to investment –A new Investment Encouragement Law –Pilot Law: Industrial Zones Attract high quality investors who will promote best practice

7. BFIA’s mission as a catalyst of FDI 1.One-stop-shop for investors −eliminate bottlenecks in state administration −shorten time-to-market 2.Legislative initiative 3.Build an image of Bulgaria as a preferred investment destination – promote a new image of Bulgaria across the business community – conduct direct marketing with “high probability” investors 4.Match potential business partners and facilitate B-to-G relationship

8. BFIA projects needing donor assistance 1.Institutional building of the BFIA −Currently Bulgarian government contributing c. BGN 0.5 mln −Additional resource needed to materialize the “One-stop-shop” 2.Regulatory framework for economic development −Investment Encouragement Law and the Industrial Zones Law 3.Targeted promotion of Bulgaria −Marketing budget and marketing strategy