Investment Agency Head: Bulgaria's FDI to Peak Again after 2013Business | June 24, 2010, Thursday // 21:06| views
The new head of the InvestBulgaria Agency Borislav Stefanov was one of the keynote speakers at the "Banks Investment Money" forum in Sofia. Photo by M3 Communications Group, Inc.
Bulgaria is most likely to restore its pre-crisis level of foreign direct investments in 2013-2016, according to Borislav Stefanov, the recently appointed director of the InvestBulgaria Agency.
“Optimistic scenarios about the development of Eastern Europe show that Bulgaria can expect to regain its levels of FDI from the peak years 2007-2008 in 2013. According to the pessimistic forecasts, this will happen in 2016,” Stefanov declared as he was attending a meeting organized by AmCham, the American Chamber of Commerce in Bulgaria, entitled “Bulgaria’s Competitive Advantages in Attracting Foreign Investors.”
The InvestBulgaria Agency head based this prediction on a report of international auditing firm PricewaterhouseCoopers, which says that in 2003-2008 the volume of foreign direct investments in Eastern Europe increased five-fold – from USD 30 B to USD 150 B (even though most of these went to Russia.)
The economic crisis that kicked in at the end of 2008 resulted in a 50% reduction of these FDI levels.
“Bulgaria’s best year in terms of foreign investments was 2007 when it attracted a total of EUR 9 B, and 2008, when they amounted to EUR 6 B. Thus, if these forecasts about Eastern Europe come trues Bulgaria should restore its investment levels from 2007-2008 between 2013 and 2016,” Stefanov explained.
He has stressed the intention of the InvestBulgaria Agency, a government body handling inquiries by foreign investors, to facilitate investments in sectors with a high added value such as industry and IT services.
In his words, the Bulgarian Cabinet is expected to approve by July 7 the draft amendments of the Investment Encouragement Act proposed by his agency, which entail new incentives for foreign companies. The changes include expanding the list of industries eligible for state aid to include logistics and tourism based on Bulgaria’s cultural heritage.
Stefanov said that in the last few years three sectors – construction, finances, and commerce – attracted over 70% of all FDI in Bulgaria. He added that these sectors will continue to account for a sizable share of the country’s total foreign investments but that it will continue to decline at the expense of other branches of the economy, probably plummeting to 35%-40%. In the first half of 2010, the FDI in finances, construction and trade in Bulgaria declined six-fold year-on-year.
The InvestBulgaria Agency head did point out that in the last five years Bulgaria’s export of hi-tech products doubled, which he cited in support of his institution’s intention to focus on high added-value industries.
Stefanov also mentioned the preliminary data of the Bulgarian National Bank about foreign investments in Bulgaria in April amounting to EUR 36 M, up from EUR 29 M in the same month of 2009.
“Bulgaria is one of the economically stable countries in the region. We have lived through one of the most serious economic crisis in decades without resorting to bailout loans from the International Monetary Fund. Our economic stability is boosted by the low state debt, which is only 15% of the GDP, ranking Bulgaria third in the EU after Estonia and Luxembourg. In order to improve the macroeconomic climate, the Bulgarian businesses have to invest in hi-tech and high added value goods,” he declared.
The InvestBulgaria Agency director has insisted that the country has to take advantage of the fact that under EU regulations it is allowed to provide up to 50% of state aid to foreign investors for certain industries.
“The EU allows a certain level of state subsidies to investors depending on their development level. In most of the Western European states, this subsidy is 0%. In Central and Eastern Europe it ranges from 0% to 50%. For Bulgaria, it is the maximum allowed of 50%. Of course, the money comes from the state budget, not from the EU funds, which is probably Bulgaria does not provide 50% aid to every single project. But this could be decisive factor for attracting many investors,” Stefanov said.
In his words, the Agency will ask the government to introduce direct grants to foreign investors because currently the state only provides indirect subsidies for infrastructure and training of personnel.
“For example, the infrastructure subsidy kicks in when somebody is building a new factory in Bulgaria, and the state constructs a road to it. But this does not involve a transfer of money from the state to the company. What we would like to introduce is to reimburse the investors directly for some of their expenditures as soon as they carry certain parts of the investment project, i.e. the government could reimburse them with a certain amount of money when they complete 30% or 50% of their project,” explained Stefanov.
Novinite.com (Sofia News Agency) interview with the new head of the InvestBulgaria Agency Borislav Stefanov READ HERE