South Central Europe attractiveness survey Focus Bulgaria Public
South Central Europe attractiveness survey Focus Bulgaria Public presentation 18 March 2010
► Methodology ► Reality of FDI in South Central Europe ► Perception of South Central Europe and future attractiveness ► Focus on Bulgaria Page 2 Ernst & Young South Central Europe Attractiveness Survey 2009
Scope of the study Countries: ► Romania ► Bosnia & Herzegovina ► Bulgaria ► Kosovo ► Croatia ► Macedonia ► Serbia ► Moldova ► Albania ► Montenegro South Central Europe population: ► 57 801 245 inhabitants GDP (purchasing power parity) ► 621 billion $ GDP growth ► between 5, 1% and 7, 2% in 2008 Page 3 Ernst & Young South Central Europe Attractiveness Survey 2009
An image and reality approach Image: 203 international business leaders interviewed by the CSA research firm in October 2009 Reality: Foreign Direct Investment projects (FDI) tracked across 43 European countries since 1997 European Investment Monitor® is an Ernst & Young database powered by Oxford Intelligence Page 4 Ernst & Young South Central Europe Attractiveness Survey 2009 Call centers R&D HQ Shared services centers Manufacturing Back offices Logistics …
A sample representative of all business models Sectors Location Consumer Out 51% 49% 30% 12% 8% 15% 2% Nationality Business services Size > 1. 5 B€ 3% 15% 18% Page 5 Pharma Asia Northern America Central and Eastern Europe Industry In Telecoms and high -tech Other Nordic countries 32% 7% 11% 60% < 150 M€; Western Europe From 150 M€ to 1. 5 B€ Ernst & Young South Central Europe Attractiveness Survey 2009 37% 47%
► Methodology ► Reality of FDI in South Central Europe ► Perception of South Central Europe and future attractiveness ► Focus on Bulgaria Page 6 Ernst & Young South Central Europe Attractiveness Survey 2009
South Central Europe captures 25% of FDI projects in CEE ► ► 1, 239 FDI projects ► 120, 471 jobs created Number of FDI projects 2004 -2008 75% 25% Source: Ernst & Young European Investment Monitor 2009 Page 7 Ernst & Young South Central Europe Attractiveness Survey 2009
An industrial attractiveness Distribution of FDI projects in South Central Europe (nb of FDI projects, 2004 -2008) 78% 70% 55% 45% 62% 38% 30% 63% Industrial activities* Services 37% 22% 2 004 2 005 2 006 *Industrial activities includes manufacturing and logistics Page 8 2 007 2 008 Source: E&Y European Investment Monitor 2009 Ernst & Young South Central Europe Attractiveness Survey 2009
Business services and software in the top 5 Top sectors by number of FDI projects attracted (2004 -2008) Market share 2004 -2008 Automotive 11% Food 9% Non-metallic mineral products 8% Business Services 7% Software 6% Machinery & Equipment 5% Financial intermediation 5% Electronics 4% Other transport services 4% Chemicals 4% Source: Ernst & Young European Investment Monitor 2009 Page 9 Ernst & Young South Central Europe Attractiveness Survey 2009
Germany, the #1 investor in South Central Europe Top 5 origin countries for FDI projects in SCE (2004 -2008) 15% 12% 188 8% 8% 143 5% 103 94 Germany USA Austria France Source: Ernst & Young European Investment Monitor 2009 Page 10 Ernst & Young South Central Europe Attractiveness Survey 2009 64 Italy
► Methodology ► Reality of FDI in South Central Europe ► Perception of South Central Europe and future attractiveness ► Focus on Bulgaria Page 11 Ernst & Young South Central Europe Attractiveness Survey 2009
A middling perception of performance for investors outside SCE Most attractive regions for FDI in 2009 Western Europe 47% Central Europe 38% Russia, Ukraine, Belarus 24% South Central Europe 21% Baltic countries 17% Nordic countries 15% Northern Africa 13% Ernst & Young SCE attractiveness survey 2009 - Respondents: 103 Total > 100%: many possible answers Page 12 Ernst & Young South Central Europe Attractiveness Survey 2009
A strong industrial appeal SCE most attractive region for manufacturing and logistics Manufacturing Logistics 27% 26% 19% 14% 22% 2 1 3 WE SCE CEE SCE WE CEE Ernst & Young SCE attractiveness survey 2009 - Respondents: 203 Total > 100%: many possible answers Page 13 20% Ernst & Young South Central Europe Attractiveness Survey 2009
But promising credibility on shared services centers Top countries to locate a Shared Services Center, within Central, South Central Europe and North Africa Czech Republic 26% Hungary 23% Croatia 22% Bulgaria 20% Romania 11% Poland 9% Estonia 8% Serbia 7% Latvia 6% Egypt 5% Ernst & Young SCE attractiveness survey 2009 - Respondents: 203 Total > 100%: many possible answers Page 14 Ernst & Young South Central Europe Attractiveness Survey 2009
Loyalty of foreign investors Intentions to develop or expand activities in SCE Can't say 6% No 44% European average Yes 50% Ernst & Young SCE attractiveness survey 2009 - Respondents: 203 Total > 100%: many possible answers Page 15 40% Ernst & Young South Central Europe Attractiveness Survey 2009 Source: Ernst & Young’s 2009 European attractiveness survey
Reforms wanted: infrastructure and labor skills Most important investments to make, among those eligible for EU funds Transport and telecommunication infrastructure 49% Labor skills level 34% Administrative efficiency 22% R&D environment and innovation 17% Business parks 16% Ernst & Young SCE attractiveness survey 2009 - Respondents: 203 Total > 100%: many possible answers Page 16 Ernst & Young South Central Europe Attractiveness Survey 2009
► Methodology ► Reality of FDI in South Central Europe ► Perception of South Central Europe and future attractiveness ► Focus on Bulgaria Page 17 Ernst & Young South Central Europe Attractiveness Survey 2009
Bulgaria, as a challenger in SCE Most attractive SCE countries for FDI PERCEPTION REALITY ( number of FDI 2004 – 2008) Croatia 40% Romania 39% Bulgaria 34% Serbia 33% 49% 23% 2 Bulgaria Ernst & Young SCE attractiveness survey 2009 - Respondents: 203 Total > 100%: many possible answers Page 18 1 13% 3 Romania Serbia Source: Ernst & Young European Investment Monitor 2009 Ernst & Young South Central Europe Attractiveness Survey 2009
A clear industrial profile Industrial and services distribution of FDI (nb of FDI projects, 2004 -2008) Industrial activities Job creation Service 42% 58% Source: Ernst & Young European Investment Monitor 2009 Page 19 Ernst & Young South Central Europe Attractiveness Survey 2009 Ø Automotive, 23% Ø Construction, 15% Ø Electrical, 12%
But promising credibility on business support services Top countries for SSC (within Central, South Central Europe and North Africa) Czech Republic 26% Hungary 23% Croatia 22% Bulgaria 20% Romania 11% Top 3 SCE countries for call centers 21% 18% 2 Croatia Ernst & Young SCE attractiveness survey 2009 - Respondents: 203 Total > 100%: many possible answers Page 20 Ernst & Young South Central Europe Attractiveness Survey 2009 14% 1 3 Bulgaria Romania
A hub potential to be developed through logistics centers? Most attractive SCE countries for logistics centres 18% Croatia 16% 16% Bulgaria Romania Serbia Ernst & Young SCE attractiveness survey 2009 - Respondents: 203 Total > 100%: many possible answers Page 21 Ernst & Young South Central Europe Attractiveness Survey 2009
Wanted: more friendly business environment Measures to improve Bulgaria’s attractiveness Eradicate corruption and bureaucracy Improve communication 30% 21% infrastructure Ensure political environment stability Implement more flexible administrative procedures Ernst & Young SCE attractiveness survey 2009 - Respondents: 203 Total > 100%: many possible answers Page 22 Ernst & Young South Central Europe Attractiveness Survey 2009 14%
Bulgaria: the greatest confidence asset Confidence in the improvement of the attractiveness over the next three years Bulgaria 54% Romania 51% Croatia 49% Serbia 44% Macedonia 38% Ernst & Young SCE attractiveness survey 2009 - Respondents: 203 Total > 100%: many possible answers Page 23 Ernst & Young South Central Europe Attractiveness Survey 2009
Challenges ahead ► How to further compete with Romania and Central Europe? ► How to cultivate the service and Hub potential of Bulgaria? ► How to turn the greater level of confidence into real projects? ► How to improve business environment? Page 24 Ernst & Young South Central Europe Attractiveness Survey 2009
Contacts Ernst & Young International Location Advisory Services ► Marc Lhermitte ► Country Managing Partner marc. lhermitte@fr. ey. com ► Fabrice Reynaud John Mystakidis vincent. raufast@fr. ey. com ► Vincent Raufast ► Elena Litova Senior Manager Senior Consultant Marketing coordinator fabrice. reynaud@fr. ey. com vincent. raufast@fr. ey. com elena. litova@bg. ey. com http: //www. ey. com/FR/fr/Services/Advisory/European-attractiveness-survey
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