issue 159 may 2015

Analysis Greece: The Drama That Is Not Market Liberalization for Electricity Bulgaria’s Tourism Falls on Hard Times

AmCham Events: First Member 2 Member Gathering

The Healthcare Issue

American ChamberC hamber of CommerceC ommerce in BulgariaBulgaria

Business Park , Sofia Mladost 4 AreaArea, Building 22, Floor 66, 1766 Sofia Tel.: (359 2) 9742 743 Fax: (359 2) 9742 741 homepage: www.amcham.bg e-mail: [email protected]

editorial

Dear Reader,

I hope this issue of our magazine reaches you in a fine mood and good health, particularly since healthcare is our main topic (see pages 4-11). Capital’s Desislava Nikolova provides an overview of this sector, which is augmented by interviews with representatives from AmCham member companies. Our maga- zine has always seen its role as a place where politicians and businesses can share their respective viewpoints with the readers, and discuss them among themselves. We certainly hope that the reform started by Minister succeeds in improving Bulgarians’ health, which is lagging behind in so many respects judging by the statistics.

Another germane topic is related to our summer vacations. Should we be expect- ing to start paying with drachmas in Greece, if we go for visit in a couple of months? Can we be forced to obtain entry visas? Not likely, as Boyko Vassilev’s overall optimistic outlook on the so-called Grexit concludes (Page 12). EU Commission’s Jean Claude Juncker has reaffirmed this confidence by taking charge of the negotiations with Greece in an attempt to find a compromise. For now, breathe out, if not in a complete relief, but at least with a more peaceful mind.

Those of you who are determined to rest on the Bulgarian seaside, may be delighted to know that the beaches will be a bit emptier than last year. Fewer Russian tourists will come to visit (see Page 16). Of course, this is only good news for the beachgoers. If you are running a vacation business on the Black Sea coast or are involved with real estate sales, the downturn will hurt you financially. In an effort to curb or even reverse your losses, consider running a page or two of advertising in our magazine.

Sincerely, AmCham Bulgaria Magazine May 2015

Milen Marchev Editor-in-Chief

page 1 contents

AmCham Bulgaria Magazine is a primary forum for political and economic analyses, news, viewpoints as well as for the presentation of new business opportunities. The articles in the AmCham Bulgaria Magazine express the opinions of the authors and do not necessarily reflect the position of the American Chamber of Commerce in Bulgaria. Publisher Writers: American Chamber of Commerce in Bulgaria Boyko Vassilev, Marina Tzvetkova, Business Park Sofia, Mladost 4 Area Mina Georgieva, Panayot Angarev, Building 2, Floor 6, Sofia 1766, Bulgaria Yuliana Boncheva Tel.: +359 (2) 9742 743 Fax: +359 (2) 9742 741 Advertising e-mail: [email protected] AmCham Bulgaria: www.amcham.bg Nadejda Vakareeva, [email protected]

Editor-in-Chief AmCham Bulgaria Magazine: Milen Marchev Milen Marchev, [email protected]

Deputy Editor-in-Chief The AmCham Bulgaria Magazine reaches a broad audi- Christopher Karadjov ence of AmCham members, leading US, Bulgarian and international companies, US and Bulgarian decision-mak- Senior Editor: ers, all AmChams around the world. Irina Bacheva Subscription is free of charge. If you would like to sub- scribe to AmCham Bulgaria publications, please contact ISSN 1312-935X the AmCham Bulgaria office.

2 AmCham Bulgaria Magazine May 2015 May Magazine AmCham Bulgaria amcham bulgaria

Board of Directors of the American Chamber of Commerce in Bulgaria President Ms. Krassimira Chemishanska Amgen Bulgaria Vice President Mr. Alex Nestor Individual Member Vice President Mr. Daniel Berg European Bank for Reconstruction Contents and Development (EBRD) Treasurer Ms. Petya Dimitrova Eurobank Bulgaria cover story Members Mr. Plamen Zhechev Cisco Systems Bulgaria Mr. David Butts CMS Cameron McKenna EOOD Urgent Help for Healthcare ...... 4 Ms. Diana Pazaitova Fama Consulting Mr. George Brashnarov Nemetscheck Bulgaria Mr. Peter Lithgow Individual Member Healthcare is Complex and Needs Mr. Sergey Koynov Forton International Mr. Solomon Passy Atlantic Club Bulgaria a Strategy and Long-term View Mr. Venislav Yotov AIG Europe Limited (Bulgaria Branch) Ex-Officio Member Mr. Thomas Bruns Senior Commercial Officer, Says Dimitar Dimitrov, CEO, Sopharma Trading . . . . 5 U.S. Embassy Executive Director Mr. Valentin Georgiev

E-healthcare is Fundamental for 3M Bulgaria EOOD . AA KRES EOOD . Abbott Products EOOD . AbbVie EOOD . Actavis Bulgaria EAD . Adecco Bulgaria ltd. . ADM Bulgaria Trading EOOD . Advance International Transport EOOD . AES Corporation . Establishment and Functioning AFA OOD . AGORA-IN Ltd. . AIG Europe Limited (Bulgaria Branch) . AIMS Human Capital . Albena AD . ALD Automotive OOD . All Channels Communication . Alliance One Tobacco Bulgaria . Allied Pickfords Bulgaria of a modern Healthcare System . Alpha Bank Bulgaria . America for Bulgaria Foundation . American College of Sofia . American English Academy . American Research Center in Sofia . American University in Bulgaria (AUBG) . Amgen Bulgaria EOOD . Amway Romania Marketing Srl. . Anglo-American School of Sofia . AON Bulgaria . APOLO Ltd. . Architect Nikolay Says Dr. Krassimira Chemishanska, M.D., Mihaylov Galabov . Arexim Engineering . Ashtrom International Ltd. . Association Srednogorie Copper Industrial Cluster . Astra Zeneca Bulgaria EOOD . AT Engineering 2000 Ltd. . Atlantic Club Bulgaria . Atos IT Solutions MBA Country Director, Amgen Bulgaria EOOD . . . . . 8 and Services EOOD . Attica Media Bulgaria Ltd. . August Research . Aurubis Bulgaria AD . Auto Bavaria Ltd. . AVON Cosmetics Bulgaria . AW-Tronics LLC . Axway Bulgaria EOOD . Baker Tilly Bulgaria . Balkan Star Automotive EOOD . Ballistic Cell Ltd. . Baxter Bulgaria EOOD . BG Radio . BICA International Ltd. . BMG How much drugs cost...... 11 Ltd. . BMW Vertiebs GmbH - Branch Bulgaria . BNP Paribas S.A. - Sofia Branch . BOYANOV & Co. . Braykov's Legal Office . British American Tobacco Bulgaria . Brown-Forman Bulgaria Ltd. . bTV Media Group . Bulgarian American Enterprise Fund . Bulgarian Charities Aid Foundation (BCAF) . Bulgarian Executive Search Association . Bulgarian Property Developments EOOD . Bulgarian-American Commission for Educational Exchange Fulbright . analysis Bulgarian-American Credit Bank . BulPros Consulting JSC . Bulstrad Life Vienna Insurance Group . Business Intellect Ltd. . Business Park Sofia EOOD . C3i Europe EOOD . CAD R&D Centre Progress Ltd. . Carat Bulgaria . Castello Precast OOD . Center for the Study of Democracy . CEZ Bulgaria EAD . Chaos Software ltd. . Cheque Greece: The Drama That Is Not...... 12 Dejeuner Bulgaria Ltd. . Cisco Systems Bulgaria . Citibank Europe Plc, Bulgaria Branch . CMS Cameron McKenna LLP - Bulgaria Branch . Coca-Cola Enterprises Services Bulgaria EOOD . Coca-Cola HBC Bulgaria AD . Coface Bulgaria Credit Management Services EOOD . COLLIERS International Bulgaria . Comverse Bulgaria . Congress By Boyko Vassilev Engineering Ltd. . Construction Management Group . Contitrans M Ltd. . ContourGlobal Maritsa East 3 AD . Curtis / Balkan Ltd. . Dalkia Bulgaria EAD . Danailov, Drenski, Nedelchev & Co. . Delchev & Partners Law Firm . Deloitte Bulgaria EOOD . denkstatt Bulgaria OOD . Deutsche Bank AG . Devin AD . DHL Express Bulgaria Market Liberalization Will Not Necessarily Ltd. . Diamed Ltd. . Dimitrov, Petrov & Co. . Djingov, Gouginski, Kyutchukov, & Velichkov . Dobrev & Lyutskanov Law Firm . Dr. I.S. Greenberg Medical Center . Drujba Glassworks SA . Dundee Precious Metals Inc. . DuPont Pioneer . EcoPack Bulgaria AD . Edenred Bulgaria . Ekoterm Proekt EAD . Ekotoi - Service Ltd. . Ekzotika Mean Cheaper Electricity...... 14 EOOD . EL-A-Project Ltd. . Electron Progress EAD . Eli Lilly and Company . Eltrak Bulgaria Ltd. . EMC Computer Systems Austria GmbH . Emerson Process Management . EnergoService AD . Engineeringservice Sofia By Investor.bg Ltd. . Enterprise Communications Group OOD . EOS Matrix Ltd. . EPAM Systems Bulgaria . EQE Control OOD . Ernst & Young Bulgaria EOOD . ESRI Bulgaria Ltd. . Etap Adress . Eurobank Bulgaria . Eurohold Bulgaria . European Bank for Reconstruction and Development (EBRD) . European Trade Center EOOD . Evrika Commerce Ltd. . EVS Translations Bulgaria . Expat Capital . Experian Bulgaria EAD . FairPlay International . Fama Bulgaria’s Tourism Consulting OOD . Flying Cargo Bulgaria Ltd. - Licensee of FedEx . Force Delta Ltd. . Forton AD . Foundation Glob@l Libraries - Bulgaria . GAEA - Green Alternative Energy Assets EAD . Galardo Real Estate . Gasstroymontaj Falls on Hard Times ...... 16 Jsc . General Electric International . Georgiev, Todorov & Co. . Geostroy AD . Geotechmin OOD . Geotrading AD . Gi Group . GIFTA . Grand Hotel Sofia . GSK . GTC Bulgaria . Harley-Davidson Sofia . Helios Power Jsc . Hewlett-Packard Bulgaria Ltd. . Hilton Sofia . Honeywell EOOD . IBM Bulgaria . ICAP Bulgaria By Marina Tsvetkova JSC . IDC Bulgaria . Ideal Standard - Vidima AD . Incotex Group Ltd. . Industrial Holding Bulgaria . INFORMA . InterConsult Bulgaria Ltd. . Interdean Relocation Services . Interlang Ltd. . Intertek BA . Intracom Bulgaria EAD . Investbank JSC . Investor BG AD . IP Consulting Ltd. . Japan Tobacco International Bulgaria . Jobs. bg EOOD . JobTiger Ltd. . Johnson & Johnson Bulgaria EOOD . Junior Achievement Bulgaria . Kalamaris Group amcham events . Kaliakra AD . Kamenitza AD . Katilin Popov Enforcement Officers . Kempinski Hotel Grand Arena Bansko . Kempinski Hotel Marinela Sofia . Kinstellar Sofia Branch . KPMG Bulgaria OOD . LANDMARK Property Management AD . Lexim Sofia Co. Ltd. . Lindner Immobilien Management EOOD . Lirex BG Ltd. . M3 Communications AmCham Bulgaria Magazine May 2015 Sixty Meetings Take Place Group, Inc. Hill+Knowlton Strategies Associate . Maria Vranovska, MD, MBA . Mars Incorporated Bulgaria EOOD . Marsh LLC. . MBL| Part of the CBRE Affiliate Network . Megatron EAD . Mellon Bulgaria EAD . Merck Sharp at First M2M Event ...... 20 & Dohme Bulgaria . MetLife Europe Ltd. - Bulgaria Branch . Microsoft Bulgaria . Miltech Ltd. . Minstroy Holding Jsc . Mobiltel EAD . Monbat Plc. . Mondelez Bulgaria AD . Moten Sport . Moto-Pfohe Ltd. . Mr. Alex Nestor . Mr. David Hampson . Mr. Jean Talmon . Mr. Nikolay Ouzounov . Ms. Anelia Tatarova . Ms. Gergana member news Valova . Ms. Kalinka Kovatcheva . Ms. Margarita Radeva, CPA . Municipal Bank Plc . Musala Soft AD . NDB Ltd. . Nemetschek Bulgaria . NEXTDOOR Ltd. . Novacon Bulgaria Ltd. . Novotel Sofia . Nu Boyana Film Studios . On Bulgaria Ltd. . Oracle East Central Europe Limited - Branch Bulgaria . Orak Group Europe Ltd. Mtel Educates More than 1000 Children . Orbit Ltd. . Panchim Ltd. . PANDA - IP Ltd. . Pedersen & Partners . Penev LLP . Penkov, Markov & Partners . Pfizer Luxembourg SARL Branch Bulgaria . Philip Morris Bulgaria EOOD . Philips Bulgaria Ltd. . PPD How to Surf The Web Safely...... 22 Bulgaria EOOD . Premier Luxury Mountain Resort . Premier Tours Ltd. . Prestige 96 AD . Provident Financial Bulgaria Ltd. . PSG Payroll Services Ltd. . PwC Bulgaria . Quintiles Bulgaria Ltd. . Radisson Blu Grand Hotel page . Raiffeisen Investment Bulgaria EOOD . Red Devil Catering Plc . Regus Bulgaria Ltd. . Renault Nissan Bulgaria SRL . Right Rental Ltd. . RSM BX Ltd. . S&T Bulgaria EOOD . Sanofi - Aventis Bulgaria EOOD . Sb 3 Harley-Davidson Sofia Holds Accounting and Consulting . Schenker EOOD . Schneider Electric Bulgaria . SECTRON . Sensata Technologies Bulgaria EOOD . Shell Bulgaria EAD . Sherita M Ltd. . Siemens EOOD . SIENIT Holding . Silver Ridge Demo Truck Event ...... 23 Power . Sitel Bulgaria EOOD . Sodexo Pass Bulgaria EOOD . Sofia Hotel Balkan . Sofita Translation Agency . Sogelife Bulgaria IJSC . Sopharma AD . Sopharma Trading JSC . Sportal.bg JSC . Stanton Chase International Bulgaria . Stefan Dimitrov, Norman Realestate Co. Ltd. . Sunfoods Bulgaria EOOD - Development Licensee of McDonald’s in Bulgaria . Sutherland Global Services Bulgaria EOOD . Synchron-S OOD . Tavex EOOD . TBI new members ...... 24 Bank EAD . TechnoLogica EAD . Telelink EAD . TELUS International Europe . The Coca-Cola Company Bulgaria . Tishman Management Company EOOD . Titan Zlatna Panega Cement . TMF Services EOOD . Tocheva & Mandazhieva Law Office . UniCredit Bulbank . UniCredit Leasing EAD . Unimasters Logistics Plc . Unique CEZ Estates . United Bulgarian Bank . Videolux Holding / Technopolis . VISA Europe . Visteon Electronics Bulgaria . VIVACOM . VMware Bulgaria EOOD . VSK Kentavar - IZ Dinamika EOOD . VUZF University Higher School of Insurance and Finance . Walltopia Ltd. . Welcome to Bulgaria . Westinghouse Energy Systems Bulgaria Branch . Bulgarian Fulbright Commission World Courier Bulgaria Ltd. . World Transport Overseas Bulgaria Ltd. . WorleyParsons Nuclear Services JSC . Wrigley Bulgaria EOOD . Xerox Bulgaria Ltd. . Xogito BG Ltd. . Yastrebets Hotel Wellness & SPA . Yatoto . Zlatina Ruseva-Savova, LL.M., MBA . Zobele Bulgaria EOOD . cover story Urgent Help for Healthcare Botched reform, lack of accountability, poor tax collection drag down a vitally important sector

Minister of Health Peter Moskov shakes hands with two great medical experts – professor Nikolay Petrov and Professor Gencho Nachev, part of the Ministry of Health team after a press conference in Sofia.

At first sight, a business generating 7 billion Leva of revenue amount of funding for health services: emergency aid is not per year sounds attractive. It is a substantial amount and the working properly, the number of hospitals is about 400 with business in question is healthcare. But when “Bulgarian” is 13 healthcare establishments having opened this year alone, added to this enterprise, it somehow loses its attractiveness. patients have no rating or criteria whatsoever how to choose That is because it means work with major social implications a hospital by the quality of the service, and the result of treat- in the conditions of tough and strict regulations, trade ment does not match the money invested. regimes, people’s problems and facilities in one of the least changed sectors in the country. Painful statistics

The reforms and the implementation of a working health-in- Bulgaria is a lamentable leader, usually in the top three in the surance model stopped in 2001, when the Russian-originated European Union, in number of poorly treated non-infectious so-called “Semashko system” – where all healthcare estab- diseases that come to a lethal end, such as cardio-vascular, 4 lishments are owned by the state and medical workers are cancer, diabetes and pulmonary diseases, and in child mor- paid public wages – was revoked. Every government since tality. The country is lagging on a few other indicators: nearly then has tried to rein in the constantly rising payments for a third of the population, or 2 million people according to data health services, which however have failed to result in a of the National Revenue Agency, do not pay social insurance healthier population. Whether due to another local or parlia- contributions, despite the fact that they are supposed to be mentary election coming, or indecisiveness, or fear of the mandatory. expected reaction of doctors and patients the ruling parties have failed to muster the political will to reform the healthcare Bulgaria is also a leader in expenses covered with own AmCham Bulgaria Magazine May 2015 May Magazine AmCham Bulgaria sector. As a result, Bulgaria is allocating an increasing resources, i.e., additional cash payment for health services, cover story

medicines and medical devices, no matter whether the patient has health insurance or not. According to the latest report of the World Bank, which was commissioned by the government and delivered in the beginning of the year, the expenses covered with own resources are the biggest source of revenue in the healthcare system, representing 47 percent of its revenue, and, respectively, the biggest expenditure of households in 2012, or nearly 4 billion Leva. The National Health Insurance Fund (NHIF), which manages 40 percent of the expenditures, or 3 billion Leva in 2015, is only the second biggest source of revenue for healthcare establishments. Following are the payments made by the Ministry of Health. Private health insurance companies cover just 70 million Leva or so of the payments made for medical services according to data of the Financial Supervision Commission. Despite the small amount, they co-pay the check-ups and treatment of more than 200,000 people. The payments are provided by private companies as part of the social services for their staff, which is quite indicative of the poor manage- ment of the resources for health and the gaps in the unre- all uninsured people to start paying health installments, the formed health sector. state to gradually start paying real contributions for the 4.5 million pensioners, children and civil servants insured by it, to In his very first months in office, Health Minister Petar Moskov clearly define what the NHIF will pay for, to reduce the num- drew up a strategy for development of healthcare, which was ber of hospitals, to introduce criteria for quality assessment unanimously approved in parliament. Its ultimate goal is for and patient satisfaction that will determine whether a given Healthcare is Complex and Needs a Strategy and Long-term View Says Dimitar Dimitrov, CEO, Sopharma Trading Mr. Dimitrov, it is expected the suade our colleagues from the sector e-healthcare card to be introduced in and these days we have achieved to the HC system of Bulgaria very soon. sign a Memorandum of understanding Do you believe that this measure will and we will start the system very soon, I help the HC system to become more hope. transparent and in favor to the patient? The proposed new health insurance model by Minister Peter Moskov -First of all, let’s wait and see to have the regarding the health payments to be e-card. Unfortunately, we had been hear- distributed both in state and private

ing that from a long time and the latest funds triggered a wide discussion AmCham Bulgaria Magazine May 2015 information was quite contradictory com- among the interested parties. How ing from the different Ministries of our would you comment? Government. But even if we have it, it is only the starting point of an e-health - I can’t support any idea, which is only a platform. The benefits it will provide will partial measurement without seeing the be of limited scope without the rest of the complete plan. Most probably Minister obligatory elements of e-health. What I Moskov has the strategy, but unfortu- mean is that the e-card will support the nately he didn’t share it with the industry. page improvement of the control over the pub- As for the new model, we still miss the 5 lic expenses, but without the e-recipes of Pharmaceutical Wholesalers (BAPW) crucial information what the main and for example, this control won’t be really has started an initiative about introduc- the additional packages include. It is efficient. We will still miss comprehen- tion of unified nomenclature of the medi- extremely strange to introduce such a sive information about the consumption cines in the Bulgarian supply chain. In substantial change in the health insur- of the medicines in the country for exam- BAPW, we have realized long time ago ance model without any practicalities. I ple. that this nomenclature is an obligatory don’t trust also to the style of making pre-condition for having an e-health. changes without any profound analysis In this respect, the Bulgarian Association That’s why, we put a lot of efforts to per- on the economic effect! The business cover story

that are expected to trigger the most heated debates.

Where is the money for health

This year some 1.6 million people employed in the private sec- tor will pay more than 2 billion Leva in health installments to the NHIF. For the over 4.5 million people it insures, the state will contribute 978 million Leva. Besides, it is practically the worst payer, because it covers the contributions of pensioners and children, which are lower.

Together with the 4 billion Leva or so in cash payments made by patients, the gross domestic product allocated for health in Bulgaria is some 8 percent, which is about the average for the EU countries. The problem is that this share is allocated from a modest GDP, while the prices of all medical supplies and medicines are at European levels. The result is evident to Prime Minister Boyko Borissov, Minister of Health Peter Moskov, Minister of everyone who has had anything to do with the healthcare sec- Sports and , Minister of Regional Development tor. Doctors’ work, medical tests and implants have no set and Public Works recently were in Varna for the official opening of a new Cancer Treatment center. values. The clinical paths paid by the NHIF for the most expen- sive treatment – that in hospitals – are underfinanced by an healthcare establishment will have a contract with the NHIF, average of 30 percent. and to make the Emergency Aid Service start working prop- erly. At the same time all healthcare establishments are companies registered under the Commercial Act and logically try to attract Some of the changes in the health-insurance model that more clients. The reason for the high hospitalization rate – one underlie the strategy are already being discussed on second in three citizens stays in hospital every year – is that most reading in parliament, others have been put to public hearing. hospitals compensate the treatment of a serious patient by There are very important details that will be specified in ordi- admitting a few milder cases in order to avoid losses. Despite nances and methods to be issued by the Ministry of Health, that and due to poor management state and municipal-owned however, once the laws are approved and it is these details hospitals have piled up some 400 million Leva debts and

needs figures and needs predictability of - If you mean the idea about the increase through different web channels depend- the government policies in order to plan of the quota of the state in NHIF govern- ing on the specifics & the needs of the the growth of its activities. The current ing, I fully disapprove! This was the particular group. We have an intranet atmosphere in the healthcare system is strangest suggestion made by a right platform as well, because the employees of uncertainty, which our unstable sys- politician and another proposal for reform of a company are one of the most impor- tem needs the least! without any deep analysis behind it. The tant audiences for the success of any current distribution of roles in the Fund is business organization. Which in your opinion are the most not adequate anyway as the business, urgent matters to be resolved (e.g. who is caring the heaviest financial bur- How does the multichannel approach electronic healthcare, emergency den of the system, is not proportionately (social media, e-commerce, patients' care, hospitals restructuring, other)? represented. What to say to make it forums) helps to achieve your com- completely voteless! I think the pany goals? -You can’t say that there is one measure- Government has already all required ment that is more urgent than another! In tools to control the spending of the bud- -First, by facilitating the contact with our our system, which was left for too many get by the National Fund. different target customers and partners. years to go downstream by only short- And after, by making it possible to com- term actions - everything is urgent. The -Does your company have an interac- municate in the global world, where the healthcare system consists of many ele- tive health web platform where you market is global too - even if the com- ments, which are interrelated and self- exchange information with the public pany operates in one country. The most dependent. If you leave one element in a and colleagues? valuable resource now-a-days is the 6 bad condition it will influence the rest. information and its’ processing – to That’s why, we need a strategy, a plan, a -We use different platforms to communi- extract the valuable fact from the huge long-term view on how each of the ele- cate with our different publics. Sopharma data flow. If you don’t cover all informa- ments of this complex system should Trading is a complete healthcare provid- tion sources you might miss a crucial develop and how to achieve that. er and we give services to very different piece of information for your business. audiences – hospitals, pharmacies, That’s why, every company should use Do you approve more centralized healthcare investors, clinical research every possible channel to communicate management of the National Health companies, end patients, etc. That’s in order to receive and to provide correct Insurance Fund?

AmCham Bulgaria Magazine May 2015 May Magazine AmCham Bulgaria why, we target the communication, up-to-date information.

cover story

nearly half of the amount is overdue. Another restriction is that the NHIF. The government, in the person of the Ministry of hospitals have admission limits. While last year they could be Health, finances emergency aid. The NHIF pays for the so- easily breached and the NHIF covered the additional activity, called basic package of medical services. Minister Moskov’s this year the limit is up to 95 percent of the medical services proposal, which was approved by the parliament’s Health performed in 2014. Committee and is now being discussed on a second reading in the plenary hall, envisages the introduction of three packages NHIF’s resources are allocated in such a way that most funds of services: emergency, basic and supplementary ones. are not used for prevention and non-hospital treatment but for hospital treatment. In hospital treatment, as well as in non-hos- Emergency aid has a lot of problems and Moskov’s aim is pital treatment, the most severe cases are underfunded. For the clear: a month ago he signed a cooperation agreement for largest group of patients, for instance those suffering from car- emergency aid reform with Romania, which is a model of dio-vascular diseases who are often old people, the main treat- efficient service. The aim of emergency medics and the 112 ment is pills. The NHIF however reimburses only 25 percent of team has always been to provide clear regulation of which their price on the average, so patients cannot afford them, their cases are truly urgent. Currently emergency aid is called for condition worsens and they often go to hospital. Cardio-vascular a variety of trivial cases when the general practitioner is not diseases are also the most common cause of death. available; false calls do not result in efficient fines for the offenders. As a result ambulances often fail to reach the It is towards covering the treatment of the main causes of patients who really need them and the aim of the ministry is death – cardio-vascular diseases, cancer, some pulmonary to change that, to specify the emergency algorithms and to diseases, children’s and maternal health – that the amend- modernize the service itself following the Romanian model. ments to the health laws are aimed. The aim of the basic package is to provide really free treatment to Three packages of medical aid patients whose diseases are among the main causes of death.

Healthcare in Bulgaria is currently financed by the state and The supplementary package will include non-emergency dis-

E-healthcare is Fundamental for Establishment and Functioning of a modern Healthcare System Says Dr. Krassimira Chemishanska, M.D., MBA Country Director, Amgen Bulgaria EOOD -It is expected the e-healthcare card distributed both in state and private to be introduced in the HC system of funds triggered a wide discussion Bulgaria very soon. Do you believe among the interested parties. How that this measure will help the HC would you comment? system to become more transparent and in favor to the patient? -The new healthcare model and the split in basic, additional and emergency pack- -The electronic healthcare is a priority ages is still in the very initial stage of in EU policies. It is the fundamental existence as a general framework. There basis for establishment and function- are still a lot of questions that need to be ing of a modern healthcare system. Its answered before final decisions are introduction in Bulgaria has been long taken. The model should also be exposed discussed and I hope that the e-health- to a broad public discussion. The details care card will be just the first step of of this model, which still impends to be 8 its implementation. The e-card will specified, will give more clarity on the ensure better patient access and expected outcome. At the moment it is awareness; increased transparency of important to be determined which dis- the system and at the same time will eases will be included in the basic pack- lead to more efficient use of resources age; on what principle; what will be the in the long run. Electronic health level of coverage of therapies and ser- records are key instruments in achiev- -The proposed new health insurance vices in the different packages; how will ing better and more affordable health- model by Minister Peter Moskov the coverage of the additional package care. regarding the health payments to be by private insurance companies look like AmCham Bulgaria Magazine May 2015 May Magazine AmCham Bulgaria cover story

eases for the treatment of which patients can be put on a waiting list. If they do not want to wait, they will have to pay the treat- ment by themselves or through a private insurance company.

Since the ministry will determine the contents of the two pack- ages by means of an ordinance after the law is approved, this is where the most heated discussions can be expected. Many issues still remain unclear: will the current budget of the NHIF suffice to cover the basic package, which diseases exactly will be included in the supplementary package, what will be the period patients can wait to use their right to treatment that ensues from their health installments. Besides, the current legislation has no mechanism to encourage insurance compa- nies to accept patients with serious chronic diseases. The state in turn will hardly have resources to pay supplementary insurance installments for pensioners and children.

The legislative discussion will focus on the rights ensuing from health insurance contributions and the waiting lists. This is expected to be the main issue among medical professionals and patients.

File photo of the newly renovated hospital in the town of Troyan officially opened in April this year. More than BGN 165 million will be invested in health care Quality and patient satisfaction renovations, including ER and Ambulances thanks to Operational Programme “Regions in Growth”. The highest rate of hospital-acquired infections is registered in

and what steps will be undertaken to -One of the main principles in order to tunities for students, young healthcare ensure that the private segment will be achieve better results for patients and at professionals, experienced doctors and ready to cover the financing and the same time ensure efficiency of the patients. The platform is interactive, con- increased expectations in certain thera- healthcare system is the balance taining educational materials, latest arti- peutic areas. In the end, the main ques- between different stakeholders. The cles, videos and possibility for scientific tion should be – does the model result in equal delegation of the main representa- exchange between participants. a better or worse access of patients to tives of the society in NHIF manage- modern healthcare. ment, secures that balance in the sys- -How does the multichannel approach tem. The change to a more centralized (social media, e-commerce, patients’ -Which in your opinion are the most approach could lead to risks, shifting the forums) helps to achieve your com- urgent matters to be resolved (e.g. focus one-sidedly, not taking into account pany goals? electronic healthcare, emergency all aspects of the concerned partici- care, hospitals restructuring, other)? pants. -Amgen focuses on areas of high unmet medical need and leverages its biolog- -The implementation of the electronic -Does your company have an interac- ics manufacturing expertise to strive for healthcare is a must. Benefits associat- tive health web platform where you solutions that improve health outcomes ed to e-health adoption are twofold. On and dramatically improve people’s lives. exchange information with the public AmCham Bulgaria Magazine May 2015 the one hand, they would be related to and colleagues? A biotechnology pioneer since 1980, the modernizing healthcare system by Amgen has grown to be the world’s improving efficiency, safety, quality and -The information channels in the world largest independent biotechnology com- reducing clinical and administrative have changed significantly over the last pany, and continues to develop a pipe- costs. On the other hand e-health would decade. The access to information via line of medicines with breakaway poten- contribute to citizen`s empowerment, internet, the possibility for direct tial. As a pioneer in innovation, Amgen notably in terms of control over their exchange between people has nowa- invests in continuous education and health information and associated ser- days reached a new dimension. scientific exchange through multichan- page vices. The implications for consumer Healthcare professionals, students and nel approach, which gives the opportu- 9 welfare would be dramatic in terms of patients can interact via new innovative nity of each stakeholder to have access increased accessibility, transparency web platforms, reaching out to the latest to the latest breakthroughs in biotech- and competition in the provision of both achievements in healthcare. Amgen nology and medicine. Working closely public and private services. Bulgaria has developed a web platform with medical associations, universities focused on educational modules in social and patient associations, Amgen aims -Do you approve more centralized significant diseases, new treatment alter- to ensure access to modern healthcare, management of the National Health natives, innovations in diagnosis and contemporary education and patients’ Insurance Fund? therapy. It grants support and new oppor- wealth. cover story

the private City Clinic, which is quality certified under the pres- ministry itself will prepare the quality methods for treatment tigious international standards of Joint Commission International assessment by patients. (JCI). Why so? It is not because of some terrible problems there, but because of the fact that other hospitals do not report Too many hospitals their hospital-acquired infections, so that it appears they do not exist. There are no ratings, no data about the success rate of There are almost no long-term care hospitals and rehabilitation treatment and operations, about complications, mortality, infec- centers in Bulgaria. All hospitals are for active treatment, which tions and dehydrated patients. There are no data about the is the most expensive level of healthcare. number of operations a given doctor has performed and their result. The initial idea of the reforms in 1999 was to privatize most hospitals and give their medical teams preference in the share- The aim of the changes suggested by the Ministry of Health buying procedure. That did not happen and actually resulted in is to introduce common quality criteria. There will also be the best doctors in state-owned hospitals starting their own methods for assessment of patient satisfaction of the care private practices and some of them later taking on the risk of they have received. These two assessments will be the basic opening private clinics. Due to the poor payment in state hos- tools of the NHIF for closing contracts with clinics. Currently pitals it is a common practice, rather than an exception, for a it is obliged to close a contract with any newly emerged doctor to have two places of work. At the same time the state medical structure, no matter whether it is needed in the is forced to maintain behemoth hospitals built during social- respective municipality and without any consequences for the ism. clinic in case of patient dissatisfaction or poor service quali- ty. The government’s program does not provide for privatization, probably because it is too belated, nor for any type of public- According to the amendments to the Health Insurance Act private partnership. Instead, the health minister has made it proposed by the ministry, which are being discussed in the clear that he will consolidate state-owned clinics. For a start, Health Committee, NHIF’s contracts with hospitals will be can- that concerns only the merger of the administrative units of the celled in case of poor quality or patient dissatisfaction. The largest metropolitan hospitals. That will allow them to organize quality criteria are currently being drawn up by the Union of common procurement of medicines, equipment and all those Bulgarian Medical Specialists and will be presented to the non-medical services like laundering, catering, cleaning, secu- Ministry of Health by the Bulgarian Medical Association. The rity and so on, thus saving money from economy of scale.

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Medical Doctors from the town of Ruse protesting against the structural changes in their hospital. According to the Minister Moskov plan, a few Bulgarian hospitals AmCham Bulgaria Magazine May 2015 May Magazine AmCham Bulgaria should be reformed in order to cut off administrative expenses. cover story

How much drugs cost The government is trying to reach an agreement with the pharmaceutical industry Since 2001, when Bulgaria started replacing the communist scheme of free state-funded healthcare, until today, when the problems in the sector are brought under the spotlight, politicians have always avoided the tough ques- tions about the healthcare reform by shifting the issue to medicine prices. “Drugs are expensive and we will further reduce their prices” has been the mantra of each newly appointed health minister for the past 15 years.

Medicines are the only health goods that have a clear market price in the health- care sector in Bulgaria. When Bulgaria joined the European Union it adopted the principles of international reference pric- ing and has been for years one of the countries in the EU with the lowest pro- ducer prices of medicines. Medicinal people’s treatment. At the same time The government proposed a legal provi- products make up 0.9 percent of the total innovative medicaments that prolong life sion according to which pharmaceutical healthcare budget, which in turn is just 4 and treat extremely serious diseases companies shall recover funds received percent of Bulgaria’s GDP. are emerging on the market. As a rule from the NHIF if their product is proven they are expensive, because they are to have not been efficient for patient. The But when hospitals are short of money, usually biotechnological products in proposal, however, was not backed by doctors pin their attention on the only which the R&D investment is $1 billion the parliament’s Health Committee. direct payment for patients – that is, on the average. While other developed drugs – and insist the expenses are too countries with large markets have no Another key proposal is something that big. problem allocating public funds for their pharmaceutical companies have been purchase and negotiating discounts with insisting on for years. It will allow the As a matter of fact, Bulgaria has more producers, this is not the case in government and the NHIF in particular to than a million chronically ill people and Bulgaria. close flexible agreements with medicine they are not treated properly, because producers, according to which they will their access to the latest therapies is The most illustrative example of the low share the increase in medicine costs and delayed for financial reasons. Unlike medicine prices in Bulgaria is the con- the deficit created by new expensive other countries, where patients do not stantly increasing parallel trade in medi- therapies. If there is no agreement with know the exact price of medicines as a cines, which amounts to some 300 mil- the industry and a legal provision allow- rule, the National Health Insurance Fund

lion Leva according to unofficial data. ing producers to hold individual negotia- AmCham Bulgaria Magazine May 2015 (NHIF) in Bulgaria does not have enough Because of the price difference between tions with the NHIF, they have no reason resources to fully cover all therapies, so Bulgaria and other EU member states to sign a contract with the NHIF that will patients are compelled to co-pay for there are whole groups of expensive save it money. The existing legislation prescribed medicaments. The level of medicaments that disappear from the allows pharmaceutical companies to co-payment is the highest among EU market and sometimes there is a deficit provide additional discounts to the NHIF countries. Last year the NHIF paid less of life-saving therapies. if they want. In principle very few of them than 1 billion Leva to cover chemothera- do it in order not to compromise their py costs in hospitals and drugs for home Besides, there is no national medicine price on other European markets. treatment of cancer patients; patients page policy in Bulgaria, nor incentives and Generic companies in turn have no 11 contributed 1.7 billion Leva according to stoppers to prevent the prescription of incentive to close agreements with the data from analyst company IMS Health. certain medications that have cheaper NHIF, because their products compete There is hardly a person who would buy generic analogues. Almost all political with at least several other products in a a cancer medicine with their own money parties in the current parliament said in given therapeutic class, as a result of if they do not need it. Every Lev spent by their election programs that they would which their price is constantly falling and a seriously ill patient is an excessive try to implement a pro-generic policy. As they are not a factor for cost overruns. cost and it is quite evident that the NHIF for now, however, the law drafts do not Besides, the NHIF generally covers cannot properly play its role in covering include such a provision. generic therapies only partially. analysis Greece: The Drama That Is Not By Boyko Vassilev

The situation is hopeless but not serious. replies by quoting Franklin D. Roosevelt: Minister Alexis Tsipras and Varoufakis “They are unanimous in their hate for me; drew “the red lines” that Syriza would not Older people remember this 1965 comedy and I welcome their hatred.” cross: no further reduction in pensions, no movie starring Alec Guinness and Robert reforms in the social sector and no VAT Redford. The story is about a selfless Such actions are not good for the delicate increases. German who hides two American soldiers from the Nazis in his cellar during World War II. The host enjoys the amiable sol- ders’ company so much that seven years after the end of the war he still lies to them it is not over. Eventually they manage to escape and find a peaceful West Germany. The title is a variation of an old Viennese saying: “The situation is desperate but not serious.”

Everything about Greece’s case reminds of this curious movie plot. Let’s start with the title.

Yes, when the extreme-left Syriza won the election in Greece and made a coalition with the right-wingers of Panos Kammenos the situation seemed hopeless. The new Greek government threatened not to pay lenders and the European Union threat- Greek Finance Minister Yanis Varoufakis speaks at the Economist`s conference entitled `Europe: the comeback? Greece: How resilient?`, in Athens, Greece, 14 May 2015 ened to stop giving money to Greece if there were no reforms. The most pessi- soul of the financial markets. In half a This time, however, Europe wants reforms. mistic observers predicted Grexit: the year’s time companies, state-owned Berlin has made it clear that Athens will Greek withdrawal from the eurozone. enterprises and individuals withdrew 35 have to provide a detailed list of reforms if billion Euro from the Greek banks. That it is to unlock 7.2 billion Euro worth of Yanis Varoufakis, the extravagant finance immediately resulted in the circulation of rescue funds minister, economics professor, austerity another 10.9 billion Euro outside the critic and bon vivant, stepped on the inter- banks in what Bulgarians call mattress to avert default on debt national stage. Famous for going to gov- banks. That increased the amount of payments. ernment meetings by motorcycle, ending money outside the banks to 41 billion the night in chic bars and spending his Euro, or nearly 25 percent of Greece’s Brussels would prefer that instead of weekends at his wife’s luxury island villa, gross domestic product, compared with a attacking lenders Varoufakis and his col- this share of 6-8 percent in the other European leagues cracked down on corruption, countries. political oligarchy and bloated bureaucra- self-confident professor cy within Greece itself. On the whole, Greek bankers were started lecturing his European colleagues among the losers. The concerns about Purely in political terms, the European without listening too much to their argu- the lack of an agreement with lenders governments also have their “red lines.” 12 ments. Unfortunately, he was faced by the affected them. The German governing elite is facing an elderly, unflinching and highly respected increasingly nervous public opinion that finance minister of Germany, Wolfgang The government started considering would not pay for the wastefulness of oth- Schäuble. extravagant measures like a one-Euro ers. Dutch, Belgian and Scandinavian state fee on deposit withdrawals. There politicians are in the same situation. Here comes a story: Two cowboys draw was a proposal to freeze privatization, their guns. Everyone is waiting for to see including ongoing procedures such as the Here is more. The Spanish right-centrists who will blink first. Schäuble calls sale of the ports of Piraeus and are awaiting an election and they fear that AmCham Bulgaria Magazine May 2015 May Magazine AmCham Bulgaria Varoufakis “foolishly naïve.” Varoufakis Thessaloniki. At the same time Prime each success of Syriza’s hard tactics will analysis

give advantage to its leftist radicals of The biggest concession, however, was German war reparations by relying on PODEMOS. The ruling Italian left of Matteo made by Athens itself. Yanis Varoufakis Germany’s post-war guilt. Until now such Renzi is worried that its own painful reforms was removed from the leadership of the issues have been especially painful for could be discredited. Slovenians, team that holds negotiations with the lend- the liberal German public opinion. But Hungarians, Slovaks, Croats and ers. He was replaced by Euclid Tsakalotos, today Germany bears new responsibilities Bulgarians are also raising their voice: our minister of international financial relations. and reacts to such topics without emotion, pensions are much smaller than the Greek Despite Tsipras’s insistence that Varoufakis debating with facts and arguments. ones and we are not protesting; why would continue to oversee the team, the should we suffer for those who are richer extravagant finance minister got the mes- Berlin is looking for its soul in a Europe than us? So the European policy towards sage and for the first time he did not wave that needs leadership. It is approaching Greece is not a question of honor but of at reporters from his motorcycle after the this leadership carefully – without aggres- sense – and party of political survival. government meeting. sion but without complexes either. The Greek issue is one of its most important But let us recall the saying from the movie. Sources from the European Commission tests – Berlin has no right for mistake.

How does the 1965 movie actually end? It’s a happy ending, albeit with a seven- year delay. The outcome is positive but the characters have quite a tough time while the audience is having fun, because it knows the truth.

The case of Greece has all these ele- ments, except for the audience and the truth. Most probably it will end with a typi- cal European compromise, where every- one will be

equally unhappy

but there will be a result. Well, not as glori- ous as idealists have hoped for but not a failure either as prophesied by the eternal Prime Minister of Greece Alexis Tsipras (right) and Varoufakis (center) during a meeting with journalists in dark Cassandras of the European idea. Athens. Tsipras recently drew “the red lines” that Syriza would not cross: no further reduction in pensions, no reforms in the social sector and no VAT increases. Let me be clear: even the Grexit is not the Yes, the situation may be hopeless but it said that it had become impossible to end of the world. Today the European is not very serious. communicate with Varoufakis. Even the Central Bank and the Eurozone are readi- European administrators and politicians, er for it than yesterday. They are not Why not? Judge by yourselves. The Grexit who had seen everything one can imag- infected with toxic assets – and contagion did not happen immediately – and it will ine, got fed up with being lectured. The will not spread so fast. Besides, at a given hardly ever happen. The “troika” scorned economics professor retained his ministe- moment the exit from the euro may turn by Syriza (the International Monetary rial office, however, or the whole govern- out the less bad option for Greece. Fund, the European Central Bank and the ment of Syriza would have collapsed. AmCham Bulgaria Magazine May 2015 European Commission) was formally If we think of the Bulgarians as the audi- renamed to “the institutions” and remained There were other sighs of relief too. Syriza ence, they are watching the Greek drama at the negotiating table as a partner to the did not become epidemic. At the local with mixed feelings. On the one hand, Greeks. The ports’ privatization was election in Andalusia, which precedes the they do not trust the world bank capital; on general election in Spain, PODEMOS the other, they think they have undeserv- “unfrozen” and activated, was third and the new centrist party of edly suffered more than the Greeks. But CIUDADANOS, which is not generous in they are wrong about both things. Firstly, which in turn prompted a 24-hour warning promises, became the national sensa- the Greeks do not work less – not less strike by sailors and dockers. The tion. than the Bulgarians at least. Secondly, the page 13 European Central Bank revises each world understands the Balkans better week the aid for Greek banks and most Since we started with the 1965 comedy, than the Balkan people think. recently it raised the ceiling of their urgent though, let’s go on with it. You remember, financing by 2 billion Euro to 78.9 billion don’t you: in it, Germany did not turn out The world knows that people in the Balkans Euro: this is the only way it has been help- what the main characters imagined it to are passionate in love, as well as in hatred, ing them since Syriza came to power. The be. It is the same now. that they swear often and act zealously. European Union published a growth fore- But nothing here is as bad as it seems. In cast of 1.8 percent, and the Eurozone, 1.5 Many Greek politicians lied about Berlin. other words, the situation is always hope- percent. Syriza raised the issue about the unpaid less but never that serious. analysis Market Liberalization Will Not Necessarily Mean Cheaper Electricity

It's hard to know what will happen when the market opens up but one thing is sure – prices will be market based

It's not easy to predict how the liberal- ization of the market will affect the price of electricity in Bulgaria although the end user expects that it will lower the price. This was the main theme of a recent discussion on the energy developments in Bulgaria. , Minister of Energy (middle) during a meeting of the Council of Ministers in Sofia. Given the attitudes of the society the electricity companies asked for a production just consumes a lot of ization of the energy market is over. transparent information campaign to energy. be launched similar to the one for the “An energy exchange is a futile effort”, digitization. Temenuzhka Petrova, With the liberalization the prices will be added the former energy minister at Minister of Energy, agreed that the market based, stated Stamenov and the three-party coalition Rumen Bulgarian society should know what called for the energy producers to stop Ovcharov. He commented that the lib- exactly happens on the market and assuming that the price can only rise. He eralization will basically lead to adding stated that a campaign will be launched set as an example the tenders proce- one more link in the chain – electricity once the model of the energy exchange dures where a minimum price is defined traders. is set. and the participants bid above it. CEZ Bulgaria shared their experience The chairman of the Energy and Water “We don't have a minimum price for from the market liberalization in the Regulatory Commission (EWRC) Ivan our production”, commented Stamenov Czech Republic which started in 2002 Ivanov, presented some ideas on the and added that the energy producers and ended in 2006. Before proceeding liberalized market in Bulgaria – all pro- should comply with market conditions. with the opening, however, the first ducers will access the free market, but step taken was removing the “distorted the conditions of the preferential When the market opens up, electricity prices” and the cross subsidies. In agreements will be included in the prices will go up, claimed the energy result there are 15 different electricity addition called “public service obliga- expert Ivan Hinovski. He said the price rates in the country. tions” that will be paid by all users. of the energy producers will rise between 16% and 20% and recom- EVN Bulgaria on the other side recom- Still Ivan Ivanov allowed for the possi- mended either achieving some balance mended a road map of the liberalization bility the grand energy users to be or gradual opening of the market. to be made that includes specific goals stimulated by receiving a maximum and steps to be followed. Bulgaria has 14 limit of the addition above which no He pointed out that the crisis in the the advantage to learn from European public service obligations will be paid. energy sector will continue as we don't experience in the sector and to avoid have any energy strategy. The EWRC mistakes already made. The chairman of the Bulgarian chairman Ivan Ivanov admitted that Federation of Industrial Energy the current energy strategy is inade- According to the third power company Consumers (BFIEC) Konstantin quate as it includes a number of proj- – Energo Pro, the missing thing in Stamenov said that the members of ects that have already been dropped. Bulgaria are discussions over what the trade organization have already A new strategy though will be available kind of liberalization is needed and AmCham Bulgaria Magazine May 2015 May Magazine AmCham Bulgaria invested in energy efficiency but their in 2016 or even 2017 after the liberal- what we should expect.

analysis Bulgaria’s Tourism Falls on Hard Times Among the reasons for the downturn: the situation in Ukraine, devaluation of the ruble and appreciation of holidays abroad for Russians By Marina Tsvetkova

Tourism is one of the most important Tourism Organization show that nearly panies. It is not good for the accom- industries for Bulgaria. Tourism rev- 1.4 billion people on the planet travelled panying business on the Black Sea enue in the country exceeds 6 billion for tourism in 2014. That is 51 million coast either. Leva. The importance of tourism for more than the trips registered the year the economy however is not mea- before. Among the main reasons for the nega- sured only in the money spent by tive results are the situation in Ukraine, foreigners and direct employment in On a local basis, the depreciation of the Russian ruble, the sector. Tourism creates jobs in the appreciation of foreign holidays for 16 construction, transport, the service the travel sector is in panic over the Russians, the restrictions imposed on sector, administration etc. Tourism- data about early bookings for the Russians’ trips abroad, the bankruptcy related activities provide jobs to summer of 2015 made by Russian of more than 20 Russian tour operators nearly 370,000 people and the direct tourists. The drop is 60 percent year and the upsetting of charter programs. and indirect share the industry gen- on year, says the deputy chairperson The situation with the markets of erates in the Bulgarian economy is of the Bulgarian Association of Travel Ukraine, Moldova and Belarus is simi- around 14 percent. Agents, Donka Sokolova. The situa- lar. tion is not good for tour operators, AmCham Bulgaria Magazine May 2015 May Magazine AmCham Bulgaria On a global scale data of the World hotel owners, airlines, transport com- The Ministry of Transport also forecasts analysis

a drop in Russian tourists in 2015 due to the sanctions imposed by the European Union against Moscow. Expert assess- Statistics ments show that in 2015 the trend to a  International tourism in Russia dropped 50 to 70 percent in 2015 according to the reduction in the number of tourists plan- Russian Union of Travel Industry. The reasons are the drop in the ruble and the ning to spend their holidays outside economic crisis; Russia will persist. Experts’ concerns are prompted by the substantial appre-  The biggest drop in Russian tourists is expected to be seen on the expensive ciation of holidays abroad for Russian European markets and the smallest, in cheaper destinations like Bulgaria and citizens. The projected increase is 30 to Montenegro, as well as in countries with cheap all-inclusive packages; 60 percent compared to the prices Russians paid for vacation last year.  Cyprus: the expected drop in Russian tourists is 30 to 50 percent (a 30-percent decrease registered in October 2014); An additional factor for the gloomy fore- cast is the drop in Russian tourists in  Greece: an 18-percent drop in Russian tourists in 2014; tour operators expect Bulgaria connected with the restrictions another 50-percent drop in 2015; for travel abroad imposed on a number of Russian businessmen and public ser-  Russian tourists in Antalya (Turkey) decreased 41 percent in the first two months vants. Recently Moscow introduced new of the year; rules for the use of the social funds that previously financed the holidays of pub-  Foreign arrivals in Bulgaria in 2014 were 9.4 million people. Of those, the share lic servants and their families in Bulgaria. from the EU was 57 percent, Turkey - 12 percent, Russia - 7 percent, Macedonia Other reasons of concern are the active - 5 percent, Serbia - 5 percent, Ukraine - 4 percent. role taken by Moscow in promoting 17.6 million Russian tourists projected this summer, some 8 million are expect- ed to stay in their country.

Draganov added that Bulgaria remains on the map of charter flights from Russia, unlike other destinations. The change in the exchange rate of the dol- lar to the Euro makes prices from Russia more favorable, which may improve the price of the package, because Russia buys its petrochemi- cals in dollars and its main payments are in dollars. To a certain extent that will make up for the depreciation of the Russian ruble. Besides, the visa issue mechanism will be eased this year for Russians who have visited this country before. Russians who have properties The Director of the Institute for Analysis and Assessment in Tourism, Rumen Draganov during a press in Bulgaria will also get visas with a AmCham Bulgaria Magazine May 2015 conference. term of up to three years. In addition, a home tourism and the lower prices should use that, Draganov said. In his ferryboat line from Burgas to offered by the resorts in Russia and words we should not forget the Novorossiysk will also be organized. Crimea as compared to Bulgarian Russians who have properties on the resorts. Bulgarian Black Sea coast, as they As for now Bulgaria can attract relatives and friends. cannot take measures to The director of the Institute for compensate Russian Analysis and Assessment in Tourism, According to Draganov this summer our tourists Rumen Draganov, also expects a country will see page 17 substantial drop in the markets in because it does not have a budget for Russia, Ukraine, Moldova and more than seven million this, while neighboring Turkey will subsi- Belarus. According to him Bulgarian Bulgarian and foreign dize charter flights from Russia, Donka tour operators should focus on last- tourists, Sokolova said. The Turkish state will minute bookings in order to reach last provide 6,000 Euro per charter. year’s levels. As Russians are getting who will create 320,000 jobs. The num- poorer, they will be looking for cheap- ber of Russian visitors will drop by The Bulgarian Ministry of Tourism said it er destinations. Bulgaria in principle 160,000, or 30 percent on 2014, he fore- expected growth in the number of tour- is well positioned in this segment and casts. The expert pointed out that out of ists from other countries, which will analysis

make up for the drop in Russian holiday- experts have calculated. that demand for properties by Russians, makers. which was so active in previous years, Trade turnover between has gone in to a virtual standstill. There The ministry forecasts a rise of some 5 the two states has were almost no deals closed in percent for German tourists. Stronger decreased by nearly a December, January and February, which interest and an increase by some 40 fifth, were the strongest months for purchas- percent are expected from Austria. The es in previous years. forecasts for Lithuania, Latvia and Boyko Kotsev, the Bulgarian ambassa- Moldova also show some 40-percent dor to Russia, said. For the first 10 Some 500,000 properties in eastern jump. Tour operators’ data show that months of 2014 the volume of trade was Bulgaria are owned by Russian citizens, tourists from Poland will increase by 6 about $4.5 billion, including $4 billion of show data of the Generate Consulate of or 7 percent and from the Czech energy imports from Russia. But the the Russian Federation. There are tem- Republic, by 5 or 6 percent. More tour- result was 18 percent lower as com- porarily or permanently residing ists can be expected from the neighbor- pared with 2013, Kotsev said. Russians in the regions of Varna, ing Balkan countries: some 15 percent Dobrich, Shumen, Burgas, Yambol and from Turkey, 15 percent from Greece, 2 Bulgarian exports, which are assessed Sliven. Some of them have moved their to 3 percent from Serbia, and around 3 at some $600,000, have decreased 4 business to Bulgaria. These are usually percent from Macedonia. The forecasts percent. The ambassador believes that real-estate or tour operator companies. are also good for the markets of France the drop is mainly due to the situation in Bulgaria is an attractive place from (a rise by some 4 to 5 percent), Israel Ukraine and the sanctions imposed on Russians from the middle class who are (more than 10 percent), Belgium and Russia, as well as to the condition of the trying to avoid the stress in the big cities. Slovakia (about 20 percent), and Russian ruble. More and more often they are buying Scandinavia (some 3 percent). All that homes in Bulgaria to live here year- will result in a higher number of tourists Statistical data show that round and not just spend their summer in Bulgaria. vacations. They choose mainly coastal Russians are the fourth cities. The residents of Pomorie for That happened already during the win- biggest foreign tourist instance have doubled due to Russian ter. Despite the drop in Russian tourists group citizens taking up residence there. by some 15,000, the total number of Nevertheless real-estate brokers report holiday-makers increased more than 9 in Bulgaria. A total of 650,000 tourists a drop in the number of clients from percent (80,000 tourists) as compared from Russia visited Bulgaria – a drop of Russia in recent months. The main rea- to the year-ago period. just 3 percent compared to 2013. As for son is the crisis in Ukraine, which has now only a part of the Russians who depreciated the Russian ruble. For the On the whole, the annual losses of the have properties in the Bulgarian sum- past 10 years Russian investment in the Bulgarian economy from the Russian mer resorts are expected to come here. Bulgarian economy has reached nearly embargo will reach 200 million Euro, Brokers in the coastal resorts also warn $2 billion. Last year five Russian citi-

18 AmCham Bulgaria Magazine May 2015 May Magazine AmCham Bulgaria Minister of Tourism discussed the upcoming summer season at a meeting with businesses and local authorities in the seaside city of Varna. analysis

EU-member country.

The second group is families with small kids who are looking for a way to move their small business and live easily in Bulgaria. Their business here usually services the Russian community itself.

The third group of buyers consists of Russian-speaking Ukrainians, who are looking for an option to invest part of their money in a safe place. They have reached 12 percent of the buyers on the Bulgarian market as of end-2014 and make up for the withdrawal of low-bud- get Russians. Ukrainians have much higher budgets than Russians – more than 50,000 Euro – and their main crite- rion is buying property in an EU-member state.

Nearly two-thirds (65 percent) of buyers in 2014 had a budget ranging from 45,000 to 60,000 Euro. Those were mainly middle-class Russian citizens. The share of families with low budgets – below 40,000 Euro – dropped rapidly Russian mothers and their kids at the Health and SPA resort near Kamchia, south from Varna. The resort is reserved for Russian tourists and there are no vacancies for the summer 2015. and some of them entirely withdrew, while others moved to the secondary zens received Bulgarian IDs for invest- Lower-budget Russians are in a stand- market where prices are lower. ments of a million Leva each, which still period, while middle-class Russians option is provided for by the Bulgarian were viewing properties as early as in More than 80 percent of Russians con- law. January, which is not typical for the tinue buying holiday properties to use seasonally-based holiday property mar- by themselves rather than let even Regardless of the negative ket. when they are not in Bulgaria and do forecasts for the Bulgarian not use their apartments. All payments holiday property market in Most of the viewed apartments are in are made in cash and without use of 2015 Pomorie, where properties are used borrowed financing. The same trend year round and for permanent residence holds true for the small share of the annual analysis of investment rather than for summer holidays. Buyers Bulgarians who can already be seen on company Green Life shows that mid- are middle-aged families who choose a the market. dle-class Russians were “shopping” last year – despite the political insta- bility in Moscow and the slump of the AmCham Bulgaria Magazine May 2015 ruble. Two-thirds of the purchased properties were for year-round use, while just a third of them were for use in summer.

Nevertheless the year 2014 was tough for the holiday property market because of the natural disasters, which affected the market more than the political crises page 19 and the ensuing economic processes, the company says.

The volume of holiday property deals in 2014 remained unchanged year on year. The level of deals for new modern apart- ments and houses in gated develop- ments remained the same, while deals Bulgarian former Deputy Minister of Tourism Branimir Botev and the Bulgarian Ambassador in Moscow on the secondary market decreased. Boyko Kotsev making statement in front of Russian media during a tourist exhibition in Russian capital. amcham events Sixty Meetings Take Place at First M2M Event

Preparing for the meetings: Maxim Bilyanov, Sales, World Courier confers with Olga Stoichkova, Leasing Manager, Tishman Management Company EOOD (right) and Ivanka Djoleva-Minioti, Manager Corporate & Government On the left side of the photo are Snezhina Kazakova, Managing Director and Communications, Mondelez Bulgaria. Monika Miteva, Sales and Marketing Director, DHL.

An impressive number of sixty four (64) business to business AD, The Coca-Cola Company Bulgaria, Wrigley Bulgaria meetings were held at the first M2M Monthly Executive EOOD, Etap Adress, Unimasters Logistics Plc, World Transport Meeting event organized by the AmCham on April 28, 2015. Overseas Bulgaria Ltd., DHL Express Bulgaria Ltd., Flying The members had the opportunity to meet fellow AmCham Cargo Bulgaria Ltd. - Licensee of FedEx, World Courier members from a specific sector at a speed matchmaking event Bulgaria Ltd. hosted by Novotel Sofia. At the tete-a-tete meetings the par- ticipating companies elaborated in detail on their business All in all, 25 other AmCham members met with the industry activities and upcoming projects. firms sharing positive outcome from this new format with pure business approach. 11 firms confirmed from the focus sectors of food and beverag, logistics and transportation, and couriers, namely: The next M2M executive meeting event will take place in Coca-Cola HBC Bulgaria AD, Devin AD, Mondelez Bulgaria June.

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Nikolay Stoichev, General Manager, Synchron-S meets with representatives of Dessislava Miteva, Country Manager, Regus Bulgaria meets with Alberto AmCham Bulgaria Magazine May 2015 May Magazine AmCham Bulgaria World Transport Overseas Bulgaria Ltd. (right). Melyov, Key Account Manager, Wrigley Bulgaria.

member news Mtel Educates More than 1000 Children How to Surf The Web Safely The lectures are part of the telecom’s “Internet for all” project and were part of the Sofia Science Festival how to protect their personal informa- tion. After the presentation, which was carried out by Marina Marinova from The Center for Entertaining Mathematics, the children visited the “Mtel Digital Café”, where they had practical exercises with various sorts of devices, provided by Mtel.

Except for “Mtel Digital Café”, which is open for the guests of the Festival, Mtel also provided free Wi-Fi, which covers all scenes of the Sofia Theatre, as well as all the Sofia Science Festival tents in the “Zaimov” park, where a variety of experiments, study groups and exhibi- tions took place.

More than 1000 students from 1st to safely. The Sofia Science Festival is organized 7th grade learned what risks surfing on for the 5th time by the British council, the web may pose. This happened During the training, the children found under the patronage of The Ministry of through trainings, specially organized out how the World Wide Web was cre- Education and Science in partnership by Mtel for the Sofia Science Festival. ated, how to use the internet when they with Mtel and is part of the Calendar of The lectures were part of the telecom’s search for various information, how to cultural events of the Sofia Municipality. “Internet for all” project, which started find out new things and in what cases This year the program gathered scien- two years ago and aims to teach the they should be careful. They learned tists from Bulgaria, UK, Ireland, Poland young people in Bulgaria how to use how to protect themselves from viruses and Spain, who demonstrated the the internet and modern technologies and other harmful programs as well as beauty of science.

22 AmCham Bulgaria Magazine May 2015 May Magazine AmCham Bulgaria member news

Harley-Davidson Sofia Holds Demo Truck Event

Harley-Davidson Sofia held Demo Truck Event on May 9 and 10. This European scale event gave the fans a chance to see all the new models of the bikes for the year 2015.

Harley on Tour campaign begun in 2011 with one truck, 20 events and 8 countries. This year it continues with 2 trucks, 33 events and 15 countries. The tour started at the end of March and will go on until the end of August, and the route goes AmCham Bulgaria Magazine May 2015 through Turkey, Greece, Romania, Bulgaria, Serbia, Croatia, Poland, Czech, Hungary, Slovakia, Ukraine, Russia, Estonia, Latvia and Lithuania.

To celebrate the occasion Harley-Davidson Sofia organized „Open House Days“ and gave their fans the chance to test ride the newest models of the brand.

More than 300 test rides were taken during the weekend, and shosse in Sofia. There were demonstrations of safety riding page 23 the day before the official start of the campaign there was a and all attendees were given information on the basic rules presentation for the media where the journalists had the oppor- when riding a bike. Everyone was encouraged to place a spe- tunity to test the bikes themselves. cial sticker with the logo of the campaign „Stop and save the child!". During this event Harley-Davidson Sofia had the opportunity to support the socially responsible campaign of the Bulgarian The visitors were surprised with an open stage with live music National Television called „Stop and save the child!". For the from the bands Casual Threesome, Faces and Sound City. first time bikers joined the initiative of the National Television at Media partners were Radio 1 and Radio Z-Rock. The event a joint event on Saturday, the 9th of May, on Botevgradsko was supported by Jim Beam and Monster energy drinks. new members

CEZ is a leading Czech-owned energy com- The Bulgarian-American pany in Europe, including Bulgaria. It has Commission for Educational been operating in Bulgarian market since Exchange (Bulgarian Fulbright 2005 when it acquired the electricity distribu- Commission) was inaugurated in tion and supply business in Western Bulgaria. 1993, under a bilateral agreement between the United States and CEZ is currently one of the biggest foreign investors in Bulgaria Bulgaria. The U.S. Ambassador to Bulgaria and the Bulgarian with over BGN 2.5 billion of investments made over the last 10 Minister of Education serve as honorary chairpersons of the years. It is also one of the largest employers in the country with Commission. The Commission’s activities include: administering approximately 3500 employees. Since 2005 CEZ has replaced the exchange of Bulgarian and American scholars, students, one-third of the electricity grid in Western Bulgaria and has joined teachers, artists and professionals; educational advising; and dis- to the grid over 70,000 new clients. Two of CEZ companies in seminating information about opportunities for study, research, Bulgaria– the electricity supplier CEZ Electro and power distribu- and teaching in the U.S. tor CEZ Razpredelenie – are listed on the Bulgarian Stock Exchange and are among the best trading stocks on the market. Contacts: Angela Rodel, Executive Director CEZ is part of integrated electricity conglomerate CEZ Group Tel.: +359 2 981 85 67, 980 82 12 which operates in a number of countries in Central and Address: 17 Alexander Stamboliiski Boulevard Southeastern Europe and Turkey. CEZ Group principal business- 1000 Sofia es encompass generation, trading, and distribution of power and heat, as well as coal mining.

Contacts: Petr Dokladal CEO Tel.: +359 2 89 58 480 http://www.cez.bg Address: 140, G.S. Rakovski Str. 1000 Sofia

24 AmCham Bulgaria Magazine May 2015 May Magazine AmCham Bulgaria RIGHT TIME, RIGHT PLACE, RIGHT NOW

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