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Investment Climate in the Transport Sector in the Republic of Bulgaria

Investment Climate in the Transport Sector in the Republic of Bulgaria. Sixth Southeast Europe Economic Forum. Nikolay Vassilev, CFA Deputy Prime Minister and Minister of Transport and Communications 2-3 November 2004. Strategic geographic location

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Investment Climate in the Transport Sector in the Republic of Bulgaria

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  1. Investment Climate in the Transport Sector in the Republic of Bulgaria SixthSoutheast Europe Economic Forum Nikolay Vassilev, CFA Deputy Prime Minister and Minister of Transport and Communications 2-3 November 2004

  2. Strategic geographic location Liberalised access to markets with over 560 m consumers (incl. EU, CEFTA, Turkey) Almost 100 agreements on the protection of investments and avoidance of double taxation NATO membership – March 2004 Forthcoming EU membership – 2007 The Competitive Edge of Bulgaria Ministry of Transport and Communications 2

  3. Institutional support for major foreign investment projects Robust legal framework focused on attracting and protecting foreign investment Among the lowest costs of doing business in Europe Low regulatory obstacles and start-up costs Highly educated workforce Excellent labour quality/labour cost ratio Investors in Bulgaria Will Find … Ministry of Transport and Communications 3

  4. Significant reduction in bureaucracy Simplification or abolishment of more than 50% of the existing licensing, permit and registration regimes Introduction of one-stop-shop administrative services Introduction of the “silent consent” approach Adoption of International Accounting Standards (IAS) 2003 for financial institutions and public companies Significant Business Climate Improvements Ministry of Transport and Communications 4

  5. Corporate tax 19.5%; 15% from 2005 0% in regions with high unemployment fast depreciation rates: 2 years for computers, 3 1/3 years for equipment Personal income tax highest rate at 29%, falling to 24% in 2005 rates of 0, 12, 22, 26 and 29% (year 2004) Capital gains tax: 0% Interest income tax: 0% Among the Lowest Taxes in Europe Ministry of Transport and Communications 5

  6. GDP grew by 4.3% in 2003; about 5.3% expected for 2004 FDI: USD 1.42 bn in 2003; almost USD 3 bn expected in 2004 Unemployment rate declines to 11.7% in September 2004, compared to 19.3% in February 2001 Inflation stays at bay: 2.4% average for 2003 Industrial production grew by 14.8% yoy in 2003, industrial sales – by 17.2% yoy Tourism booms: growth expected in 2004: revenues – 20% yoy, visitors – 17% Bulgarian Economy: Persisting Growth Ministry of Transport and Communications 6

  7. Foreign Direct Investment (USD m, 1992-2003) Source: Bulgarian Investment Agency, Bulgarian National Bank * Total Expected Ministry of Transport and Communications 7

  8. General Statistics Source: National Statistics Institute Ministry of Transport and Communications 8

  9. Share ofTransport and Communication in the GVA, 2003 Communications Source: National Statistics Institute Ministry of Transport and Communications 9

  10. Foreign Direct Investments in Transport and Communications, 2003 Communications Ministry of Transport and Communications 10

  11. New model of the economic relationships in the sector Rehabilitation and modernisation of the transport infrastructure Transport park – modernisation and new technologies Safe, secure and environmental friendly transport Integration of the Bulgarian transportation system with the European transportation system Main Transport Strategic Objectives Ministry of Transport and Communications 11

  12. Successful completion of the major infrastructure projects Liberalisation of transport services and establishing conditions for competitiveness through: Concessions of airports, ports and port terminals Privatisation of state-owned companies Licensing of private operators Railway reform Financial stabilisation Purchase of new rolling stock Modernisation of the infrastructure Modernisation of all vehicles State Activities for the Achivement of the Main Objectives Ministry of Transport and Communications 12

  13. State budget Revenues from state fees(charges) EU and other grants Concessions, privatisation and other forms of PPP EU structuralfundsand the Cohesion Fund Loans from other financial institutions Financial Sources for the Achievement of the Main Objectives Ministry of Transport and Communications 13

  14. Major Infrastructure Projects New bridge across the Danube at Vidin – Calafat Winter camp for Danube river ships Lom Rousse Vidin Reconstruction and modernisation of the Port of Lom New breakwater and bulk cargo terminal at the Port of Bourgas Sofia Bourgas Reconstruction, development and extension of Sofia Airport Plovdiv Reconstruction and electrification of the Plovdiv – Svilengrad railway line Ministry of Transport and Communications 14

  15. Reconstruction, Development and Extension of Sofia Airport • Deadline: 2005 • Budget: EUR 202.4 m • State budget: EUR 40.2 m • Grants: EUR 51.8 m (ISPA and PHARE) • Loans: EUR 60 m (EIB) EUR 40 m (KFAED – Kuwait) • Others: EUR 10.4 m Ministry of Transport and Communications 15

  16. New Breakwater and Bulk Cargo Terminal at the Port of Bourgas • Deadline: 2005 • Budget: EUR 142 m • State budget: EUR 24 m • Loans: EUR 118 m (JBIC) Ministry of Transport and Communications 16

  17. Reconstruction and Modernisation of the Port of Lom • Deadline: 2006 • Budget: EUR 29.7 m • State budget: EUR 8.2 m • Loans: EUR 17 m (EIB) • Grants:EUR 4.5 m (HiPERB – Greece) Ministry of Transport and Communications 17

  18. Reconstruction and Electrification of Plovdiv – Svilengrad Railway Line • Deadline: 2007 • Budget: EUR 340 m • State budget: EUR 37 m • Loans: EUR 150 m (EIB) • Grants: EUR 153 m (ISPA) Ministry of Transport and Communications 18

  19. New Bridge across the Danube near Vidin • Deadline: 2007 • Budget: EUR 230 m • State budget: EUR 65 m • Loans: EUR 70 m (EIB) EUR 18 m (KfW – Germany) • Grants: EUR 70 m (ISPA) EUR 5 m (AFD – France) EUR 2 m (KfW) Ministry of Transport and Communications 19

  20. Deadline: 2005 Budget of the project: EUR 13.7 m Financing: state budget, grant (PHARE) Importance of the project Enhanced efficiency and navigation safety along the Danube river Improvement in the water quality and microclimate in the region Reduction in unemployment in the region of Rousse Building of a Winter Camp for Danube River Ships Ministry of Transport and Communications 20

  21. Concessions of the airports of Bourgas, Varna, Plovdiv and Gorna Oryahovitsa Concessions of 23 ports and port terminals Privatisation of Bulgaria Air Privatisation of Navibulgar (BMF) and Bulgarian River Shipping Co. (BRP) Concession and Privatisation Opportunities Ministry of Transport and Communications 21

  22. Danube River Major Airports 1.336m pass.* Black Sea Varna Gorna Oryahovitsa 1.618m pass.* 1.357m pass.* Sofia Bourgas Not for concession Plovdiv * Expected 2004 Source: Directorate General Civil Aviation Administration Ministry of Transport and Communications 22

  23. Bulgarian Airports Performance, m passengers Source: Directorate General Civil Aviation Administration * Expected Ministry of Transport and Communications 23

  24. Danube River Major Ports Toutrakan Silistra Oryahovo Somovit Vidin Rousse Lom Balchik Svishtov 9.5m t* Black Sea Varna Sofia Nessebar Pomorie 13.2m t* Bourgas Sozopol Tsarevo Ahtopol * Expected 2004 Source: Executive Agency Port Administration Ministry of Transport and Communications 24

  25. Goods Processed by Bulgarian Ports, m tons * Expected Source: Executive Agency Port Administration Ministry of Transport and Communications 25

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