Invest in New Bulgaria Ministry of Economy July 2003
The Competitive Edge of Bulgaria u Strategic geographic location u Liberalised access to markets with over 560 m consumers (incl. EU, CEFTA, Turkey) u Almost 100 agreements on the protection of investments and avoidance of double taxation u Forthcoming NATO and EU membership
Investors in Bulgaria Will Find. . . u Among the lowest costs of doing business in Europe u Robust legal framework focused on attracting and protecting foreign investment u Fast improving business climate – among the lowest taxes in Europe – significant reduction in regulatory obstacles and start up costs – aggressive business stimulus package introduced in 2002/2003 u Institutional support for major foreign investment projects u Superb academic and vocational training u Excellent labour quality/labour cost ratio – average monthly salary of EUR 144
Significant Business Climate Improvements u Simplified licensing, permit and registration regimes – simplification or abolishment of more than 50% of the existing ones; clarification of remaining regimes – new regimes to be imposed solely by Parliament vote u Ambitious economic programme stimulating the economy – 0% profit tax in over 1/3 of the territory of the country – pending creation of industrial zones with significant investment incentives – VAT-free imports for investment projects over EUR 5 m u Adoption of International Accounting Standards (IAS) – 2003 for financial institutions and public companies – 2005 for all other companies
Macroeconomic Indicators
Bulgarian Economy in Early 2003: Accelerating Growth u Industrial production grew by +23. 4% yoy in March and by +9. 2% yoy in April. Industrial sales – by +30. 4% and +9. 6% respectively u Exports for the first four months jumped up by impressive +40. 4% yoy u Unemployment went down to 14. 3% in May 2003, a record low level for the last three years u Inflation stays at bay: 0. 8% for the first five months, 1. 5% of the year and deflation of 0. 6% is recorded for May
Bulgarian Economy in 2002: Well on Track u Bulgaria is among the leaders in Europe in economic growth: 6. 4% in Q 3, 3. 4% in Q 4, 4. 8% for 2002 u Inflation of 3. 8% u Unemployment of 16. 27%, a drop of 1. 63% compared to 2001 u Record high forex reserves: EUR 4. 58 bn u Near record low external public debt: USD 8. 3 bn u Robust growth in tourism revenues: 10% compared to 2001 u Improving current and trade account deficits to GDP ratios
Macroeconomic Stability – Testimony from Abroad u The Government’s economic program has received positive evaluation. The country’s credit rating has been raised on several occasions. The rating for Bulgaria’s long-term foreign currency currently stands at: – – – BB+ (with stable outlook) according to Standard&Poor’s BB (with positive outlook) by Fitch IBCA Bа 2 (with stable outlook) by Moody’s BB+ (with positive outlook) by the Japan Credit Rating Agency more rating upgrades are expected in 2003 u Support of the international financial institutions – the IMF approved a two-year stand-by agreement for SDR 250 m – the World Bank adopted a supporting strategy worth USD 750 m in total – the EBRD launched a USD 500 m private sector financing program
Second Generation of Economic Reforms (1) u VAT-free imports for investment projects over EUR 5 m u 0% profit tax in high unemployment regions u Significant reduction of bureaucracy – introduction of one-stop-shop – Introduction of “silent consent” approach – reduction of licensing regimes – new regimes to be imposed solely by Parliament u Planned creation of industrial zones with significant investment incentives u Planned introduction of 100% yearly depreciation for equipment for priority investment projects
Second Generation of Economic Reforms (2) u The launch of a Private Equity Fund(s) is shortly expected – state participation of up to EUR 51 m (BGN 100 m) – additional investment from the private sector – the funds will be invested in equities of developing Bulgarian companies – strong competition for the professional management of the Fund: 15 applications – 4 candidates selected (TBIF Financial Services BV and Equest Partners Ltd. , Copernicus Capital Management SP, GED Capital Development SA, Time Capital Partners and BAC)
GDP Growth (by Quarters, %) Source: CANSTAT, EUROSTAT
GDP Growth (%) Source: EBRD, Ministry of Economy
Gross Domestic Product (EUR bn) Source: Ministry of Finance
GDP Structure (by Sector, %) Source: National Statistics Institute
GDP Structure (by Ownership, %) Source: National Statistics Institute
Annual Inflation (%, Year-End, 1991 -2003 E) Source: National Statistics Institute
Inflation (%, Year-End) Source: Governmental Sources and National Statistics Institute
Unemployment (%, 01/1992 -05/2003) Source: Employment Agency
Unemployment (%, 01/2001 -05/2003) Source: Employment Agency
Base (Benchmark) Interest Rate (%, 01/1998 -05/2003) 2. 96% Source: Bulgarian National Bank
Base (Benchmark) Interest Rate (%, Year-End) Source: Governmental Sources and Bulgarian National Bank
Budget Surplus/Deficit (% GDP) Bulgaria CEE Countries (2002) Source: Governmental Sources and Ministry of Finance
Foreign Exchange Reserves (EUR m, 1998 -2002) Source: Bulgarian National Bank
Foreign Debt (USD m, 1996 -2002) Source: Bulgarian National Bank
Government Debt (% GDP, 1997 -2002) 110% 105. 1% 100% 90% 83. 2% 86. 7% 77. 1% 80% 70. 1% 70% Maastricht criterion 60% 56% 50% 1997 Source: Ministry of Finance 1998 1999 2000 2001 2002
Average Monthly Salary (EUR, 01/2000 -03/2003) Source: National Statistics Institute
Gross Monthly Salary Levels (USD) Low average High average Source: AIMS Human Capital Bulgaria (2002)
Gross Monthly Salary Levels (USD) Low average High average Source: AIMS Human Capital Bulgaria
Gross Capital Formation (% GDP, 1996 -2002) Source: National Statistics Institute
Gross Capital Formation (BGN bn, 1997 -2002) Source: National Statistics Institute
Macroeconomic Indicators (1) Source: Ministry of Finance
Macroeconomic Indicators (2) Source: Ministry of Finance, Ministry of Economy and Bulgarian National Bank
Taxation
Among the Lowest Taxes in Europe u Corporate tax – 23. 5% – 0% in regions with high unemployment, 1/3 of the country’s territory – fast depreciation rates: 2 years for computers, 3 1/3 years for equipment u Personal income tax – highest rate at 29% – rates of 0, 15, 22, 26 and 29% (year 2003) u Capital gains tax: 0% u Interest income tax: 0%
0% Corporate Profit Tax in 2003 (Green Regions) N. B. The list is solely based on unemployment figures The regions include industrial sites with developed infrastructure
Tax and Accounting Reform u Adoption of International Accounting Standards (IAS) from 2003 for financial institutions and public companies and from 2005 for all other companies u Introduction of 100% yearly depreciation for equipment for priority investment projects u Creation of a single State Revenues Agency u Value added tax (VAT) – – – exemption for imports for investment projects over EUR 5 m general tax refund time falls from 4 to 3 months 45 days refund for export-oriented companies exemption for software exports registration threshold falls to BGN 50, 000 from BGN 75, 000
Personal Income Tax Rates/Brackets (%, 1999 -2005) Source: Ministry of Finance
Market Access & Foreign Trade
Preferential Market Access (1) u WTO membership since 1996 u European Union Association Agreement u EFTA Agreement u CEFTA membership u Free Trade Area with Turkey, Macedonia, Latvia, Lithuania, Israel, and Estonia u Sighed Free Trade Agreement with Albania u Pending signature of a Free Trade Agreement with Moldova, Bosnia & Herzegovina, and Serbia & Montenegro
Preferential Market Access (2) Free Trade Agreement With: European Union EFTA CEFTA Others Pending FTAs: - Bosnia & Herzegovina - Serbia & Montenegro - Moldova
Exports (by Region, %, 1995 -2002) Source: National Statistics Institute
Imports (by Region, %, 1995 -2002) Source: National Statistics Institute
Exports (by Country, %, 1999 -2002) Source: National Statistics Institute
Bulgarian Export Growth (%, 1996 -2002) Source: Bulgarian National Bank
Bulgarian Exports (by Commodity Groups, 2002) 200 Source: National Statistics Institute
Bulgarian Imports (by Commodity Groups, 2002) 200 Source: National Statistics Institute
Current and Trade Account Deficit/Surplus (% GDP) Bulgaria CEE Countries (2002) Source: Governmental Sources and Bulgarian National Bank
Foreign Trade with the European Union (USD bn, 2001 -2005 F) bn
Foreign Trade Projections Up to 2005 u Improving trade balance – trade deficit to drop from USD 1. 3 m in 2001 to USD 0. 9 m u Exports will continue to grow, reaching a 29% increase compared to 2002 u Imports will continue to grow, reaching a 14% increase compared to 2002 u Exports/imports ratio will increase to 0. 82 (from a current value of 0. 74) u No major changes in commodity groups’ relative shares of exports and imports
FDI and Business Climate
Foreign Direct Investment (USD m, 1992 -2002) Source: Bulgarian Foreign Investment Agency
Inflow of Foreign Investment (by Sector, % and USD m, 1998 -2002) Source: Bulgarian Foreign Investment Agency
Inflow of Foreign Investment by Country (USD m, 1992 -2002) Source: Bulgarian Foreign Investment Agency
Privatisation (1) u Privatisation Law – completely new law embodying new philosophy – state-owned stakes in some 1, 600 enterprises are declared open for privatisation – no preferences for employee-management buyouts – limited deferred payments – concentration of privatisation process in a specialised body-the Privatisation Agency – new Post-Privatisation Control Agency
Privatisation (2) u Privatisation achievements (2002) – Biochim Bank – DZI (insurance) u Privatisation achievements (2003) – DSK Bank – 12. 8% Bulgartabac on the stock exchange u Forthcoming major deals (2003) – BTC (telecommunications) – Electricity distribution companies – Bulgartabac
Privatisation Revenues (EUR m, 1997 -2002) Source: Privatisation Agency
Business Climate and Reduction of Bureaucracy (1) u In June 2003, the Parliament approved the removal of 20. 5% (c. 74 out of 360) of the existing licensing, permit and registration regimes, and for the simplification of another 33% (c. 120 out of 360) of them u About half of the changes have already been implemented u A new Law on Administrative regulation and control of commercial activity became in law in June 2003 establishing the new registration and permit regimes and reducing the bureaucracy in the business environment
Business Climate and Reduction of Bureaucracy (2) u An upsweep in the activity of the courts with regard to companies u According to Transparency International data, in the period 1998 -2001 Bulgaria has moved from the 66 th to the 47 th place in the list based on the international index of corruption perceptions
International Corruption Indicators Transparency International Index * * Higher figures show improvement WEF Corruption Subindex Ranking Source: Transparency International, World Economic Forum Global Competitiveness Report 2002 -2003
Education u Bulgaria’s secondary education is among the best in the u u world in recent years: 5 th in the world in sciences, 11 th in mathematics in late 90 s Bulgarians rank second in international IQ tests (MENSA International) Bulgarians are among the top university students worldwide (2 nd in the world in SAT scores) Many students abroad A top-quality MBA (Master of Business Administration) program started in 2003
IT Certified Professionals (Top 10 Countries in % of Population) Source: Global IT IQ Report of March 2002 of Brainbench, Inc. The data for the population is taken from the mid-2001 estimates of U. S. Census Bureau, International Database and The World Factbook, 2000
Electronics & Electrical Engineering u Strategic sector with priority in long-term development programs u Potential for more than 200 enterprises with possible specialisation in: – Electrical engineering, Computer and office facilities, Electronics, Radio engineering and communication equipment, Household appliances, Defense industry Source: Bulgarian Foreign Investment Agency
IT and Telecoms u Cross-point for telecommunications traffic from Europe to the Middle East and Asia u Regulatory framework harmonized with EU standards u By rate of development in 2000, Bulgarian market for mobile telephone services ranked 5 th among CEE countries; over 2 m mobile phone subscribers u Telephone switch exchange manufacturing presents another opportunity Source: Bulgarian Foreign Investment Agency
Energy Investments expected until 2005 USD 2. 5 -5. 8 bn u Stable legal and regulatory framework harmonized with EU standards u Positioning of Bulgaria as a reliable country for the provision of future transit of oil, natural gas and electric power and as a dispatching and market center in the region u Introduction of clear and sustainable market rules and a clear schedule for the opening of the internal and external energy market to competition u Infrastructure projects expected to form the major investment inflow and contribute most to economic growth u Power generation and distribution companies offered for sale
Transport and Logistics u Strategic geographic location u Infrastructure comprising more than 37, 000 km road, including 416 km highways u 6, 500 km railways, more than 64% electrified u Two main ports, servicing over 60% of foreign trade u The Danube River and the Black Sea as international water roads u Five international airports Source: Bulgarian Foreign Investment Agency
Leisure u Established holiday destination for Germans, Scandinavians, British and East Europeans u 2. 993 m tourists for 2002 u USD 1. 2 bn revenues in 2001, USD 1. 334 bn in 2002 u Bulgaria is one of the few European destinations with strong growth in tourism in 2002 u Wide range of products: Beach/Recreation, Winter Sports, Spa/Health, Culture/Museum/Monasteries, Nature/Activity, Touring, Conference Source: Bulgarian Foreign Investment Agency
Textile and Clothing u One of the oldest and fastest developing sectors u Some 3, 000 enterprises, accounting for 22% of exports u Opportunity for productivity gains by investment in modern equipment u Main partners and consumers include Germany, France, Italy, Belgium, USA, Canada and the Scandinavian countries Source: Bulgarian Foreign Investment Agency
Food Processing and Beverage Industry u Excellent climate and natural conditions u Established traditions u Famous for organic food production u EU support program, SAPARD, extending EUR 52 m per year for 2001 -2006 u Up to 50% investment subsidy provided for private investment projects to Bulgarian registered companies, incl. with foreign participation Source: Bulgarian Foreign Investment Agency
Customs Regulations u Customs Act harmonized with the EU Customs Code u Inward processing preferences without or with limited collateral u Option for local custom office for major industrial companies u Option for simplified export/import customs declaration procedures u Option for inward processing under customs control
Tourism Sector
International Tourism, Balance of Payments (m USD, 1998 -2002) Source: Bulgarian National Bank
International Tourist Arrivals (Thousand People*, 1998 -2002) *Excl. Children Without Own Passports) Source: Ministry of Economy
Top 20 Countries for International Arrivals (Number of People, 1998 -2002) No. Countries TOTAL 5562917 TOURISM 2992590 VFR** 23998 BUSINESS OTHER 180138 236550 TRANSIT 2129641 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 MACEDONIA* YUGOSLAVIA* GERMANY GREECE UNITED KINGDOM RUSSIA ROMANIA* ISRAEL SWEDEN POLAND CZECH REP. SLOVAKIA UKRAINE FINLAND DENMARK FRANCE TURKEY BELGIUM U. S. A. AUSTRIA *Including "Shuttle trade" 848849 840881 562239 486750 124382 129598 571525 67974 61332 102106 129945 145049 95820 39293 35794 43238 581291 45279 39153 58805 621875 534822 480460 391386 110902 99389 92826 64064 54898 48738 48485 42452 39426 38108 31628 30983 29645 29076 25417 24358 242 683 2189 793 649 1636 434 393 350 332 252 90 787 77 77 659 6494 193 1236 611 2084 4549 14874 23091 9132 8171 6516 2973 1475 2703 2524 1059 3512 626 1294 7156 24594 2597 7780 6239 208774 286541 59433 57601 2673 4107 453939 429 4433 46698 74911 98718 17992 414 2327 3846 462387 13134 3844 25302 **VFR - Visiting friends and relatives 15874 14286 5283 13879 1026 16295 17810 115 176 3635 3773 2730 34103 68 468 594 58171 279 876 2295
International Tourist Arrivals (Thousand People, 2001 -2005 P) Source: Ministry of Economy
International Tourism Receipts (m USD, 2003 P-2005 P) Source: Ministry of Economy
Financial Sector
Bulgaria – Currency Board Arrangement u BGN 1 = DEM 1 = EUR 0. 5113 u Long-term goal for EU membership, the anchor currency being the Euro – The share of the Euro in the external trade is constantly increasing – The EU is by far the leading trade partner of Bulgaria – The CBA helps curb inflation – a step towards meeting the Economic and Monetary Union criteria u No indications that Bulgaria should exit the CBA
Banking Sector Overview (1) u Total banking sector assets account for 41% of GDP u Over 80% of the assets in the banking sector are in private hands u Over 80% foreign share of total bank assets u Following the privatisation of DSK (the State Savings Bank), the banking sector is almost completely privately owned
Banking Sector Overview (2) u 45% yoy increase in banking system assets in 2002 u High levels of capital adequacy and liquidity (by 2002) – 25. 2% total capital adequacy – 11. 2% primary liquidity (percentage of deposits)
Commercial Banks Assets, Deposits and Loans (BGN bn, 01/1998 -02/2003) 01/199815. 4 9. 4 6. 4 Source: Bulgarian National Bank
Commercial Banks Credits to Non-Government (BGN bn, 01/1998 -02/2003) 6. 4 Source: Bulgarian National Bank
Commercial Banks Deposits and Credits as % of Total Assets (01/1998 -02/2003) 60. 7% 41. 9% Source: Bulgarian National Bank
Commercial Banks Non-performing Loans as % of Total Loans (01/1998 -09/2002) 3. 34 Source: Bulgarian National Bank
Commercial Banks Total Loans (BGN bn 01/1998 -09/2002) 9. 512 Source: Bulgarian National Bank
Banking System Financial Result (BGN m, 01/1998 -02/2003) 545 Source: Bulgarian National Bank
Capital Adequacy (%) 26. 84 Source: Bulgarian National Bank
Loan-Deposit Interest Rate Spread (%, 01/1998 -02/2003) 6. 64 Source: Bulgarian National Bank
Steady Growth of M 2 and Quasi-Money (BGN bn, 01/1998 -02/2003) 01/199813. 4 8. 2 Source: Bulgarian National Bank
Capital Markets (1) u Bulgarian Stock Exchange – Sofia – Doubled turnover in 2002 against the previous year – The stock exchange index (SOFIX) increased by 270% since the June 2001 parliamentary elections u Radical measures for the protection of minority shareholders’ rights u A new Privatisation Law which sets a new era in Bulgarian privatization by radically improving the transparency, speed and economic effectiveness of the deals concluded
Capital Markets (2) u International Accounting Standards (IAS) – 2003 for financial institutions and public companies – 2005 for all other companies u A new Law on Deals in Compensatory Instruments u Major changes have been made to the Securities Law u A list has been approved comprising c. 1, 084 companies with state participation in the capital ownership, for the privatisation of which payment through different kinds of vouchers (non-cash instruments) is allowed. The shares of 95 of these companies are to be traded on the stock exchange
Bulgarian Stock Exchange - Sofia (SOFIX Index, 23/10/2000 -10/06/2003) +270% - 29% Source: Bulgarian Stock Exchange 260. 9
Brady Bonds
Brady Bond Exchanges: Parameters u March 2002: Bulgaria exchanged USD 1, 326 m of Brady bonds into a new USD 512 m Eurobond with a coupon of 8. 25% maturing in 2015 and a new EUR 836 m Eurobond with a coupon of 7. 5% maturing in 2013 u September 2002: Bulgaria exchanged USD 888 m of Brady bonds for an increase of USD 759 m in the 2015 Eurobond
Brady Bond Exchanges: Effects on External Public Debt u Decrease in debt face value by USD 186 m u Release of USD 340 m of collateral u Lengthening of the average maturity by 4 years u Decrease of debt service payments over next 10 years by around USD 1. 1 bn u NPV saving of USD 126 m
Bulgaria’s Spreads: Investment Grade League Eurobond spreads Investment grade countries or countries with split ratings
Bulgarian Institutions on the Internet u Bulgarian state institutions in the field of economics activity: – Ministry of Economy: www. mi. government. bg – Ministry of Transport and Telecommunications: www. mtc. government. bg – Privatisation Agency: www. priv. government. bg – Bulgarian Trade Promotion Agency: www. bepc. government. bg – Bulgarian Export Insurance Agency: www. baez-bg. com – Bulgarian Foreign Investment Agency: www. bfia. org
Скачать презентацию Invest in New Bulgaria Ministry of Economy July
e78de63febe3b267e91a46b4d0b1fe61.ppt