COMPETITIVENESS OF THE BULGARIAN ECONOMY AND ENERGY Invest in .ppt

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					    COMPETITIVENESS OF THE
BULGARIAN ECONOMY AND ENERGY




                Petar Dimitrov
       Minister of Economy and Energy
                   June 2008
                    FINANCIAL STABILITY


   Currency Board since 1st July 1997

   Bulgarian currency rate fixed to the Euro

   Foreign reserves of € 12 936.8 million of the Bulgarian National Bank
    up to 30 April 2008

   Resources of € 4 135.4 million for the Fiscal budget, calculated on the
    basis of programmed currency rates as of 31 March 2008

   Budget surplus of € 547 million as of 31 March 2008




                                                                              2
                      MACROECONOMIC ENVIRONMENT
                                              Real GDP Growth (%)
    7.0
                                                                 6.6                                                          6.5
                                                                              6.2                     6.2         6.2
                                                                                          6.1

                5.4
                                                     5.0
    5.0
                                        4.5
                            4.1
          3.9
%




    3.0                                                                             2.9         2.8
                                                           2.4                                              2.4         2.4
                      2.0
                                                                        1.7
                                               1.3
                                  1.2
    1.0
           2000        2001        2002        2003         2004          2005      2006         2007       2008f       2009f
                                                           EU-25       Bulgaria

Source: NSI, EUROSTAT, Ministry of Finance



   High and constantly rising economic growth
   Bulgaria is among the leaders of CEE countries
   The main contributor to the GDP growth is the industrial sector
                                                                                                                                    3
                MACROECONOMIC ENVIRONMENT


  Low levels of unemployment rate (under 7%)



        18.0%     17.9%
18%
                             16.3%

15%                                  13.5%
                                             12.2%
12%                                                  10.7%
                                                             9.1%
9%
                                                                     6.9%     6.5%
6%
         2000      2001      2002    2003    2004    2005    2006    2007    2008 F

Source: National Employment Agency



 •    Decrease of the unemployment rate by 5.25 % compared to the end of 2004

 •    Financial backing of Euro 1.2 bln for investments in human resources under the
      “Human Resources Development” Operational Program

                                                                                       4
            INTERNATIONAL POSITION OF BULGARIA
               Business conditions – classification of the World Bank

                 Country                     2006    2007              2008
                BULAGRIA                      59       54                46
                 Romania                      71       55                48
                 Slovenia                     56       53                55
                   Turkey                     84       65                57
                Macedonia                     94       95                75
                   Serbia                     95       84                86
                  Croatia                    134      120                97
                  Greece                     111       95               100
        Approx. for the Balkans               91       86                82
       Source: World bank – Doing Business


Now Bulgaria is ranked:
   • 46th among 178 countries in terms of business conditions according to the World
     Bank Doing Business Report
   • 39th in terms of competitiveness out of 55 top economies, according to the
     International Institute for Management Development (IMD)
   • 79th among 131 countries in terms of competitiveness according to the World
                                                                                     5
     Economic Forum, Davos
                                              CREDIT RATING
                                  Moody's   Standart&   Fitch   Japan Credit
                                              Poors             Rating Agency
                                   Aaa       AAA         AAA      AAA
                                    ...       …          …         …                                   Fitch has
                                                                                                       confirmed the
                                   A3         A          A         A
       Subinvestment Investment



                                                                                                       long-term credit
                                   Baa1       A-         A-        A-               27.06.2007         rating of
                                                                                                       Bulgaria,
               rating rating




                                   Baa2       BBB+       BBB+      BBB+             31.01.2008         however the
                                   Baa3       BBB        BBB       BBB              26.11.2007         long-term
                                                                                                       credits
                                   Ba1        BBB-       BBB-      BBB-             23.02.2007         perspective has
                                                                                                       been
                                   Ba2        BB+        BB+       BB+          Latest credit rating   lowered from
                                   Ba3        BB         BB        BB                assigned          stable to
                                                                                                       negative. Fitch
                                   B1         BB-        BB-       BB-                                 has revised the
                                   B2         B+         B+        B+                                  Region outlook
                                                                                                       due to the
     27.09.1996                    B3         B          B         B                                   change of
                                                                                                       macroeconomic
      First credit                 ...        …          …         …                                   conditions.
        rating                     C          D          D         D
       assigned
    Source: Ministry of finance

•    An investment rating was assigned to Bulgaria for the first time in 2004. Since 2005
     the international credit rating agencies have increased Bulgaria’s credit rating 13
     times.                                                                               6
                          FOREIGN TRADE , (USD bn)

          32.0
                                                                     29.9
                      Export(fob)      Import (fob)
          28.0


          24.0                                         23.0


          20.0                                                18.4
                                       18.3


          16.0                                  15.0

                                11.8
          12.0

                                                                                              8.4
           8.0
                                                                                  6.2
                          5.5                                                           5.4
                    4.0                                                     3.8
           4.0


           0.0
                     1999           2005          2006          2007        03/2007     03/2008

      Source: BNB


 The Bulgarian exports increased more than three times since 1999 and in
  2007 г. amounted to USD 18.4 bn
                                                                                                    7
                       EXPORT
  Major export destinations 2006/2007 (USD million)

2 200
                 2 116

2 000

                                  1 920
1 800




                                                  1 882
         1 735




1 600




                                                                  1 638
                                          1 513
1 400
                          1 448




                                                          1 334
1 200                                                                                                                                       2006




                                                                                 1 150
1 000                                                                                                                                       2007




                                                                           982
 800




                                                                                                            888
                                                                                               825




                                                                                                                        733
 600




                                                                                                      631




                                                                                                                  627
                                                                                         579
 400




                                                                                                                                    448




                                                                                                                                                425
                                                                                                                                          426
 200




                                                                                                                              228
   0
        Turkey           Germany          Italy           Greece          Belgium        Serbia      Romania      France      Russia      USA



    Source: NSI




                                                                                                                                                      8
            BILATERAL TRADE TURNOVER WITH USA


500




                                                                                                                                    464.0
                                                                                                                           454.3
                                                                                                   439.5




                                                                                                                                   425.7



                                                                                                                                            424.8
400




                                                                                                                   356.6
                                                                                   330.5




                                                                                                                                                    323.1
                                                                                                           313.5
300




                                                   284.7




                                                                   270.5




                                                                                           273.2
                                                                                      Export
200
           194.5




                                           190.7



                                                           190.8
                           193.8


                                   189.5




                                                                           172.2




                                                                                                                                                                    84.7
                   146.6




                                                                                                                                                             66.3
        111.2




100

    0
        1998       1999            2000            2001            2002            2003            2004            2005            2006     2007            03/2008
                                                                   Export                   Import



    Source: NSI




•   In 2007 Bulgarian export for the USA came up to USD 424.8 million and
    decreased by 0.2% as compared to the year 2006. The import from the USA
    amounted to USD 323.1 million, or decreased by 30.4% as compared to the same
    period of the year 2006 . The trade balance is positive for Bulgaria and amounts to
    USD 101.7 million.
                                                                                                                                                                           9
               STRUCTURE OF TRADE TURNOVER WITH USA
                       BY SECTORS FOR 2007

        Export from Bulgaria             (%)                 Import from USA               (%)
Petrol oils and oils from bituminous              Mineral products                               40.5
                                           35.2
minerals, other than crude ones

Products from food processing industry     11.2   Machine and Machinery                          26.3

Textiles                                   10.6   Transport facilities                            8.4

                                                  Products from chemical industry                 4.8
Machines and Equipment                     10.2
                                                  Optical and photographer’s instruments          4.2
Products from chemical industry             8.0
Optical and photographer’s instruments      4.2   Products from food processing industry          3.9
Base metals and articles                    2.8   Base metals and articles                        2.9
Live animals                                2.7
                                                  Plastic articles                                2.2
Plaster and cement articles                 2.2
                                                  Textiles                                        1.1
Other                                      12.8   Other                                           5.8


           Source: MEE
                                                                                                        10
             FAVORABLE BUSINESS CLIMATE


Bulgaria is ranked
2nd in the Business
climate rating for
EU-27 (after
Denmark)




                                                                            11
                      Source: Association of European Industrial Chambers
               FAVORABLE BUSINESS CLIMATE
According to the World Bank Report Bulgaria is ranked 1st among
178 countries in successful implementation of tax reforms for the
period 2006-2007

• 10% corporate tax since 2007 (34.3% in 1999)

• 0% corporate tax in 138 municipalities with unemployment rate higher than
  the average level

• 0% capital gains tax

• 5% dividend tax from January 1, 2008

• Lower social security burden with 6 percentage points in 2006 and by other
  3 percentage points since October 1, 2007

• 10% “flat tax” of incomes of physical persons since 2008


                                                                           12
                                                  CORPORATE TAX FOR 2008 (%)

 40,0%

                                                                                                                                                                                                                                                                                              35%
                                                                                                                                                                                                                                                                           33%33,3%
                                                                                                                                                                                                                                                                  32,5%


 30,0%                                                                                                                                                                                                                               29,5% 30%
                                                                                                                                                                                                                   27,5%28%
                                                                                                                                                                      26%
                                                                                                                                                   25%25% 25% 25%25,5%


                                                                                                                                        22%
                                                                                                                 21% 21%
 20,0%                                                                                       19% 19%


                                                                         16% 16%
                                          15% 15% 15%

                               12,5%

           10% 10%
 10,0%




  0,0%




                                                                                                                                                                                                                                                                           Belgium
                                                                                                                                                                                                         Finland
                                                                                                                                                                                 Denmark
           Bulgaria




                                                                                             Slovakia
                                                               Germany




                                                                                                        Poland




                                                                                                                                                                                                                                                   Great Britan
                                Ireland




                                                                                                                                                                                                                                      Luxembourg
                                                                         Romania




                                                                                                                                        Slovenia




                                                                                                                                                                                                                                                                                     France
                                                                                                                                                   Greece




                                                                                                                                                                                           Netherlands




                                                                                                                                                                                                                                                                   Spain
                                                                                                                                                                                                                            Sweden
                                                                                                                 Czech Rep.




                                                                                                                                                            Portugal




                                                                                                                                                                                                                                                                                              Malta
                                          Lithuania




                                                                                                                              Estonia
                      Cyprus




                                                                                                                                                                                                                    Italy
                                                                                   Hungary
                                                      Latvia




                                                                                                                                                                       Austria




Source: EU Taxation Database, World Wide Taxes - www.worldwide-tax.com                                                                                                                                                                                                                                13
                                                 PERSONAL INCOME TAX FOR 2008
                                                      (MAXIMUM RATE %)

  60,0%                                                                                                                                                                                                                                                                                    59%

                                                                                                                                                                                                                                                                                  56%

                                                                                                                                                                                                                                                                    52%
                                                                                                                                                                                                                                                50% 50%
  50,0%

                                                                                                                                                                                                                                      45%
                                                                                                                                                                                                                      43% 43%
                                                                                                                                                                                                           42%
                                                                                                                                                                                      41% 41%
  40,0%                                                                                                                                    40% 40% 40% 40%
                                                                                                                              38%
                                                                                                                    36%
                                                                                                            35%

                                                                                                 31,5%
                                                                                        30%
  30,0%
                                                                            25%
                                                                   24%

                                                         21%
  20,0%                                       19%

                       15% 16%


           10%
  10,0%



   0,0%




                                                                                                                                                                                                                                                          Belgium
                                                                                                  Finland




                                                                                                                                                             Great Britain




                                                                                                                                                                                                                                                                                           Denmark
            Bulgaria




                                              Slovakia




                                                                                                                                                                                                                                      Germany
                                                                                                                                           Poland
                                                                                                                              Luxembourg




                                                                                                                                                                                      Ireland
                                    Romania




                                                                                                                                                                                                Slovenia
                                                                                                                                                                             France
                                                                                                                                                    Greece




                                                                                                                                                                                                                                                                    Netherlands
                                                                                                                                                                                                                              Spain




                                                                                                                                                                                                                                                                                  Sweden
                       Czech Rep.




                                                                                                                                                                                                           Portugal
                                                                                                            Malta
                                                         Estonia




                                                                            Lithuania

                                                                                        Cyprus




                                                                                                                                                                                                                      Italy
                                                                                                                    Hungary
                                                                   Latvia




                                                                                                                                                                                                                                                Austria
Source: EU Taxation Database, World Wide Taxes - www.worldwide-tax.com                                                                                                                                                                                                                               14
                                        SOCIAL INSURANCES
                        SOCIAL INSURANCES PAID BY THE EMPLOYER IN 2006
     (% of total employer’s expenses, incl. salaries, insurances, compensations, tuition’s expenses ,etc)
          Sweden                                                                                               30.6%
          Belgium                                                                                            30.3%
             Litva                                                                                   28.2%
         Hungary                                                                                 26.9%
         Romania                                                                             26.1%
       Czech.rep.                                                                            26.1%
          Estonia                                                                        25.1%
            Spain                                                                       24.9%
         Slovakia                                                                      24.6%
           Austria                                                                 23.5%
         Germany                                                                   23.3%
         Portugal                                                          21.2%
         Bulgaria                                                         20.9%
                                                                                   *
          Finland                                                         20.8%
            Latvia                                                        20.6%
       Luxemburg                                            15.2%
           Cyprus                                       15.1%
         Slovenia                                   13.4%

                  0%           5%         10%         15%           20%                25%               30%           35%
Source:Eurostat

                       *Note: In 2007 social security burden paid by the employer is reduced by 2.5%
                                                                                                                             15
                                                            LABOR COST
      AVERAGE MONTHLY EXPENDITURES FOR THE EMLOYERS IN 2006 (incl. salaries, insurances,
                                                                 compensations, etc)

       Luxemburg                                                                                                             4625
           Sweden                                                                                                       4518
            France                                                                                                    4382
          Belgium                                                                                              4047
          Germany                                                                                        3868
            Austria                                                                                     3827
           Finland                                                                                    3685
             Spain                                                              2203
            Cyprus                                                            2091
          Slovenia                                              1673
          Portugal                                          1618
             Malta                                       1445
        Czech.rep                                 1028
          Hungary                             947
            Poland                          889
           Estonia                          840
          Slovakia                      775
              Litva                   646
             Latvia               532
          Romania               414
          Bulgaria        243

                      0                     1000                       2000                    3000      4000                       5000
                                                                              euro per month                                               16
Source: Eurostat
                                     0.000
                                             0.020
                                                          0.040
                                                                       0.060
                                                                               0.080
                                                                                       0.100
                                                                                               0.120
                            EU 27                        0.082




Source: Eurostat
                            Latvia           0.044
                          Bulgaria           0.047

                           Estonia              0.053

                            France              0.054
                           Poland               0.054
                           Finland              0.054
                             Litva               0.055

                          Sweden                     0.063

                         Denmark                     0.064
                           Greece                     0.070
                          Slovenia                     0.075
                        Czech.rep.                      0.078

                           Austria                      0.079

                             Spain                       0.081
                          Hungary                        0.081
                          Romania                        0.084
                                                                                                                  (EURO/ kWh)




                          Portugal                       0.086

                          Belgium                            0.088
                            Malta                            0.090
                   The Netherlands                           0.092
                          Slovakia                            0.093
                                                                                                          ELECTRICITY PRICES IN 2007




                         Germany                              0.095

                          England                             0.095
                                                                                                       FOR FINAL INDUSTRIAL CONSUMERS




                       Luxemburg                              0.096
                             Italy                                0.103
                           Cyprus                                 0.105

                           Ireland                                   0.113
            17
                                                                                  10.0
                                                                                         12.0
                                                                                                14.0




                                     0.0
                                           2.0
                                                         4.0
                                                                      6.0
                                                                            8.0
                             EU27                            8.9




Source: Eurostat
                           Estonia         3.7

                          Bulgaria           5.2

                            Latvia               5.3

                         Denmark                 5.8

                             Litva                6.0

                        Czech.rep.                 6.6

                          Belgium                      6.9

                             Spain                     7.1

                          Romania                      7.3

                          Slovenia                     7.3

                           Poland                       7.5

                           Finland                      7.6

                            France                      7.6
                                                                                                                   (EURO/GJ)




                          Portugal                      7.8

                          Slovakia                       8.0

                   The Netherlands                       8.4

                             Italy                           8.5
                                                                                                         NATURAL GAS PRICES IN 2007




                           Austria                           8.9

                          Hungary                              9.5
                                                                                                       FOR FINAL INDUSTRIAL CONSUMERS




                       Luxemburg                               9.9

                          England                                  10.6

                          Sweden                                   11.1

                         Germany                                     12.2
            18
                                     INVESTMENT CLIMATE

       Bulgaria             3.16             1.04      1.56
        Slovakia          2.79           1.04         1.79
         Estonia         2.44         0.96            2.2
 Czech Republic          2.43          1.1            2.05
          Latvia          2.64          0.91           2
         Poland           2.59          1.17          1.79
        Hungary           2.54         0.95           1.98
      Lithuania            2.6          0.83          1.98
       Romania             2.88              0.87      1.53
          Russia           2.61              1.38          1.16
        Ukraine             2.79               0.98        1.09

   Financial Score    People Score    Environmental Score
   Source: A.T. Kearney 2007 Global Services Location Index

• According to the report of A.T. Kearney from 2007 Bulgaria is ranked 9th in the
  World and 1st in Central and Eastern Europe as most attractive country for
  business;
• According to UNCTAD Bulgaria takes 7th place as the most attractive investment
  destination. Bulgaria has moved up in this rating by 14 places in comparison with
  the 2005 report.
                                                                                      19
                              FOREIGN DIRECT INVESTMENTS
                                                                   FDI, 2007
 25                                                               (% of GDP)
          21.1
 20
 15                  11.7
 10                            7.9
                                          5.8         5.2     5.0
   5                                                                      4.2       4.0         3.8        3.0         2.5      1.9          1.1
   0




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 Source: BNB and Bank Austria
 Creditanstalt
                                                     FDI IN BULGARIA (mln euro)
   7 000                                                                                                                              6 500
                                                                                     5 961                       6 109
   6 000
   5 000
   4 000
                                                                  3 152
   3 000                                     2 736
   2 000             1 851

   1 000
          0
                     2003                    2004                 2005                2006                     2007                 2007
                                                                                                      Preliminary data        expectations
Source: BNB
                                                                                                                                                   20
       BULGARIA LEADS CEE COUNTRIES IN TERMS OF
                 FDI TO GDP INDICATOR
  TURKEY
                        3.6
                                5.0
 SLOVENIA
                   3.0
            1.7
 SLOVAKIA
                         4.0
                                                 7.5
   SERBIA
                                    5.3
                                                                            14.2
 UKRAINE
                                                7.1
                                    5.4
 ROMANIA
                                       6.0
                                                             9.3
  POLAND
                              4.5
                                    5.5
   LATVIA
                                                      8.1
                                                       8.3
 HUNGARY
                  2.6
                                          6.3
CZECH REP
                            4.7
                          4.2
                                                                                   21.1
BULGARIA
                                                                                          23.6
                                                2006               2007 F


                                                                                             21
                 FDI STOCK BY SECTORS, 1998 – 2007,
                      Total for the period 24 266 Euro mln.


                                                                        21
                                                    19       19
                                        17
                                                                      5112.4   Value in EUR m

                                                4619.8 4679                      % of Total
                  6      6     7       4019.1
      5
                       1515.6 1602.4
    1259 1459.1

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                                                                                                22
               INVESTMENT PROMOTION LAW

•   Focusing on the following sectors of economic activities:
    Industrial Sector
    Processing industry;
    Power generation from renewable energy resources.
    Services sector
    High tech activities in the field of computer technologies;
    Research and development activities;
    Education;
    Healthcare.

•   Two classes of investment „А” and „B”

•   Minimum amount of investments in a single project
      for class А – 70 mln BGN (~56 mln USD)
      for class B – 40 mln BGN (~32 mln USD)

                                                                  23
                     INVESTMENT PROMOTION LAW

                             CLASSIFICATION OF INVESTMENTS
DEPENDING ON THE REGION
In municipalities with unemployment rate of 35% or higher than the national, the minimum required amount is:
            for class A - 35 mln BGN (~28 mln USD)
            for class B - 20 mln BGN (~16 mln USD)

In municipalities with unemployment rate of up to 35% higher than the national, the minimum required amount
     is:
            for class А - 45 mln BGN (~ 36 mln USD)
            for class B - 25 mln BGN (~ 20 mln USD)

DEPENDING ON THE ECONOMIC SECTOR

Minimum amount of investments in high tech production - two times lower:
    for class А - 35 mln BGN (~28 mln USD)
    for class B - 20 mln BGN (~16 mln USD)

The minimum required amount in high tech activities in the services sector is three times lower:
    for class А - 24 mln BGN (~19 mln USD)
    for class B - 14 mln BGN (~11 mln USD)




                                                                                                               24
                  INVESTMENT PROMOTION LAW
                             ENCOURAGEMENT MEASURES

1.   Shorter terms of administrative service (for class А or class B)

2.   Individual administrative service (for class А) – the measure is implemented by
     the Invest Bulgaria Agency before central authorities of the executive power and in
     the rest of the cases by the territorial authorities of the executive power;

3.   Acquisition of property rights or establishment of limited rights to real
     estate – private state or municipal property” (for class А or class B);

4.   Financial assistance for construction of public infrastructure for class A and
     for accomplishment of two or more certified investment projects in the boundaries of
     an industrial zone; implementation of the two classes in certain conditions. The
     accent is posed on the industrial;

5.   Financial assistance for training for acquiring professional qualification to
     persons 29 years old or younger, including trainees from Bulgarian universities
     employed as new recruits in the investment project.


                                                                                            25
             US DIRECT IMVESTMENTS IN BULGARIA

         FDI in Bulgaria ,1992-2007, USD million                               Dynamics of the US direct investment in
                                                                                      Bulgaria (USD million)
                Austria                                    4 532   2007                                201

             Nederland                             3 377           2006                                              306

                                                                   2005                   103
                Greece                      2 892
                                                                   2004                          134
           Great Britain                   2 754
                                                                   2003                         128

Belgium and Luxembourg             1 685                           2002             57

                                                                   2001         44
              Germany              1 647
                                                                   2000             57
                Cyprus        1 449
                                                                   1999              62

                    USA     1 254                                  1998              64

              Hungary       1 207                                  1997        36

                                                                   1996   19
            Switzerland    1 040


      Source: NSI


•   For the period 1992-2007 the USA ranked 8th among the investors in Bulgaria in
    terms of FDI amount – USD 1.254 bln
                                                                                                                           26
              US INVESTMENTS IN BULGARIA
                   (total USD 1 254 m.)
Major US Investments in Bulgaria
   American Standard (production of sanitary faience), USD 239,7 m.
   Hilton (hotel), USD 39,7 m.
   Craft Foods (chocolate factory), USD 38 m.
   MacDonald's, USD (fast food chain)23 m.
   News Incorporated (tv channel) USD 22,8 m.
   World Trade Company /Gort Securities UK/ (Radisson Hotel), USD 17.7 м.
   Westinghouse –modernization of 5 & 6 energy units of NPP “Kozlodui” (completed)

Ongoing projects with US participation in Bulgaria
   AES Corporation – construction of a new 670 MW TPP within “Maritza East 1” TPP (for
    the period 2006-2009) – the biggest “green” investment of AES in SEE, worth more than
    USD 2 bln.
   Textron –offset agreement (signed in November 2007) for USD 20,4 m. ”green”
    investment in the construction of Low-voltage equipment Factory
   Honeywell - modernization of 1,2 and 4 energy units of TPP “Maritza East 2” for
    USD16,9 m. (started 2006)
   Hewlett Packard- “Global service centre” for its clients in Europe, Africa and Near East.
   Microsoft is to open in Bulgaria a free online software support centre, covering SEE
   Microsoft, Cisco Systems and Siemens – are to launch soon a centre for innovations

                                                                                                27
                  INVESTMENT COOPERATION
                 BETWEEN BULGARIA AND USA
Forthcoming US projects in Bulgaria
   AES-Bulgaria plans to build a 120 MW Wind Power Park for USD 250 m.

   Tishman International Companies” plans to invest in a Logistics and Business Centre more than
    USD 300 m.

   Honeywell– plans to open a centre for assembling of industrial automation systems

   CISCO – plans to open a fund for investment in IT SMEs in CEE, including Bulgaria

Possibilities for future US investment in Bulgaria
   In 2008 will commence a Special Public Procurement Award “Development of Communication
    and Information Means” (Offset Project №9) for the modernization of the Bulgarian Armed Forces,
    USD 300 m.
    - ITT Corporation, Lockheed Martin and General Dynamics are interested to participate

   In 2010 the Offset Project № 3 “Acquisition of a new multiple-role fighter” for the modernization of
    the Bulgarian Armed Forces is to be started.
    - Lockheed Martin and Boeing have presently expressed interest to participate.

   Global Environment Fund has included Bulgaria in its long-term plans for investment in renewable
    energy sources and water treatment plants in Bulgaria.

   Bulgarian-American Investment Fund and its Bulgarian –American Credit Bank provides
    funds for investment in Bulgaria (mainly in the field of tourism and SMEs) with a capital USD 70 m.

                                                                                                           28
      SUFFICIENT ACQUISITION OF THE EU FUNDS IS ANOTHER
      IMPORTANT PRIORITY FOR STIMULATING THE ECONOMY
                                                 25%
                                                                   22%
                                                                                20%
                             15%
            15%                                                                                                    Value EUR m
                                          2003
                                                                                                                   % of Total
                                                              1800
                                                                             1601                  2%         1%
           1234            1213                                                                              56
                                                                                              180




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                                                                       Ad
     The Ministry of Economy and Energy runs Operational Program “Competitiveness”
     with a Budget of EUR 1.2 billion

         Priority 1: Economic development based on knowledge and
                   innovation activities (budget – EUR 246 million or 21%)
         Priority 2: Increasing production efficiency and development of
                    favorable business environment (budget – EUR 593 million or 51%)
         Priority 3: Provision of financial resources for business development
                      (budget – EUR 200 million or 17%)
         Priority 4: Strengthening of the Bulgarian economy's position in
                    international markets (budget – EUR 87 million or 7.5%)
         Technical support (budget – EUR 34 million or 3%)
         Considerable financial support for SMEs                                                                                29
    SIGNIFICANT PROJECTS UNDER IMPLEMENTATION
               (valued over 8 bln. euro)

•   Construction of a new nuclear capacity at the site of Belene nuclear
    power plant –Euro 4 bln;
•   Construction of spare capacity plant at Maritza East 1 thermal
    power plant – Euro 1.3 bln;
•   Rehabilitation and installation of flue gas desulphurization plants
    in Units 1-4 and increase of the production capacity of Units 5 and
    6 at Maritza East 2 thermal power plant – Euro 190 mln.;
•   Rehabilitation and modernization of Maritza East 3 thermal power
    plant – Euro 800 mln.;
•   Construction of hydro power plant Tsankov Kamak – Euro 220 mln;




                                                                       30
               ENERGY PROJECTS UNDER STUDY


•   Construction of hydro power complex Nikopol (Bulgaria) – Turnu
    Magurele (Romania) – Euro 1.5 bln;
•   Construction of hydro power complex Silistra (Bulgaria) – Kalarash
    (Romania) – Euro 1.2 bln;
•   Construction of Gorna Arda Cascade and Tundja Dam;
•   Construction of Maritza East 4 thermal power plant.




                                                                     31
            ELECTRICITY INTERCONNECTION PROJECTS
(Under       implementation)
Construction    of   electricity
interconnection       between        Bor
Bulgaria    and    Macedonia:
substation Chervena Mogila
                                           Vidin
(Bulgaria) – substation Shtip
(Macedonia).

 -------- interconnections
(Planned) - Extension of
electricity
towards     Albania  to Italy
/European Corridor N 8/

(Planned) Construction of
second             electricity
interconnection     between
Bulgaria and Serbia (Vidin –
Bor).
(Planned) Construction of
second                 electricity
interconnection         between
Bulgaria       and      Greece:
substation      Maritsa     East
(Galabovo,       Bulgaria)       –
substation Filippi or Nea Santa
(Greece)
                                                   32
   NABUCCO PROJECT
ROUTE & TECHNICAL DATA
              Pipeline diameter: 56” (1422 mm)
              Distance: 3 300 km
              Investment: 8 billion €
              Maximum transport capacity: 31 bcm/y




                                                      33
     “SOUTH STREAM” PROJECT POSSIBLE ROUTES OF
         THE BRANCHES & TECHNICAL DATA

             NORTH

                 HU




                                                                          RU
                 SR


                               BG

IT
                           Transport capacity: 31 bcm/y
                           Under discussion - 2 branches “SOUTH” and
     SOUTH                 “NORTH”
                           Offshore part RU-BG – 900 km
                      GR   Max. deep: 2000 m
                           Singed MoU Eni-Gazprom 23.06.2007
                           Signed agreements of Russia with:
                           Bulgaria, Serbia, Hungar, Greece
                           Total amount of the investment: Euro 12 bln.    34
REGIONAL GAS INFRASTRUCTURE PROJECTS
  1. GAS PIPELINE BULGARIAN (BG) GRID – TURKEY – GREECE INTERCONNECTOR
  2. REGIONAL LNG TERMINAL (BG & SEE REGION)
  3. DUPNITZA – NIS GAS PIPELINE (BG-SR)
  5. RUSE – GIURGU GAS INTERCONNECTION (BG-RO)


                                    Giurgu
                                                  4
                                    Ruse
           Nis


                    3

                        Dupnitsa

                                     1       Haskovo



                                      LNG
                                              2




                                                                         35
         OIL TRANSPORT INFRASTRUCTURE PROJECTS




Oil pipeline Bourgas- Alexandroupolis
•Length of the pipeline- 290 km, BG territory - 155 km;
•Pipe diameter – 900 mm (36”);
•Capacity: 0.75 M barrels/day (35 M tons/y);
•2 pump stations;
•Trilateral agreement Bulgaria-Greece-Russia signed
and ratified;
•IPC establishment - February 2008;
•Expected: Start of the construction by the end of        36
2008.
          OIL TRANSPORT INFRASTRUCTURE PROJECTS




Oil pipeline Bourgas– Vlore (along the
European Corridor No. 8 route)

•Length of the pipeline – 900 km;
•On Bulgarian territory – 480 km;
•Pipe diameter – 900 mm (36“);
•Capacity: 0.75M barrels/day (35 M tons/y);
•4 pump stations;
•Convention Albania-Bulgaria-Macedonia            37
signed and ratified.
                     OUTLOOK FOR THE PERIOD 2008 - 2010
                         INDICATOR                                      2008        2009        2010

     Real growth of GDP                                                 6.2%       6.5%         6.9%
     Average annual inflation                                           6.9%       4.4%         3.7%
     (harmonised index of consumer
     prices)
     Unemployment                                                       6.5%       6.2%         6.1%

     Current account, € bn                                               -6.9       -7.7         -8.2

     Current account, % of GDP                                        -21.1%       -21.0%     -20.0%

     FDI, € bn                                                            7.0       7.6          8.2
     (average annual rate of 8%)
    Source: Agency for Economic Analysis and Forecasting. FDI – prognosis of MEE


   It is expected that the dynamic and ascending development of the Bulgarian economy will continues.
   The economic growth rate is envisaged to exceed 6% annually.
   According to the forecast in the end of the period the average annual inflation rate will drop to 3.7%.
   The unemployment rate will remain 7%.
   The current account deficit will remain 21% of GDP.
   In order to cover the current account deficit FDI should increase annually by 8%                          38
               GLOBAL COMPANIES ARE GAINING INSIGHT IN
              ADVANTAGES OF DOING BUSINESS IN BULGARIA
                        Examples of those who already have discovered their opportunity in Bulgaria

                  “Very well educated, talented and committed
                  workforce, large talent pool, very competitive
                  cost structure, European culture, good English
                  skills, short flight times and almost no time
                  difference from Western Europe…” - Dr. Peter
                  Kurpic, Senior Vice President NetWeaver                                                             “Political and economic stability, the
                  Foundation SAP AG                                                                                   qualified labor force and the cost
                                                                                                                      structure” – Gilles Bernard,
                                                                                                                      Executive Director of EPIQ
                                                                                                                      (Belgium)
                                                                                          YOUR
 “…among the reasons why HP had chosen Bulgaria were                                      LOGO
 the high level of education in terms of technical skills and                             HERE
    languages, good infrastrucutre and investor-friendly
    legislation.“ – Tino Canegrati, HP Global Delivery
                      General Manager




                 “Over the past several years, we have proven that Bulgaria is a
                 competitive, productive place to do business with a lot of talented
                                                                                                     “The combination of existing and proven local expertise,
                                                                                                     the excellent academic facilities and the strength of the
                 and well trained people. As we look to expand here in Sofia we                      Bulgarian economy, made Sofia an ideal choice for
                 plan to continue hiring the best and the brightest people that                      further investment in our global mixed-signal engineering
                 Bulgaria has to offer.” – Eric Dumas, Director of Tumbleweed                        capabilities.” – Nelly Pergoot, Managing Director, AMI
                 Communications Bulgaria                                                             Semiconductor (USA)

                     The list of foreign companies in Bulgaria is growing quickly!
                                                                                                                                                                 39
Source:   Invest Bulgaria Agency – Bulgaria Investment Guide 2007, Value Scope Bulgaria, http://neveq.com
THANK YOU FOR YOUR ATTENTION!


   Ministry of Economy and Energy
       www.mee.government.bg




                                    40

				
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