The Bulgaria 2010 Review: Business

German retail chain Lidl launched its business in Bulgaria on November 25. Photo by EPA/BGNES

In January, Sofia's City Hall officially opened the offers of the 9 candidates who took part in the public tender for construction of Bulgarian capital Sofia's long overdue waste plant.

In the same month, the German Lidl discount chain  indicated interest in acquiring the Bulgarian business of its German competitor Plus retail chain.

Later in January, The European Commission has authorized the payment of BGN 116 M to Bulgaria's tobacco producers for their 2009 crop.

Meanwhile, Bulgaria's Economy Minister, Traicho Traikov, informed that Bulgaria was suffering losses in the amount of EUR 3 M per day over the blockaded border by protesting Greek farmers.

In the end of January,  a Visa Europe survey announced that up to 37% of Bulgaria's Gross Domestic Product (GDP) is generated by the gray economy. On the other hand, the National Statistical Institute reckoned that Bulgarian entrepreneurs in the construction and services sectors were becoming more optimistic about future prospects.

In February, the Greek blockade of the Bulgarian border was eventually lifted.

A British investment fund was planning to set up an electric car factory in Bulgaria's Stara Zagora, according to Bulgarian Prime Minister Boyko Borisov, who was on an official visit to the UK in February. He announced that it was going to invest about BGN 100 M in the electric car plant in Stara Zagora, and that the Fund was currently making prototypes of the electric cars in Germany.

In the same month, US-based Advent International started delisting leading Bulgarian mineral water bottler Devin from the Bulgarian Stock Exchange (BSE) after the acquisition of more than 95% of its shares.

Bulgaria's negative trade balance declined by almost 50% in 2009 compared to the 2008 levels largely thanks to the effects of the global economic crisis, dropping down to BGN 9,6 B in 2009, according to data provided by the National Statistical Institute in February.

Later in February, it was announced that Bulgaria's telecom company Vivacom will transfer on March 1 2010, its technical and operational activities for the development of cell and landline phone networks to the French giant "Alcatel-Lucent."

Central European Media Enterprises has signed a deal for the acquisition of Bulgaria's first national private television bTV, wholly owned by Rupert Murdoch's News Corp, it was officially announced

in February.

Also in February, the Apple store for iPhone, iPod Touch and iPad, applications officially stepped on the Bulgarian market.

In the end of the month, The European Bank for Reconstruction and Development (EBRD) boosted the availability of financing in the Bulgarian real economy with two credit lines worth a total of EUR 27,5 M

In March, Turkish consortium "Mapa Cengiz", which is responsible for construction of the Lyulin Highway on the outskirts of the Bulgarian capital Sofia, requested a further EUR 60 - EUR 70 to complete the project.

Meanwhile, the probe of the Transport Ministry had discovered serious violations committed at the Bulgarian State Railroad Company, BDZ, between 2007 and September 2009. Transport Minister, Alexander Tsvetkov, reported that over BGN 127 M have been lost, calling the waste of resources a "total disgrace."

Also in March, Bulgaria's largest international commercial exhibit of wines "Vinaria 2010" was opened in the city of Plovdiv. A total of 262 wine producers (114 Bulgarian) from 14 different states participated.

A new ferry line connecting Bulgaria and Romania across the Danube River was put into operations in the second half of March.

Soon, Bulgaria and Russia added a second ship to the Varna-Port Kavkaz ferry line in the Black Sea starting April 2010.

In March, The Transport Ministries of Bulgaria and Qatar signed an agreement which includes regular services of Qatar Airways to Sofia, starting in October 2010.

In the end of the month, Bulgaria's Cabinet approved a package of 60 anti-crisis measures negotiated with the country's business sector and trade unions.

March was the first month that saw a slight decrease in the country's unemployment rate, which dropped to a little under 10%, according to the Labor Ministry - a trade that has continued until the end of 2010.

In April, a German machine, especially ordered for the construction works for the expansion of the metro in Bulgaria's capital Sofia, was officially set in motion. The so-called "mole" equipment, weighting 1 600 tons, is capable of underground excavations at the speed of 9 meters per day.

Also in April, The Bulgarian Alfa Finance Holding sold the majority share package of 58% of the Plovdiv airport to the Danish Nordic Airport Infrastructure ApS.

The Bulgarian government gave green light to the procedure for the construction of the final 115-km section of the Trakiya Highway. Later in April, The Bulgarian Road Infrastructure Agency signed Friday the contract with 'Unified Highway Trace' for the construction of a 32 km stretch of the highway, connecting Stara Zagora and Nova Zagora.

Meanwhile, Bulgaria's airlines and foreign companies, carrying out flights over the territory of the country, suffered losses between EUR 300 000 and EUR 400 000 a day due to travel disruptions caused by the high-altitude ash billowing from an erupting Icelandic volcano, which brought trouble in whole Europe. The total losses were estimated at EUR 1.3 M.

Black Sea town of Sozopol has become Bulgaria's first certified and formally registered fishing port in April. Agriculture Minister Miroslav Naydenov announced that a total of four fishing ports will be set up along the Bulgarian Black Sea coast – two in the north and two in the south.

Also in April, Bulgaria's National Company "Industrial Zones" Jsc and the Qatar Investment Authority announced they were going to set up a joint venture with a capital of at least BGN 500 M.

Bulgaria's PM Boyko Borisov promised in the end of April that Bulgaria's new National Sports Center will be completed by August 2011. The sports arena is supposed to have a capacity of 16 000 spectators

In May, German logistics company Schenker AG, which is a subsidiary of railway carrier Deutsche Bahn, has opened a new terminal outside of the Bulgarian capital Sofia. Schenker EOOD, the company's Bulgarian branch, has invested EUR 10 M in the new logistics complex located in the town of Bozhurishte, some 20 minutes away from Sofia.

A World Economic Forum study, published in May, revealed that Bulgaria remained the least competitive economy in the European Union, preceded by Romania and Italy.

Also in May, US company Pharmaceutical Product Development (PPD), Inc., announced the opening of a pharmacovigilance and medical communications center in Sofia, Bulgaria

Later in the month, Several leading foreign store chains in Bulgaria established their Association for Modern Retail. The founders included Billa, Praktiker, Kaufland, Lidl, HIT, Monsieur Bricolage, Penny Market, and Metro Cash and Carry.

Bulgaria's top cable providers Eurocom and CableTel, which merged earlier in 2010 after the acquisition by Swedish investment fund EQT V, were rebranded under the name of Blizoo in May. Sweden-based private equity firm EQT acquired two of Bulgaria's major cable TV and Internet operators in a EUR 210 M deal at the end of October 2009 and merged them to form the country's biggest cable operator.

Later in May, the biggest low-cost air company in Bulgaria, Wizz Air announced its plan to launch flights to and from the country's second largest city of Plovdiv.

Meanwhile, the Ministry of Transport announced that the Lyulin Highway will be ready by May 15, 2011, making it Bulgaria's first completed highway.

Later that month,  Bulgaria's Road Infrastructure Agency (API) had ranked as number one the bid of the Greek company Aktor to build Lot 3 of the "Trakiya" highway. A total of 12 companies had submitted offers to supervise the construction of the section linking the town of Nova Zagora with the city of Yambol by that time.

In June, Senior representatives of the Bulgarian government were jubilant during the ground-breaking ceremony of the first IKEA store in the country. According to estimates of the Fourlis Group, IKEA's first store in Bulgaria will attract 1.6 million clients in the first year after its opening.

The store chain iStyle, a premium reseller of Apple in Bulgaria, opened its largest mall store in the country and the world in June.

Also in June, The Director of the Bulgarian Customs Agency, Gen. Vanio Tanov, promised a BGN 1 B more in revenues for 2010, compared to 2009.

Meanwhile, the Bulgarian Pernik Municipality together with the Greek-own company Data Concept Bulgaria  unveiled formally their plan to set up a new industrial zone in the city quarter called Karamanitsa. The municipality is going to provide 35 hectares for the establishment of the future industrial park, which is supposed to become the spot for greenfield investments in manufacturing and logistics facilities

On June 14 2010, Bulgarian minister of economy Traicho Traikov opened the official Bulgaria Day at Expo 2010 Shanghai, extending a hand for Chinese investors to Bulgaria.

Later that month, Greek operator Goldair Handling was granted a license to provide full passenger and ramp ground handling services at the Sofia International Airport.

At the end of June, poll of 580 businesses around the country conducted by the National Center for the Study of Public Opinion showed that a large number of firms in Bulgaria's construction sector, transport, light industry, services and commerce are accumulating big losses. The number of pessimistic entrepreneurs had increased six times compared to May 2009.

In July, Bulgarian capital has started constructing the final section of its first metro line, which is suppose to go all the way to the Sofia International Airport.

Also in July, it was announced that The gap between Bulgaria's import and export was closing as the country's trade deficit was down by 39.7% in the first five months of 2010 year-on-year. According to data of the National Statistical Institute, Bulgaria's total exports in January-May 2010 amounted to BGN 10.554 B, which indicated a 22.1% year-on-year growth

Romanian and Greek companies are moving in droves to Bulgaria lured by less red tape, cheaper labor, lower taxes, political and economic stability, reports stated later that month.

At the end of July, Japanese companies expressed interest in the joint production of electric cars with Bulgarian firms, according to Bulgarian Economy Minister Traicho Traikov.

Meanwhile, the Road Infrastructure Agency announced that the highway connecting Bulgaria's capital Sofia with the Kalotina border crossing on the Serbian border will be ready by 2015.

In August, it was announced that Bulgaria's export for China grew by the staggering 238% in the first five months of 2010 year-on-year, reaching BGN 170 M.

Also in August, The average wage in Bulgaria during the second quarter of 2010 was reported to be up by nearly 9% year on year by the National Statistics Institute (NSI).

However,  a report published during the same month in the UK "Economist" revealed the size of the so-called 'shadow economy' was over 37%, according to the estimate, ranking the country third only behind Latvia and Estonia.

The sale of 50% stake in Bulgaria's radio and television broadcasting unit NURTS to Cyprus-based international financial investor Mancelord Limited was recorded in the country's trade register in August, bringing the deal to completion.

At the end of August, the government of Abu Dhabi was reportedly considering investing in Bulgarian infrastructure projects, including the potential construction of a Formula 1 circuit near Sofia. The project was backed by Bulgaria's Economy Minister. However, the project has not seen a significant development recently.

In August 2010, Bulgaria registered for the first time a positive monthly trade balance in the past ten years, according to preliminary data of the National Statistical Institute.

September saw Bulgaria ranking 70th out of 139 economies in the by the Switzerland-based World Economic Forum Global Competitiveness Report 2010-2011, better than its 76th place in 2009's report.

In September, the leading Bulgarian operator Mobiltel has signed pre-arrangements for the acquisition of two Bulgarian cable operators, Megalan Network and Spectrum Net. The price of the merger was said ti ne about EUR 70 M.

Also in September, two foreign companies constructing large infrastructure projects in Bulgaria  were accused of "twisting the arms" of the Bulgarian government by Deputy Transport Minister Ivaylo Moskovski. He said that the Spanish company FCC constructing the second Danube bridge between Bulgaria and Romania, and the Italian Astaldi working on the modernization of a major railroad are demanding dozens of millions from the Bulgarian government in addition to the contract sums.

At the beginning of October, Bulgaria's Competition Protection Commission allowed German supermarket chain Lidl to acquire the Bulgarian stores of another German discount chain, Plus.

In October, Bulgarian Prime Minister, Boyko Borisov, officially opened Saturday a 31-km section of the Maritsa Highway between the towns of Harmanly and Lyubimets.The new road junction near Novo Selo, providing direct connection with the highway to Greece, also opened.

Meanwhile, Bulgaria won a bid to sell large quantities of the "Arsenal" automatic gun to India.

A total of 9 out of the 500 "most influential" European companies have indicated they will locate branches in Bulgaria's capital Sofia, according to a study of consultancy Cushman & Wakefield in October.

In the same month, Chinese businessmen suggested that Bulgaria should increase the marketing and advertising of its goods in China, in order to boost the consumers' interest. The suggestion was made by Wan Jifei, the Chair of the China International Trade Promotion Committee. He stated Bulgaria is the most important country in the Balkans for China's business, and one of the markets with greatest potential in Central and Eastern Europe.

The Bulgarian Cabinet has approved draft amendments in October to extend by 6 months the legal deadline for the campaign to register anew all firms in the country.

Later in October, Bulgaria ranks fifth in the world in quality of broadband Internet, according to results of a research by Cisco Systems Inc, conducted by the Oxford University.

Also in October, Hewlett-Packard announced will expand its outsourcing services in Bulgaria. The American information technology corporation in Bulgaria will open 2,000 new job positions for engineers and qualified personnel.

In the same month, Chinese car maker Great Wall Motor Co and Bulgarian company Litex Motors announced they will be rolling off their first vehicles in the plant in the town of Lovech, Northern Bulgaria, in February 2011.

At the end of October, Bulgaria's government revealed it is planning a total investment of about BGN 1.7 B in infrastructure construction in 2011.

It was also announced that Bulgaria will have two new railroad stations to connect the cities of Pernik and Plovdiv with the Sofia subway.

A total of over twenty million people visited the Bulgarian pavilion at the Shanghai Expo, which was closed on the last day of October.

The world's largest low-cost airline, the Irish company Ryanair, launched of a new route from London Stansted to the Bulgarian city of Plovdiv on November 1 2010.

In November, Bulgaria was ranked 51st among 183 countries in the Doing Business 2011 report, compiled by the International Finance Corp (IFC), the World Bank's private-sector lender.

Meanwhile, The outsourcing market in Bulgaria is currently estimated at EUR 100 M to EUR 150 M a year, but has the potential to go up over 10 times, according to Economy and Energy Minister, Traicho Traikov. The Minister announced Bulgaria ranks 1st in Europe and 13th in the world by outsourcing, citing a March research of the international research agency "ATKearney."

Later in November, German discount retailer Lidl opened its first stores in Bulgaria on Thursday morning, offering shockingly low prices, a move that will certainly heat up further the competition in the sector.

The combined fortune of the 100 richest people in Bulgaria amounts to BGN 11.7 B, according to a survey of the financial newspaper "Pari", published in early December.

Also in December, the regional office of the real estate company "Foros" in the southwestern Bulgarian city of Blagoevgrad has registered an increased interest by Greek clients in the last few months of 2010. The interest was said to come mostly from Greek businessmen, who already have or want to start their own business in Bulgaria and are attracted to the country because of the cheap labor force and the lower prices of transport services and rents.

In the same month, representatives of major companies from South Korea have informed Bulgarian Prime Minister Boyko Borisov of their large-scale investment plans for the country at a meeting on Monday.

The Korean Development Bank, Korea South-East Power Co., Korea Trade Insurance Corporation, and SDN Company Ltd have presented to Borisov the project for the construction of a photovoltaic park near the village of Zlataritsa close to Veliko Tarnovo.

The facility will feature a power distribution and a 4.7-km power line of its own, and the Korean companies will invest a total of EUR 150 M in it. EUR 20 M have already been invested in the solar power plant since August 2010 when the construction of the facility started.

In December, the company "BG Privateinvest" became the new owner of the two of the leading Bulgarian dailies "Trud" (Labor), "24 Chasa" (24 Hours), and the weekly "168 Chasa" (168 Hours), "Trud" writes.

Bulgaria has registered the highest year-on-year growth of its exports of all EU 27 countries in the first nine months of 2010, according to Eurostat data announced in December. Bulgaria's exports grew by 33% in January-September 2010 compared with the same period of 2009. It is followed by Latvia, whose exports grew by 29% year-on-year, Lithuania (28%), Estonia (28%), and Romania (26%).

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