New strategies for the development of the Bulgarian – Japanese economic relations Georgi Stoev SOFIA Bulgarian-Japanese forum 2003

Major barriers to the development of both countries’ trade activities I.Regarding export from Japan: 1.Bulgaria is far away country, 2.Japanese have little information and knowledge about Bulgarian business opportunities 3.Bulgaria’s import duties on Japanese goods are 10 times bigger than import duties on EU-origin products 4.Negligible investments by Japanese businesses which has no inducement effect to expand trade 5.Lack of one-stop shop for the investors.

II.Import to Japan 1.Longer period and higher costs of transportation 2.Lack of competitive and qualitative export commodities 3.Lack of motivation for the Japanese investors, due to insufficient information Major barriers to the development of both countries’ trade activities

The new strategies 1 -Provision of rapidly developing, integrated industrial parks with logistics and utilities, to meet investors’ immediate needs -Supporting industry, based on clusters of SMEs that supply parts and components – the role of BCCI and BIA -A package of investment incentives -Establishing a nonprofit Bulgarian-Japanese economic forum, acting as one-stop shop

-The forum should work out investment incentives package, equally applicable to all Bulgaria-based companies. -Elaborated under national priorities the incentives should help FDI and promote local investment activities. -The forum should unite the efforts of all institutions dealing with Japan such as BCCI, BIA, JBEC, BJTIC, Ministry of Economy and the Government Agencies and provide reliable services. The new strategies 2

Bulgaria offers foreign potential investors -Political and Macro-economic Stability -Strategic and Convenient Location -Low Cost, Well Educated and Skilled Workforce -15% Corporate Tax, the Lowest in the CEE Countries -Bulgaria’s low prices of land and utilities are also attractive for the development of the agricultural cooperation But all these are only prerequisites. The new strategies 3

The forum should take the following actions -Promote trade, investment and tourism; -Cooperate with JETRO/ROTOBO research and investigation missions; -Organize investment seminars in Bulgaria and Japan together with JICA, ROTOBO, JETRO or JOI; -Establishing contacts with KEIDANREN and create opportunities for establishment of JETRO office in Sofia; The new strategies 4

-The Forum should help the establishment of joint ventures, able to receive credit lines or soft loans from Japan; -The Forum can build up a credit rating agency based on the database of BCCI, BIU, BPQC, TBI and using Japanese methodology or the methodology of S&P or IBCA; The new strategies 5

-The capital market is still under developed but the yield on government bonds is growing and pension funds are looking for alternative investments; -Our estimate is that only in Bulgaria there would be about USD 1 billion of funds available for investments in fixed income securities by the end of 2005; -Therefore we believe that the corporate bond market will take off in the short to medium term. The new strategies 6

-AOTS tentatively planned to organize 15 regular Management Training Courses for Fiscal Proposal of Management Training Courses for our country and applications could be send by 31.JAN.2003 AOTS and JICA Training Courses – help to overcome the gaps

Thank you for the attention and have a nice day !