Bulgaria investment climate and business opportunities Seoul March 2013
Bulgaria at a glance Location and key data Area: 110,910 sq km (42,823 sq mi) Number of inhabitants (2011): 7.4 mln Capital and largest City: Sofia Other cities: Plovdiv, Varna, Burgas, Ruse, Stara Zagora, Pleven, Veliko Tarnovo Natural Resources: oil, gas, coal, iron ore, copper, lead, zinc, antimony, chromite, gold, silver, magnesium, nickel, pyrite, marble, limestone, salt, arable land Major industries: electricity, water and gas supply; food, beverages and tobacco; machinery and equipment; base metals, chemical products, coke, refined petroleum Currency: Lev (BGN). Fixed exchange rate with Euro. EU Member since 2007, NATO Member since 2004 Government type: parliamentary republic Last government elections: July 2009 Page 2
Bulgaria at a glance Geography, landmarks and economic overview Kozloduy NPP Veliko Tarnovo Rousse Dobrudja Belogradchik Balchik Sofia Varna Sunny Beach Sozopol Sandanski Maritza Iztok Bansko Plovdiv Page 3
Macroeconomic indicators show consistent pre-crisis economic growth and quick post-crisis recovery Real GDP Growth Inflation (HICP) 6.6% 6.4% 6.5% 6.4% 6.2% Bulgaria EU-27 Bulgaria EU-27 12.0% 0.4% 1.7% 6.1% 6.0% 7.4% 7.6% 2.5% 3.0% 3.4% -5.5% 2004 2005 2006 2007 2008 2009 2010 2011 2004 2005 2006 2007 2008 2009 2010 2011 Unemployment FDI Inflow 12.2% 10.7% 9.1% 6.9% 6.3% 9.1% Bulgaria 9.2% EU-27 10.4% mln. 2,736 3,152 6,222 9,052 6,728 2,437 1,209 1,341 2004 2005 2006 2007 2008 2009 2010 2011 2004 2005 2006 2007 2008 2009 2010 2011 Source: Bulgarian National Bank, Eurostat Page 4
FDI in Bulgaria comes mostly from EU countries and is concentrated in four main sectors FDI by host country, 1996-2011 ( mln.) FDI flows by industry, 1996-2011 ( mln.) (1) Netherlands 6,018 (2) Austria 5,809 (3) Greece 3,664 (4) UK 2,733 (5) Germany 2,523 (6) Cyprus 2,257 (7) Russia 1,486 (8) USA 1,283 (9) Italy 1,279 (10) Hungary 1,272 Real Estate 8,204 Finance 7,652 Trade 6,522 Manufacturing 6,479 Construction 2,705 Energy 2,699 Telecom 2,260 Other 2,664 Source: Bulgarian National Bank Page 5
Why invest in Bulgaria? Political and business stability EU and NATO member Currency board Low budget deficit and government debt Low cost of doing business 10% corporate tax rate Lowest cost of labor within EU Access to markets European Union / EFTA Russia Turkey / Middle East Educated and skilled workforce Government incentives Page 6
Government financial indicators are remarkable not only in the region, but on a pan-european scale Average government debt (2006-2011) 130% 120% 110% Greece Italy 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% -11% -10% Portugal France Hungary Germany United Kingdom Malta Ireland Iceland Austria Cyprus Poland Spain Netherlands Finland Turkey Sweden Croatia Norway Slovakia Denmark Lithuania Slovenia Czech Republic Romania Latvia Bulgaria Luxembourg Estonia -6% -5% -4% -3% -2% Belgium -1% 0% 1% 15% 16% Average budget deficit/surplus (2006-2011) Source: Eurostat Page 7
Bulgarian economy maintains its excellent performance despite global challenges Budget deficit for 2012, % of GDP Egypt -10.9% Japan -9.8% United Kingdom -8.3% Spain -8.0% Greece -7.0% United States -7.0% India -5.6% Czech Republic -5.0% France -4.5% Netherlands -4.1% Poland -3.7% Denmark -3.6% Euro Area -3.3% Italy -3.0% Hungary -2.8% Austria -2.6% Brazil -2.5% Turkey -2.0% China -1.6% Sweden Switzerland Germany Source: Eurostat, The Economist, National Statistics BG 0.0% 0.0% 0.1% Bulgaria was the only European country with increased credit rating by Moody s in 2010 and 2011 01/10 04/10 07/10 10/10 01/11 04/11 07/11 10/11 Estonia Lithuania Bulgaria Hungary Ireland Turkey Greece Page 8
Bulgaria has one of the lowest business costs in Europe Lowest corporate income tax rate in Europe Cost of electricity for industrial users is 70% of the EU average Office rents in Bulgaria are among the lowest in Europe Bulgaria 10% Estonia 0.062 /kwh, 2011 Sofia 168 / sq. m / year, Q2 2011 Romania 16% Bulgaria 0.064 Zagreb 191 Romania 0.080 Bucharest 234 Hungary 19% Turkey 0.086 Budapest 240 Slovakia 19% Germany 0.090 Prague 252 Czech Rep 19% EU average 0.092 Warsaw 312 Croatia 20% Hungary 0.104 Czech Rep 0.110 Athens 336 Istanbul 339 Turkey 20% Slovakia 0.123 Moscow 724 Source: Eurostat; Savills Page 9
Educated and skilled workforce is among the main advantages of Bulgaria Sofia University Established 1888 25,000 students Laboratories run by IBM, Oracle; Affiliate center of Harvard University Bulgaria has one of the highest proportions of students abroad from all European countries Iceland 17.8% Ireland 14.2% American University in Bulgaria Liberal arts educational institution Among the most famous American universities in Central and Eastern Europe 63% international students Slovakia 10.2% Bulgaria 8.3% Greece 5.8% Austria 4.7% Sofia Technical University 14,000 students Department of German engineering education (joint project of Bulgarian and German governments) and English engineering education Germany 3.1% EU-27 average 2.8% Romania 2.2% Czech Republic 2.1% Students in another EU / EEA country, % of all Source: InvestBulgaria, Eurostat Page 10
Bulgaria is only 3 hours flight from all major destinations in Europe, Russia and the Mediterranean region Strategic geographic location Major transport corridors passing through Bulgaria Page 11
The government supports specific industries under the Investment Promotion Act (IPA) Investments must be related to the following sectors: Manufacturing Research & development Education Healthcare High-tech services Warehousing and logistics Minimum investment amounts must exceed 10m 3.5 in regions with high unemployment and 2m for investment projects in high-tech services Benefits for certified investors include: Shortened administrative procedures Preferential acquisition of state or municipal land Financial support for professional training / education Infrastructure subsidies Labor cost subsidies Individual administrative services Page 12
Attractive FDI sectors Services: Transport and Logistics Information technologies Outsourcing of business processes Health and tourism related to healthy lifestyle Industry: Transport equipment and machine building Electronics and Electrical engineering Chemical industry Food and Agriculture Resources: Mining Oil Page 13
Leading global investors have chosen Bulgaria as an FDI destination IT development Back office operations Chemical and metal Industry Engineering Food Page 14
InvestBulgaria Agency Sofia 1000, 31 Aksakov Str. Phone: (+359 2) 985 5500 Fax: (+359 2) 980 1320 E-mail: iba@investbg.government.bg Web: www.investbg.government.bg