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BULGARIA – THE NEW GATEWAY TO EUROPE AND ASIA

BULGARIA – THE NEW GATEWAY TO EUROPE AND ASIA. Ivailo Kalfin Deputy Prime Minister а nd Minister о f Foreign Affairs June, 2008. Bulgaria is on the crossroad of the main Pan European Corridors. 9. 4. 7. 10. 8. Integration and proximity of markets.

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BULGARIA – THE NEW GATEWAY TO EUROPE AND ASIA

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  1. BULGARIA – THE NEW GATEWAY TO EUROPE AND ASIA Ivailo Kalfin Deputy Prime Minister аnd Minister оf Foreign Affairs June, 2008

  2. Bulgaria is on the crossroad of the main Pan European Corridors 9 4 7 10 8 Integrationand proximity of markets • EU membership and the strategic geographic location of Bulgaria provide easy access to the leading regional and world markets

  3. For over 100 years the Republic of Bulgaria and the United States of America have enjoyed diplomatic relations. These relations are at their highest level since their establishment. The high intensity of the political dialog is a proof of the strong partnership between Bulgaria and the United States of America. Why Bulgaria – Political Relations with USA

  4. Excellent political relations between Bulgaria and USA - reasons: - Political stability due to Bulgaria's NATO membership /March 29th, 2004/ and the accession to the EU /January 1st, 2007/; - Stable economic perspective and growing credit rating of Bulgaria and its institutions; - Common positions on various international issues; Why Bulgaria – Political Relations with USA

  5. - Bulgaria and the United States of America stand together in the fight against terrorism; - Bulgaria actively participates in military missions and has a close security partnership with the USA and other anti-terrorist coalition partners; - Republic of Bulgaria demonstrates strong commitment to all international obligations; - Bulgaria is a reliable and predictable partner in the international arena. Why Bulgaria – Political Relations with USA

  6. Why Bulgaria – Basic Economic Data • Stable economic environment • 10 %corporate income tax (lowest in EU together with Cyprus); 0% for manufacturing companies in areas with high unemployment • 10 % personal income tax, flat rate • The lowest operational costs in Europe • Well educated and highly skilled labour force • 22% of population hold university degree • 45,000 Bulgarian students in Europe. Second largest group after China • Governmental support to priority investment projects • Excellent climate, natural scenery, food and hospitality

  7. Bulgaria is full of investment opportunities waiting to be discovered… Business opportunities • Industries with rapid annual growth • Financial services • Consumer credit up by 31,8%, mortgages up by 75,4% • Media, Advertising, IT, Telecom (up by 20%) • Retail (up by 20%) • 4th in Europe and 12th in world in the 2007 A.T. Kearney GRD Index • Real estate (up by 30%) • Pharma and healthcare (up by 50%) • Fragmented market • Opportunity for consolidation, M&A activities • Seed financing, start-ups • Excess and growing demand for early stage company financing • Opportunity for private equity funds A.T. Kearney Global Retail Development Index results Source: A.T. Kearney Global Retail Development Index; Global finance

  8. 2nd in the world in international IQ tests 47 universities with 32,000 students graduating every year: 28% with business related degrees 63% with IT related degrees Good language literacy (English, German, French, Spanish and Russian) Average monthly salary as low as 221 EUR Legal minimum monthly wage in Bulgaria is 113 EUR …in its people Bulgaria has an invaluable asset Well-educated and affordable labor force Source: PWC Bulgaria, The Sofia Echo, InvestBulgaria Agency – Value Scope Bulgaria, Sofica

  9. Access to the Black Sea and world oceans through its 2 large ports and 470 km of waterways 4 international airports, 131 paved airports and 4 heliports 7,300 km of railways and 20,000 km of roads EU-backed investments into infrastructure development Access to 9.3bn EUR in EU financing until 2013 (structural and cohesion funds, funds for rural development) Three GSM operators and ADSL internet Bulgaria’s improving infrastructure is enhanced by the access to the Black Sea Good infrastructure Source: EBRD country factsheet, CIA The World Factbook, Wikipedia, InvestBulgaria Agency - Bulgaria Investment Guide 2007, www.enviropea.com

  10. Bulgaria is growing at a rapid pace while keeping labor cost low ... GDP growth comparison Labor cost Bulgaria’s accession into the EU will ensure long term sustainable GDP growth Source: Bulgaria Investment Guide 2007, InvestBulgaria Agency, Eurostat

  11. ... and its growth outperforms other countries in the entire European Union also in the long term GDP growth forecast (2007 – 2009) Industrial growth forecast1)(2007 – 2009) GDP growth (%) Industrial growth (%) Bulgaria has a stable forecast for GDP and industrial growth Notes: (1) Malta doesn’t provide information about industrial growth, year 2000 = 100% Source: Eurostat

  12. World Competitiveness Yearbook 2008 – overallposition 39 World Competitiveness Yearbook 2007 – overallposition 41 41 A lot has been achieved, our competitiveness is continuously improving 39 Source: IMD, Centre for democracy research Due to significant improvement of performance, Bulgaria moves in 2008 two places up in the global list of competitiveness

  13. Record inflow of FDI in 2006 & 2007, EUR m Source: BNB, IBA

  14. Bulgaria leads CEE countries in terms of FDI to GDP indicator FDI to GDP, %, 2006 – 2007F Source: Bank Austria Creditanstalt

  15. FDI stock by sectors, 1998 – 2007, EUR m 21% 19% 19% 17% 7% 6% 6% 5% Source: BNB, IBA

  16. FDI stock by country,1996-2007, %, EUR m Source: BNB, IBA

  17. Top Foreign Manufacturing Investors (between $24 & $580 m)

  18. Investor/investment amount USD mln. Bulgarian company Activity AES (1 400)* TEZ MARITZA EAST 1 energy (ADVENT INTERNATIONAL) through VIVA VENTURES (433) BTK AD telecommunications AMERICAN STANDARD (240) IDEAL STANDARD, VIDIMA plumbing, sanitations ALICO/CEN (111) POSHTENSKA BANKA finance BULGARIAN-AMERICAN ENTERPRISE FUND (94) BULGARIAN-AMERICAN CREDIT BANK, USA banking HP (52) HP-Bulgaria IT HILTON INTERNATIONAL (40) HILTON SOFIA hotel KRAFT FOODS (36) KRAFT FOODS BULGARIA food industry ALKOA (30) ALKOA PACKAGING BULGARIA packaging industry BULGARIAN-AMERICAN PROPERTY MANAGEMENT (26) BULGARIAN-AMERICAN PROPERTYMANAGEMENT real estate SOCOTAB (26) SOCOTAB BULGARIA tobacco McDonalds (23) McDonalds BULGARIA restaurants NEWS INC. (23) BTV television SOROS FUNDS (15) EUROCOM CABLE cable TV Top US Investors in Bulgaria *Project under implementation Source: InvestBulgaria Agency

  19. Sufficient acquisition of the EU funds is another important priority for stimulating the economy OP “Development of the Competitiveness” OP “Human Resources Development” ОP “Transport" OP “Environment" ОP “Regional Development" OP “Administrative Capacity" OP “Technical Assistance" • The Ministry of Economy and Energy runs Operational Program “Competitiveness” • with a Budget of EUR 1.2 billion • Priority 1: Economic development based on knowledge and innovation activities (budget – EUR 246 million or 21%) • Priority 2: Increasing production efficiency and development of favorable business environment (budget – EUR 593million or 51%) • Priority 3: Provision of financial resources for business development (budget – EUR 200million or 17%) • Priority 4: Strengthening of the Bulgarian economy's position in international markets (budget – EUR 87million or 7.5%) • Technical support (budget – EUR 34 million or 3%) • Considerable financial support for SMEs

  20. Global companies are gaining insight in advantages of doing business in Bulgaria “Very well educated, talented and committed workforce, large talent pool, very competitive cost structure, European culture, good English skills, short flight times and almost no time difference from Western Europe…” - Dr. Peter Kurpic, Senior Vice President NetWeaver Foundation SAP AG Examples of those who already have discovered their opportunity in Bulgaria “The combination of existing and proven local expertise, the excellent academic facilities and the strength of the Bulgarian economy, made Sofia an ideal choice for further investment in our global mixed-signal engineering capabilities.” – Nelly Pergoot, Managing Director, AMI Semiconductor (USA) YOURLOGOHERE “Political and economic stability, the qualified labor force and the cost structure” – Gilles Bernard, Executive Director of EPIQ (Belgium) “…among the reasons why HP had chosen Bulgaria were the high level of education in terms of technical skills and languages, good infrastructure and investor-friendly legislation.“ – Tino Canegrati, HP Global Delivery General Manager The list of foreign companies in Bulgaria is growing quickly! Source: InvestBulgaria Agency – Bulgaria Investment Guide 2007, ValueScope Bulgaria, http://neveq.com

  21. THANK YOU FOR YOUR ATTENTION! IVAILO KALFIN Deputy Prime Minister and Minister of Foreign Affairs www.mfa.government.bg

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