InvEsTBUlGarIa Agency NEXT STEP TO SUCCESS InvEsT In BUlGarIa “In the decade leading up to EU accession, Bulgaria embraced difficult reforms to build macroeconomic stability and stimulate growth. It built fiscal buffers by accumulating fiscal surpluses between 2004 and 2008, and reduced public www.InvEstbg.GovErnmEnT.BG debt from over 70 % of GDP in 2000 to 16.3 % in 2010, one of the lowest debt levels in the EU today. Between 2000 and 2010, average annual growth reached 4.7 %. During that same period, Bulgaria’s per capita income as a share of the EU average increased dramatically from 28 % to 44 %. Today, Bulgaria remains among the most fiscally disciplined EU member states - an important feat in the context of global and European economic uncertainties”. Bulgaria: Your success story GEnEral InFormaTIon MAKE THE STORY OF YOUR INVESTMENT A SUCCESS IN BULGARIA WITH ITS STRATEGIC LOCATION, ECONOMIC STABILITY AND LOW BUSINESS COSTS FIGURES WHY: 0% corporate tax for investment in areas with high unemployment rate 10% personal income tax 10% corporate income tax 0,080 €/kWh 9,89 €/GJ gas price electricity price for €39,940 billion GDP for industrial users industrial users €414 average €1,1 billion monthly salary FDI inflow €22,228 billion export €24,581 billion import 18,9% government debt official name: republic of Bulgaria area: 110 994 sq.m -1,5 % Population: 7.3 million 0,4% HICP inflation rate budget deficit capital: sofia VAT Time zone: EET (UTc+2) 20% official language: Bulgarian currency: lev (BGn) 12,9% 0,9% real GDP growth Fixed exchange rate: € 1= BGn 1.95583 unemployment rate corporate income tax: 10% Personal income tax: 10% 53 universities, colleges vaT (standard): 20% and higher schools Type of government: Parliamentary democracy 45,5% of the population Proportional 4 years (Parliament) 7% of the population holds representation: 5 years (President) speaks at least one foreign an engineering degree language member of: EU, naTo, wTo 3,37 million labour force 3 Source: National Statistical Institute, BNB, Eurostat 2013 1. InTroDUcTIon 2. InvEsTmEnT EnvIronmEnT InvestBulgaria agency acquaints the reader with the economic facts and figures of Bulgaria, 2.1 Economy information on the business environment, sectors strengths, potential investment projects, vision For the last decade, Bulgaria has been one of the fastest growing Eastern European economies. and strategy for economic development and other useful information. It is characterized by a stable macroeconomic environment, the most favorable tax treatment in the European Union, highly skilled labor force and one of Europe’s lowest operational costs. The strong fiscal performance of Bulgaria for 2013 is confirmed by the one of the lowest budget deficits in Europe: -1.5% and the second lowest government debt to GDP ratio in the EU27. Why iNvEST 2.1.1 Macroeconomic indicators 2007 2008 2009 2010 2011 2012 2013 2014 Q2 iN BUlgaria? real GDP Growth 6.4 6.2 -5.5 0.4 1.8 0.8 0.9 1.6 Inflation (HIcP) 7.6 12.0 2.5 3.0 3.4 2.4 0.4 -1.6 Q2 Unemployment rate 6.9 6.3 9.1 9.2 10.4 11.4 11.8 11.4 currency exchange rate BGn/EUr* 1.95 1.95 1.95 1.95 1.95 1.95 1.95 1.95 Exports FoB (% GDP) 43.9 42.9 33.5 43.2 52.6 52.4 55.8 25.4 Political and low cost of Imports FoB (% GDP) 67.5 67.2 45.4 50.8 58.2 61.1 61.8 29.4 business Government deficit/surplus (% of GDP) 1.2 1.7 -4.3 -3.1 -2.0 -0.8 -1.5 n/a doing business General government gross debt (maastricht debt) 17.2 13.7 14.6 16.2 16.3 18.5 18.9 19.9 Q1 stability *-currency board sources: Eurostat, Bulgarian national Bank, national statistical Institute access to markets government deficit dept comparison 140% average goverment debt (2007-2012)Greece 130% Educated Government 120% and skilled Italy incentives 110% workforce 100% Portugal Belgium 90% 80% Iceland France Ireland Hungary Germany UnitedKingdom 70% Malta Austria Cyprus Netherlands Bulgaria offers great advantages to investors: Inflation rate, annual change of 0.4% (2013) 60% Spain Poland Unemployment rate of 11.8% (2013) 50% No currency risk - local currency (BGn ) is pegged to Turkey Finland Strategic location Slovakia Latvia Sweden Norway 40% CzechRepublic Denmark Bulgaria is located at the cross-road of Europe and asia Euro (€) Slovenia 30% Lithuania Croatia Bulgaria is in the center of the south East Europe market - General government surplus for the years before 2009 Romania a high growth market with 122 mn inhabitants (-1.5% for 2013) 20% Bulgaria Luxembourg Bulgaria is the only country in Europe with a credit rating Bulgaria is a suitable export base for serving the region, 10% Estonia the EU, russia and cIs, the middle East and africa upgrade by moody’s since the beginning of 2010 0% Skilled labor force, available at Europe’s most competitive -13%-12% -11% -7%-6% -5%-4% -3%-2% -1% 0% 1% 15% Macroeconomic and financial stability: salary levels Real GDP growth rate of 0.9% (2013) Low operational costs average budget deficit/surplus (2007-2013) 4 5 2.2 labour market 2.2.1 labour force approximately 3.3 million individuals or around 54 percent of the population aged 15 and over comprised the country’s labor force in 2013. while the Bulgarian labor force is generally highly skilled and well educated, wage levels in the country are significantly lower than those in western Europe, creating significant upside potential for labor-intensive investments. Structure of labour force by age Structure of labour force by level of education 2.1.2 Country credit raitings 7% 10.9% lower secondary or less Bulgaria was the only European country with increased credit rating by moody’s in 2010 and 2011. 23% 59.1% Upper secondary 28% Country credit ratings comparison Q2 2014 27.9% higher 24% country s&P rating moody’s rating Fitch rating TE rating* 17% czech republic aa- stable a1 stable a+ stable 79.28 stable 1% Poland a- stable a2 stable a- stable 67.41 stable Bulgaria BBB- Stable Baa2 Stable BBB- Stable 54.24 Stable croatia BB+ stable Baa3 negative BBB- negative 48.85 stable source: national statistical Institute macedonia BB stable BB+ stable 47.5 stable romania BB+ stable Baa3 negative BBB- stable 47.35 stable Turkey BB+ stable Ba1 Positive BBB- stable 44.58 stable Hungary BB stable Ba1 negative BB+ stable 42.58 stable serbia BB- negative BB- negative 40 negative Unemployment Ukraine B negative caa1 negative B stable 28.75 negative The unemployment rate is the ratio between the but who do not actively look for a job, because they do unemployed persons and the economically active * The TE credit rating is driven by a model created at Trading Economics. not believe they will find one. source: Trading Economics rating - http://www.tradingeconomics.com/country-list/rating population (the labour force). The long-term unemployment rate is the ratio between the number of the long-term In 2013 the unemployment rate decreased by 0.4 percentage 2.1.3 Ease of doing business unemployed persons (unemployed for one or more years) and point in comparison with the previous year and stood at 11.8%. This ranking of the world Bank considers the quality and attractiveness of the business environment. Economies are ranked the economically active population. Discouraged persons are The long-term unemployed (unemployed for one or more years) on their ease of doing business, from 1-183, with first place being the best. a high ranking on the ease of doing business the persons, who are not in the labour were 55.2% of all unemployed persons. index means that the regulatory environment is conducive to the operation of business. The rating factors are: political and force (economically inactive population) and who want to work, institutional environment, macroeconomic stability, market potential, private entrepreneurship support, taxation system, finance, enforcing contracts, the starting and closing of a business, labour market and infrastructure. Unemployment rates and long-term unemployment rates ranking on the ease of doing business 14 hungary 54 12 Bulgaria 58 10 italy 65 8 Turkey 69 6 greece 72 4 romania 73 2 Czech rep. 75 0 2009 2010 2011 2012 2013 Serbia 93 long-term unemployment rates (%) 1 rank 185 Unemployment rates (%) source: Doing Business 2014, 11th Edition 6 7 2.2.3 Education Bulgaria has highly-qualified, well-motivated, flexible and multilingual labour force 53 universities, colleges and higher schools 500 vocational gymnasiums and colleges 25% of population holds university degree 7% of the workforce has engineering degrees 46% from the population in Bulgaria speak at least one foreign language English language studied by ≈ 85% of students Enrolled Graduates Total students tertiary education 2013/2014 2013/2014 277 239 66 423 Professional bachelor 15 072 3 462 Bachelor and master 262 167 61 759 Qualification and scientific degree ‘Doctor’ 6 055 1 202 2.2.2 Wages Distribution of the universities in Bulgaria average growth of annual wages Gross annual wages and salaries are the remunerations paid regularly to the employees by the employers before the deduction of any tax and social security contributions payable by the employees and withheld by the employers. silistra The average annual gross wages and salaries are calculated through dividing the total amount of wage and salary costs accrued during the reference year by the average annual number of employees under labour contract excluding those on maternity leave. ruse Pleven svishtov veliko Tarnovo shumen varna 30 Pravets Gabrovo 25 20 Universities: sofia Pernik multiprofiled 15 Burgas Technical 10 stara Zagora medical 5 Plovdiv Economical 0 real wages and salaries (%) Pazardzhik -5 2007 2008 2009 2010 2011 2012 2013 Q1 2014 Blagoevgrad smolyan as per data provided by the Bulgarian national Bank, the average gross monthly salary for 2013 was EUr 414.