InvestBulgaria Agency investbgernment.bg

InvestBulgaria AgencyInvestBulgaria Agencywww.investbg.government.bgwww.investbg.government.bg

Bulgaria – your investment decisionBulgaria – your investment decision

Dr. Stoyan StalevDr. Stoyan StalevExecutive DirectorExecutive Director

Strategic location Why Bulgaria Macroeconomic Indicators FDI Inflow Highly Skilled Labor Force Comparison between

Bulgaria and Europe Business Sectors of Highest

Potential for Investors Our achievements in figures Investment Promotion Act Investment Incentives in

Bulgaria InvestBulgaria Agency

Structure of the Presentation

Pan-European Transport Corridors

9

4

7

10

8

Market access

EU membership and NATO membership Currency board EU’s most favourable taxes:

•10% corporate income tax rate• 0% in high-unemployment areas•10% flat tax rate on personal income

Europe’s most competitive operational costs Well-educated and highly-skilled labour force 45,000 Bulgarian students in Europe Government financial support for priority investment

projects Linking Europe and Asia Excellent climate, natural scenery, food and

hospitality

Why Bulgaria

Source: Bulgarian National Bank

GDP growth (%), 2002 – 2009

4.5 5.06.6 6.2 6.3 6.2

-5.4

6.0

2002 2003 2004 2005 2006 2007 2008

* January - September 2009

2009*

Source: Bulgarian National Bank

4.06.5 6.5

12.5

7.8

0.6

2004 2005 2006 2007 2008 2009

Inflation, (annual change, %), 2004 - 2009

13.512.2

10.79.1

6.9 6.3

8.7*

2003 2004 2005 2006 2007 2008 2009

Source: Bulgarian National Bank

Unemployment rate (%), 2003 - 2009

* January - November 2009

Agency Date

Foreign currency Local currency

Long-term

Short-term

OutlookLong-term

Short-term Outlook

Japan Credit

Rating Agency

24 July

2009BBB - Negative BBB+ - Negative

Fitch 30 April

2009BBB- F3 Negative BBB - Stable

Standard& Poor’s

1 Dec

2009BBB A-3 Stable BBB A-3 Stable

Moody’s 20 March

2009Baa3 - Stable Baa3 - Stable

Source: Ministry of Finance

Credit rating

Source: BNB, IBA

Record FDI inflow in 2006 – 2008, EUR m

* Preliminary Data, ** January – November

Greenfield+Expansion

866 1 103 903 9801 851

2 7363 152

6 222

8 596

2 630**

6 549*

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

6.0

0.8

6.85.4 5.8 6.1 6.2

4.43.4

4.93.4 3.3 3.0

6.6 5.8 5.4

2.50.7

2.5-0.8

29.7

19.2

BULGARIA CZECHREP

HUNGARY LATVIA POLAND ROMANIA UKRAINE SERBIA SLOVAKIA SLOVENIA TURKEY

2007 2008

FDI to GDP, %, 2007 – 2008

Source: BNB, Bank Austria Creditanstalt

Bulgaria leads CEE countries in terms of FDI to GDP indicator

Source: BNB, IBA

Austria the Netherlands Greece Un. Kingdom Germany

16%

5367.7

12%

4145.7

9%

3074.4

8%

2710.0

7%

2229.4

Cyprus

Belgium &

Luxemburg USA Hungary Italy

5%

1726.2

5%

1612.0

4%

1285.8

3%

1171.3

3%

1105.4

FDI stock by country,1996 – 2008, %, EUR m

1886.9

1766.6

1931.2

2247.5

5509.0

6274.3

7469.9

6477.5

Other

Telecom

Electricity, gas and water

Construction

Trade

Manufacturing

Finance

Real estate

Source: BNB, IBA

22%22%

19%19%

19%19%

16%16%

7%7%

6%6%

5%5%

6%6%

FDI stock by sector, 1998 – 2008, %, EUR m

25022

2862

12005

8253

23764

132869

12992

681

493

4175

10124

39594

14288

262

528

4901

10307

61262

Russian

Italian

Spanish

French

German

English

Sofia

Plovdiv

Varna

Source: National Statistics Institute

Language education in upper secondary general schools by city, 2008/2009

~ 39,000 – Total number of students enrolled in IT and

Engineering related programs

Sofia Gabrovo

Rousse

Varna

Plovdiv

1699516995

41324132

35923592 43234323

49244924

Students enrolment in vocational schools & technical universities for 2008/2009

Number of students, BA+MA, 2008/2009

7134

7005

4465

4313

3062

2984

2485

7319

Computer systems and technologies

Informatics

Communication systems andtechnologies

Electrical Engineering

Automation

Machine building

Electronics

Other

Enrolment in university IT and engineering programs for 2008/2009

Source: NSI

Students in university programs of intensive education in Economics, 2008/2009

University programsUniversity programs Enrolment 2008Enrolment 2008 - 2009- 2009

International Business Relations 6191

Finance 11629

Economic Management 6098

Marketing 4876

Economics 14967

Accounting 9744

Business / Public Administration 11175

Economics of Industry 1234

Business Management 8456

Other 3962

Total Business education 78332

Source: NSI

Bulgaria

Comparison between Bulgaria and Europe

Strong Fiscal Policy and Stable Currency

General Government Balance, %

-5.7%

-2.3% -2.2%-1.6%

3.5%

-3.8% -3.4%

-2.2% -2.0%

3.0%

2007 2008 E

Source: Economist Intelligence Unit

Hungary Romania SlovakiaCzech

Republic

*0% Forecast for 2009

Source: Economist Intelligence Unit

Comparison between Bulgaria and Europe

Average monthly wages, Q2 2008, EUR

261

463

744 790

945

Bulgaria Romania Slovakia Hungary CzechRepublic

10%

16% 16%19% 20% 20%

Bulgaria Romania Hungary Slovakia CzechRepublic

Turkey

Source: IBA

* 0% for manufacturing companies in areas with high unemployment

Comparison between Bulgaria and Europe

Corporate income tax rate, 2009

Source: EUROSTAT

Price level indices for all consumer goods and services, 2008, (EU27=100)

100

51

6269 70 70 72

83

99104 105

111

EU 27

Bulga

ria

Roman

ia

Polan

d

Hungar

y

Slova

kia

Czech

Rep

ublic

Slove

nia

Unite

d Kin

gdom

Germ

any

Italy

Franc

e

Attractive sectorsAttractive sectors Major investors supported by Major investors supported by InvestBulgaria Agency InvestBulgaria Agency

Electrical engineering Mechanical engineering Electronics Automotive parts manufacturing Chemical Industry

Solvay (Belgium) Aurubis (Germany) Liebherr (Germany) Lufthansa Technik (Germany) Montupet (France) Italcementi (Italy) Sise Cam (Turkey) Stomana Industry (Greece) Miroglio (Italy) Knauf (Austria) Ixetic (Germany) Schneider Electric (France)

Competitive advantagesCompetitive advantages Export oriented sectors The lowest operational cost in EU Highly skilled labour force

•7% with engineering degree•EUR 280 total average monthly

compensation (Q4 2008)

Manufacturing

OpportunitiesOpportunities Major projects supported by Major projects supported by InvestBulgaria Agency InvestBulgaria Agency

Wind parks Solar plants New nuclear PP Modernization and construction of new TPPs Biomass Biofuel

7 wind park projects 3 projects for modernization and construction of new TPPs 2 Biomass projects 3 Biofuel projects

Competitive advantagesCompetitive advantages Skilled labour force Availability of natural resources Favorable climate conditions Harmonized legislation with the EU’s

RES electricity production to double (from 6% to 12%) by 2010 Administrative and economic incentives for RES energy production

Energy Sector

IT & BPO

OpportunitiesOpportunities Main Players in Bulgaria Main Players in Bulgaria Software development IT support centers F/A shared service centers Contact centers

IT•Software AG (Germany) •Microsoft (USA)•Hewlett Packard (USA)•IBM (USA)•Nemetschek (Germany)•Johnson Controls (USA)•SAP Labs Bulgaria (Germany)•CISCO (USA)

BPO•60K (UK)•Sutherland (USA)•IBM (USA)•OPI Global (USA)•Hewlett Packard (USA)•C3i (USA)

Competitive advantagesCompetitive advantages Skills availability Strong traditions in IT development Reliable telecom infrastructure Europe's most competitive wages Reasonable office prices 9.71% share of the GDP for 2008 (second fastest growing sector in the country)

Real estate & Tourism

OpportunitiesOpportunities Major projects supported by Major projects supported by InvestBulgaria Agency InvestBulgaria Agency

Development of• trade centers • business parks • residential parks• convention centers• winter resorts • balneology and SPA tourism • rural and alternative tourism

Golf tourism Construction of luxury hotels

23 trade centers projects 6 business park projects 9 golf projects 5 winter resort projects 5 balneology and SPA tourism

Competitive advantagesCompetitive advantages Real Estate is the fastest growing sector in the country FDI inflow in Real Estate amounts to EUR 1900 mln. in 2008

(EUR 7409 mln. (22%) for the period 1998 – 2008)

Our achievements in figures

Source: IBA

We are assisting 121 certified investment

projects

EURO 9.8 bln planned investments

53 800 new jobs will be created

August 2004 – September 2009

Investment Promotion Act

Promotion for initial investment in the following sectors

Manufacturing industry

Production of electricity from renewable sources

Computer technologies

Research and development

Education

Human health care

Investment classifications under the investment promotion act, (€ Million)

Region or Sector Class B Class AGeneral

8 - 16 >16

In municipalities with unemployment rate equal or more than the country average 4 - 8 >8

In high-tech activities in the manufacturingindustry for the whole country 4 - 8 >8

In high-tech activities in the services, computer technologies and R&D sectors for the whole country

2.8 – 5.6 >5.6

Investment classes A and B depending on the value, region and sector allocation of the investment

All classes (A&B) Information services and shortened administrative services

Preferential treatment upon acquisition of a right of ownership and limited real rights over real estate – private state or private municipal property

Financial support for vocational training of employees for the needs of the investment project

A class Individual administrative services

Infrastructure support to the borders of the investment project site

Incentives under the Investment Promotion Act

No sector restrictions

Council of Minister decision

Conditions:

investment more than 50 Million Euro

or investment in depressed regions

or investment in High-Tech

or investment in industrial zone construction

Incentives

VIP treatment

Special Incentive Package

Priority Investment Projects

10% corporate income tax;

0% for manufacturing companies in areas with high unemployment

10% personal income tax, flat rate

Opportunity for R&D expenditure write-off

Depreciation of 2 years for computers and new manufacturing equipment

2-year VAT exemption for imports of equipment for investment projects over € 5 million, creating at least 50 jobs

5% withholding tax on dividends and liquidation quotas (0% for EU tax residents)

Up to 1 year minimum salary and reimbursement of social/health care security for employing young people and disadvantaged people through the Employment Agency

Investment incentives in Bulgaria

InvestBulgaria Agency is the Government investment promotion arm, part of the Ministry of Economy, Energy and Tourism.

IBA services: Macroeconomic data on Bulgaria Legal advice Data on operational costs Regional information: industrial zones and infrastructure, data on

unemployment, skilled labour force and level of education Recommendation of investment project sites Identification of potential suppliers, contract manufacturers and

joint-venture partners Personalized administrative servicing Liaison with central and local governments Liaison with branch chambers and NGOs

InvestBulgaria Agency

InvestBulgaria AgencySofia 1000, 31 Aksakov Str.Phone: (+359 2) 985 5500Fax: (+359 2) 980 1320E-mail: [email protected] Web: www.investbg.government.bg