Italian Commercial Chamber in Bulgaria Chair Marco Montecchi: Flawed Public Administration Is Bulgaria's Major ProblemBusiness |Author: Milena Hristova | June 1, 2011, Wednesday // 12:07| views
Interview with Marco Montecchi, Chair of the Italian Chamber of Commerce in Bulgaria, for the "International Survey: Bulgaria-Italy".
How did the economic and financial crisis impact the trade and business relations between Bulgaria and Italy?
The crisis would not have had much influence if the restrictive policies of the present Bulgarian government against the foreign companies in Bulgaria hadn't been so hostile.
The result is a drastic decrease of investments and many Italian companies leaving the country.
How can the inflow of Italian investments into Bulgaria be eased? Are low taxes a sufficient condition to lure investors?
By promoting Bulgaria in Italy, and making investment easier – the only thing that needs to be done is the enforcement of the EU directives. But this in itself will not be sufficient if there are no guarantees for law enforcement.
In Bulgaria, the corporate tax is 10%, and the profit tax is 5%. This should turn the country into a small tax paradise but companies come here and then leave as soon as they encounter their first difficulties. One should ask the question – why?
Are there projects, which have not been implemented in Bulgaria because of opposition by state bodies? Why did these projects fail?
There are many such projects! Many foreign investors have left Bulgaria after they faced obstructions on part of local and central authorities that interpret the laws instead of applying them.
Are these projects doomed now that the credit crunch has set in?
Of course. What comes to mind is a 50 MW biomass project, which failed because the Bulgarian state institution in charge of energy claimed that vegetable oil is not a renewable energy source.
Thus, the respective company failed to get a bank credit, and had to abandon the project. As a result – the energy agency was sanctioned twice by the Bulgarian prosecutor's office.
The project was worth EUR 120 M, it would have created 500 jobs, and in a region with high unemployment. Just image all the damage that has been done!
Are there many Italian companies, which are interested in the possibilities of setting up joint ventures with Bulgarian companies?
Italian entrepreneurs have a lot in common with the Bulgarian ones, who are very serious.
Unfortunately, however, Bulgarian companies also face enormous difficulties because of the lack of a government strategy encouraging investments.
What is the number of Italian companies with solid positions in Bulgaria, including companies with 100% Italian participation, as well as joint ventures with Bulgarian partners?
I think they are over 500. Or at least they used to be over 500...!!!
Did Bulgaria's business adapt successfully to the technology of the free market? What would you like to advise Bulgarians so that they can more easily adapt to the new rules following the country's EU accession?
The Bulgarian economy has succeeded perfectly in adapting to the system of the free market. At present, Bulgaria is seeing no growth.
Bulgarian companies have also adapted very well to the new requirements, and have invested a lot of efforts but they are also facing many challenges.
In a nutshell, the entrepreneurs know the EU requirements better than the Bulgarian administration. This is Bulgaria's major problem.
Judging by your personal impressions, which are the main obstacles, which the Italian business faces in Bulgaria?
The lack of professionalism in the public administration. Many years were necessary in order to create directors-general, senior management, and civil servants, and the present Bulgarian government has liquidated them explaining that this is done in order to fight corruption.
Now corruption continues to thrive, while they don't have the administration with the needed experience and professionalism to meet the respective requirements. Foreign companies start to complain and leave shortly after that.
How did Italy manage to become one of Bulgaria's major trade partners and foreign investors?
Thanks to the far-sighted policies of the previous governments that encourages foreign direct investment and the favorable climate they created in the country, Italian companies arrived massively in Bulgaria, leaving even countries like Romania, which had a very strong Italian presence – about 12 500 companies!
What were your expectations about the country before coming here in 1997? How would you comment the changes that you witnessed? Which was Bulgaria's biggest mistake?
My expectations were to find my way as an entrepreneur. As I ended up in a country where everything had to be built from scratch, with capable and sober-thinking people who had a great desire to work, I decided to invest!
Bulgaria and Bulgarians have made great strides and deserve all of their successes such as the accession to the EU and NATO. These are positive results!
If by Bulgaria one understands the government, I think that the current government bears enormous responsibility for the exodus of foreign investors and capital from the country. This is the greatest mistake!
Of course, also the economic and financial crisis had its negative impact.
What did Bulgaria give you over these years both in your personal and professional life?
I am really, really happy that I came here. I really appreciate Bulgaria and I am thankful to it because it gave me a lot both professionally and personally speaking.
Unfortunately, even though I did not want to do that, just like other entrepreneurs, I had to look for opportunities in other countries such as Romania and Serbia – which right now have the "European desire" to be part of the free market. I have been forced to reduce to a minimum my activities in Bulgaria but sooner or later I will come back to restore all of them!