bulgaria at a glance - aventri€¦ · • benefits for certified investors include: – shortened...
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Page 1
Bulgaria at a glance
Location and key data
• Area: 110,910 sq. km
• Number of inhabitants (2011): 7.4 mln
• Capital and largest City: Sofia
• Other cities: Plovdiv, Varna, Bourgas, Ruse, StaraZagora, Pleven, Veliko Tarnovo
• Natural Resources: oil, gas, coal, iron ore, copper, lead, zinc, antimony, chromite, gold, silver, magnesium, nickel, pyrite, marble, limestone, salt, arable land
• Major industries: electricity, water and gas supply; food, beverages and tobacco; machinery and equipment; base metals, chemical products, coke, refined petroleum
• Currency: Lev (BGN). Fixed exchange rate with Euro.
• EU Member since 2007, NATO Member since 2004
• Government type: parliamentary republic
• Last government elections: July 2009
Dobrudja
Sandanski
Bansko
Veliko Tarnovo
Belogradchik
Kozloduy NPP
Sofia
Bulgaria at a glance
Geography, landmarks and economic overview
Page 2
Maritza Iztok
Balchik
Varna
Sunny Beach
Sozopol
Rousse
Plovdiv
Macroeconomic indicators show consistent pre-crisis economic growth and quick post-crisis recovery
Real GDP Growth Inflation (HICP)
Unemployment FDI Inflow
Source: Bulgarian National Bank, Eurostat
1.7%
-5.5%
6.2%6.4%6.5%6.4%6.6%
20112010
0.4%
200920082007200620052004
3.4%3.0%2.5%
12.0%
7.6%7.4%6.0%6.1%
200620052004 20112010200920082007
10.4%9.1%9.1%
10.7%12.2%
20112010
9.2%
20092008
6.3%
2007
6.9%
200620052004
EU-27Bulgaria EU-27Bulgaria
2011
1,341
2010
1,209
2009
2,437
2008
6,728
2007
9,052
2006
6,222
2005
3,152
2004
2,736
€ mln.EU-27Bulgaria
Page 3
FDI in Bulgaria comes mostly from EU countries and is concentrated in four main sectors
Source: Bulgarian National Bank
FDI by host country, 1996-2011 (€ mln.) FDI flows by industry, 1996-2011 (€ mln.)
Telecom 2,260
Energy 2,699
Construction 2,705
Manufacturing 6,479
Trade 6,522
Finance 7,652
Real Estate 8,204
Other 2,664(10) Hungary 1,272
(9) Italy 1,279
(8) USA 1,283
(7) Russia 1,486
(6) Cyprus 2,257
(5) Germany 2,523
(4) UK 2,733
(3) Greece 3,664
(2) Austria 5,809
(1) Netherlands 6,018
Page 4
Why invest in Bulgaria?
• Political and business stability
– EU and NATO member
– Currency board
– Low budget deficit and government debt
• Low cost of doing business
– 10% corporate tax rate
– Lowest cost of labor within EU
• Access to markets
– European Union / EFTA
– Russia
– Turkey / Middle East
• Educated and skilled workforce
• Government incentives
Page 5
Government financial indicators are remarkable not only in the region, but on a pan-European scale
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
110%
120%
130%
Lithuania
Latvia
Cyprus
Italy
-6% -5% -4% -3% -2%-11% -10%
Average budget deficit/surplus (2006-2011)
16%15%1%0%
TurkeyCroatia Norway
-1%
IcelandUnited Kingdom
Sweden
Finland
Slovakia
Slovenia
Romania
Portugal
Poland
Austria
Netherlands
Malta
Hungary
Luxembourg
France
Spain
Greece
Ireland
Estonia
Germany
DenmarkCzech Republic
Bulgaria
Belgium
Source: Eurostat
Average government debt (2006-2011)
Page 6
Source: Eurostat, The Economist, National Statistics
Budget deficit for 2012, % of GDP
Bulgarian economy maintains its excellent performance despite global challenges
0.0%
0.0%
0.1%
-1.6%
-2.0%
-2.5%
-2.6%
-2.8%
-3.0%
-3.3%
-3.6%
-3.7%
-4.1%
-4.5%
-5.0%
-5.6%
-7.0%
-7.0%
-8.0%
-8.3%
-9.8%
-10.9%
BG
Egypt
Japan
United Kingdom
Spain
Greece
United States
India
Czech Republic
Italy
Hungary
Austria
Brazil
Turkey
China
Sweden
Switzerland
Germany
Euro Area
Denmark
Poland
Netherlands
France
Hungary
Greece
Estonia
Bulgaria
04/10
Turkey
07/10 10/10 01/11 04/1101/10 07/11 10/11
Lithuania
Ireland
Bulgaria was the only European country with increased credit rating by Moody’s in 2010 and 2011
Page 7
Bulgaria has one of the lowest business costs in Europe
Lowest corporate income tax rate in Europe
Source: Eurostat; Savills
Turkey 20%
Croatia 20%
Czech Rep 19%
Slovakia 19%
Hungary 19%
Romania 16%
Bulgaria 10%
Cost of electricity for industrial users is 70% of the EU average
0.080
Bulgaria 0.064
Estonia 0.062
Slovakia 0.123
Czech Rep 0.110
Hungary 0.104
EU average 0.092
Germany 0.090
Turkey 0.086
Romania
€/kWh, 2011
11,070
10,000Germany
Spain
UK 11,400
Poland 5,000
Czech Rep. 5,000
France 5,000
Greece 4,000
Hungary 3,000
Romania 2,000
Bulgaria 1,595
Lowest cost of agricultural land
in the European Union
€ / ha, 2008
Page 8
Bulgaria is only 3 hours flight from all major destinations in Europe, Russia and the Mediterranean region
Strategic geographic location Major transport corridors passing through Bulgaria
EU and EFTA
Rus
sia
and
CIS
Turkey and
Middle East
Page 9
The government supports specific industries under the Investment Promotion Act (IPA)
• Investments must be related to the following sectors:
– Manufacturing
– Research & development
– Education
– Healthcare
– High-tech services
– Warehousing and logistics
• Minimum investment amounts must exceed €10m
– €3.5 in regions with high unemployment and €2m 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
Page 10
• Services:
– Transport and Logistics
– Information technologies
– Outsourcing of business processes
– Health and tourism related to healthy
lifestyle
• Industry:
– Transport equipment and machine
building
– Electronics and Electrical engineering
– Chemical industry
– Food and Agriculture
• Resources:
– Mining
– Oil
Attractive FDI sectors
Page 11
Investing in Bulgaria conference6 December 2012, London
GLOBAL INVESTMENT DATA
ANALYSISPresentation by Courtney Fingar, Editor, fDi Magazine
About fDi Intelligence
The Financial Times Ltd’s dedicated division for FDI:
• fDi Magazine: reporting on the business of globalization
• fDi Markets: crossborder investment monitor
• fDi Benchmark: corporate location assessment tools
• fDi Reports: customised reports and data research
• fDi Atlas: investment incentives navigator
• Bespoke FDI events and investor roundtables
• www.fDiIntelligence.com: online portal
About the data
• Focus on greenfield FDI using the fDi Markets database
• Greenfield FDI is defined as new or expansion FDI projects which create
investment and jobs and is the main target for most IPAs globally
• Greenfield FDI is different to official FDI flows data (ie, UN, IMF), which includes
capital crossing borders typically with 10%+ stake in a foreign entity (ie, M&As)
• Data analytics becoming more important both as a means for corporates to identify, and justify, expansion decisions and also as a means for government agencies to present fact-based arguments for why a company should invest in their location
• Advanced methodologies like location assessment matrices are essential
Global FDI trends
• Global recession hit FDI hard in 2009 with a steep decline in FDI
• FDI project levels slowly recovered in 2010 and 2011; capex and jobs still at 2006 levels
• Europe holding back a bigger FDI recovery
• BRICS: India and China saw growth last year (15%, 3%); Russia saw decline
• Canada and Australia booming as source countries for FDI
• Software and IT the top sector by projects (+18% growth in 2011); metals the top sector for capex; renewable energy the fastest growing sector
• Greenfield FDI set to decline in 2012
Source: The fDi Report 2012
Global FDI picture
Source: The fDi Report 2012Figures for 2011
Renewableenergy
Project numbers
increased 6x
since 2003,
+20% since 2010
$91bn capex
US: top recipient
as well as source
country
Figures for 2011
Expansions: a growing part of FDI
• Since the global economic crisis, expansion projects have become more important
• Accounted for 23% of global capital
investment in 2011 – the strongest share
since fDi data began in 2003
• Expansions seen as a lower-risk and
lower-cost approach than new facilities
Figures for 2011
Europe
Europe FDI:
-3% over 2010
Top sector:
Renewable
Energy
CEE/CIS:
-4%
Bulgaria:
+15%
Figures for 2011
FDI in CEE and CIS region: 2003-2012
• Through October 2012, total of 21,140 FDI projects recorded –
a 14.6% share of global FDI
• Total capital investment: $670 billion; average investment size of $98 million
Source regions for CEE/CIS investment
Top destination countries in the region
Top industry sectors for FDI in the region
FDI in Bulgaria
• FDI projects peaked in 2008
• Domestic market growth potential is the top motive cited by companies (50% of projects), followed by skilled workforce availability and natural resources
• Top source countries: Germany, US, Spain; but UK does largest investments
• Alternative energy provides the largest overall volume and highest average investment, at $220m per project
• In 2012 (TBC), decrease in projects #s and capex; increase in jobs created