Bulgaria investment climate and business opportunities Bulgaria geographic
Bulgaria – investment climate and business opportunities
Bulgaria – geographic location Strategic geographic location in South-East Europe Ø Offers direct access to markets like: EU, Russia, Turkey and The Middle East Ø 5 Pan-European transport corridors pass through Bulgaria EU EF and TA Ru an ssia d C IS Ø Tu Mi rkey dd an le Ea d st
Why invest in Bulgaria? Ø Political and business stability − EU member − Currency board − Low budget deficit and government debt Ø Low cost of doing business − 10% corporate tax rate (0% in high unemployment areas) − 10% personal income tax − Lowest cost of labor within EU − Favorable office rents and low cost of utilities Ø Access to markets − European Union / EFTA − Russia − Turkey / Middle East Ø Educated and skilled workforce Ø Government incentives
Macroeconomic indicators Real GDP Growth Bulgarian Inflation (HICP) EU-28 Bulgarian EU-28 0. 4% 2006 2007 2008 2009 2010 2011 2012 2013 2014* 1, 151 1, 330 1, 141 1, 156 2010 2011 2012 2013 * September Unemployment Bulgarian FDI Inflow € mln. EU-28 9, 052 9. 2% 6, 728 6, 222 6. 3% 2, 437 2008 2009 2010 * September Source: Bulgarian National Bank, Eurostat 2011 2012 2013 2014 2006 2007 2008 2009
FDI in Bulgaria comes mostly from EU countries and is concentrated in four main sectors FDI by host country, 1996 -2013 (€ mln. ) (1) Netherlands FDI flows by industry, 1996 -2013 (€ mln. ) 6376. 3 (2) Austria 5639. 3 (3) Greece Manufacturing Finance 2815. 3 Real Estate 7431. 8 6833. 8 (5) UK 2369. 8 Trade (6) Cyprus 2097. 4 Energy 1849. 1 (8) USA 1443. 4 (9) Italy 1402. 7 (10) Switzerland 1367. 5 Source: Bulgarian National Bank 7508. 8 3537. 5 (4) Germany (7) Russia 7683. 5 Construction Telecom Other 3779. 3 2878. 9 2015. 2 3405. 3
Government financial indicators Average government debt (2007 -2012) Greece Italy Belgium Portugal Ireland -13% -12% -11% Iceland France Hungary Germany United Kingdom Austria Malta Netherlands Poland Cyprus Spain Turkey Sweden Denmark Latvia Slovakia Czech Republic Finland Norway Slovenia Croatia Romania Lithuania Bulgaria Luxembourg Estonia -7% -6% -5% -4% -3% -2% -1% 0% 1% 15% Average budget deficit/surplus (2007 -2012) Source: Eurostat
Bulgaria was the only European country with increased credit rating by Moody’s in 2010 and 2011 Country credit ratings comparison Q 2 2014 S&P Rating Country Moody's rating Fitch Rating TE Rating* Czech Republic AA- Stable A 1 Stable A+ Stable 79. 28 Stable Poland A- Stable A 2 Stable A- Stable 67. 41 Stable Italy BBB Negative Baa 2 Negative BBB+ Negative 62. 09 Negative Bulgaria BB+ Stable Baa 2 Stable BBB- Stable 54. 24 Stable Spain BBB- Stable Baa 3 Negative BBB Negative 52. 55 Negative Croatia BB+ Stable Baa 3 Negative BBB- Negative 48. 85 Stable Macedonia BB Stable BB+ Stable 47. 5 Stable Romania BB+ Stable Baa 3 Negative BBB- Stable 47. 35 Stable Turkey BB+ Stable Ba 1 Positive BBB- Stable 44. 58 Stable Hungary BB Stable Ba 1 Negative BB+ Stable 42. 58 Stable Serbia BB- Negative Ukraine B Negative Caa 1 Negative B Stable *The TE credit rating is driven by a model created at Trading Economics. Source: Trading Economics Rating 40 Negative 28. 75 Negative
The lowest taxes in EU Country comparison Country Income Tax (%) Social Security (%) VAT (%) Corporate Individual Employer Employee Bulgaria(*) 10 10 17, 9 -18, 5 12, 9 20 Serbia 15 10 -20 16, 9 20 Romania 16 16 28, 45 16, 5 24 Hungary 10/19 16 28, 5 18, 5 27 Czech Rep. 19 22 34 11 21 Poland 19 18/32 22, 14 13, 7 23 Turkey 20 15 -35 27 15 18 Slovakia 23 19 -25 34, 8 13, 4 20 UK 23 0 -45 13. 8 12 20 Italy 27, 5 23 -43 30 10 21 30 24, 75 -52 29, 9 6, 35 21 30 -33 (effective) 14 -45 19, 7 20, 6 19 33, 33 5, 5 -41 50 20 19, 60 Spain Germany France Source: Worldwide-tax
Bulgaria has one of the lowest business costs in Europe Gas prices for industrial users in Europe Electricity prices for industrial users in Europe €/Gigajoule, 2013 €/k. Wh, 2013 Czech Republic Bulgaria Estonia Poland Germany Austria Turkey Italy Romania EU average Hungary Spain EU average France Czech Rep Germany Source: Eurostat Slovakia
Salaries in Bulgaria Average salary by position, EUR per month Labour cost / Salary In EUR, per month % of the Gross Salary Top Management R&D Engineers Low High Low Unskilled labor Technicians Skilled labor High Low High Net Salary Employee 77, 1% 924 1925 576 770 539 693 347 462 285 385 216 270 Gross Salary Employee 100% 1200 2500 750 1000 700 900 450 600 370 500 280 350 117, 9% 1415 2948 884 1179 825 1061 531 707 436 590 330 413 Total Cost for Company Average gross salary by region, EUR per month Statistical region 2013. 09 North-West North Central North-East South-West South Central 326 330 369 370 505 331 Source: IBA Analysis, National Statistics Institute
Students in Bulgaria by narrow field of education in universities and colleges in 2012/13 academic year Business and administration 67113 Engineering and engineering trades Social and behavioural science Health Teacher training and education science Humanities Law Personal services Architecture and building Computing Agriculture, forestry and aquacultures Manufacturing and processing Physical and chemical sciences Mathematics and statistics A big number of students study in universities in Europe and USA TOTAL: 283 959 (‘Bachelor’, ‘Master’, ‘Doctor’) Source: National Statistics Institute
Bulgaria has highly-qualified, well-motivated, flexible and multilingual labour force Ø 53 Universities, colleges and higher schools Number of universities in some of the biggest cities Ø 494 Vocational gymnasiums and colleges Ø 80000 Bulgarian students in foreign countries Blagoevgrad Ø 24, 6% Population hold university degree Ø 7% Workforce has engineering degrees Ø 45, 5% Population speak at least one foreign language Ø 85% Students studied English Veliko Tarnovo Burgas Varna 1 Total number of higher schools* 53 Universities and equivalent higher schools 45 Colleges 29 Independent colleges 8 Colleges, at the universities and equivalent higher schools 21 *Incl. universities and equivalent higher schools and independent colleges Source: National Statistics Institute Plovdiv 1 Sofia Other 6 Business field Technical sciences
The government supports specific industries under the Investment Promotion Act (IPA) Ø Ø Investments must be related to the following sectors: − Manufacturing − Research & development − Education − Healthcare − High-tech services − Warehousing and logistics Minimum investment amounts must exceed € 2. 5 m − Ø € 1 m in regions with high unemployment and € 0. 5 m 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 − Labor cost subsidies − Individual administrative services
Biggest investors are supported through a priority investment scheme Ø Priority projects can be related to all sectors of the economy, which do not contradict regulation 800/2008 of the European Commission − Ø Subsidies not allowed in mining, primary agriculture production, and shipbuilding Priority projects should exceed € 50 m and create at least 200 new working places for a 3 -year period Ø − € 25 m + 100 working places for certain manufacturing projects − € 10 m + 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)
Attractive FDI sectors Ø Services: − Transport and Logistics − Information technologies − Outsourcing of business processes − Health and tourism related to healthy lifestyle Ø Industry: − Transport equipment and machine building − Electronics and Electrical engineering − Chemical industry − Food and Agriculture Ø Resources: − Mineral water − Tourism − Balneology − Alternative energy
Leading global investors have chosen Bulgaria IT development Back office operations Chemical and metal Industry Engineering Food
Invest Bulgaria Agency Invest. Bulgaria Agency is a Government investment promotion arm, part of the Ministry of Economy and Energy IBA services: Ø Macroeconomic data on Bulgaria Ø Legal advice Ø Data on operational costs Ø Regional information: industrial zones and infrastructure, data on unemployment, skilled labour force and level of education Ø Recommendation of investment project sites Ø Identification of potential suppliers, contract manufacturers and joint-venture partners Ø Personalized administrative servicing Ø Liaison with central and local governments Ø Liaison with branch chambers and NGOs
Invest. Bulgaria Agency Sofia 1000, 31 Aksakov Str. Phone: (+359 2) 985 5500 Fax: (+359 2) 980 1320 E-mail: iba@investbg. government. bg Web: www. investbg. government. bg
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