Issue-46-February-2004.Pdf

issue 46 february 2004

FinanceFinance inin FocusFocus TheThe EmbassiesEmbassies ofof MoneyMoney ChainChain ReactionReaction AreAre BulgarianBulgarian PoliticalPolitical PowersPowers Disintegrating?Disintegrating?

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American Chamber of Commerce in Bulgaria

Business Park Sofia, Mladost 4 Area, Building 2, Floor 6, 1715 Sofia Tel.: (359 2) 9769 565 Fax: (359 2) 9769 569 homepage: www.amcham.bg e-mail: [email protected]

editorial

Dear Members and Friends, And the winner is...

...You, my dear reader. You are one of the select few in Bulgaria, and in the world, I am pleased that you have chosen to read AmCham Bulgaria Magazine. For the receiving a balanced, complete and good- first time in our 10-years history of the Chamber we are launching such a complete looking publication, chockfull of valuable and diversified publication. It is our aim to bring you the most interesting business- information – AmCham Bulgaria Magazine. related topics and coverage of issues in Bulgaria. It arrives at your desk for free, because its Our ambition is to transform the magazine into the preferred media for the English- mission is not to cash out on readers, but speaking audiences in Bulgaria. Businessmen, politicians and top-level decision instead help them make money. makers should find valuable information, a forum for discussions and opportunities to expand their knowledge on the business environment from our publication. In the world of print media what matters most is readers’ trust. Your trust. When it The success of the magazine will strongly depend on you, our members. It is not only comes to magazines, publishers habitually whether you will support the publication financially with advertising, which is by all put it that way, “Every month so many means a win-win proposition. It will matter primarily if you contribute with ideas and thousands, or millions, vote for us.” suggestion on how to make the edition interesting and useful, if you can provide us Readers don’t cast ballots, they put their with fresh news and insightful opinions, share your experience and expertise, let us in money where they trust it will do them on successful business practices and tell us about the best in your corporate life. most good. Month after month people The success of this new endeavor will also depend on our publisher. Outsourcing hand over their dollars, pounds or euros to the publishing of the AmCham Magazine is our new approach. After a long and the magazine of their choice, retaining the competitive review of different offers, the Chamber decided to outsource the mag- right to be informed. azine’s writing and production to Milen Marchev. The latter has been the most recent publisher of the magazine, and though we have been happy with the cooperation so far, we are looking forward to a new promising development. The cachet of АмCham Bulgaria Magazine is How will it look like from now on? even more complex and The new content of the magazine will include three main directions: responsible. We must • AmCham Events and Member News. This section will cover the current ver- win your vote with sion of the magazine, but in more detail. something more than • AmCham Business. Main business and social events of the month which are the usual cost-benefit somehow connected with AmCham activities will be included in this section. analysis of an attractive cover price vs. We will focus on legislation issues, political events, overview of key eco- interesting contents. The magazine is not nomic reforms, privatization, business opportunities, tax policy and finance, sold to you, but you are paying for every export and import regime, macroeconomic analysis and forecasts. issue much more than a dollar or two. You • AmCham Sector. Here we will report on a particular business sector every – our readers – provide AmCham Bulgaria month. Finance, information technologies, real estate, tourism, agriculture, Magazine with your knowledge, insights, infrastructure, energy, pharmaceuticals and so on will be covered in detail business skills, know-how, and experi- AmCham Bulgaria Magazine February 2004 by expert opinions, with facts and figures, and best-practice examples. ences. You are giving us a lot, so the magazine can return it many-fold in the form of In conclusion I would like to remind you that the magazine is not the only AmCham well-written, interesting and useful texts medium and means of communication between us. You have the AmCham web site, that will inform you and promote your the Daily and the Yearbook. Please take advantage of all opportunities we are offer- endeavors. ing to inform you. Let us know about your successes and developments, promote your company and expand your contacts. I hope that this magazine will fulfill your If you want to host an event, discuss ideas for seminar or roundtable, seek an expectations and will be worthy of your page opportunity to organize a conference, sponsor a cocktail or just share opinions on time. I expect we will be winning your vote 1 how to increase member benefits, please contact our AmCham office. We have a month after month. very committed Board of Directors and a devoted AmCham team, whom I person- ally want to thank from my very heart for their effort and contribution. Since this is the first issue of the new edition for 2004, let’s wish success to this Very truly, endeavor and to all of us.

Have a happy and prosperous 2004! Milen Marchev, Best regards, Editor-in-Chief, Valentin Georgiev AmCham Bulgaria Magazine Executive Director, AmCham Bulgaria contents

Board of Directors of the American Chamber of Commerce in Bulgaria President Kenneth Lefkowitz Lefkowitz & Co./BalkanData Vice President Stefan Dimitrov Allied Pickfords Contents Treasurer Dennis Fiehler Bulgarian American Enterprise Fund Borislav Boyanov Borislav Boyanov & Co. David Hampson US Meds – Bulgaria Janet Heckman CITIBANK Roumen Mihailov 3M (East) AG Friedrich Niemann Hilton Sofia financial sector Georgi Randelov IBM Bulgaria Maria Shishkova AIMS Human Capital Elitsa Tsaneva Ideal Standard EastEuro Link Conference: Maria Vranovska Eli Lilly Economic Freedom is Vital Ex-Officio Member Reginald Miller US Commercial Attache for Successful Reforms Executive Director Valentin Georgiev by Irina Bacheva ...... The Embassies of Money 3M (East) AG . AA KRES EOOD . ABB (Asea Brown Boveri) Ltd. . AbC.R.O. - Bulgaria EAD . Abela Airport Services Ltd. . Abrotea Bulgaria AD . Accor Foreign Banks in Bulgaria Services Bulgaria . Acsior . ACT Soft Ltd. . Address Bulgaria Holding Stabilize the Financial System JSCo.- A real estate company . ADIS Ltd. . AES Corporation . AFA OOD by Marina Tzvetkova ...... 08 . Ahrend Profesionalni Interiery S.R.O. . AIG Bulgaria . AIG Life Bulgaria . AIMS Human Capital . Albena Joint Stock Company . Alexandrov Ltd. . There is a Substantial Support Allan Collautt Associates, Inc. . Allied Pickfords Bulgaria . American Bar from the Banking Sector to the Economy Association and CEELI . American College of Sofia . American Construction An interview with Athanassios Petropoulos, Products JSC . American University in Bulgaria . Amylum Bulgaria AD . Executive Director of Bulgarian Post bank ...... 11 Anglo-American School of Sofia . Anton Preslavski, Liebert Hiross . APIS - Hristovich Ltd. . APOLO Ltd. . Aries Commerce . Association of Bulgarian Broadcasters - ABBRO . AT Engineering 2000 Ltd. . AUBG - Elieff Center . . . amcham event for Education and Culture. Avendi Ltd. AVON Cosmetics. Bulgaria. Ltd Balkan ES Team Ltd Balkan News Corporation Plc. Balkan Star Baxter Bulgarian National Bank Governor Expects AG . Bayer Bulgaria . BearingPoint LLC . BG Radio . BICD - International . . 5.3% Growth of GDP...... 14 Bank for Commerce. and Development . Bodyguard-Fire-K. Ltd. Borislav Boyanov & Co. .Bristol-Myers Squibb BTC-NET Ltd. Bulgarian. American Enterprise Fund Bulgarian Charities Aid Foundation (BCAF) Bulgarian nominals Post Bank . Business Links . Business Park Sofia EOOD . Business to Business . CA IB Bulinvest . Cable Bulgaria . Carlson Wagonlit Travel . First Bulgarian Banknotes Cefin Bulgaria EOOD . Center for the Study of Democracy . Cilag AG Printed in England 125 Years Ago ...... 16 International (Johnson & Johnson) . Cisco Systems Bulgaria . Citibank, N.A.- Sofia Branch . City University . Coca-Cola Bulgaria EOOD . Coca-Cola H.B.C. Bulgaria S.A. . COLLIERS Continental Properties . Combi Trans amcham interview Bulgaria Ltd. . Compass Translation Services . ConsulTeam . Contex Drouzhba Ltd. . Corstjens Worlwide Movers Group . CPM International Ltd. LARBA Act Helps Businesses Fend . Cresta Marketing S.A. . Curtis / Balkan Ltd. . DeConi M&A . Deloitte off Government Intrusion & Touche . DHL International (Bulgaria) Ltd. . Diageo Bulgaria Ltd . DIMON Bulgaria . Djingov, Gouginski, Kyuchukov, & Velichkov . Domaine Boyar AD Interview with Valeri Dimitrov, Chairman . Don & Co. . Dow Europe GmbH Representation Office . Dr. Emil Benatov of Parliamentary Economic Policy Committee & Partners . Effekten Und Finanz - Bulgaria EAD . Eli Lilly and Company . by Irina Bacheva ...... 18 Elido . Ellen Ruth Greenberg, Ph.D., Dr. I.S. Greenberg Medical Center . Elta Consult Ltd. . Emerson Process Management AG . Engineeringservice Sofia Ltd. . Entergy Wholesale Operations . ERATO HOLDING PLC . Ernst & Young Bulgaria . EURO RSCG New Europe Sofia . Expo Team OOD . . bulgarian politics First Global. Health Corporation. Flying Cargo Bulgaria Ltd. - .Licensee of FedEx Force Delta. Ltd. General. Electric International. Genmark Chain Reaction Automation Bulgaria. GEO - CAR Ltd. Glaxo. SmithKline Goleminov & Goleminov. Group 4 .Securitas (Bulgaria) Ltd. Hayhurst. Berlad Robinson. Are Bulgarian Political HEBROS Bank .AD Hewlett-Packard. Bulgaria. EOOD Hilton Sofia . Powers Disintegrating? Honeywell EOOD Horizon IBM Bulgaria Ideal Standard Bulgaria by Petyo Tsekov ...... In Time Ltd. . Infoguard - Stefan Nedkov . ING Bank Sofia Branch . Interamerican Bulgaria Ins.Co . Interbrands Marketing & Distribution Inc. . Internet Securities Bulgaria EOOD . Interpartners Plc. . IP Consulting Ltd. . . . analysis Junior Achievement. Bulgaria Kolbis International. Transfer Corporation . KPMG Bulgaria Kraft Foods Bulgaria Lefkowitz & Co / BalkanData Bulgarian Financial Sector Overview Lexim Sofia Ltd. . Lindner Immobilien Bulgaria OOD . Lirex BG Ltd. . Lowe Swing Communications . M & M Air Cargo Service BG Ltd . M3 by ISI Emerging Markets ...... 24 Communications Group, Inc. A Hil & Knowlton Associate . Maersk Bulgaria Ltd. . Magnetic Head Technologies . Management Systems International . EU Membership Card Costs Dearly Marsh EOOD . McDonald's Bulgaria . Merck Sharp & Dohme IDEA Inc. . Bulgarian companies doing nothing yet to get Michael Delia, European Bank for Reconstruction and Development (EBRD) . ready for the western competition? Microsoft Bulgaria . Miltech Ltd. . Moto Pfohe Ltd. . Motorola Bulgaria by Juliana Boncheva...... 26 EAD . National DISTRIBUTORS . NDB Ltd. . NDT Equipment Supplies LTD . Net Is Ltd. . NET IS SAT Ltd. . New-I . Nexcom Bulgaria EAD . Nokia Bulgaria EOOD . Oracle East Central Europe Limited - Branch Bulgaria . Pain D'or Ltd. . Pfizer H.C.P. Corporation . Pioneer Semena Bulgaria EOOD 2 . Popov Legal Office . PricewaterhouseCoopers . Prima Soft . Procter & Gamble Bulgaria . ProSoft . Radisson SAS Grand Hotel . Rockwell/Intelpack . RTC Mobikom . S&D Chemicals Bulgaria . S&T balkans Bulgaria . Sante International OOD . Schering - Plough Central East - Bulgaria . SEAF Trans-Balkan Bulgaria Fund . Sheraton Sofia Hotel Balkan Is the Rage of the Balkans . Sherita M Ltd. . Smartcom – Bulgaria AD . Sofia Echo Media Ltd. . Stefan Dimitrov, Norman Management Company Ltd. . Student Labour Office Coming Back . Sun Spree Holidays . TechnoLogica . The Atlantic Club of Bulgaria . by Boiko Vasilev ...... TM Auto Ltd. . TMF . Tumbleweed Communications . Unimasters Logistics Group Ltd. . Unisys Bulgaria Branch . Urban 3000 Ltd. . US Meds - . . . . from the corner office Bulgaria AD Via Expo Ltd. Videolux Ltd.. VOCA Consult. Ltd.

AmCham Bulgaria Magazine February 2004 February Magazine AmCham Bulgaria Westinghouse Energy Systems Bulgaria Branch WizCom Ltd. Wrigley Bulgaria . Wyeth-Whitehall Export . Xerox Bulgaria Ltd. . Zlati Dinev Studio Big Ad Budgets in Small Bulgaria? by Milen Marchev ...... 30 contents

issue 46 february 2004

AmCham NEWS events • member news • new members 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 arti- General Assembly Re-elects cles in the AmCham Bulgaria Magazine Mr. Dennis Fiehler and Welcomes express the opinions of the authors and do Mrs. Maria Vranovska on BoD ...... not necessarily reflect the position of the American Chamber of Commerce in Bulgaria.

Publisher Economist Conferences: American Chamber of Commerce in Bulgaria From Government Reforms Business Park Sofia, Mladost 4 Area to Better Business Results – Next Steps for Bulgaria ...... 34 Building 2, Floor 6, Sofia 1715, Bulgaria e-mail: [email protected] Eli Lilly Granting Scholarships ...... 34 www.amcham.bg

M&M Handles Aid Delivery to Iran ...... 35 Editor-in-Chief Toastmasters Club: Do People Really Keep Their New Years Resolution? ...... 35 Milen Marchev How To Survive In The Corporate World ...... 36

Upcoming AmCham Events...... 36 Deputy Editor-in-Chief: Christopher Karadjov

Editors: Irina Bacheva Stella Savova

The Way Christmas Parties Layout & Design Free the Spirit of Merriment ...... Milen Marchev There is a Hidden Potential in Convention Business for the Economy of Bulgaria Friedrich W. Niemann, Chairman of the Bulgarian Convention and Visitors Bureau ...... 40 Printed by: BAGRA Ltd, www.bagra.net ® Citibank, N.A. – Sofia Presents: CitiDirect Online Banking ...... 41 Writers: new members Boiko Vasilev, Diana Popova, Kalina BICD – International Bank for Commerce and Development ...... 41 Garelova, Marina Tzvetkova, Petio Tsekov, Peter Gavrilov, Yuliana Boncheva

Advertising AmCham Bulgaria Magazine February 2004 AmCham Bulgaria: travel Stella Savova, [email protected] Bansko: How Europe Came to Pirin AmCham Bulgaria Magazine: by Petar Gavrilov ...... 43 Milen Marchev, [email protected]

The AmCham Bulgaria movies & dvd Magazine reaches a broad audi- page DVD Reviews: Pirates of the Caribbean: the Curse of the Black Pearl ence of AmCham members, 3 Charlie: The Life and Art of Charles Chaplin ...... 46 leading US, Bulgarian and international companies, US and In the Movies: Runaway Jury ...... 46 by Kalina Garelova Bulgarian decision-makers, all AmChams around the world. art Subscription is free of charge. If Erotic Drawings Adorn Financial Institution you would like to subscribe to by Diana Popova...... 47 AmCham Bulgaria publications, please contact the AmCham Bulgaria office. humor ...... 48 financial sector

EastEuro Link Conference: Economic Freedom is Vital for Successful Reforms

High level officials gather in Sofia for the economic future of the region by Irina Bacheva Rumiana Toneva

Plamen Panayotov, Deputy Prime Minister of Bulgaria talks to IMF Resident Representative in Bulgaria James Roaf and Governor of the Bulgarian National Bank, Mr. Ivan Iskrov during the EastEuro Link Conference.

The successful economic reforms The two days conference focused on countries remains grey economy. If the required for the EU membership of the latest macroeconomic develop- necessary measures were taken 4 Central and East European countries ments, fiscal policies and opportunities against it, there would be a significant depends on the economic freedom in of entire region. The major topics con- GDP growth, is the common opinion. those countries. That was the focus, centrated on the overview of the which united the participants in the region’s latest monetary policies, bank Key government officials who drive the annual EastEuro Link Conference restructuring, foreign exchange, multi- economies forward in emerging finan- “Growth towards Synergy: lateral lending, political risk insurance, cial markets of Central and Southeast Restructuring Macroeconomics and banking reforms, access to interna- Europe were speakers at the event: Finance in Southeast & Central tional debt markets. The Conference Milen Veltchev, Bulgarian Minister of

AmCham Bulgaria Magazine February 2004 February Magazine AmCham Bulgaria Europe” in Sofia, held on January 29- participants agreed also that one of Finance, Nikola Popovski, Minister of 30, at Sheraton Sofia Hotel Balkan. the biggest issues for South European Finance of Macedonia, Ivan Miklos, financial sector

Deputy Prime Minister and Minister of Finance of Slovakia, Plamen Panayotov, Deputy Prime Minister of Bulgaria, Ivan

Iskrov, Governor of the Bulgarian Bacheva Irina National Bank, Mugar Isarescu, Governor, National Bank of Romania and James Roaf, Resident Representative of IMF in Bulgaria. Also at the conference presentations were introduced by Marta Postula, Ministry of Finance, Poland, Pavel Filipec, Ministry of Finance Czech Republic and Jiri Pospisil, Central Bank of Czech Republic, Ljubinko Jankov, National Bank of Croatia, Alexander Kockerbeck, Moody’s. Minister of Finance Milen Velchev before AmCham stand together with Deputy Prime Minister of AmCham Executive Director Valentin Georgiev Slovakia Ivan Miklos: Economic reforms - an advantige for Eastern Europe AmCham Panel

The EU applicant countries have excel- From the Regional lent positions to move on with the economic reforms, which could even turn to be an advantage in comparison to Perspective: The Role of their West European partners, when fulfilling the decisions of EU forum in the Banks in Bulgaria Lisbon, according to Mr. Ivan Miklos, Deputy Prime Minister and Minister of Amеrican Chamber of Commerce also participated in the Finance of Slovakia. During the Lisbon forum with its own panel. AmCham President Kenneth Lefkowitz presented the main activities of the Chamber and pointed that it unites banks and financial institutions, law and consultancy firms, marketing and advertising companies, manufacturing and and transport firms. Mr. Lefkowitz accent- ed also on the good macroeconomic indicators of Bulgarian reforms. “The process of bank privatization has been completed successfully in the country and it could be felt by the improving bank service in Bulgaria”, said the president. The other speaker Athanassious Petropoulos, Executive Director and Member of MB of PostBank AD addressed the audience with a speech on the role of banks in creating growth. He pointed out four important roles of the banks: AmCham Bulgaria Magazine February 2004 Funding providers: Accounting for the undeveloped Capital markets, Banks bear the full burden of providing funding for all stages of development of the businesses; Accession and Foreign Programs: On most of accession and foreign financial assistance programs the banks serve not only as intermediaries in the funding process but also as providers of additional funding, bridge financing and direct page know-how assistance in the business planning and invest- 5 ment process. Business Discipline and Transparency: Being among the most strictly regulated sectors in the economy, the banking system is the major promoter of financial discipline and reporting transparency in the corporate clients, which is a major requirement in the EU accession process Expertise and Advisory: The banks have extensive international contacts and expertise which they have started sharing with the clients, facilitating the development of foreign trade and introducing best business practices. ■ financial sector

EU forum, the leaders of the Fifteen EU • Improving the competitiveness of and to achieve higher efficiency of members set up the strategic goal for Bulgarian economy resources’ allocation. Bulgaria’s EU: “to become the most competitive • Generating high and sustainable preparation for EU accession, and the and dynamic knowledge-based econo- economic growth resources required for co-financing of my in the world, capable of sustainable • Improving the standard of life of projects under the EU pre-accession economic growth with more and better Bulgarian citizens programs (PHARE, ISPA, SAPARD) jobs and greater social cohesion by • Optimizing the real and public are also taken into consideration. 2010.” sectors • Membership in NATO and in the Mr. Nikola Popovski, According to Mr. Miklos, Europe faces European Union. Minister of Finance, structural issues, like huge taxation Macedonia: burden, involvement of state in the Bulgaria has achieved one of the Fighting for stable country economy, lack of flexibility on the labor highest rates of economic growth not economics market. All these problems could only in global terms but among SECE become familiar to Eastern Europe, countries as well. The average GDP The Republic of Macedonia under- but they also could be avoided if eco- rate for the period 2000 – 2002 is went a process of complex economic nomic reforms conducted properly, 4.8% even on the background of a and political reforms, aimed towards likewise in Slovakia, Mr. Miklos added. not quite favorable external environ- building modern democratic society The ways of achieving are to apply an ment. This growth is based on an with market-oriented economic sys- appropriate macro-economic policy increased domestic demand, with its tem. mix; modernize the European social key triggering forces being individual model by investing in people; preparing consumption and investment, which The assessment of the three basic the transition to knowledge-based have been stimulated by the increase components of the integrated devel- economy and society by stepping up of employment, disposable income opment concept (sustainable eco- the process of structural reforms for and bank credits. One of the major nomic, social and regional develop- competitiveness, completing the inter- challenges facing Bulgarian economy ment), points out that the biggest lag nal market and introducing better poli- is the negative balance of the current is at the economic component, cies for the information society and account. Current account deteriora- although the other two components R&D. tion is related mostly to the trade bal- show major lag as well. ance. The reasons therefor include Ivan Miklos introduced the basic phi- the slow growth in the countries that Actually, the so-far applied economic losophy in the Slovak very successful are Bulgaria’s main trade partners concept in the Republic of tax reform, which was aimed at light, and the increase of domestic credit. Macedonia was much more success- non-distort, simple and transparent tax However, we should also take into ful in achieving and maintaining price system. Main targets are at elimination account the fact that the share in stability and changing the ownership of the existing weaknesses of the tax imports of raw materials, materials structure than in achieving efficiency law; achieving the highest possible and investment goods is considerable. in restructuring, functioning of market degree of tax fairness by taxing all institutions and dynamic economic types and all amounts of income As regards tax policy the amend- development. The case of Macedonia equally; creation of business and ments envisaged are targeted at is a striking example that the devel- investment friendly environment and establishing a sustainable environ- opment issue is much more complex elimination of use of tax policy as ment for business development. than the achievement of price stabili- instrument for achieving non-fiscal Amendments that will leave to the ty, which is necessary, but not suffi- goals. At the end, the Slovak minister business more than BGN 150 million, cient condition for dynamic growth. of finance pointed the challenges for which we expect Bulgarian entrepre- the future: further progress in structur- neurs to invest in their competitive- The disciplined monetary strategy of al reforms, rapid entry into EMU and ness. targeting the exchange rate enabled improvement in creating conditions for stabilization of the inflation expecta- a stable advance of knowledge econ- Tax policy aims at stimulating busi- tions among economic entities, omy. ness activity, investments and eco- whereby the price stability was main- nomic growth. The Corporate Income tained also in the period of political Milen Veltchev, 6 Tax rate will be decreased signifi- and security crisis in the country. Minister of Finance, Bulgaria: cantly - from 23.5 to 19.5% in 2004. Regarding price stability, the Republic Sustainable Growth to Corporate Income Tax reliefs will be of Macedonia falls into the group of Counter Corruption introduced for companies that invest successful countries in transition, in high unemployment regions. having 3.4% annual inflation rate in The Government’s fiscal policy is the the period 1997-2002. The policy of key instrument to influence the econo- As regards expenditure policy, the low and stable inflation continued in my and to implement the national pri- Government adheres to its commit- 2003 as well, whereby the inflation

AmCham Bulgaria Magazine February 2004 February Magazine AmCham Bulgaria orities of Bulgaria. They envisage: ment to limit the budget sector share rate was 1.2%. ■

amchamfinancial events sector Peter Ganev Peter

The Embassies of Money Foreign Banks in Bulgaria Stabilize

the Financial System by Marina Tzvetkova

Embassies worldwide are considered a sovereign territory of market.” This assessment of the condition of the banking the state they represent. The national flag flutters at the top, system in this country was recently made by Dimitar Kostov there are security guards of the country’s own army, and any of the Association of Commercial Banks. He said the attempt at forced invasion can be considered an act of war. prospects before the 35 financial institutions operating today During times of unrest in the developing countries the local in Bulgaria are good. progressive people seek refuge in the embassies of the democratic states to avoid the chaos, the repression of the The 1996 crisis, which precipitated the failure of one-third of regime and even to save their lives. the commercial banks at the time and raised monthly inflation rates to 242 percent, can never be repeated. Today Foreign banks in Bulgaria presented themselves in such an Bulgarian bankers only smile with sadness when recalling the extraterritorial status after the financial crisis of 1996-1997, crisis that reduced the value of deposits from $7.4 billion to islands of fiscal stability. Today, eight years later, the banking $1.8 billion. sector in Bulgaria – now fully democratized and free – views the weathered storm sympathetically. One of the key factors allowing Bulgaria to maintain a stable 8 financial system in 2004 have been the representatives of foreign banking institutions, which established new rules of Never again the game after 1996. Experts are unanimous that it is the entry of foreign capital into the local financial markets that “The banking sector in Bulgaria entirely private and the for- has improved the quality and access to financial services. eign investors in it are representatives of renowned banking Foreigners introduced modern know-how and technologies, institutions and groups. The supervision exercised by the which in turn enhanced the competitiveness of the whole Bulgarian National Bank is at a high level, the competition banking system.

AmCham Bulgaria Magazine February 2004 February Magazine AmCham Bulgaria among banks takes place in the conditions of an expanding financial sector

The forecasts are that the sector will remain stable in the future as well.

“I do not expect rapid movements in the system until Bulgaria’s accession into the European Union,” Central Bank Governor adviser Kalin Hristov recently said. Mergers or acquisitions will be possible only after 2007, because when the country joins the common European family, the BNB will no longer have to issue permits and licenses for opening bank offices or branches. Then the “small” representatives of the sector may merge with each other or with foreign banking institutions, due to the new realities that will emerge with Chipeva Nadia Bulgaria’s accession into the EU.

According to BNB statistics, the 35 banks that are currently competing freely on the Bulgarian market have a total of 694 branches and the sector is predominantly owned by foreign capital.

The picture was entirely different in late 1996, when the share of foreign capital in the Bulgarian banking system was only 2 percent, BNB data show. The first serious steps were made in 1997, when the then Mollov Commercial Bank was acquired by Istrokapital of Slovakia and renamed into Eurobank. A year later the majority owner of the institution changed, but the deal remained in the records as the first acquisition of a Bulgarian bank by a foreign investor. In the same year BNB gave operative licenses, that is, the right to perform banking deals in compliance with permits issued in 1996, to Societe Generale, Sofia Branch, and to Bulgarian-American Credit Bank, Sofia Branch. United Bulgarian Bank (UBB), which was established following the Bulgarian Post Bank, priced at $38 million. Since then the merger of 22 banks, also has a majority foreign equity. The holding has increased its interest to 91.71 percent of shares year is also noted for the fact that the banking and financial through a purchase of minority stakes in the institution and crisis in Bulgaria was overcome with the introduction of the initiating a capital raise. currency board system from July 1, 1997.

As of Dec. 31, 1997 the share of the state as majority owner In 1999 the foreign capital in the of banking assets was 67 percent and foreign investors held banking sector rapidly increased 9.5 percent. The representatives of the banking sector in this country had already improved their capital adequacy consid- and reached 44.7 percent, while private Bulgarian capital AmCham Bulgaria Magazine February 2004 erably, maintained high liquidity. They had observed the BNB held 6.4 percent and the state had 48.9 percent. The share- supervisory regulations and provided limited credits. holding structure of a series of banks changed after foreign investors stepped in with the permission of the BNB, such as At the end of 1998 foreign capital already held 32.3 per- Refco Capital Markets, AIG-New Europe Fund, Societe cent of the assets in the sector, which comprised 10 for- Generale, Regent Pacific Group. The first private Turkish eign banks and their branches. Their total assets registered bank, Demirbank (Bulgaria), received an operating license a 39 percent growth, which was the highest rate of from the central bank at that time. page increase among all financial institutions. Large and 9 renowned banks had already emerged on the Bulgarian The transformation of ownership in the banking sector con- banking scene, such as ING Bank and Raiffeisenbank. tinued in 2000 as well. By a decision of BNB’s Banking There were also foreign shareholders in Bulgarian-Russian Supervision Department, in March 2000 Regent Group Ltd. Investment Bank, International Bank for Trade and acquired 98 percent of the capital of Hebros Commercial Development, among others. Bank for $12.8 million. The National Bank of Greece received permission from the BNB to acquire 90 percent, and later all In November 1998 Cyprus-registered ALICO/CEH Balkan voting shares, in United Bulgarian Bank. UniCredito Italiano Holding Ltd. became majority owner of 78.23 percent of acquired 93 percent of the capital of one of Bulgaria’s financial sector

biggest banks, Bulbank. Germany’s insurance company was won by Hungary’s OTP Bank with a bid for a little over Allianz also became a shareholder in that institution. A per- 311 million Euro. mission to carry out banking activities through a local branch was issued to Citibank, N.A., of New York. Bulgaria’s The new owners declared their management would focus on Expressbank became part of the family of Societe Generale, DSK Bank’s transformation and integration. Over the next five the international financial group, for $39.1 million. years OTP Bank will carry out initiatives to the total amount of 600 million Leva. The changes in DSK Bank will be aimed Financial analysts have claimed that these acquisitions radi- at overall modernization of the Bulgarian financial institution, cally changed the competitive environment in the Bulgarian expanding and upgrading its product structure, developing the banking sector by posing challenges to the smaller local information technology system and boosting DSK Bank’s banks to consolidate and by stimulating them to improve the market position. quality and diversity of their banking services. With the privatization of “the people’s bank,” the share of In 2001 Procredit Bank opened up with shareholders includ- foreign banks in the Bulgarian financial system exceeds 90 ing Commerzbank AG, the European Bank for Reconstruction percent. The state’s share was reduced to its equity in and Development, the International Finance Corporation, Encouragement Bank, which neither takes deposits, nor pro- Internationale Micro Investitiones AG and Deutsche vides most of the typical banking services to its clients. Investitions und Entwicklungsgesellschaft GmbH, each holding a 20-percent stake. The new bank decided to focus on Financiers say that DSK Bank’s privatization has been crucial a relatively free niche: lending to small and medium enter- for the new architecture of the Bulgarian banking system, prises in Bulgaria. A banking permit was also issued to HVB where the state and the private Bulgarian capital have an of Bulgaria, a Bank Austria’s subsidiary. According to the per- increasingly small participation. ■ mit, which became effective on April 1, 2002, the institution acquired the branch of Hypovereinsbank of Bulgaria operat- Bank Infrastructure in Bulgaria ing until then. The transformation followed the acquisition of 100 percent of Bank Austria’s capital by Bayerische BANK BRANCHES OFFICES Hypovereinsbank AG in 2001. DSK Bank 26 1301 UBB 108 – On July 26, 2002 the Bank Consolidation Company (BCC) Biochim 40 118 signed the contract for privatization of Biochim after a long Bulbank 36 56 protracted procedure. The buyer, Bank Austria, paid 82.5 mil- Hebros Bank 47 47 lion Euro for 99.59 percent of the capital. With Biochim’s pri- Allianz Bulgaria Bank 25 34 Bulgarian Post Bank 29 89 vatization the share of foreign banks reached nearly 80 per- First Investment Bank 19 22 cent of the total assets in the system. Eurobank 27 23 SG Expressbank 21 41 Experts of the Institute for Market Economics say that the Municipal Bank 16 39 direct result of the deal is the reduction in the system risk in Procredit Bank 14 6 the banking sector, since the institutions with foreign share- Rossexim Bank 21 122 holders can always rely on fast access to resource from the Raiffeisenbank 37 – owner banks in the event of liquidity difficulties. Besides, the EIBank 17 147 entry of foreign banks into the local market is connected with Central Cooperative Bank 34 99 modern know-how in banking and upgrade of the technolo- Unionbank 17 3 gies used, as well as with investment in infrastructure. This PEB Texim 10 4 in turn results in the development of new products and ser- Commercial Bank vices, boosts competition, increases the quality requirements of Greece (Bulgaria) –6 towards the banks’ management and improves staff training. FEIB 28 24 What is most important is that individuals and companies Investbank 10 8 receive direct access to modern banking services, the IBTD 29 22 Institute for Market Economics analysis concludes. Tokuda Bank AD 9– Corporate Bank 82 BACB –5 10 DSK Bank’s privatization – Demirbank 5– a symbol of the state’s withdrawal BNP Paribas 12 from the financial sector ING Bank 11 Citibank банк 1– The sale of 100 percent of DSK Bank was finalized in Alpha Bank 1– October 2003. The privatization of the bank with the longest Pireaus Bank 18 track record and the only institution that had the right to oper- T.C. Ziraat Bankasi 1– ate with people’s deposits under Communism had a symbol- National Bank of Greece 1–

AmCham Bulgaria Magazine February 2004 February Magazine AmCham Bulgaria ic meaning. According to a BCC decision, taken on behalf of West-East Bank 1– the Bulgarian government, the tender for DSK Bank’s capital Encouragement Bank 1– financial sector PR Office

There is a Substantial Support from the Banking Sector to the Economy

An interview with Athanassios Petropoulos, Executive Director of Bulgarian Post bank

Have you ever dreamed to be a banker? Yes, since my family was involved in banking for some years in Greece and I liked working for a bank.

What is the most interesting in the working process in a bank? Meeting clients, addressing their plans and being the right partners for them. My biggest pleasure in Postbank is seeing our customers being happy and grow their business. The Executive Director and Member of the MB of Bulgarian Post Bank What is your prognosis for the development of Bulgarian Mr. Atanassios Petropoulos graduated in 1981 from the University of market in the next five years? Patras (Mathematics), and followed postgraduate studies and research at Banking market will consolidate since there are already too many the University of Birmingham (1982) for a M.Sc. in Industrial banks of all sizes. We know the market players and Postbank is Management and at the University of Manchester Institute of Science and certainly one of the most important now and will remain so in the Technology with thesis in Shipping Finance/Economics. Mr. Petropoulos is future. member of Finance Committee to American Chamber of Commerce and Chairman of Banking and Financial Service Committee to Bulgarian AmCham Bulgaria Magazine February 2004 As a person graduated in Mathematics what parallel can International Business Association. you make between science and banking? In fact graduated Math’s, Industrial Management and portfolio theory, which are basic in analyzing business and looks for optimum solutions in a risk return environment, which is the local businesses. Combined with the stability of the financial essence of modern banking. system, the substantial foreign currency reserves that provide for stability of the Currency Board, and the obvious political In the last year Bulgaria’s sovereign credit rating has been consensus towards EU and NATO integration, these facts sup- page upgraded. Do you consider this development as a sub- ported a better credit rating of the country. But not all prob- 11 stantial step towards the country’s accession to EU? lems were resolved. Privatization progress remains a major In the last year, Bulgaria achieved good economic growth, issue, with the failure of big deals creating uncertainty among backed by around 7% increase in consumption, which was strategic foreign investors. The legal system remains inefficient substantially above consumer price inflation, while unemploy- with substantial problems and delays in court procedures. ment has decreased further and is now firmly below 13%. At Corruption is still present at different levels of administration, the same time, the foreign debt burden as percentage of GDP and criminal activity is far from being contained. Finally, there decreased tangibly. There was increased liquidity in the mar- is a lack of any definitive progress in infrastructure develop- ket, which both eased potential inflationary pressure on the ment. Until these problems are resolved, the country will economy and improved the accessibility of bank funding to remain a much higher risk compared to EU member countries. financial sector

Considering the significance of GDP growth in Bulgaria macroeconomic stability for the country, how do you see the role of the As major provider of funding for the business, the Banking System has the role Banks in maintaining and enhancing of evaluating the business and moving funds towards more efficient ventures, this stability? and stimulating investments in quality and productivity. If you compare the first nine months of 2003 with the same period of 2002, GDP had grown around 5%, while bank lending to the non-financial sector marked a ten times greater increase of over 50%. So, it is obvious that the support from the banking sector to the economy has been substantial. At the same time, as a major provider of funds for the corporate sector, banks have the additional role in evaluating the business and moving funds towards the more efficient ventures, stimulating investments in quali- Data from Mr. Petropoulos presentation at the annual EastEuro Link Conference “Growth ty and productivity. Thus, bank financ- towards Synergy: Restructuring Macroeconomics and Finance in Southeast & Central Europe” ing helps in achieving long-term growth. Also, through financing of individuals and SBLs, banks enhance consumption growth, business planning and investment process. Being among assisting especially in the development of investment goods the most strictly regulated sectors in the economy, the demand through scheme loans for cars, furniture, house- banking system serves as a major promoter of financial hold appliances and mortgage lending for housing. As a discipline and reporting transparency among our corporate result of increased lending availability, consumption has clients, which is one of the major requirements to be grown in 2003 approximately twice faster than GDP growth. adopted during EU accession. Also, accounting for owner- Through increasing our efficiency, banks have in the last ship, the leading banks in Bulgaria have extensive inter- two years lowered substantially interest rates on lending, national contacts and expertise, which they are capable which have helped both contain inflation and help busi- to, and have started, sharing with the clients, facilitating nesses to improve their profitability. Finally, with developing the development not only of foreign trade, but also intro- new and more aggressive products targeting SMEs the duction of best business practices. banking sector helps promote start-ups and business expansion, which is favorable for increasing employment. Where do you see the major challenges of the future for the Bulgarian banking sector and do you believe local Following the aggressive credit expansion in the last banks to be ready to face these challenges? year, there were some comments that the financial sector may be overextending, while others have maintained First of all, in terms of EU accession. As intermediary and that this policy really results in feeding economic direct lender on pre- and post-accession programs, the growth. As an Executive Director of one of the biggest Banking sector will continue to have a key role, especially in terms of corporate lending Banks in the country, what accounting for its role in advising the entrepreneurs on the is your view on this issue, and where do you see the projects. Another important challenge concerns business role of banks in creating economic growth? expansion. The financing activity of banks has supported greatly the economy, but may create substantial depen- To understand the trend of bank financing expansion we dence on continued external financing for the business in must account for the fact that due to the lack of a devel- terms of availability, flexibility, and cost of funding. A major oped Capital Market, the banking sector bears the full challenge will be translating lending growth into sustainable burden of providing financing for all stages of develop- business growth, supported fully by the legal framework, ment of the business as well as the secondary and and increased efficiency of the juridical system and infra- money markets. Also, after the completion of the privati- structure renovation. Project finance for infrastructure has 12 zation in this sector, banks have become far more aggres- been practically non-existent and its appearance and sive but at the same time, the bigger banks in the coun- development as a crucial component of sustainable eco- try strive to successfully face the issue of maintaining nomic growth will depend on the successful blending of high portfolio quality, which requires very careful and pro- public and bank financing. SMEs are key to low unem- fessional assessment of the corporate market. On the ployment and sustained macroeconomic growth, and they majority of accession funds and foreign financial assis- depend very strongly on increasingly active bank support tance programs, banks serve not only as intermediaries, for their future. And also, banks have to more actively par- but also as as provider of additional funding, bridge ticipate in the marketing and promotion of Bulgaria among

AmCham Bulgaria Magazine February 2004 February Magazine AmCham Bulgaria financing and often direct know-how assistance in the foreign investors. ■

amcham event

Bulgarian National Bank Governor Expects 5.3% Growth of GDP

The AmCham business luncheon with Mr. Ivan “…It is a pleasure for me to take part in this business Iskrov, Governor of the Bulgarian National Bank, lunch and to have the opportunity to speak before the on January 20 attracted more than 80 representa- members of the American Chamber of Commerce. I would tives of AmCham members. Among the distin- like to express my thanks to Mr. Lefkowitz for the invita- guished guests were Valeri Dimitrov, Chairman of tion and to the American Chamber of Commerce for this Economic Policy Committee of Parliament, James opportunity. Roaf, IMF representative, Oskar de Bruyn Kops, World Bank, Stamen Tasev, Deputy Finance As the Governor of the Bulgarian National Bank I have the Minister, Tsvetan Manchev, BNB Deputy Governor, possibility and the responsibility to directly participate in the Bozhidar Kabakchiev, BNB Deputy Governor, Kalin designing and pursuing of the country’s economic policy. Hristov, Senior Adviser in BNB. AmCham Magazine publishes excerpts of Mr. Iskrov’s speech. What is important for the business is political stability and the prospects for our country's development (NATO and EU membership included), the soundness and efficiency of 14 public institutions and the economic environment in Bulgaria. The political stability and predictability of the policy implemented by public institutions is one of the most significant conditions for long-term investment decision- making by companies and households.

In the current year, our country will become a full-fledged NATO member, and in 2007 also an EU member-country.

AmCham Bulgaria Magazine February 2004 February Magazine AmCham Bulgaria These processes require continuous improvement of public amcham events

institutions, the BNB included. In the global environment, the Bulgarian economy realized a GDP growth rate of 4.1% in the first nine months of 2003. The average annual inflation in 2003 was 2.3 per cent.

The financial sector was among the most dynamically developing ones in the Bulgarian economy in 2003. This development ensured access of more and more companies and households to the credit market. An increasing number of investment projects are funded by the banking system and more households can purchase housing and consume goods through commercial bank lending. For the 11 months of 2003, the average rates of growth of lending to households and to companies were 62 and 45 per cent, respec- tively.

Statistics indicate that considerable part of the rapidly increasing lending to households is spent on import consumer goods, which impacts negatively the trade balance and the current account of the country. In 2003, direct foreign investments in the country reached up to USD 1.4 billion for the first 10 months of 2003. What are the expectations for 2004?

In 2004, we are anticipating up to 5.3% growth of GDP. We expect the growth of investments and final consumption will be preserved at the high rates attained in 2003.

This will be the driving force of economic growth in the country in the current year too. The financial sector will remain as one of the main sources of financing investments in the country. The year past was very successful for the Bulgarian banking system. Data concerning the first three quarters prove that the good level of liquidity and capital adequacy (23% capital adequacy) of the banking system and the high quality of commercial banks' portfo- lios (92% performing loans) has been preserved. In the same period, the profits in the banking system have increased by 34 per cent against the previous year, reaching BGN 293 mill.

In 2004, we expect the trend of increasing foreign direct investment will continue. Previous years' experience indi- AmCham Bulgaria Magazine February 2004 cates that the rates of growth of investments are highly cor- related to the level of FDI in the country. I expect the US direct investments in Bulgaria to increase in 2004, as well as the contribution of US investors towards increasing the amount of foreign investments to our country.

Inflation rates will remain at low and stable levels. Both glob- page ally and domestically, there are no strong pro-inflationary 15 factors. The appreciation of the Bulgarian Lev to the US Dollar and the stable international prices of basic raw materials will be the main factors determining the low inflation rates in 2004. A temporary price level rise can be expected early in the year accounted for by the increased indirect taxes. Тhis will be a short-lived growth of inflation, and as our early 2002 experience indicates, such one-off inflation increase subside within several months…” ■ nominals

First Bulgarian Banknotes Printed in England 125 Years Ago

With Bulgaria's Liberation in 1878 the year coins of 1 and 2 levs were mint- Bulgarian National Bank has printed its traditions of the Bulgarian system of ed in Russia. banknotes in Russia, Germany, state, disrupted for five centuries, were England, the USA, and the former State restored. New Bulgaria began estab- The Law on the Bulgarian National Printing Works in Sofia. Since 1998 lishing its institutions, economy and Bank of 1985 enhanced the purely issu- banknotes have been printed at the system of government. One of the ing activities of the Bank, granting it the new Printing house of the Bulgarian most important steps in this direction "exclusive privilege to issue banknotes National Bank. was taken on 25 January 1879, when which shall be accepted as instruments the Russian emperor's commissioner in of payment in the coffers of the state The nominal value, design and style Bulgaria, Knyaz Dondoukov-Korsakov, and in аll government institutions." of the Bulgarian banknotes reflect signed the draft Articles of Association different stages in the development of for the establishment of the Bulgarian The first Bulgarian banknotes were the state. They are part of the sym- National Bank. convertible into gold. These were the bols of the system of state and pre- golden 20 and 50 levs printed in St. serve in а unique manner the histori- Тhe Bank officially opened on 2З Мау Petersburg, Russia. In 1891 the BNB cal and cultural memory of the 1879, when the Russian administration was authorized to issue banknotes con- Bulgarian people. ■ left and management was taken over vertible into silver, enforced since 1899. by the Bulgarian authorities. On 6 June the same year the first banking opera- Throughout its 125-year history the history tion was effected.

The young state inherited chaos in Issue 1899 money circulation - all sorts of coins Nominal value – 10 levs, silver from European and even farther coun- Size - 140 х 90 mm, horizontal tries were used in settlement. The Watermark – none necessity to introduce а unified mone- Obverse – а woman picking tary measure was urgent. The first gov- roses (а detail from the ernment budgets for the fiscal 1879 engraving "Rose-picking near and 1880 were compiled in French Kazanluk" by Pheliks Kanitz) 16 francs. On 4 June 1880 the Second on the left; the coat of arms Ordinary National Assembly adopted on the right; "Law on the Right to Mint Coins in the colours: grey, light blue, ochre. Principality", which established the Reverse – а picture of а shepherd with Bulgarian national monetary unit; the а flock, а sheep-pen at the bottom; LEV, divisible into one hundred printed in blue Printed in Bradbury, stotinkas. The first Bulgarian coins -of Wilkinson & Со, London, England. 2,5 and 10 stotinkas -were minted in In circulation from 1899 to 1

AmCham Bulgaria Magazine February 2004 February Magazine AmCham Bulgaria Birmingham, England, in 1881. The next December 1908. nominals

Issue 1925 Nominal value – 100 levs Size – 157 х 85 mm, horizontal Watermark – none Obverse – the coat of arms on the left, the picture of Tsar Boris III in military uniform on the right; blue frame Reverse – fragment from the picture "Sofia Market" by Anton Mitov; printed in green Artistic design – Alexander Bozhinov, Boris Denev, Konstantin Shturkelov Printed in Bradbury, Wilkinson & Со, London, England In circulation from 1925 to Зl December 19ЗЗ

Issue 1962 Nominal value – 1 lev Size – 105 х 54 mm, horizontal Watermark – а net of stylized sickle and hammer Obverse – the coat of arms on the left, the figure "1 " and the text "ЕДИН ЛЕВ" (one lev) in the middle, and on the right the figure "1" in а vignette against white margin; Colours: dark brown, light brown, grey-blue, orange Reverse – the Shipka peak monument on the left; colours: dark brown, grey-blue with beige incrustations Printed in Goznak, USSR In circulation from 1 January 1962 to 31 October 1996

Issue 1994 Nominal value – 1,000 levs Size – 149 х 74 mm, horizontal Watermark – the picture of Vasil Levski AmCham Bulgaria Magazine February 2004 Security thread with the initials "БНБ" (BNB) appear- ing as rnicroprint Designation for blind people – а triangle and а circle Obverse – the picture of Vasil Levski, the lithography "Liberated Bulgaria" by Georgi Danchov, anti-copy stripe; colours: green, brown Reverse – the monument of Vasil Levski in Sofia; colours: light green, light brown, yellow page Artistic design – Kiril Gogov 17 Printed in Giesecke & Devrient, Leipzig, Germany In circulation from 1 November 1994 to З1 December 1999 The same design was used for the 1996 Issue with two changes: а hologram stripe was added and the signature of the governor Todor Vulchev was replaced with the signature of the governor Lyubomir Filipov. In 1997 the same design was used: the hologram stripe was removed and the govver- nor signature was replaced with the signature of the new governor of the BNB * This article is published with the permission of the (Svetoslav Gavriiski). This Issue was printed in BNB Printing Works. Bulgarian National Bank amcham interview

Valeri Dimitrov, Chairman of Parliamentary Economic Policy Committee New Law Helps Businesses Fend off Government Intrusion

The LARBA Act is not a panacea, but it moves the country toward greater economic liberty, says Valeri Dimitrov, Chairman of Parliamentary

Economic Policy Committee By Irina Bacheva

Mr. Dimitrov, do you believe that the Limitation of trations to be predictable in their actions, so investors know Administrative Regulation of Business Activity Act (the what to expect. Government should be more open for dialogue. LARBA Act), which came into effect on December 18, 2003, provides adequate regulation and will enhance dialogue You are saying that the law provides a good regulation for 18 between foreign investors in this country and public admin- this type of relationships? istration? I think it introduces some order into existing administrative The Act provides a very clear signal that public authorities take regimes because they were plagued by chaos. It was assumed up a position that is entirely in line with the idea of the limit- by default that the state and municipalities can always inter- ed government and the rule of law. That is to say, intervention vene in the market at any time they see fit. This has been an by public administration in business affairs should be ended, extremely negative tendency which contradicts the modern as it has been one of the notorious traditions in Bulgarian soci- concept of economic liberties and made it difficult for

AmCham Bulgaria Magazine February 2004 February Magazine AmCham Bulgaria ety. It is important for local and central government adminis- investors. It is clear that countries with higher levels of free- amcham interview

The Limitation of Administrative Regulation of Business of and Trade in Optical Devices Act is now being introduced Activity Act /LARBA Act, promulgated June, 17, 2003 in the to Parliament for deliberation. The new bill is fully harmonized State Gazette/ sets the common rules for the limitation of with the LARBA Act. administrative regulation. The law main purpose is to facil- itate and encourage the economic activities through Do you provide for possible attacks against actions of the reducing the administrative regulation to “publicly justifi- administration which overburden addressees, in accor- able limitations”. It is for the first time that a public act as dance with the principle of proportionality? a law aims at setting the visibly acceptable restrictions of state regulations. The main principles in LARBA Act Once the act has taken effect, I hope that when the Council renounce the long-established state regulation tradition in of Ministers introduces bills to Parliament, those bills will be the Bulgarian legislation. LARBA Act also comes in line in line with the basic precepts of the LARBA Act. It would be with EU engagements of Bulgaria for reducing licensing good if the MPs take the spirit of this Act into account when regimes and unjustified administrative delays. they are introducing new proposals. The proportionality principle has been borrowed from Western legislation and is typi- dom of entrepreneurship and business activity prosper and cal of modern administrative law. It is embedded in the acquis their peoples have better lives. The latest data about the eco- as well, and is applied by the European Court on Human nomic liberty index indicate that Bulgaria ranks 78th, while the Rights. The idea is that addressees of administrative action previous year it was 97th. One of the key areas of develop- should not be imposed burdens out of proportion that are not ment of society is to free business from unreasonable gov- in line with the LARBA Act. Disproportional action occurs if a ernment intrusion. regulation has been issued on the basis of a law which provides for a permission regime for a given transaction or action Now that the Act has already taken force, do you expect while the regulation itself imposes burdens that do not ensue that administrative officers will be fined if they are pro- from the purpose of the law. There are certain regulations that crastinating when deadlines for issuing a registration have stipulate additional requirements, which seriously encumber expired, in which case the concerned party – the the business environment and that does not ensue from the addressee – can assume “tacit agreement”? Is the admin- purpose of the law. Such regulations can be challenged legal- istration well informed about this law? ly precisely because of non-compliance with the proportionality principle. I believe this act makes it possible to attack No, it is not. We are working on training the administrators in secondary pieces of legislation – regulations, sets of rules – this law. In practice, any procrastination will be to the benefit that run counter to the purpose of the law. For example, of the addressee. The principle of “tacit agreement” is being where a license has been revoked for minor irregularities that introduced, which means that if the administration fails to can be remedied by lighter measures as well. But where the reply within the deadline set in the law the interested party is administrative body has imposed a heavy measure, we have automatically able to legitimize the respective action. This is an irregularity that is disproportionate. Then the administrative quite beneficial to business development, as it indicates that officer would be fined exactly under the proportionality prin- we have come to realize the limiting role that the government ciple. It is very important to see how case practice will move, used to play in the business field. We hope that it will provide if there will be any attacks. The broad public and the busi- a serious stimulus for economic liberty. Administrative officials ness community need to be made aware of the law. should be faced with fines, and such fines will be imposed in Representative business organizations have a particularly cases where they have not done their job properly. To a cer- important role to play. tain extent, this may hold some risk for the public interest, where an addressee has interests that infringe on other rights Is the scope of this principle narrowed down in our law? and interests. But here again the administration has been given the right to put a stay on transactions that break the It is, indeed, because in Germany, for example, it is a consti- AmCham Bulgaria Magazine February 2004 law. Indeed, we have carefully considered the negative as well tutional principle and is widely applied. Also, in the new as the positive consequences of tacit agreement. It is vital European Constitution this principle has been used to a sig- that central and local administrations get to know this Act. nificant extent. In this country, we are only now beginning to Together with the Institute for Market Economics and the realize the regulatory significance of this principle. But let’s Minister of Public Administration Dimitar Kalchev, we are edu- see how the principle and the law itself will be implemented. cating the administration. On January 30 we reached an agreement on how to explain the principles of the law to Will interested parties have the possibility to present state- page regional governors. They can issue memoranda establishing ments and arguments that would then be considered by 19 violations of the law and cases of non-compliance to mayors, the administration? That is, could they be making sugges- and Minister Kalchev can then impose fines. We hope that tions on how to improve practices? this arrangement will come to work but to that end the administration needs to be well informed. However, the enforcement Representative organizations of the business community can of LARBA Act’s penalties will hardly be taking place from the have a dialogue with the central government and the respec- very beginning. I rely on good will. In general, the central gov- tive local governments. It is a common practice for larger ernment administration is much better educated than the local municipalities to introduce such regimes, and it contradicts the administration. The Administrative Regulation of the Production law. Any foreign representative could attack such regulations amcham interview

that introduce an administrative regime that has no basis in expands. Thus anyone who meets the requirements of the the law. Regulations can be challenged in regional courts. law can engage in the respective activity for which they have requested registration. Since this law has a general nature, does that imply that its purpose is to attack the arbitrary behavior of the For example, in the Tourism Act, we will eliminate the licens- administration and local governments against the applica- ing regimes for tour-operator and tour-agency activities, tion of administrative regimes that do not have any basis which will require only registration. We have considered this in a special law? regime and decided that it would be good to change it. To a certain extent, the same is true of the Optical Discs Act. This law cannot rescind all existing regimes or remodel them, The Administration cannot prohibit entry into any given line since it is general in its nature. If a specific law seriously con- of business for reasons of expediency. This is the key cri- tradicts the principles of the LARBA Act, the task of the law- terion. With licensing, it prevents you from doing business for maker is to change this set of special laws that have reasons of expediency, while with registration this is impos- amassed in the meantime that introduce licensing, permission sible. There should be some pressure coming from the busi- regimes. There are over 50 such laws. The idea is to make ness community, there is a need for its active involvement. an impact assessment of each future permit-requiring regime The law is not a panacea; it sets a good basis for busi- as to the respective field of business activity. nesses to protect their interests before government. ■

When do you expect foreign investors to be able to feel the difference?

This will not happen by a stroke of a magic wand, yet I would like to see first some relaxation in the regimes imposed by local authorities. That is where the problem is more severe, particularly in large municipalities such as Sofia. For example, the City Council has introduced a registration regime for trading activities in Sofia, which has no foundation whatsoever in the LARBA Act. Instead, the regulation is based on the Local Self-Government Act. The purpose is to have these secondary pieces of legislation reviewed and assessed by the respective municipal councils and be repealed, if they pose obstacles to business. I expect that businesses would take up a role in this, and I expect to see some interesting developments. I also expect that disputes would be taken to court where the businesses would attack actions that are legally

20 non-compliant, and see such actions reversed. It is important that licensing regimes should gradually be phased out, brought down to the minimum, while converting into registration regimes. With registration regimes, the government is

AmCham Bulgaria Magazine February 2004 February Magazine AmCham Bulgaria more predictable and liberty bulgarian politics

Two potentional leaders of the Bulgaria’s right: ex-Prime Minister Ivan Kostov and ex-Foreign Minister Nadezhda Mihaylova.

Chain Reaction Are Bulgarian Political Powers Disintegrating?

Will the MPs of Prime Minister Simeon Saxe-Coburg-Gotha split into two new parliamentary groups. The Union of Democratic Forces may headed for a break-up also. What happens with the others? By Petyo Tsekov AmCham Bulgaria Magazine February 2004

What ex-monarch Simeon Saxe- The explosion is all-pervasive. While better positions at the start of the next Coburg-Gotha failed to complete – to six months ago the fire of disintegration parliamentary election. If we do not shatter the bipolar system in Bulgaria – was burning only the Simeon II National accept this assumption, we will hardly will obviously be accomplished by the Movement (SNM), today it is affecting explain why, for instance, UDF MPs old parties themselves. With each the Union of Democratic Forces (UDF) believe the court should dissolve their passing day the Bulgarian scene more and the recently formed National Ideal party or why deputy chairmen of the and more resembles a battle, an for Unity (NIU) and the flames will SNM parliamentary group openly speak page uncontrollable chain reaction, which hardly miss apparently monolithic orga- of establishing a new political power. 21 inevitably leads to an in-depth restruc- nizations like the Bulgarian Socialist turing of the political space. From Party (BSP) and the Movement for What is happening in the SNM catalyzes episodic and local, the centrifugal Rights and Freedoms (MRF) as well. a chain reaction in politics in Bulgaria. fights within the Bulgarian parties are The group of the governing party now becoming permanent and extensive. It An in-depth restructuring of the consists of 107 MPs, 13 members quit in is more than evident now that some Bulgarian political scene is under way the past two years, and the expectations parties are dying, others are born and and it can only be explained with the are that it may be further reduced to 80 new coalitions are formed. fact that parties are striving to take MPs within a month. bulgarian politics

the streets of Sofia today enjoy about 10% public confidence. Dwindling away, the UDF has reached its final battle:

Two people are most likely to lead the Bulgarian political right: ex-Prime Minister Ivan Kostov and his Foreign Minister Nadezhda Mihaylova. As often happens, after passing through social, radical, Christian-democratic stages of their love, it turns out in the end that the two cannot bear each other. She wants to “air” the party and unite with other soul mates; he insists on preserving the team of the former government and maintaining the myth of UDF’s self-sufficiency. The grave accusations of tampering with the party’s statutes and the threats to expel the rebels from the party will be given a sanction by the highest forum of the party, the conference.

Some expectations are that leader The MPs of Prime Minister Simeon Saxe-Coburg-Gotha and leaders of the New Time Movement Emil Nadezhda Mihaylova, who is backed up Koshlukov and Miroslav Sevlievski already announced a competition for the name of the future party. by the party’s executive leadership and regional structures, will prevail. However, The king’s movement another new group, the People’s it will not put an end to the crisis in the may give birth to two Union, which is yet to be formed on UDF, because UDF’s MPs support Ivan new parliamentary the basis of the Bulgarian Agrarian Kostov and will continue to support him groups National Union and the Democratic until the end of the term of the 39th Party. The composition and positions National Assembly. The natural solution One of them may be: the New Time of of the group are already settled but its to the drama could only happen when Emil Koshlukov, Miroslav Sevlievski very launch will be postponed until the the parliament is disbanded and the and Borislav Tsekov, who have already results of the big “bomb” this season lists for the next National Assembly announced a competition for the – the processes in the UDF – are begin to be drawn up. name of the future party. The other clear. To a large degree the drama of group that is likely to split from the the Right will be untangled on Feb. 21, The processes in the SNM is that of the Bulgarian Women’s when the 14th extraordinary national BSP are not so different Party and the Oborishte Movement, conference convenes. The Bulgarian from those in the UDF, the two organizations that bear SNM’s Right, which until 1997 was a coalition mandate. To set up a group, however, of 15 parties and then became a probably just the manner of dealing is they have to rely on the free MPs that monolithic party, is facing complete different. This is a slightly paraphrased, were elected on SNM’s list. One disintegration. The process of division but very illustrative description by one source of such MPs are the indepen- within the UDF started in the first of the Bulgarian Left’s leaders, dent MPs who quit the SNM at an ear- years of Ivan Kostov’s government Tatyana Doncheva. The Bulgarian lier stage; another source is the NIU (1997-2001) and continued through the Socialist Party utilized best the lack of 22 parliamentary group, which will be dis- heavy losses of a series of national government potential of the SNM, the solved by the end of the month. The elections: the local election in 1999, disintegration of the UDF and the sur- smallest parliamentary group, NIU, the parliamentary and presidential prising victory of its then leader Georgi was set up by SNM splinters in elections in 2001 and the local elec- Parvanov at the presidential election in February 2003, but it failed to prove tion in 2003. Moreover, the UDF suf- 2001. By measured moves and by itself at the local elections last fall fered disintegration of cadre and demonstrating stability the BSP suc- and now its days are obviously num- structure, which brought the party to ceeded in rising from the third to the bered. Now NIU’s Maria Gigova and its current unenviable state: those who first political power in a year only after

AmCham Bulgaria Magazine February 2004 February Magazine AmCham Bulgaria Plamen Kenarov are ready to join in 1990 rallied one million people to the last parliamentary election. bulgarian politics

On the surface the BSP an island of coordinated internal opposition and of a party that has almost always been tranquillity in the tumultuous political structures that have for a long time the balancing element in Bulgaria’s sea. The Socialists undoubtedly stand been insisting on challenging the gov- politics. Dogan is also following close- at the top in the battle for public con- ernment. Thus, pressed among its ly the amendments to the election law, fidence. They have a colossal prob- high rating, the lack of government which will admit more players onto the lem, however, as BSP leaders realized prospects and the unrest brewing at political scene. that receiving the confidence of 22 to the lower levels, the BSP is becoming 25 percent of the public is the ceiling increasingly uneasy. The regular parliamentary election in they can reach. To be first with 25 Bulgaria will be in the late spring of percent in not a reason for pride in The MRF, the most monolithic organi- 2005. A possible early relief of the politics. The Left realized that at the zation in Bulgaria, is also subject to parliamentary guard depends entirely last election, too, when it had the plu- high pressure. Dogan’s party succeed- on the preparedness of the “old” par- rality of municipal councilors in Sofia, ed in preserving its substantial pres- ties – the BSP and the UDF – and on but then relinquished the governance ence in the local power thanks to not the new branch of SNM splinters. At of the city and the region to a hastily admitting MRF’s second most influen- this stage nobody is ready to make formed right-wing coalition. The same tial man, Osman Oktay, to the election. the first step. But one thing is certain: problem the Left will face in a parlia- He was expelled from the movement the dissolution of the 39th Parliament mentary election. and established a new structure. It is will be like lightning and the restruc- very likely that the political disintegra- turing of the political space will be In a word, the BSP has no big partner tion will reduce the role of the MRF – fast and rapid. ■ to govern with. Both in the UDF and in the BSP the problems may come from wrong coalition policy. Unlike the UDF, which during Kostov’s time decided it needed no partners, the BSP sheltered some 20 pocket-sized parties under its wing.

Is a union between the BSP and the MRF possible?

In the last few years the MRF was considered a potential partner-to-be of the BSP but the Socialist leadership showed categorically it would not allow its future government to depend on the whims of MRF leader Ahmed Dogan. The leader of the Socialists, Sergey Stanishev, called Dogan “a political broker” and clearly showed he would look for other friends. Since there are no such friends, the BSP is not ready for an early parliamentary election. Who AmCham Bulgaria Magazine February 2004 can take the place next to the BSP in a future government is the puzzle of Bulgarian politics today. Obviously all possible options are discussed at the party’s headquarters, since a fantas- tic piece of news recently transpired that the Left would “breed” its own partner by supporting a newly formed page 23 party to take seats in parliament and govern together with the BSP. Though somewhat murky, such an idea is not inconceivable at all.

The Socialists have not settled the partner problem yet but they are already feeling the pressure of poorly analysis

Bulgarian Financial Sector Overview: Bank System Reports Improved Profit Rates, Revenues of Insurance Companies Rise by 20% in 2003

Monetary Aggregates Money supply (M3), (BGN bn, end-of-month) The money supply growth in 2003 continued to outperform the economic expansion, reflecting financial inflows linked mainly to net FDI (Foreign Direct Investment) and reallocation of bank deposits held abroad to the local credit market. The FDI inflows have little impact on the consumer prices but a part of the bank transfers, especially those to consumer loans, could be in our view blamed for the annual CPI (Consumer Price Index) rebound in November though the major inflationary impact came from supply shocks in the agricultural sector. The monetary growth (M3) slowed from real 19.3% y/y as of end-October to 14.8% y/y as of end- November but remained roughly three times faster than the expected GDP growth for the same period. The increasing Domestic Credit monetisation of the economy is in our view a correction to The stock of domestic credit grew by real 30.6% y/y at the the steep downswing driven by the bank crisis in 1996 and end of November but slowed from 32.1% in end-October due early 1997. The share of M3 in the expected GDP (Grorss mainly to price effects. In nominal terms, the growth rate Domestiv Product ) for 2003 was around 45% as of end- remains stable at 36.7 y/y in end-October and 37.3% y/y in October and was still low for the standards of the first-wave end-November. The credit to the non-government sector EU applicants. The monetary expansion seems consistent remained higher than the average at real 42.3% y/y in end- with some of the fast growing sectors of the economy and November and marked a similar slowdown compared to the helps the nominal EU convergence. But the process needs total amount of the domestic credit. careful monitoring due to the dual effects on the CA (Current Statements from the central bank implied that it was not Account) balance through increased import demand and planning any aggressive measures for taming the rapid cred- price hikes affecting the real exchange rate. We view the it growth. Representatives of commercial banks also stressed credit and monetary expansion as favourable for the econo- that reports like "booming" credits are exaggerated, as risk my but only in case that the government is fully committed concerns could arise when the share of credit to GDP grows to fiscal tightening. The budget for 2004 reveals some wor- by more than 5pps per year but that rate is not reached yet. rying signs in that direction and the finance ministry is get- Bank officials expect the stock of bank credits to reach some ting more and more uncertain in its efforts for offsetting polit- 65% of GDP in long terms from 25% at present (25.8% in our ical pressures for fiscal expansion. end-November estimates).

Money and Credit Aggregates, BGN mn

12/97 12/98 12/99 12/00 12/01 03/02 06/02 09/02 12/02 03/03 06/03 09/03 11/03 Money Supply, BGN mn, end-of-period M3 5,948 6,647 7,536 9,857 12,422 12,362 12,164 12,901 13,967 13,812 14,515 15,450 15,976 •BGN 3,511 4,138 4,733 5,813 7,494 7,257 7,265 7,692 8,719 8,382 9,021 9,652 9,766 •Foreign currency 2,436 2,509 2,802 4,044 4,928 5,105 4,900 5,209 5,248 5,430 5,494 5,797 6,210 M2 5,672 6,375 7,209 9,525 12,077 12,056 11,843 12,546 13,553 13,156 13,868 14,715 15,287 M1 2,433 2,961 3,305 3,976 4,883 4,593 4,401 4,803 5,542 5,087 5,583 6,061 6,128 •Cash outside banks 1,316 1,743 1,962 2,374 3,081 2,855 2,828 3,022 3,335 3,088 3,356 3,624 3,559 •Demand deposits 1,117 1,218 1,344 1,602 1,802 1,737 1,573 1,781 2,207 1,999 2,227 2,437 2,569 Domestic Credit, BGN mn, end-of-period 24 Gross credit stock 3,627 3,503 3,640 4,792 6,009 6,645 6,247 6,697 7,661 8,159 8,134 8,681 9,106 Credit to+consolidated government 2,001 1,136 766 1,430 1,567 1,962 1,142 929 1,264 1,338 372 200 -58 Credit to non- government entities 1,627 2,367 2,874 3,362 4,443 4,683 5,105 5,767 6,397 6,822 7,762 8,481 9,164 •Enterprises 1,451 1,879 2,336 2,743 3,522 3,720 4,039 4,552 5,053 5,328 5,978 6,325 6,789 •State 680 564 398 186 202 277 308 294 334 346 336 332 324 •Private 771 1,315 1,938 2,556 3,319 3,443 3,731 4,258 4,719 4,982 5,642 5,993 6,465 •Households 167 476 522 591 862 901 993 1,127 1,242 1,355 1,646 1,934 2,117 •Non-bank financial institutions 8 12 17 29 59 62 72 89 103 138 138 222 258 AmCham Bulgaria Magazine February 2004 February Magazine AmCham Bulgaria Source: BNB, backward data revisions are made as of June 2003 analysis

Financial inflows push up money supply gearing also DSK Bank posts EUR 25mn net profit for last year inflation and import hikes The net profit of DSK Bank grew by nominal 19% y/y to BGN 48.5mn (EUR 25mn) last year, according to data revealed by bank executives. DSK Bank retained its position of the largest lender in the country and the second largest bank in terms of assets. The bank plans to start a more aggressive credit campaign this year offering lower interest rates and more flexible terms on consumer and business credits. As recalled, Hungary's OTP has taken over the full stake in DSK Bank last year at a price of EUR 311mn. OTP has officially entered the managing boards of DSK Bank in October last year.

Hebros Bank posts a 181% Y/Y profit increase Banking and Finance Major Developments Hebros Bank posted a profit before tax of BGL 14.951 mln for The Central bank approved amendments to credit classification 2003 compared to BGL 5.319 mln for the previous year. This is and provisions. an increase by BGN 9.632 mln or 181% year-on-year. The executive council of the central bank approved amend- The high percentage of capital adequacy of 22,28%, which in our ments to the regulation on classification of risk assets and bank case is almost twice higher than the minimum requirements set by provisions aiming to tame the rapidly growing stock of credits. BNB, is one of the major indicators for the BankТs stability, Gautam The changes in the regulation took into account the recent rec- Vir, Chief Executive Officer and Chairman of the Managing Board ommendations of the commercial banks' association and some commented. According to Mr. Vir, as soon as the Bank got the of the more radical restrictive measures proposed by the cen- impressive results of the third quarter of 2003, it received evidence tral bank were withdrawn. The major changes passed by the that Hebros is on the right track with its new business strategy. executive council include a 90-day period for deeming non-serviced credits as bad assets relative to a period of 120 days ear- Investment regime for pension funds, insurers to lier and a new 4-grade ranking for the credit classification rel- be liberalised in 2007 ative to the previous system of 5 grades. The bank provisions The legal requirements for private pension funds and insurance for credits that are not serviced over a period of 61 to 90 days companies to invest certain shares of their assets in government were raised from 30% to 50%. In addition to the legislative debt instruments would be dropped in 2007 when the country is amendments, the central bank plans to increase the number of expected to join the EU, according to officials of the state audits in the most aggressive lending institutions. agency for economic analysis and forecasting. The officials Bank association opposed calls for increased provision ratio. noted that such regulations were not applied in EU member The association of commercial banks opposed the central countries. The pension funds are among the major bidders in bank's draft amendment for increased provisions on non-per- the government auctions for long-term bonds but their demand forming loans from 10% to 20% in the regulation on bank pro- for such instruments would probably remain even after the liber- visions and classification of risk assets. The draft is designed alisation of the investment regime, as they have limited options to tame the rapidly growing stock of credits though the bank liq- for purchase of low-risk instruments with a relatively high return uidity, capital and loan service ratios are above the require- rate. The liberalisation, however, would undoubtedly improve their ments. The association also opposed the plan of the central capacity for managing liquidity and exchange rate risks. bank to shorten the period of overdue debt service payments for placing loans under observation saying that the central bank Pension funds expect further concentration should retain the current tolerance term of 30 days instead of The private pension funds in the country expect further con- the proposed 15 days. The bankers claimed that 90% of the 15- centration in the sector in near terms. The financial experts in day overdue payments are duly serviced in the following 15 the sector think that the growing concentration of assets and days. However, the changes in the central bank regulation are pension insurance contributions to 3-4 funds in the country AmCham Bulgaria Magazine February 2004 expected to take place any time now. would trigger mergers and acquisitions among the 8 funds in the country. Last year, the largest pension fund Doverie took Bank system reports improved profit rates over one of the smallest players in the segment but the finan- The aggregate financial reports of the commercial banks oper- cial supervision agency licensed a new pension fund, keeping ating in the country show improvement in the return on assets unchanged the overall number of entities on the second- and ratio to 2.19% last year from 1.83% in 2002, according to data third-pillar pension insurance market. Revenues of insurance released by the central bank. The ratio however remained below companies rise by 20% y/y in 2003. The revenues from core page the benchmark of 2.61% reported for 2001. The profit growth activities of the insurance companies increased by nominal 20% 25 last year was fuelled by reallocation of bank deposits held in y/y in 2003, according to preliminary estimates. On the other foreign accounts to the local credit market. As a result, the hand, the life insurance segment would most likely report a stock of credits grew at a much faster rate than the stock of decline for last year due to reduced tax saving benefits on life assets. insurance premiums relative to 2002. ■

This article is based on extracts from ISI Emerging Markets IntelliNews publications Bulgaria This Week and Bulgaria Country Report. For more detailed information please contact ISI Emerging Markets office in Sofia at +359 2 9806598 or [email protected]. analysis EU Membership Card Costs Dearly Bulgarian companies doing nothing yet to get

ready for the western competition? by Juliana Boncheva

Can the modern business do without tens of billions of euros. Currently their The Bulgarian economy is worthy of computers and Internet? A disturbing- productivity is one-tenth of the average the Guinness Book of World Records in ly big percent of Bulgarian companies rate in the EU. The average age of the terms of energy-intensiveness. An give a wrong answer to this simple production facilities in this country is average of 1.57 kg of fuel is put in a question (see charts below). What 28 to 30 years. unit of production, compared to only causes particular concern is the 150 g in the European Union. thoughtlessness of most small and Of a total of 8,000 combine harvesters in medium enterprises, which still Bulgaria for instance only several hun- Only 4% of the companies manufactur- believe that modern equipment, new dred are modern machines. Thanks to ing foods and beverages meet the technologies and international stan- the European Special Accession Program European standards. Only 16 out of dards and certificates of quality, envi- for Agriculture and Rural Development hundreds of dairies are licensed to ronment and safe labor conditions are (SAPARD), which subsidizes the pur- export cheese to the EU. an unnecessary luxury. The markets chase of farming equipment, the ratio is of the European Union will remain an changing, slowly though. The Ministry of The pharmaceutical industry has impregnable fortress for the narrow- Transport tallies up 4,000 cargo trans- already paid the high price of the minded managers. Because the mem- portation companies, which have a total preparation for EU membership. Of a bership card to the club of the devel- of 11,000 trucks. But only 1,400 of the total of 55 shops for Bulgarian medi- oped European states costs really vehicles have a Euro 3 certificate of cines, 45 were closed. Some closed dearly. compliance with the European environ- only temporary, for repair and upgrade, mental requirements. At the same time but most of them closed down forever, In order to become really competitive, more and more European countries are because they could not find the nec- Bulgarian enterprises have to invest closing their roads to old trucks. essary financial means to introduce the Good Manufacturing Practice (GMP) standard in time.

The care for the environment will consume colossal amounts. The EU environmental requirements will be a particular burden to the “heavy sectors”: energy, metallurgy, chemistry. In the coming years Bulgarian enterprises will have to “sacrifice” a total of EUR 8 to 9 billion in reconstructions and new installations for the good of the environment. Thermal power plants alone have to allocate BGN 2.5 billion to re- equipment. At least the industrial giants are clear about their “green” obliga- tions. But some sectors do not even 26 suspect they have environmental oblig- ations to fulfill. Many farms and dairies for instance are unaware that they cannot sell their yogurt or sausages in the EU if they have not taken care to drain their wastewaters to purification plants. (Results from a survey conducted by the Bulgarian Industrial Association among representatives of the small and medium business, spring 2003) The Healthy and Safe Labor Conditions

AmCham Bulgaria Magazine February 2004 February Magazine AmCham Bulgaria Act has been effective in Bulgaria for seven years. It obliges employers to analysis

Do you want to implement the Do you want to implement the healthy and safe international environmental standard ISO 14000 % labor conditions standard ISO 18000 %

Our production is already internationally certified 1.2% Our production is already internationally certified 0.4%

Such certification is forthcoming 7.5% Such certification is forthcoming 4.1%

It is not economically expedient for the time being 29.0% It is not economically expedient for the time being 31.5%

It is useless to implement them 14.5% It is useless to implement them 10.8%

Other 8.7% Other 8.7%

No response 39.0% No response 44.4%

provide a good working environment to the Bulgarian business. Machines and times as much, according to employers. their staff. But more than 80% of materials posing risk to employees’ Bulgarian enterprises have not yet health have to be replaced with safe The closer Bulgaria moves to EU mem- complied with the Act. At least 200,000 analogues. Besides the inevitable invest- bership, the tighter the control over the people earn their wages in conditions ments, resources have to be put in aspi- observation of the laws and European where they are exposed to hazardous rators, air conditioning, protective requirements will become. If not the substances, dust, noise, humidity, heat screens, glasses and headphones and Bulgarian authorities, the European or cold above the norm. all other protective means and equip- inspectors will be imposing fines and ment. The cost of healthy working envi- closing non-compliant shops and stores. Catching up with the European require- ronment will reach BGN 4 billion, accord- This is already happening to the dairies ments in these sectors will cost dearly to ing to the Ministry of Labor, and tree that do not meet the requirements. ■ Ignorance is Bliss Only 9% of small firms in Bulgaria are worried about the competition of European companies The small and medium business in proven with the respective certificate. Almost half of the interviewed man- Bulgaria is definitely ill with unground- But as is seen from a survey conduct- agers do not even know what SAPARD ed Euro-optimism. Entrepreneurs are ed by the Bulgarian Industrial is. Even the most popular European poorly informed, they are not fully Association: program in Bulgaria, PHARE, turns out aware of the difficulties and do not • only 10% of enterprises have imple- to be “terra incognita” to 45% of the realize that Bulgaria’s accession into mented the ISO 9000 international Bulgarian business. ■ the European Union will have negative quality standards, consequences as well. • only 1.2% of Bulgarian companies Only 9% of the interviewed companies have an ISO 14000 certificate of Are you Yes No for instance fear the stronger competi- environment protection, acquainted with: % % tiveness of western companies. • less that one percent of enterprises AmCham Bulgaria Magazine February 2004 Another 6% are concerned about have the ISO 18000 certificate prov- The ISPA program: for improving European membership because of the ing their employees work in a good transport infrastructure stricter requirements for safety and environment. and environment 25.3 74.7 consumer protection. But the majority It is strange that at the background of of businesses are looking forward to universal optimism only one in four The PHARE program: for supporting Bulgaria’s joining part of the EU, companies expects to really avail itself the pre-accession process because they picture rivers of of the generous European funds after of candidate countries 55.2 44.8 page European aids, colonies of investors Bulgaria joins the EU. The reason for 27 and lines of foreign clients. that? Mainly ignorance. An enormous The SAPARD program: a special The optimism of one-quarter of the percent of owners and managers of accession program for managers is rooted in the conviction enterprises in Bulgaria are not agriculture development 49.4 50.6 that after January 1, 2007 they will acquainted even with the current possi- have free access to the German, bilities for receiving free European aids. The European Charter of Small French, British, etc. markets. Quite a Three-quarters of the business for and Medium Enterprises and naive look at the future! Bulgarian instance are not acquainted with ISPA, its principles (accepted goods will find no market at all if they the EU program for improving trans- by Bulgaria as well) 12.0 88.0 are not manufactured in compliance portation and environment in aspirant the European requirements, which is countries. balkans

Is the Rage of Reuters the Balkans Coming Back or on precision in vampire hunting

Supporter of Serbian Renewal Movement shouts slogans during final pre-elections rally of Serbian Renewal Movement and New Serbia opposition coalition led by Vuk Draskovic and Velimir Ilic in Belgrade December 24, 2003.

Journalist Boiko Vasilev analyzes possibilities of new nationalistic waves rising in former Yugoslavia

To kill a vampire, you either force an there, at the thin red line between this the Serbian Radical Party (SRS). aspen stake through his heart, shoot a and the other world, life after death is Voyvoda Vojislav Seselj, the leader of silver bullet into his forehead, or throw possible. So, you do not have to refer to SRS, is on trial for wartime crimes in garlic in his face. There is no other way Marry Shelly or Anne Rice, but just turn Hague. The Socialist Party, led by to be sure that the evil creature is dead. to the history of the region, shyly called another defendant in Hague, Slobodan Two parliamentary elections at the end “West Balkans” today. Milosevic, entered the Parliament, too. 28 of last year – in Serbia and Croatia – set The observers were quick to spot bad us thinking about how that principle What are the facts? news in this coincidence, but I believe applies to history. Has the rage of In Croatia, the parliamentary elections the good news is more important. Surely, nationalism that racked former on November 22, 2003 were won by late in the Balkan context, you will never go Yugoslavia been exterminated forever, or Franjo Tudjman’s Croatia Democratic wrong if you bet on the pessimistic sce- is it coming to life again? Community (HDZ) party, which nario – it is a rule of thumb for any The answer is a faltering “no.” Faltering, European commentators hastily labeled freshman Western expert on the region. because rage and myths from the past “nationalistic”. The parliamentary elec- However, that is not exactly the case, so

AmCham Bulgaria Magazine February 2004 February Magazine AmCham Bulgaria are like vampires – you are never sure tions in Serbia, on December 28, 2003, let us look at the encouraging news hid- whether they are dead or alive. Out were also won by the nationalists from den behind the media frenzy: balkans

We could be positive that the Croatia they have always been one of the most cannot dam it up - you can only drift 1 Democratic Community of Ivo suspicious political forces on the forward. Sanader is not the same as the one of Balkans. But paradoxically they, too, Franjo Tudjman. After HDZ fell off power used a couple of “tender” words in their Here comes the bad news in January 2000, it went through a num- rhetoric, addressed to the outside – more than one, I think ber of painful changes, the most signifi- observer. They even said that they cant one being the expulsion of the backed Europe in its conflict (real or The late Serbian prime minister Zoran extreme wing, led by Ivica Pasalic. That exaggerated) with the United States. Djindjic worded the first one for me. was a brave move for a political party When I asked him if the Serbs had to go that had failed, because not only the An unexpected, but optimistic anal- through the catharsis of forgiveness, self- diehard nationalists (the politicians with 4 ogy – Bosnia and Herzegovina. I reflection, self-criticism and realize what kinship and political ties in Herzegovina), remember when the nationalistic parties they had done to themselves, he said: were expelled, but a part of the big won the first postwar elections in 1996 “Catharsis?! We have to deal with our money financing HDZ for years was lost (the same parties that had made their economy first. The people are hungry, as well. As a result HDZ turned into a peoples wage war) and kept on winning and you are talking about putting ashes usual Christian Democratic party of the with variable success later. Bitterly did on our heads in public!” Western type. The warm relationship we wail then. The habitual Bosnian pes- So it happened - the Serbian reformers with the Croatian Serbs proves exactly simism was in fashion and we were did start with the economy. Yet, the lack that, despite looking incomprehensible at blind to see anything but more and more of an open and straightforward debate in first sight. In other words, things are not blood shed in vain. Well, years went by, the society kept the killers from the what they seem to be. the West elbowed here and there, Yugoslavian wars in key positions. Finally, arrested this man or that, canceled the they even murdered Djindjic himself. Was The Serbian radicals, led by the for- election of these or those, the Bosnians the Serbian “Sword” operation too slow? 2 mer cemetery worker Tomislav cried over this and that, and there you Would everything have been different and Nikolic, really won the better part of the go: today even the former nationalistic the prime minister still alive if the Serbian votes, but not sufficient for them to rule, parties have to put up with the rules of society had had an honest talk within even together with Milosevic’s Socialists. the game. Furthermore, after what hap- itself? What if, after a hundred years of Parties from the democratic community pened in Iraq, Bosnia looks like a sur- brilliant historic victories it had admitted, ranked second through fifth in the par- prisingly positive example of successful “We lost and part of the fault is ours?” liament, all of them former friends. nation building on the Balkans. It’s worth raising these questions. Communication among them is tough, One more thing: Recently, there is a curi- and the alliance quite problematic (here, Let’s be honest – overall, both Croatia ous tendency on the Balkans – the on the Balkans “the psychology of little and Serbia, and Montenegro, fell into reforming governments, convinced in the differences” applies best – you hate the rapid waters of the merciless inter- need of a certain reform, justify them- above all the one you are most closely national context that dragged them selves with the West: “You know, the related to). Yet the international commu- through harmonization and integrations, West wants it that way. America (Europe, nity will bless this alliance, even press through agreements and paragraphs, IMF, the World Bank, NATO) is pressing for it, and the former Democrat allies through complying with criteria and us, don’t you see?” know that they have no choice but come meeting conditions. On the Balkans, like This tactics may save the reformers’ face to terms with each other. everywhere in the world, not everything in the short term, but in fact it’s very dan- depends on Belgrade and Zagreb. The gerous. First, because it shifts our The Serbian radicals did not idea of national sovereignty strives for responsibilities to somebody else. 3 change the way HDZ did, moreover new definitions. Once in the stream you Second, because it creates an anti-West attitude in places where there used to be AmCham Bulgaria Magazine February 2004 pro-West enthusiasm. And, third, because this is a typical Balkans way of shirking

Reuters responsibilities, that could give birth to an irresponsible elite and a society always bristled up, unhappy and short-sighted. It is a political skill to be able to tell good from bad news in time. Then strike the page aspen stake, hit the forehead with the sil- 29 ver bullet and thrust the garlic right into the face to stop the vampire of the Balkan rage from coming to life again. The rage that makes us see the world in the light of myths and legends; the rage that wants us to fight the battles of the past forever; the vampire that (as Tomislav Nikolic, deputy head of hardline Serb nationalist Serbian Radical Party and other high officials Milosevic once said to Joschka Fischer) celebrate victory in Serbia's general elections in Party's headquaters. But this victory is not sufficient for will readily rise to shed blood again. ■ them to rule, even together with Milosevic’s Socialists. from the corner office

by Milen Marchev Big Ad Budgets in Small Bulgaria? Cheaper ways to make your advertising work hard for you

Big advertising budgets sell. The best proof air in prime time. Here are some examples not of a product that can be found in these of this axiom is the successful existence of of such strategies that are cost-effective, hypermarkets, no problem This will elimi- PROCTER & GAMBLE – world’s top ad especially when applied to niche products nate the noise coming from other cam- buyer in the last 20 years. True, but how such as automobiles, computers, kitchen paigns that are going on in METRO on a many companies can afford spending 24 and home appliances, high-class insurance daily basis. ■ million Leva for television ads in Bulgaria and banking services. (To be continued in the next issue) alone (see the table)? Businesses not pro- ducing soap and shampoo can get by in Direct mail. It is a no-brainer that the suc- Total television advertising expenditures Bulgaria on considerably tighter budgets, cess here depends on what exactly you in 2003, thousand Leva and still run successful campaigns. After drop in the mailbox. If your company’s ad Total 260 540 all, the country in question has an 8--mil- agency or your marketing department 1. Procter & Gamble 24 836 lion population and some 2.7 million active come up with something intriguing, that is, 2. Unilever 15 354 consumers. something that will hold the addressee’s 3. Wrigley's 9 839 attention and won’t end up on the garbage 4. Coca Cola Co. 7 737 5. M Tel 6 368 In the case of PROCTER & GAMBLE, pile, your promotional effort has all but 6. Henkel 6 284 spending a lot of money on advertising is a achieved its goal. An original idea, send via 7. Nestle BLG. 6 065 tried-and-true strategy. P&G ads are pro- direct mail, is much cheaper on a per-cus- 8. Fikosota 5 146 duced centrally and their release around tomer basis than television ads. One-time 9.Beiersdorf 4 962 the world is well-choreographed, so similar 30-second spot costs 4,500 Leva during 10. Peshtera Distilleries 4 497 themes blanket whole world regions. The BTV’s prime time. For this price you can 11. Zagorka Beers 4 484 most expensive part in this approach is have some 3,000 people receive your pro- 12. Kraft Foods Bulgaria 3 889 buying television time. Such strategy works motional materials – and those 3,000 will 13. GloBul 3 614 14. Johnson Wax 3 378 best for products that are in mass demand. be well-selected, potential customers. An 15. Financial Group DZI Rossexim 3 074 interactive element of some sort included in 16. Germanos 2 997 Recently, Bulgarian companies have tried your mailing will certainly help, because it 17. Aroma Cosmetics 2 703 to implement something similar to P&G’s ad will require the addressee to respond. 18. Dannone 2 689 saturation, even though on a much smaller However, be aware that various drawings 19. Lepten Cosmetics 2 392 scale. For instance, Peshtera Distillers has with prizes, office gifts such as cheap ball- 20. Local Elections 2003 2 301 launched several wide-ranging campaigns, point pens or two-liter cola bottles are not Total advertising expenditures, print with ads shown in prime time, following a novelties anymore and their effectiveness is media, 2003, thousand Leva belief that cheap liquor is as ubiquitous already poor. Total 44 912 (and at least as important) as laundry 1. M Te l 5 5 61 detergent. The potential consumer base for Promotions. Word of mouth is capable of 2. Globul 2 233 Peshtera’s FLIRT vodka brand is at least working miracles on the small Bulgarian 3. First Investment Bank 703 2.7 million, indeed, as FLIRT is two and a market. A dozen satisfied users of your 4. Financial Group DZI Rossexim 667 5. Bulgarian Sport Lotto 653 half times cheaper than FINLANDIA. This product will spread the good news among 6. Peshtera Distilleries 553 reality justifies prodigious ad spending and friends and family. Give the people the 7. Moto Pfohe 476 large campaigns. chance to read about, hear of, see and try 8. Procredit Bank 445 your product. Over 1,000,000 people live in 9. United Bulgarian Bank 430 30 Bulgarians are new to the market reality Sofia and about 60% of the active popula- 10. Sofia France Auto – Peugeot 399 and still cannot see themselves as the tion at least once a month visit the hyper- 11. Berlin–Chemie 391 omnipotent, capricious consumer of the markets BILA and METRO. Which other 12. Bank DSK 367 13. Zagorka Beers 346 Western type. People are not yet spoiled by city in which country will allow you to have 14. Biochim 318 more than half of consumers visit regularly the abundance of products, relentless com- 15. LukOil 317 petition leading to price wars and pervasive six places in the city?. BILA’s four stores 16. Unilever 315 advertising so characteristic of the industri- and METRO’s two are perfectly suited for 17. Ind Commerce 311 al democracies. This relative innocence various direct promotions, such as handing 18. Bulgarian Post Bank 293

AmCham Bulgaria Magazine February 2004 February Magazine AmCham Bulgaria allows for successful promotional strategies out leaflets and coupons, catalogs, special 19. Samsung Electronics 289 that do not require millions to produce and deals and so on. Even if the promotion is 20. EI Bank 273 events • member news • new members

January:January: EventEvent ofof thethe MonthMonth AmChamAmCham GeneralGeneral AssemblyAssembly

UpcomingUpcoming Event:Event: EconomistEconomist ConferencesConferences FifthFifth BusinessBusiness RoundtableRoundtable withwith thethe GovernmentGovernment ofof BulgariaBulgaria amcham news

Mrs. Maria Vranovska from Eli Lilly The AmCham Treasurer Dennis Fiehler was was elected as BoD unanimously re-elected on the BoD

General Assembly Re-elects Mr. Dennis Fiehler and Welcomes Mrs. Maria Vranovska on BoD Maria Vranovska, M.D., MBA Country Coordinator of Eli Lilly in Bulgaria

Mrs. Vranovska is a Country coordinator in one of the leading U.S. phar- The AmCham General Assembly gath- The president reminded the develop- maceutical companies. She is serving ered January 27, 2004 to approve ments in bilateral relations between US as a Vice-Chairman in the Association Annual Report for 2003, the Audit and Bulgaria and commemorated the of the American Pharmaceutical report for 2002 and the budget for 100-th anniversary of diplomatic rela- Companies since 2002. The newly 2004, to honor the special guest H.E. tions celebrated in September 2003. elected BoD member has an exten- US Ambassador James Pardew and Among 22 big AmCham events, Mr. sive experience of nearly eleven years elect board members. The current Lefkowitz outlined NATO Trade and in the pharmaceutical business. AmCham Treasurer Dennis Fiehler, Investment Conference in 2003 on Mrs. Vranovska is a Doctor of Medicine from BAEF has been re-elected on Bulgaria’s NATO accession. The and has MA in Business Administration the Board of Directors. Mrs. Maria Chamber had 21 Toastmasters meet- from City University, USA. Vranovska from Eli Lilly has been ings, 13 Committee meetings, several elected as a new member. networking seminars, and all of them rewardingly organized, added Mr. In consensus, the Assembly approved Lefkowitz. unanimously the Annual Report for 2003, the Audit report for 2002 and the In his address to the Assembly, the budget for 2004. Executive Director Valentin Georgiev 32 AmCham President Kenneth Lefkowitz also added that AmCham could be welcomed the Members and marked proud of the different initiatives the that the year 2003 was thriving in terms Chamber had during 2003. The of numerous events and committee most important achievement is that meetings, as well as because of the the AmCham has become a successful lobbying on behalf of respectful organization among all AmCham regarding revival of the bilat- the business community in the eral negotiations between US and country and gained credibility from

AmCham Bulgaria Magazine February 2004 February Magazine AmCham Bulgaria Bulgaria on Avoidance of Double the government institutions. ■ Taxation Treaty. amcham news

H.E. US Ambassador James Pardew was a special guest to the General Assembly and talked about the business climate in Bulgaria

According to the Ambassador, the USA of Treasury and the Bulgarian Ministry of hopes that American and Bulgarian Finance that a Double Taxation Treaty companies will work together in the will result in increased American invest- reconstruction of Iraq. To help achieve ment in Bulgaria. this goal, the U.S. Department of Commerce is going to organize a semi- “We are not there yet, but your hard US Ambassador: An Improved nar in Bulgaria on the contracting work and letters are moving us closer to Business Climate Will Promote process and doing business in Iraq. reaching this objective. We are also Trade and Investment Representatives from the Department of making progress in our tariff negotiations Commerce, the Coalition Provisional and expect a team from the U.S. Trade H.E. US Ambassador to Bulgaria James Authority and prime contractor compa- Representative to come to Bulgaria in W. Pardew was the special guest at the nies will discuss the contracting process February for a second round of discus- AmCham General Assembly. Mr. Pardew and offer advice in preparing proposals sions”, said Mr. Pardew. reminded his personal priorities as the as subcontractors. The Ambassador American Ambassador to Bulgaria: announced that they will introduce inter- The U.S. Government has also worked • To help Bulgaria become the best possi- ested Bulgarian firms to resources avail- to improve access to credit in Bulgaria. ble candidate for NATO able for matchmaking with interested The Embassy has provided critical sup- • To work with Bulgaria in the war on ter- Iraqi companies, including small and port in the financial sector, ranging from rorism medium-sized (SME) businesses, to be the extremely successful bank privatiza- • To enhance the security of the U.S. agents or partners in the Iraqi market. tion program to our work in improving Mission in Bulgaria AmCham has agreed to take the lead in Bulgaria’s regulatory processes. The • To support economic reforms, business organizing the seminar in Sofia. Ambassador mentioned the success development and job creation story of the micro-finance program • To promote the rule of law in Bulgaria, The Ambassador stressed that despite established to provide credit to those including judicial reform and measures to the positive indicators and a heightened areas not targeted by traditional bank- reduce organized crime and corruption interest in Bulgaria by American compa- ing, such as start up businesses. In nies, the level of U.S. business activity in 2003, these programs had 25 offices Concerning the commercial issues H.E. Mr. Bulgaria is still not at the appropriate serving 5,400 clients throughout Pardew stressed that Bulgaria has produced level. During this past year, the U.S. has Bulgaria. an excellent macroeconomic performance dropped from the 6-th to the 9-th largest during 2003 thanks to tight fiscal policy. investor. Cumulative U.S. investments, as “This leads us to the most important According to H.E. the commercial relations of Oct 2003, were $346 million and only objective: job creation. Three areas – between the United States and Bulgaria $24 million were recorded for Jan – Oct SME-s, agriculture and infrastructure - have also moved into high gear. Last year, 2003. In order to improve the situation, have particular potential to add jobs to both Secretary of Commerce Donald Evans US Mission is working hard to identify the economy. These are areas of focus and Deputy Secretary Samuel Bodman vis- and resolve obstacles to trade and for our assistance programs. The U.S. ited Bulgaria. In addition, the Embassy host- investment, Mr. Pardew said. The US Government will be investing an addition- ed two trade missions – both of which have Mission efforts have focused on the fol- al $3 million to support SME develop- already produced several million dollars in lowing key areas: ment in Bulgaria”, added the trade between American and Bulgarian Ambassador. AmCham Bulgaria Magazine February 2004 companies. • Improving the business climate to promote trade and investment According to the Ambassador, a discus- • Improving access to financial resources sion of the Bulgarian business climate • Creating new jobs, especially through must also include those factors that con- small and medium sized enterprises tinue to hamper the conversion of its macroeconomic success into jobs and Mr. Pardew noted that the Embassy and better wages. At the top of the list is the AmCham worked closely over the past legal reform. page year on two important business climate 33 issues: reopening negotiations for a “Bulgarian companies understand that Double Taxation Treaty, and continuing laws-on-the-books mean little if enforce- negotiations for tariff reductions. The ment is weak and the judicial system is AmCham demonstrated impressive dedi- unable to effectively resolve commercial cation in convincing the U.S. Department disputes”, H.E. commented. ■

The AmCham members flocked to the ballot-box to vote for their favorite BoD candidates amcham news

From Government Reforms to Better Business Results: Next Steps for Bulgaria

Key points that will be discussed at the Roundtable with Bulgaria’s leaders, including Prime Minister Simeon Saxe- Coburg Gotha, Deputy Prime Minister and Minister of Economy Lidia Shuleva, Minister of Finance Milen Veltchev and many others include: • Given the political will for reform, what might slow down actual progress? • What will it take to create the right operating conditions for Bulgarian business in the next two years? • Is there scope for a significant loosening of fiscal policy? • How realistic are hopes of EU accession in 2007? Does EU accession mean much faster growth and an immediately Bulgaria’s expected EU accession in 2007 places pressure on better business environment? the government to perform, but how quickly will this truly cre- • How can Bulgaria become a major FDI hub for CEE and ate a better business environment? Nenad Pacek, Director, Europe? Economist Corporate Network, said, “the will for reform is clear, but some obstables do remain for Bulgaria—ranging from This Roundtable, being the fifth that Economist Conferences is the residual power of vested interests to an unreformed judi- hosting in Sofia, is the leading business-to-government event ciary and a growing current account deficit.” How and when in Bulgaria. The number of participants for this conference has initial positive economic performance will result in sustainable been limited to 80 to ensure that true dialogue can take place. business gains will be a central focus of debate at the Delegates will be seated at round tables for optimal netwoking Economist Conferences Fifth Business Roundtable with the and debate. Members of the American Chamber of Government of Bulgaria, taking place at the Sheraton Sofia Commerce in Bulgaria are eligilble for a 100 Euro discount. For Balkan, February 24th 2004. further information and on-line registration, please see member news www.economistconferences.com and search for Bulgaria. Eli Lilly granting scholarships The American Pharmaceutical Company Eli Lilly is grant- Do People Really ing four specialization scholarships in the following fields: psychiatry, endocrinology and metabolism, oncology and By Christa Pleasants Hunter, AbC.R.O., Inc. clinical pharmacology. The news was announced at the AmCham Bulgaria Toastmasters International, President 34 traditional New Year Eve reception party of Eli Lilly. “The initiative is prompted by the company’s ambition to I am not one for making New Years resolutions, therefore I do improve the quality of healthcare in the country and to not have an obligation to keep them. However, that does not successfully interact with the medicine community”, Maria mean that I do not set goals for myself. I am of the belief that Vranovska, Eli Lilly coordinator said. in order to grow and improve as a person one must have goals. At the moment, the company is working together with the I generally follow a simple rule of writing my goals on a piece relevant science associations on the membership criteria of paper in my date planner. I keep these planners and peri- for the scholarships. The initiative official launch is due in odically go back to them to see if I have indeed succeeded

AmCham Bulgaria Magazine February 2004 February Magazine AmCham Bulgaria the beginning of April 2004. ■ in what I have set out to do. For the most part, I do succeed. The reason? I firmly believe that once you make a commit- amcham news M&M Handles Aid Delivery to Iran

On January 4, 2004 M&M Air Cargo Service BG handled an emergency IL 76 charter to Teheran with 42 tons relief goods from the Bulgarian Red Cross and the American Red Cross, in support of their humanitarian relief efforts in Iran, for the victims of the catastrophic earthquake in the town of Bam on December 26, 2003. After preliminary non-commital discussions on New Year's how Bulgaria had served as a base for storing and distribut- Eve, a telephone call was received in Sofia in the late after- ing materials of first necessity to the countries of South and noon of January 2, 2004 (there were national holidays in Eastern Europe in force majeure cases. Bulgaria from December 31 to January 5) from Transgroup Because of the huge size of the damages in the town of Worldwide Logistics, Dulles Airport. M&M was informed that Bam, leaving 80 000 people homeless in the Iranian winter, the American Red Cross had authorised the charter flight where the temperatures are minus 10 degrees Centigrade, from Sofia to Kerman Airport, Iran, and was requesting M&M and responding to an appeal by the International Red Cross, to handle it. Geneva, the American Red Cross and the Bulgarian Red Transgroup chartered the aircraft, while M&M handled coor- Cross took a decision to use their joint stock in Bulgaria. dination. M&M had to obtain local authorisations and permits, So the supplies (tents and blankets) came from this joint to collect the goods, to clear customs, to load the aircraft stock in Bulgaria and were picked up on January 4, morning and to set all expenses with Sofia Airport Authority. from the Bulgarian Red Cross warehouse. The strenuous endeavors continued tens of hours, from 4 pm Five people of M&M Air Cargo service were constantly at the on January 2, to 10 pm on January 3, when all permits were Sofia Airport from 8:30 am on January 4, to 3:30 am on obtained for the Moldova registered aircraft to land in Sofia. January 5, to witness the plane safely take off for Bam. The flight was endorsed as a humanitarian aid operation and The American Red Cross and the Bulgarian Red Cross are the Civil Aviation Administration relieved the flight from pay- ready to send more materials from the same stock such as ing all government taxes. water containers, plastic sheeting, as well as, more tents and Since the year 2000 the American Red Cross has set up a blankets. M&M is prepared to ship those materials at the joint aid stock together with the Bulgarian Red Cross. That is shortest possible deadlines, even in no notice time. ■

ment to a goal speaker. There are basically four guide- easiest of the four steps; however, this by writing it lines that Scott Chapin, CTM has out- step can be the hardest with a tough down, it lined in the January 1995 edition of the travel schedule. Nevertheless, I find that becomes Toastmaster. I am using these four the more meetings I attend, the more part of your guidelines as an outline for achieving improvement I achieve. subcon- the personal goal of being a great pub- Rome was not built in a day; likewise, I scious, thereby lic speaker. The guidelines are simple: will not become a great public speaker providing the 1: Determine what the causes of my overnight. It is my firm belief that by set- framework for achieving it. Sound silly fears for speaking in public are. Once I ting my goal to be a great public speak- to you? Perhaps. But so far, it has identified what the causes of my fears er, breaking it down into small achiev- AmCham Bulgaria Magazine February 2004 worked for me. were, I was able to address them. 2: able steps, and moving forward in meet- Keep Their New Years Resolution?

One of my goals is to be a great public Accept my fear in speaking publicly. ing each challenge, that I will be suc- speaker. Thus, it is obvious why I am a Being that I am not one to readily admit cessful. I do not need a New Years res- page Toastmaster. That does not mean that I fear, accepting it was even harder. I have olution to succeed. What I do need is a 35 have achieved the goal of being a great accepted that I have a fear of speaking support group that will lend me the public speaker; however, by being a publicly and like any good 12-step pro- framework to work towards improving my Toastmaster, I am moving towards suc- gram; acceptance was the hardest part public speaking skills. By being a mem- cess, one speech at a time. for me. 3: Maintain focus. Once I ber of the AmCham Bulgaria Within each goal, generally many small accepted my fears and determined what Toastmaster’s International club, I have goals make up the whole. The adage; my fears stemmed from, I was able provided myself with the best possible the whole being a sum of its parts takes move forward. Likewise, I was able to chance of success. My fellow shape here. There are many small goals set a clear plan that I could stick to. 4: Toastmasters are my inspiration, the that I must achieve in order to achieve Participate in my local Toastmasters club is my forum, and my goal is achiev- the main goal of being a great public club. I know that this seems like the able! ■ amcham events

Business Game: solving communication problems

How To Survive by Stella Savova In The Corporate World How to justify a pay rise? How to survive the lay-offs? How to motivate your employees?

These are just a few of the myriad of can be so different from theory. In the Therefore, AmCham Bulgaria and City burning questions in the manager’s real life you can find the answers to University Distance Learning Center in mind. You are a brilliant professional some of the questions the hard way, Sofia decided to bring expertise from – an engineer or lawyer, but will you using the old “trial-and-error” method the US corporate sector to the be a brilliant manager as well? which may cost you dearly. Or, you can Bulgarian audience and invited Mr. be smart enough to “pick the brains” of James S. Caldwell, J.D., to share his Even with a master’s degree in your those who have built a successful car- experience with managers from pocket you will find out that practice rier in the corporate world. AmCham member companies.

01.03–02.03 – Mon.-Tuesday: Upcoming AmCham Events Annual meeting of AmChams in South East Europe, Athens, Greece. 18.02. – Wednesday: Business Lunch 24.02. – Tuesday: AmCham partici- with Mr. Milen Velchev, Minister of pates as an exclusive partner of 10.03. – Wednesday: Toastmasters 36 Finance. Mr. Velchev is a guest speak- Economist Conferences, Fifth Business Club, Radisson SAS, 19 P.M. er before the AmCham members who Roundtable with the Government of are welcomed at the Radisson SAS Bulgaria From reforms to better busi- 09.03-11.03 – Wed.-Thursday: Forging Grand Hotel ness results: Next steps for Bulgaria, New Partnerships in Emerging Europe, Sheraton Hotel Balkan, Sofia Investment Conference, Bucharest, 18.02. – Wednesday: Toastmasters Romania, sponsored by the Overseas Club, Radisson SAS Grand Hotel, 19 P.M. 26.02. – Thursday: The US Embassy Private Investment Cooperation /OPIC/. and AmCham are organizing a joint AmCham Bulgaria to participate with a

AmCham Bulgaria Magazine February 2004 February Magazine AmCham Bulgaria 19.02. – Thursday: Regular AmCham seminar on Iraqi Reconstruction at the stand. Board of Directors Meeting Hilton Sofia, 2 P.M. amcham events

Mr. James S. Caldwell, is a licensed Management attorney from the United States with 15 Survival Skills years of experience in the US corporate Training Seminar: sector negotiating contracts for the high Mr. James tech and computer software industries, Caldwell talking including international military and com- about the essential mercial transactions. Mr. Caldwell regu- functions of man- larly lectures in the MBA program of City agement. University in Slovakia, Bulgaria and other countries. He believes in a practical approach to training and likes to call his course “how to survive in the corporate organization.”

More than fifty top and middle managers attended the Management Survival Skills Seminar on December 5, 2003. The conference hall of the Business Park Sofia was packed. Mr. Caldwell talked about strategic planning, the second half of the seminar the training exciting and useful. AmCham Michael Porter’s 5 forces model of managers took part in a business Bulgaria would like to thank City competitive analysis, leading styles, game: divided into working groups they University for their kind cooperation in “manage your manager”, motivating had to solve the communication prob- the organization of the training. your employees without money, etc. Mr. lems in an ailing enterprise and to jus- AmCham will continue taking every Caldwell shared with the audience the tify their decisions. opportunity to bring the experience of lessons he had learned from his expe- the US business to the Bulgarian man- rience in the US corporate sector, sup- According to off-record feedback, the agers, in line with its mission to promote ported by lots of practical examples. In Bulgarian audience found Mr. Caldwell’s US-Bulgarian economic relations. ■ AmCham Bulgaria Magazine February 2004

page 37 amcham events

A large number of guests The gathered on the dance floor

Managing director, assisted Mr. Way Christmas Parties Lefkowitiz in by offering his own special thanks to the sponsors. Finally, the stage’s captivating light show and bril- Free the Spirit of liant use of color helped create the right party atmosphere. Awards Merriment The Hilton hall filled up once again, following the announcement that several The cozy atmosphere, welcoming ges- guished guests welcomed by the contributors to the AmCham Magazine tures, warm smiles, light and candles AmCham team. were to receive rewards. The party’s helped crate a special mood during the Lindt chocolates were made available participants could barely contain their Christmas Festive Season. The gather- at the gates of Mousala Hall, the ideal excitement at the prospect of winning ings awake the spirit of cheerfulness setting for sipping cocktails. The pas- one of the coveted awards. All eyes that is usually waiting for the right sionate red curtains, brilliant lights and were on center-stage as Ken Lefkowitz sparkle to set it off. light background music provided the began presenting the awards: Balkan Accordingly, no less than 300 distin- perfect backdrop to the sensation of Star, with its 3 years of support, guished guests at the AmCham melting chocolate and wine provided by received praise for its significant contri- Christmas Party uncovered the mystery Domaine Boyar. bution to the magazine; Allied Pickfords and spirit of New Year Eve season also received recognition for its sup- when everybody weighs what had been Starter port,as well as its role in the develop- accomplished in the previous year. The official program commenced with ment of new ideas; ADIS Ltd. was 38 For the long-awaited event, guests opening remarks by Kenneth Lefkowitz, awarded for its invaluable contribution flocked to the Hilton’s gates at a quar- AmCham President. He thanked the to the magazine while ISI Emerging ter to seven. assortment of prestigious guests for Market earned the distinction as having H.E. James Pardew, US Ambassador to contributing to the party’s genial the “Most insightful analyses.” Sofia, Mr. James Roaf, IMF Resident atmosphere. In his address, Mr. In addition, Djingov, Gouginski, Representative for Bulgaria, Milko Lefkowitz highlighted his appreciation Kyuchukov & Velichkov was presented Kovachev, Energy minister, H.E. Avraam of all the good work the AmCham staff with an award for its informed com- Sharon, Ambassador of Israel, H.E and its members had done throughout mentary concerning Bulgaria’s personal

AmCham Bulgaria Magazine February 2004 February Magazine AmCham Bulgaria Bertil Roth Ambassador of Sweden, the year. data protection legislation. On a more were amongst several of the distin- Friedrich Niemann, the Hilton’s personal note, Antoine Iskandar Chairman of Pain D’Or S.A., received an award for his appro- priately entitled story “Why I Love Bulgaria and My work Here The Most”, that appeared in the October issue of the AmCham magazine. The awards ceremony culminat- ed with the Hilton’s Friedrich W. Niemann winning the award for “the Most Exciting Travel Story” with respect to his inspired personal travel tale entitled “My Oregon Trail.” The guests could taste the won- Wine derful soft-melting chocolate Connoisseurs: balls of Lindor, one of the Following the award ceremo- Lindt's most popular products ny, wine connoisseurs were not only throughout the world, given an opportunity to par- but in Bulgaria as well. ticipate in a wine testing competition presented by Valentin Georgiev, AmCham Executive Director. Participants included: the Minister of Energy, Milko Kovachev, Senior AmCham President Kenneth Commercial Adviser at the Lefkowitz congratulates Philip US Embassy, Reginald Miller Kittoff from Balkan Star with as well as AmCham Board the award Member David Hampson. Competition was fierce as those involved tried to recognize three different varieties of wine. Doing a good job in representing his ministry Mr. Kovachev’s finely tuned skills resulted in him winning the competition hands down.

Gradually the spirit of the night made all of the AmCham guests gravitate towards the dance floor. They enjoyed for more than 60 minutes the live music of SAFO band. The most courageous dancers on the floor appeared to be David Hampson and Kathie Pardew, the wife of US Ambassador to Bulgaria. Clearly experienced dancers, amcham members, diplomats and financiers, followed them on the dance AmCham Bulgaria Magazine February 2004 floor. Rock and pop music added to the merriment of H.E. US Ambassador the guests dancing up until James Pardew and midnight hour. ■ AmCham President Kenneth Lefkowitz enjoy during the Christmas Party at Hilton page 39

From Left: Mr. Milko Kovachev, Energy Minister, David Hampson, BoD Member, Mr. Reginald Miller, US Embassy Commercial Service test different kinds of wine member news There is a Hidden Potential in Convention Business for the Economy of Bulgaria Germany, Switzerland and Spain are the main feeder markets in Europe Says Friedrich W. Niemann, Chairman of the Bulgarian Convention and Visitors Bureau By Irina Bacheva

Preface: The Bulgarian Convention and To give you another explanation, I would gorization, however, will not be a BCVB pri- Visitors Bureau is a broadly spread busi- like to share some data with you, prepared ority. ness association, focusing on convention by the World Tourism Organization. During Since we operate in a free economic envi- business, where Convention Centers, the whole year 2000, literally 2.000 con- ronment, pricing is absolutely up to the Hotels, Convention Organizers, Airlines, vention visitors came to Bulgaria, whereby markets acceptance. No enterprise offering Cities etc. will be members. It is not to be Romania was host to 116.000 and Hungary low standards at exaggerated prices will understood an hoteliers association, even to 451.000 visitors. What a huge chal- successfully market these on a long term – although hoteliers are presently the main lenge for Bulgaria! a sound market quickly disguises the drivers. However, since convention and incentive cheater and the customers will simply not business is usually long-term business, we buy in. Mr. Niemann, how did you reach the idea doc not expect any results in the very near of establishing the bureau? Did you have future. How do you plan to boost the advertise- preliminary discussions with representa- ment of Bulgaria in Germany and tives of the other five star hotels, or that What kind of tourism congressional forms throughout Western Europe? was your personal suggestion to them? are you going to develop? The main feeder markets in the convention With all its facilities already very well in During recent years Bulgaria’s image as business in Europe are Germany, place, Sofia and the whole of Bulgaria is a tourist destination has already improved Switzerland and Spain. Due to the close perfect convention destination in very well; thus, the BCVB will not focus on economical relationship to Bulgaria also Southeastern Europe. Having the National the individual tourists in the beginning. We Austria and France are considered main Palace of Culture (NDK) - the largest con- plan to strengthen the countries position in markets. Bulgaria as a convention destina- vention hall in the region, daily direct flights the so-called ‘MICE’ business (Meetings, tion will be firstly presented by the BCVB to most European cities, excellent hotels, Incentives, Conventions, Events). Here we as soon as end of February at the Confex friendly and well trained people, this coun- see a big potential for Bulgaria, especially tradeshow in London. We also plan to try is ideal for big international conventions. in Sofia with the largest convention center attend other events throughout the year, like After having been in Sofia for a short time, (NDK) in all Southeastern Europe, accom- ITB, immix or EIBTM and will have road my colleagues and I liaised and together modating up to 4.000 people in its largest shows to directly meet our business part- we approached various other potential part- hall. During the year 2000, all over Europe ners. In this business, it is vital to have a ners and organizations to motivate them for 20.1 million MICE trips were taken interna- very direct contact to the respective deci- setting up such an organization. tionally. This comprises a huge volume of sion makers; therefore, we are strongly rely- which Bulgaria should get its fair share. ing on the excellent international connec- Do you regard the new bureau as an In the beginning we will target the profes- tions of the Ministry of Economy and the exclusive opportunity for Bulgarian econ- sional convention agencies, who plan and management of NDK and all other partners. omy to increase radically the revenues carry out conventions for all kinds of inter- from tourism? national associations or organize interna- Can you mention other firms and NGO-s Whether it might be radically has to be tional meetings for big companies. Within that are interested in the bureau mem- questioned, but Yes, there is definitely a the next step, we will then also target these bership? gigantic potential for Bulgaria. Let me give organizations and companies directly. The BCVB is still in its development stage you an example: The average participant in and has not really gone public yet. However, an international convention in 2002 in Are you going to lobby for firm catego- after participation at the recent Bulgaria 40 Western Europe spent average EUR 715 rization of Bulgarian hotels /3, 4 and 5 Dream Area convention, we have already (GCB study). If the BCVB can acquire only stars/ and strict rules in pricing in regard been contacted by various organizations in two events with each 1000 participants per with the hotel category? the travel trade, other hotel companies and year and assuming a 30% destination dis- It would be definitely beneficial for every- also institutions like the American University count, we would generate two million BGN body in the business, especially our cus- in Bulgaria with its Elieff Center. As soon as incremental income for all stakeholders, like tomers, if Bulgaria will have an official, the BCVB will be fully in place, we will start the convention center, hotels, travel agen- strict categorization system for its hotels. To a national promotion campaign to make it cies, airlines, local transportation, nightlife, be competitive, this needs to be compara- known all over the country. Then we expect

AmCham Bulgaria Magazine February 2004 February Magazine AmCham Bulgaria retail shops and many others. ble with international standards. Hotel cate- a strong interest in this organization. ■ member news Red Devil Social Corner

For the people you have never seen, For the people you have never heard about, For the people you have never touched, For the people you have never known,

There are such people and they not far away, They are among us!

Citibank, N.A.- Sofia Presents CitiDirect® Online Banking - Internet Banking for Corporate Clients

Service Now Available in 21 Languages and more than 90 Countries

Fun and Citibank, N.A. – Sofia, a member of Citigroup, presented laughter in February CitiDirect® Online Banking, the bank’s online after school banking service for corporate clients. CitiDirect® is available in more than 90 countries and in 21 languages. It has more than 150,000 users within 25,000 corporate clients. Red Devil CitiDirect® Online Banking is Citigroup’s web-based deliv- sponsored ery platform that offers seamless global access to an entertain- expanding array of corporate banking services through a ment for kids from Sofia children’s homes in November and December 2003. single application, allowing customers to be more effi- We wold like to take this opportunity to express their appreciation for cient, flexible and in control of their banking transactions. Mr. Antoine Iskandar’s overall commitment to charity. Whether or not companies are already transacting busi- Red Devil ness on the web, they can take advantage of Internet technology and get an enhanced banking experience new members through CitiDirect®. The crucial advantage of CitiDirect® is the state-of-the- BICD - International Bank for Commerce and art security based on the dynamic passwords and Development – was established in February encrypted connection. The information is real time updat- 1991 under Bulgarian law and legislation. ed and 24-hours accessible. Through CitiDirect® the BICD operates under a full international bank- clients can operate not only with their accounts in ing license and since its establishment it has never been refinanced Bulgaria but in every country wherever Citigroup is pre- by the Bulgarian National Bank; it is registered at the Securities and sent. The program allows usage of payment preformats AmCham Bulgaria Magazine February 2004 Exchange Commission AD as an authorized investment intermedi- that save even more time in the completion of payment ary; it is a member-shareholder of the Central Stock Depository AD; orders. CitiDirect® is unique in allowing interface with it is a member-shareholder of the Bulgarian Stock Exchange AD. other accounting systems for automatic payments and BICD was chosen in 1991 by American Express Europe Ltd. to reconciliation. become its representative in Bulgaria for all matters related to Ani Filipova, Head of Global Transaction Services charge cards, financial & travel-related services, and business devel- Department in Citibank, N.A. – Sofia said, “CitiDirect® opment. BICD offers tailored banking and financial services to its enables customers in Bulgaria and the world at large, to Bulgarian and international clientele with maximum personal atten- access information reporting through the web. CitiDirect® page tion, know-how and discretion. It has advised a number of major pri- offers Bulgarian companies the ability to track and make 41 vatization transactions, acquisitions and creations of joint-ventures in transactions, view account balances in detail and make the country for companies such as Nestle, Givaudan-Roure, online inquiries. Using their own customized selection cri- Holderbank, Bouygues, Total, UBS, etc. BICD stands by its commit- teria, customers can retrieve reports easily and reliably, ment to first-rate service. ■ including intra-day, real-time status of their accounts.” With CitiDirect®, Citigroup is building the infrastructure Banque Internationale pour le Commerce et le Developpment (BICD) that will also serve as a foundation for many of the value- 2, Ivan Vazov Street, 1000 Sofia added services that the bank is developing on the Tel. +359 2 986 38 28, e.mail: [email protected] Internet. ■ Branch offices: Varna, Plovdiv, Pleven, Pernik, Sevlievo, Velingrad, Svishtov, Veliko Tarnovo, Rousse and Burgas. iF YOUR AD WERE pLACED HERE, YOUR MESSAGE

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Came to Pirin Gavrilov Petar

New Ski Lifts and Hotels Made this Winter Resort a Bit Too Popular By Petar Gavrilov

If your intention is to visit Bansko in search of a quite place where everyone willing to purchase a daily pass must go. A for rest, think again. Bumper-to-bumper traffic starts right simple addition of more registers would have done it. after we exit the Sofia-Kulata main highway at Simitli. It is still early Friday evening, making me wonder what it would be Ski rental is another story. I am happy to eschew renting, like during the weekend. but my friend Michael Lemosle is startled to learn that get- ting mini-skis is virtually impossible, unlike in his native It is inconceivable to arrive in Bansko without a reservation France. If you want a snowboard, you have to wait in two and expect to find a free room for the night. The resort town consecutive lines until you learn that the certain boot sizes hosts tourists from all over Europe. On the weekends, every- have run out. one in Sofia with a car or SUV and a ski rack barges in. The result can be somewhat depressing, as every decent-looking The trip up the mountain with the gondola lift is very comfort- AmCham Bulgaria Magazine February 2004 restaurant (mehana) greets us with the same sign, no free able, unlike the drive on the icy road that was the only option tables. The only reasonable thing to do in this situation is to before. A bit of disappointment comes with the discovery that make a reservation for Saturday night anyplace before we you cannot by a one-way ticket for the gondola and need to continue canvassing. purchase the round trip for 8 Leva. A daily pass which is good for all lifts on the mountain costs 24 Leva and twice that much In the end we end up in a mehana close to the town’s cen- if you are a foreigner (that is, for exactly the same product), tral square, and ready to do anything for food, wine and the which is hardly a friendly gesture toward visitors from abroad. page local specialty, hot rakiya with honey. A quick tour to the 43 nearest disco, Amnesia, confirms our suspicions – no entry Another organizational flop of the resort is the lack of single- without a reservation – so we turn around. trip tickets or carnets for those who want to make just a few runs on the cheap. I decide to use the four-seat chair lift up Saturday starts late. We reach the new gondola lift about 11:30 Todorka range, but realize that the only way to do this was a.m. All parking spots are taken and cars are jammed on both to purchase a daily pass. The personnel explains this obvi- sides of the road, creating chaos that contrasts sharply with ous inadequacy with the new electronic chip-card system the well-organized and virtually line-free lifts in this resort. The that reads the passes. It sounds ridiculous as the introduc- only exception are the two cashier windows at the gondola, tion of electronic tickets should be a no-brainer given all the travel

sophisticated equipment already in use. A friend I meet in the Where to stay? line saves me from my predicament by lending me his daily Bansko boasts over 50 hotels, not counting private pass, so I ride the lift to Todorka and back. accommodations and semi-hotels offering rooms. The tendency is that this number may double next season. The overall impression from Bansko is that the resort is Prices are starting at 15-20 Leva per night and then only friendly only toward skiers and snowboarders. As if the peo- sky is the limit. ple of Bansko and Yulen Co., the concessionaire of the skiing center, are trying to return their investment in a couple of This first full season of the renovated ski center has seen seasons. This may explain the pricing peculiarities, but a huge influx of tourists, which creates problems with instances of sub-par service put the brakes on tourists’ accommodation, especially on the weekends. An alterna- desire to return. tive is to sleep in the nearby Dobrinishte (15 km), especially if you are driving and your priority is skiing and not Bansko seems hell-bent on gaining the reputation for the best the town of Bansko. winter resort in Bulgaria, and maybe in the Balkans. There is a lot of talk about felling more trees for new ski runs. A ski New hotel designs have rarely anything to do with the tra- resort ultimately depends on the health of the mountain that ditional Bansko architecture, and that somewhat spoils surrounds it, and the reckless tempo of Pirin’s deforestation the authentic atmosphere of this town. On the negative does not promise a rosy future for Bansko. Pirin is still a side is the often lukewarm service offered in some national park, protected by UNESCO. Bansko’s municipal web restaurants and the lack of enough friendly staff around site, by the way, boasts about that. ski lifts. To put it in computer-friendly terms: Bansko has upgraded its hardware by building new hotels and ski lifts, Ski lifts in Bansko, all built by Doppelmayer of Austria, are for and is now in need of a software update, that is, estab- the most modern and largest-capacity in Bulgaria. Some ski lishing a better level of service. runs are quite hard, if you trust the judgment of Vassiliy from Sankt Peterburg, among others. Vassiliy is in Bulgaria for the What to eat? first time, but he is not alone in giving high marks to the great Finding a table in a restaurant on the weekend is tough snow conditions, both natural and manmade, of Bansko – a reservation helps and the usual down payment is 10 slopes. ■ Leva per person. Don’t miss local specialties such as Petar Gavrilov Gavrilov Petar

44 AmCham Bulgaria Magazine February 2004 February Magazine AmCham Bulgaria travel

banski starets, kapama, hot rakiya with honey. However, if you have problem with spicy foods, ask the waiter about the contents. Gavrilov Petar Ski runs, lifts Ski lifts nominally work from 8:30 a.m. until 4:15 p.m., but a more realistic estimate is from a bit after 9 a.m. to just before 4 p.m. Daily passes are sold at the cash registers of the lower station of the gondola lift. They use a chip- card technology that sends a signal to lift’s control gates. Ski runs are very good, but don’t venture into backcoun- try free-styling – numerous avalanche-prone zones are Bansko on the Web: surrounding the marked trails. Pirin is notorious for dan- www.banskoski.com - Presents Bansko as a ski center. gerous snow – the area above Banderishka Polyana reg- Current information about weather, rates, ski schools, ularly produces the largest avalanche in the Balkans. rentals. Forum with opinions of tourists and skiers. An excellent web site overall, although it could benefit from How to get to Bansko? broadening the range of offered information. By car, take international highway E-79 toward Kulata. www.bansko.bg is Bansko’s municipal web site. It is very The exit for Bansko is near Simitli. Quality asphalt ends useful if you want to know more about the town and what there, too. The remainder of your drive will take you along to do in it. Offers a list of hotels in Bansko and in the a poorly maintained blacktop freckled with Bulgaria’s nearby Dobrinishte, complemented with addresses, notorious road holes. Do obey all posted signs – the phones and capacities for each. You will find also infor- police are abundantly present along the way. mation about the cultural events outside of ski season, such as the traditional summer jazz festival. You can reach Bansko from Sofia by bus (every day dur- www.banskojazz.com – the site of the Jazz Fest. ing the winter) or you can take the train to Simitli and www.dedopene.com - Presents Dedo Pene’s, one of the continue by other means. Many local hotels have their best known mehana in town plus its little hotel. Nice, own transportation. informative site. ■ AmCham Bulgaria Magazine February 2004

page 45 movies & dvd

DVD Reviews by Kalina Garelova The Pirates: famous actor Johnny Depp Pirates of the and his partner Orlando Bloom, Caribbean: known as Legolas Greenleaf from Peter the Curse of the Jackson’s Lord of Black Pearl The Rings.

Director: Gore Verbinski With: Johnny Depp, Orlando Bloom, Keira Knightley, Geoffrey Rush The creators of Pirates of the Caribbean, originally a children-and-adolescent-oriented film fashioned after a Disneyland park theme, have for sure counted on a solid gross and Includes interviews with: favorable reviews. It is doubtful that they have Charlie: Woody Allen • Richard Attenborough • expected five Oscar nomination, including The Life and Art Jeanine Basinger • Claire Bloom • Geraldine the one for a leading male role. The star of Charles Chaplin Chaplin • Michael Chaplin • Sydney Chaplin attraction of Johnny Depp, who refuses to be • Johnny Depp • Robert Downey Jr. • Milos a romantic hero and insists on playing as if The copious amount of footage from Forman • Bill Irwin • Norman Lloyd • Marcel he has lost all his marbles, has elicited view- Chaplin’s films included on the DVD guar- Marceau • David Raksin • David Robinson • ers’ sympathies, contributed to an impressive antees that you will like this biopic. You Andrew Sarris • Martin Scorsese • David box office and wowed the Academy mem- may even skip the commentary track while Thomson • Jeffrey Vance bers. Witty screenplay helps – some of the you are rolling with laughter. Classic com- Narrated by Sydney Pollack ■ word exchanges between pirates and soldiers edy moments abound and you will see are examples of absurdist linguistic humor. some home movies – Chaplin playing ten- The rest is treasures, caves, parrots, flagman nis with Grouch Marx or working on a rou- ships, skulls and bones, plus a lot of clack- tine that became the famous globe dance clack-clack sword fights. The movie has its from The Great Dictator. The director and problems, but overall it offers a lot of youth- longtime movie critic Richard Schickel has ful enthusiasm without the infantilism. invited comments from a wide range of Distributed by Alexandra Video biographers, friends, critics, actors and directors to comment on Chaplins’ career DVD extras: (Woody Allen, Martin Scorsese, Johnny Commentary track by: Depp, Robert Downey Jr., among others). • Director Gore Verbinski and actor The result is a mixed bag. Even so, the Johnny Depp story of the Tramp narrated by Sydney • Producer Jerry Bruckheimer, actors Pollack is gripping – from Mack Sennett’s Keira Knightley and Jack Davenport studio through the classics of 1920s-1930s • Screenplay writers Ted Elliott, Terry (The Kid, City Lights) to Chaplin’s political Rossio and Jay Wolpert ■ exile from the United States.

In the Movies Runaway Jury

Directed by Gary Fleder With: John Cusack, Gene Hackman, Dustin Hoffman. The intricacies of legal practice often make for in RUNAWAY JURY is vintage Grisham-for-the- (Gene Hackman), who is not lacking in confi- 46 enthralling screen stories – just consider Ally screen, a riveting scene merging high technolo- dent cold-bloodedness either. A third player McBeal, 12 Angry Men or anything based on gy with applied psychology, in which three expert emerges, controlling and extorting everyone else. John Grisham’s novels, for one. A former attor- manipulators are pulling the strings. The story in Excellent acting keeps movie cruising smoothly ney himself, Grisham possesses the inside a nutshell: A widow of an innocent shooting vic- on until the finale, which disappoints with its knowledge of trial laws and procedure, which he tim sues gun manufacturers for their indiscrimi- naive and dangerous idea that if the system is able to pour into his bestsellers. In a way, nate sales of deadly weaponry. Her counselor does not work, it is best to take the justice in our Grisham makes the innards of the legal system (Dustin Hoffman) is a sympathetic liberal, but own hands. Gary Fleder’s previous directing into a show that overshadows the personal fates way too experienced to be the idealist in the includes Kiss the Girls (1997) and Things to Do

AmCham Bulgaria Magazine February 2004 February Magazine AmCham Bulgaria decided in the courtroom, or any political or court room. He comes to head with an expert in Denver When You’re Dead (1995). moralistic insights. The jury selection sequence testifying on behalf of the gun manufacturers Coming in February. Alexandra Films. ■ art Erotic Drawings Adorn Financial Institution Jewish artists in Bulgaria show their work in an exhibition at EI Bank gallery by Diana Popova

Seven or eight artistic galleries opened 1970s. The works are diverse, because in Sofia in 2003, some of which defin- the idea of the exhibition is not to pre- ing unique and different face right from sent different generations, but rather to the start. One of them is “EI Bank” identify (as the title suggests) some gallery at 2 Slavyanska St., across distinctive Jewish features in the artis- from the National Theatre. tic sensitivity. What is more, this hap- Marko Behar pens in eroticism, where senses are Corresponding to the spirit of the insti- especially keen, and “strings” are very confronting himself, on his only gloomy tution it belongs to, the gallery exhibits thin and vibrant. picture showing two estranged naked high-class art with a surprising twist. bodies, the artist has written: Such is the present event entitled At first sight only the individual differ- ”Impotence generates spite, and spite, “Hypotheses of Difference: Jews in ences stand out. For instance, the light, alas, sometimes brings forth art …” Bulgarian Art, Erotic Black and White almost ethereal lines of Jules Paskin, Drawings and Paintings”. combining exquisiteness with keenness Carnival prevails in the works of Ada of observation close to that of carica- Mitrani. In the bottom of the general The show boasts the works of classics tures, that convey both the inmost feel- carnival exaltation an always flashes like Jules Paskin, Marko Behar, Sultana ing in the intimate love-making between half-hidden eroticism. This also goes Suruzhon, Yoan Leviev - the well-known a classical couple, and the jolly for the classical couple “ Artist and pioneers of the 1960s, as well as Ada sodomitic gallery of intertwined human Model”, even if we keep thinking of it Mitrani and Gredi Assa, who claimed and animal bodies. as professional one. the audience attention in the late The works of Marko Behar are diametri- Gredi Assa devotes a series of draw- Marko Behar cally opposite – solitary expressive figures ings to this relationship in which they in dusky interiors, women beyond any appear either as a rabbi and a whore, eroticism, forced to come back to it by or a couple of praying mantises, or lascivious men. The drawings of Sultana even as Darth Vader and an interplan- Suruzhon seem to explore the process of etary princess. “saturation” of the nude female body with eroticism through three love-making acts The exhibition leaves it to viewers to in the same posture: first, a schematic decide whether there is a common portraying of outlines, then their coming to Jewish sensitivity in the works of these life and finally the turning of the forms entirely different artists. The title implies into desired plump flesh. that it is only a hypothesis that everyone proves (or not) for themselves. ■ The drawings of Yoan Leviev are fasci- natingly profligate. Sex celebrates life, AmCham Bulgaria Magazine February 2004 which makes it beautiful. And, as if Among the new galleries in Sofia that immediately drew the attention of the public is ADS at 1 Stara Planina St. There one can see examples of the more “avant-guard” types of art: installations, objects, video art, which unfortunately have page not entered private or museum col- 47 lections yet. Art Aleia gallery at 51A Gladstone St. prefers exhibiting works of chamber and fine art type, attractive to the average collector, reasonably priced. Somewhere in the middle stands Murgash gallery at 6 Murgash St. with exhibitions combining non-standard with aes- thetic forms of art. Jules Paskin Jules Suruzhon Sultana humor Techniques on Being An Effective Employee Never walk down the hall without a To the observer, last year's work looks 1 document in your hands. People with the same as today's work; it's volume documents in their hands look like that counts. Pile them high and wide. hardworking employees heading for If you know somebody is coming to your important meetings. 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Dear Support, Dear Desperate: Whatever you do, DO NOT install Last year I upgraded from Boyfriend First keep in mind, Boyfriend 5.0 is Mother-in-law 1.0 (it runs a virus in 5.0 to Husband 1.0 and noticed a dis- an Entertainment Package, while the background, that will eventually tinct slow down in overall system per- Husband 1.0 is an Operating System. seize control of all your system formance - particularly in the flower Please enter the command: " and try to reinstall the Boyfriend 5.0 program. ated flawlessly under Boyfriend 5.0. download Tears 6.2 and don't forget These are unsupported applications 48 In addition, Husband 1.0 uninstalled to install the Guilt 3.0 update. and will crash Husband 1.0. many other valuable programs, such as If that application works as In summary, Husband 1.0 is a great Romance 9.5 and Personal Attention designed, Husband 1.0 should then program, but it does have limited 6.5, and then installed undesirable automatically run the Jewelry 2.0 memory and cannot learn new applica- programs such as NFL 5.0, NBA 3.0. and Flowers 3.5. But remember, tions quickly. You might consider and Golf Clubs 4.1. Conversation 8.0 overuse of the above application can buying additional software to no longer runs, and Housecleaning 2.6 cause Husband 1.0 to default to improve memory and performance. simply crashes the system. I've tried Grumpy Silence 2.5, Happy Hour 7.0, We recommend Hot Food 3.0 and

AmCham Bulgaria Magazine February 2004 February Magazine AmCham Bulgaria running Nagging 5.3 to fix these or Beer 6.1. Beer 6.1 is very bad Lingerie 7.7. problems, but to no avail. What can I program that will download the Good Luck, Tech Support ■ do? Signed, Desperate Snoring Loudly Beta.