Bulgaria – investment climate and business opportunities

February 2013

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

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

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

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%

LithuaniaLatvia

Cyprus

Italy

-6% -5% -4% -3% -2%-11% -10%

Average budget deficit/surplus (2006-2011)

16%15%1%0%

TurkeyCroatia Norway

-1%

IcelandUnited Kingdom

SwedenFinland

Slovakia

Slovenia

Romania

Portugal

Poland

Austria

Netherlands

MaltaHungary

Luxembourg

France

Spain

Greece

Ireland

Estonia

Germany

DenmarkCzech Republic

Bulgaria

Belgium

Source: Eurostat

Average government debt (2006-2011)

10/10 04/11 10/11 04/12 10/1207/1201/1207/1101/1107/1001/10 04/10

Spain

Hungary

Greece

Estonia

Bulgaria

Source: Eurostat, Moody’s

Portugal

Lithuania

Latvia

Iceland

Aaa

A1

Baa1

Ba1

B1

Caa1

Ca

0.2%

1.2%

0.8%

-1.0%

-1.4%

-1.6%

-2.6%

-2.6%

-3.7%

-3.8%

-3.9%

-4.3%

-4.8%

-5.3%

-5.4%

-5.6%

-8.2%

-8.4%

-8.6%

-8.7%

-10.0%

-10.0%

Japan

United Kingdom

Germany

China

Switzerland

Turkey

Sweden

BG

Hungary

United States

Greece

Egypt

Brazil

Denmark

Czech Republic

Italy

Austria

Netherlands

India

France

Poland

Euro Area

Spain

Budget deficit for 2011, % of GDP Bulgaria is the only country in Europe with a credit rating upgrade by Moody’s in 2010 and 2011

Bulgarian economy maintains its excellent performance despite global challenges

Bulgaria has one of the lowest business costs in Europe

Lowest corporate income tax rate in Central / Eastern Europe

*0% tax rate for manufacturing companies in regions with low employment

* From January 2013

Most competitive cost of labor in Central / Eastern Europe

Monthly wage, nominal, € / month December 2011

Source: Eurostat; Bank Austria, CBRE

23%

Hungary 19%

Romania 16%

Bulgaria (*) 10%

Slovenia 20%

Turkey 20%

Croatia 20%

Poland 19%

Czech Rep 19%

Slovakia(*) Slovenia 1,520

Croatia 1,048

Czech Republic 995

Poland 876

Slovakia 792

Hungary 758

Serbia 518

Romania 363

Bulgaria 350

27

15

15

21

17

20

19

13

Belgrade

Sofia

Bratislava

Zagreb

Moscow 100

Warsaw

Prague

Budapest

Bucharest

Office rents in Bulgaria are among the lowest in Europe

€ / sq.m /m, 2012

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

• 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

Balneology and SPA

Magura cave

Belogradchik Rocks

Baba Vida Fortress

Rila monastery

Rupite

Nessebar

Fortress Pliska

SOFIA Troyan monastery

Etar

Ancient Plovdiv

Pyramids of Melnik

Hundreds of historical, cultural and natural landmarks are located all over the country

Fortress Kaliakra Veliki Preslav Fortress Tsarevets

Sozopol

Vitosha mountainKazanluk's Thracian Tomb

Perperikon

Bulgaria is an attractive destination for treatment, prophylaxis and recreation

• Excellent geographical, climatic and environmental conditions

• Bulgaria ranks second in Europe after Iceland in the number the

mineral springs, providing all types of mineral water existing in

nature.

• The unique combination of seaside, mountains and mineral water

makes Bulgaria a suitable place for health promotion throughout

the year

• Long-standing tradition in balneology and spa tourism

• Refurbished world-class medical and rehabilitation centres and

hotels

• Highly qualified and experienced healthcare staff

• Relatively low cost of medical services

• Well-developed network of private cosmetic surgery and dental

clinics

Mineral water is among the greatest treasures of Bulgaria

Bulgaria has about 600 mineral water deposits with over 1600 springs of varying physic-chemical composition, temperature (10°C - 103°C) and indisputable curative properties

1400 AD

Bulgaria has been famous for its climate and mineral springs since Antiquity

Ottoman timesThracian & Roman period

5-6 Millenium BC 1878 AD3-7 century AD1-2 century AD

Prehistoric village established near Hissarya

Roman Emperor Constantine the Great: “Serdica spring is my Rome!”

Spa centers were established such as: Augustra (Hisarya), Dezudava (Sandanski), Pautalia (Kyustendil) and Serdika (Sofia)

Byzantine period

Baths and water fountains built near many mineral springs

Empress Helena was a frequent visitor to Odessos (now Varna)

Bulgaria ranks first in Europe according to the availability and diversity of mineral water and spa resorts

Velingrad

the SPA capital of the Balkans with

80 mineral springs

Sandanski

the town recognized as the

best natural “hospital” in

Europe for bronchial

asthma

Hissar

a resort with a millennial history, used by the Thracians and in

Roman times

Pomorie

the most popular and modern

mud therapy centre in the

country

Sofia

about 50 hydrothermal

deposits in the vicinity of

Sofia

SPA resorts in Bulgaria

Velingrad

• 40 km from Sofia, located in one of the most picturesque part of The Rhodope Mountains

• “Kleptuza” is the largest Karst spring in Bulgaria (1200L ice-cold water / second)

Indications for treatment:

• diseases of the central and the peripheral nervous system

• orthopedic and traumatic diseases• cardio-vascular diseases• endocrinal and metabolic diseases• gastro-intestinal diseases

Sapareva Banya

• located 75 km southwest of Sofia at the foot of the Rila mountain

• the only one in Bulgaria and continental Europe geyser-fountain

Indications for treatment:

• diseases of locomotive and nervous system• gynecological• skin diseases• prophylaxis of osteoporosis• tooth caries

SPA resorts in Bulgaria

Sandanski

• located halfway between Sofia and Thessaloniki,

in the foot of the Pirin mountain suitable climate (with the highest average annual temperature, +14.1°C)

• Over 80 mineral water springs

Indications for treatment:

• diseases of the respiratory system• chronic diseases • treatment after pneumonia, bronchiectasitis• chronic diseases of the joints• diseases of peripheral nervous system,

neuralgia, neuritis, plexitis• rehabilitation after strokes

Hissarya

• situated on the south slopes of Sredna gora mountain, at an altitude of 528 m, 140 km from Sofia.

• Contains one of the best preserved Roman public baths (thermae) in Europe

Indications for treatment:

• urinary-secretory system• alimentary system: chronic gastritis and

gastroduodenitis, functional diseases of the stomach, dyspeptic syndrome

• gallbladder-liver diseases • metabolism diseases: хhyperamnesimia,

obesity, diabetes, podagra;• loco-motory system arthro-rheumatic

diseases

SPA resorts in Bulgaria

Pavel Banya

• situated on 185 km from Sofia, in the unique Valley of Roses, between Stara planina and Sredna gora

• nine mineral springs, 7 useful for balneology• transitional continental climate, with average

annual temperature +10.8ºC

Indications for treatment:

• diseases of the peripheral nervous system• degenerative neurological diseases• orthopedic diseases: articulations,

posttraumatic and degenerative diseases and disease of the joints

• gynecological diseases

Pomorie

• about 400 km of Sofia and 20 km of Burgas• continental climate with Mediterranean influence• the lagoon lake, from which extracted the

curative firth mud

Indications for treatment:

• diseases of the locomotory system• women's and men’s gynecological diseases• skin diseases: psoriatic arthritis, neurodermitis,

chronic eczemas, skin ulcers• diseases of the respiratory system• metabolic diseases

InvestBulgaria Agency

Thank you for your attention and have a

nice and enjoyable stay in Bulgaria!