Property Market Is Waking Up

issue 149 may 2014

Analyses: Raising Incomes Hyped Banks Have Earned BGN 77 mln in February AmCham Events: Members Met Sofia’s Mayor Member News: AON Studies Trends of Work satisfaction Edenred Marks its 10th Anniversary in Bulgaria

Property Market Is Waking Up

American Chamber of Commerce in Bulgaria

Business Park Sofia, Mladost 4 Area, Building 2, Floor 6, 1766 Sofia Tel.: (359 2) 9742 743 Fax: (359 2) 9742 741 homepage: www.amcham.bg e-mail: [email protected]

editorial

Dear Reader,

It is enjoyable to see that the real estate market is perking up as our cover proclaims. Signs point in the direction that new businesses are looking for offices and people with disposable income are seeking homes. But is this revival sufficiently robust? Can more be done?

Entrepreneurs, builders and property developers have put up office complexes all around Sofia and other major cites that are in line with the latest standards. Tanya Kosseva-Boshova, executive director, European Trade Center, discusses in her interivew on Page 10 the resumed interest in offices Class A. Olga Stoichkova of Tishman International Companies informs on Page 12 that Varna, Plovdiv and Bourgas are preferred as centers of logistics. We have many new, modern, convenient office buildings with excellent communications. All that is required for them to be pulsating with life is a sustained movement of goods – regardless of whether they are manufactured in Bulgaria (I’d prefer that), imported or transit.

Commercial traffic draws in trade companies, marketing and sales offices, logistics and transportation firms, and other businesses and service structures. All these entities require offices close to storage facilities, airports, ports and train stations.

What is needed now to spur the traffic of goods? Infrastructure! What would happen to the real estate market if ports of Varna and Rousse were to be given on concession and the modernization of the railway link between these cities is completed faster? The trains between this Black Sea and Danube transportation hubs were the first ever to run in Bulgaria, starting in 1866.

Export-import commercial traffic to and from the European Union uses the ports of Rousse and Varna precisely because water provides the cheapest possible way to move cargoes. AmCham Bulgaria Magazine May 2014 The exchange of goods can be intensified via EU’s other maritime door in our region – Thessaloniki. Even though it is much closer to Sofia than Varna, no highway exists that connects the Bulgarian capital with that port, and the railway is chronically under renova- tions.

With proper infrastructure, a serious portion of the commercial traffic between EU and countries in Asia and Africa could pass through Bulgaria. The needed personnel can be page accommodated in all these excellent new Class A offices. 1 How about that?

Sincerely,

Milen Marchev Editor-in-Chief contents

issue 149 may 2014

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

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

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

2 AmCham Bulgaria Magazine May 2014 2014 May Magazine AmCham Bulgaria amcham bulgaria

Board of Directors of the American Chamber of Commerce in Bulgaria President Mr. Peter Lithgow AES Corporation Vice President Mr. Alex Nestor Individual Member Vice President Mr. Daniel Berg European Bank for Reconstruction Contents and Development (EBRD) Treasurer Ms. Petya Dimitrova Eurobank Bulgaria cover story Members Mr. Borislav Dimitrov Cisco Systems Bulgaria Property Market Is Waking Up ...... 4 Mr. David Butts CMS Cameron McKenna EOOD Ms. Diana Pazaitova Fama Consulting By Marina Tsvetkova Mr. George Brashnarov Nemetscheck Bulgaria Ms. Krassimira Chemishanska Amgen Bulgaria interview Mr. Sergey Koynov Forton International Shopping Malls and Office Buildings Mr. Solomon Passy Atlantic Club Bulgaria Mr. Venislav Yotov AIG Europe Limited (Bulgaria Branch) to Dominate Ex-Officio Member Mr. Thomas Bruns Senior Commercial Officer, U.S. Embassy the Deals This Year, Executive Director Mr. Valentin Georgiev Says Tanya Kosseva-Boshova, Executive Director, European Trade Center ...... 10 3M Bulgaria EOOD . AA KRES EOOD . Abbott Products EOOD . AbbVie EOOD . Actavis Bulgaria . Adecco Bulgaria ltd. . Advance International Transport EOOD . AES Corporation . AFA OOD . AGORA-IN Ltd. . By Irina Bacheva AHNtech Branch Bulgaria . AIG Europe Limited (Bulgaria Branch) . AIMS Human Capital . Air Berlin PLC & Co. Luftverkehrs KG . Albena AD . Alfred C. Toepfer International Bulgaria EOOD . ALICO Bulgaria ZhZD EAD, a MetLife Sofia is Preferred Office Location, Plovdiv and Varna - Inc. Company . All Channels Communication . Alliance One Tobacco Bulgaria . Allied Pickfords Bulgaria . Alpha Bank Bulgaria . America for Bulgaria Foundation . American College of Sofia . American English Academy . Good for Production and Logistics, American Research Center in Sofia . American University in Bulgaria (AUBG) . Amgen Bulgaria EOOD . Amway Romania Marketing Srl . Anglo-American School of Sofia . AON Bulgaria . APOLO Ltd. . Arexim Engineering Says Olga Stoichkova, Commercial Manager for . Ashtrom International Ltd. . Association Srednogorie Copper Industrial Cluster . Astra Zeneca Bulgaria EOOD . AT Engineering 2000 Ltd. . Atlantic Club Bulgaria . Atos IT Solutions and Services EOOD . Attica Media Bulgaria Tishman International Companies ...... 12 Ltd. . August Research . Aurubis Bulgaria AD . Auto Bavaria Ltd. . AVON Cosmetics Bulgaria . Axway Bulgaria EOOD . Baker Tilly Bulgaria . Balkan Star Automotive EOOD . Ballistic Cell Ltd. . Baxter Bulgaria Employees require a lot more than sufficient EOOD . BC Serdon . Berlitz Schools of Languages . BG Radio . BICA International Ltd. . BMG Ltd. . BMW Vertiebs GmbH - Branch Bulgaria . BNP Paribas S.A. - Sofia Branch . BOYANOV & Co. . Braykov's Legal technical equipment Says Nikola Ignatoff, Office . British American Tobacco Bulgaria . Brown Forman Beverages Worldwide Sofia Branch LLC . bTV Media Property Manager ...... 13 Group . Bulgarian American Enterprise Fund . Bulgarian Charities Aid Foundation (BCAF) . Bulgarian Executive Search Association . Bulgarian Property Developments EOOD . BulPros Consulting JSC . Bulstrad Life Vienna Insurance Group . Business Intellect Ltd. . Business Park Sofia EOOD . Carat Bulgaria . Castello Precast OOD Bulgaria’s Growth Rate and Efficient Allocation . Center for the Study of Democracy . Cheque Dejeuner Bulgaria Ltd. . Chevron Bulgaria Exploration and Production EOOD . Cisco Systems Bulgaria . Citibank Europe Plc, Bulgaria Branch . Club 50 Plus . CMS Cameron of Capital are Vital for Real Estate Business, McKenna LLP - Bulgaria Branch . Coca-Cola Enterprises Services Bulgaria EOOD . Coca-Cola HBC Bulgaria AD . Says Michaela Lashova, CEO, Forton...... 14 Coface Bulgaria Credit Management Services EOOD . COLLIERS International Bulgaria . Congress Engineering Ltd. . Construction Management Group . Contitrans M Ltd. . ContourGlobal Maritsa East 3 AD . Credit Agricole Bulgaria EAD . Curtis / Balkan Ltd. . Dalkia Bulgaria EAD . Danailov, Mihaleva, Nedelchev & Co. . Delchev & Partners New Housing Declines ...... 15 Law Firm . Deloitte Bulgaria EOOD . denkstatt Bulgaria OOD . Deutsche Bank AG . Devin AD . DHL Express Bulgaria Ltd. . Diamed Ltd. . Dimitrov, Petrov & Co. . Djingov, Gouginski, Kyutchukov, & Velichkov . By Miglena Ivanova, Investor.bg Dobrev & Lyutskanov Law Firm . Dr. I.S. Greenberg Medical Center . Drujba Glassworks SA . Dundee Precious Metals Inc. . DuPont Pioneer . EcoPack Bulgaria AD . Edenred Bulgaria . Ekoterm Proekt EAD . Ekotoi - Service Ltd. . Ekzotika EOOD . Electron Progress EAD . Elevat Ltd. Legal House . Eli Lilly and Company analysis . . . . Eltrak. Bulgaria Ltd. EMC Computer . Systems Austria GmbH Emerson Process. Management . EnergoService Raising Incomes Hyped, Maligned...... 16 AD Engineeringservice . Sofia Ltd. .Enterprise Communications . Group OOD . EOS Matrix Ltd. Ernst. & Young Bulgaria EOOD ESRI Bulgaria Ltd. Etap Adress. Eurobank Bulgaria .Eurohold Bulgaria . European By Marina Tsvetkova Bank for Reconstruction . and Development .(EBRD) European Trade . Center EOOD Expat Capital Experian . Bulgaria EAD .FairPlay International Fama. Consulting OOD Flying Cargo Bulgaria . Ltd. - Licensee of FedEx Banks Have Earned Force Delta Ltd. Forton International AD Foundation Glob@l Libraries - Bulgaria Fox International Channels Bulgaria EOOD . GAEA - Green Alternative Energy Assets EAD . Galardo EOOD . Gasstroymontaj Jsc . General BGN 77 mln in February ...... 20 Electric International . Georgiev, Todorov & Co. . Geostroy AD . Geotechmin OOD . Geotrading AD . Gi Group . GIFTA . GlaxoSmithKline . Grand Hotel Sofia . GTC Bulgaria . Helios . Power Hewlett-Packard By Svilen Kolev, Peter Neykov Bulgaria Ltd. . HILD Asset Bulgaria Jsc. . Hilton Sofia . Honeywell EOOD . IBM Bulgaria . ICAP Bulgaria JSC . Ideal Standard - Vidima AD . Incotex Group Ltd. . Industrial Holding Bulgaria . InterConsult Bulgaria Ltd. amcham events . Interdean Relocation Services . Interlang Ltd. . Intertek - Moody . Intracom Bulgaria EAD . Investbank JSC . Investor BG AD . IP Consulting Ltd. . ITT Exelis . Japan Tobacco International Bulgaria . Jobs.bg EOOD Sofia’s Mayor Announces New Projects ...... 22 . JobTiger Ltd. . Johnson & Johnson Bulgaria EOOD . Johnson Controls Electronics Bulgaria . Junior Achievement Bulgaria . Kaliakra AD . Kamenitza AD . Katilin Popov Enforcement Officers . Kempinski Hotel Grand Arena Bansko . Kempinski Hotel Zografski Sofia . KPMG Bulgaria OOD . LANDMARK Property Management AD . member news AmCham Bulgaria Magazine May 2014 Lexim Sofia Ltd . Lindner Immobilien Management EOOD . Lirex BG Ltd. . M3 Communications Group, Inc. A Hill Edenred Marks its 10th Anniversary & Knowlton Associate . Maria Vranovska, MD, MBA . Mars Incorporated Bulgaria EOOD . Marsh EOOD . Maxi I AD . MB Communications . MBL| Part of the CBRE Affiliate Network . Megatron EAD . Mellon Bulgaria EAD in Bulgaria ...... 24 . Merck Sharp & Dohme Bulgaria . Microsoft Bulgaria . Miltech Ltd. . Minstroy Holding Jsc . Mobiltel EAD . Monbat Plc. . Mondelez Bulgaria AD . Moten Sport . Moto-Pfohe Ltd. . Movex Relocations . Mr. Alex Safety at Work – a Growing Priority Nestor . Mr. David Hampson . Mr. Jean Talmon . Ms. Anelia Tatarova . Ms. Kalinka Kovatcheva . Ms. Margarita Radeva, CPA . Municipal Bank Plc . Musala Soft AD . Nemetschek Bulgaria . NEXTDOOR Ltd. . of a Sustainable Business ...... 25 Novacon Bulgaria Ltd. . Novotel Sofia MHQ . Nu Boyana Film Studios . Office for Mining Industry and Metallurgy Ltd. . On Bulgaria Ltd. . Oracle East Central Europe Limited - Branch Bulgaria . Orak Group Europe Ltd. . Orbit Ltd. . Orkikem Ltd. . Panchim Ltd. . PANDA - IP Ltd. . Pedersen & Partners . Penev LLP . Penkov, 43% of Employees Versus 63% Markov & Partners . Pfizer Luxembourg SARL Branch Bulgaria . Philip Morris Bulgaria EOOD . Philips Bulgaria Ltd. of Top Managers Consider Themselves . PMB EOOD . PPD Bulgaria EOOD . Premier Luxury Mountain Resort . Premier Tours Ltd. . Prestige 96 AD . Progress CAD R&D Centre Ltd. . Provident Financial Bulgaria Ltd. . PSG Payroll Services Ltd. . PwC page Recognized in the Company ...... 26 Bulgaria . Quadrant Beverages JSC . Radisson Blu Grand Hotel . Red Devil Catering Plc . Regus Bulgaria Ltd. . Renault Nissan Bulgaria SRL . Right Rental Ltd. . RSM BX Ltd. . S&T Bulgaria . Sanofi - Aventis Bulgaria 3 new members ...... 26 EOOD . Sb Accounting and Consulting . Schenker EOOD . Schneider Electric Bulgaria . SECTRON . Sensata Technologies . Shell Bulgaria EAD . Sherita M Ltd. . Siemens EOOD . SIENIT Holding . Sitel Amway Bulgaria EOOD . Sodexo Pass Bulgaria EOOD . Sofia Hotel Balkan . Sogelife Bulgaria IJSC . Sopharma AD . Sopharma Trading JSC . St. Sofia Golf Club & SPA . Stanton Chase International Bulgaria . Steelcase Helios Power International . Stefan Dimitrov, Norman Realestate Co. Ltd. . Sunfoods Bulgaria EOOD - Development Licensee of McDonald’s in Bulgaria . Sutherland Global Services Bulgaria EOOD . Tavex EOOD . TBI Bank EAD . sports TechnoLogica EAD . Telelink EAD . TELUS International Europe . The Coca-Cola Company Bulgaria . Tishman Management Company EOOD . Titan Zlatna Panega Cement . TMF Services EOOD . Tocheva & Mandazhieva U.S. National Soccer Team for World Cup 2014 Law Office . Totema Engineering JSC . UniCredit Bulbank . UniCredit Leasing EAD . Unimasters Logistics Plc . Unique Estates . Unisys Bulgaria Branch . United Bulgarian Bank . VAPTECH Ltd. . Videolux Holding / comes from… Germany and California ...... 28 . . . . . Technopolis VISA Europe VIVACOM VMware . Bulgaria EOOD . VSK Kentavar - IZ Dinamika. EOOD By Tony Manfred/Business Insider VUZF University Higher School of Insurance and Finance Walltopia Ltd. Welcome to Bulgaria Westinghouse Energy Systems Bulgaria Branch . World Courier Bulgaria Ltd. . World Transport Overseas Bulgaria Ltd. . WorleyParsons Nuclear Services JSC . Wrigley Bulgaria EOOD . Xerox Bulgaria Ltd. . Yastrebets Hotel Wellness & SPA . Zlatina Ruseva-Savova, LL.M., MBA . Zobele Bulgaria EOOD cover story Property Market Is Waking Up Analysts and brokers project an increase in real estate transactions and cheaper mortgage loans. Experts say interest rates will fall by up to 0.5 percent. Market revival is expected to continue throughout 2014 By Marina Tsvetkova

In theory, prices of goods and services plummeted. growth of 0.9 percent in 2013 was are something like road signs that show beyond expectations. IME forecasts what is happening in the economy. The Thus 2013 marked something like an further strengthening of the economic Bulgarian residential market seems to anniversary: five years since the begin- growth, in line with the more optimistic have started following that theory, while ning of the crisis and the end of a full expectations for the EU as a whole. the rapid ups and downs in real estate five-year boom cycle, followed by five On the other hand, investment in the prices are now in the past. years of falling prices and Bulgarian economy grew in the fourth quarter of 2013 for the first time since In the early 1990s the prices of real the beginning of a new the beginning of the year. The strength- estate in the country started rising, stage of development of ened investment activity could be 4 gained speed in 2006 and collapsed in the property market interpreted as a sign of restored invest- 2009. Statistics showed that the num- ment confidence. ber of agencies reached an impressive in Bulgaria, the industry says. The 6,000 during the peak, while a few forecasts now are increasingly opti- The better performance of the economy years before there were just 1,000 mistic: the market of mortgage resi- in 2013 and the higher incomes of bor- agencies active. As the market literally dential loans is reviving and data sug- rowers resulted in a rise in demand for froze in 2009 and 2010 and deals gest sensible growth in 2014, the bigger mortgage loans, Postbank data reached their pre-boom levels, the Institute of Market (IME) Economics show. While the share of loans worth AmCham Bulgaria Magazine May 2014 May Magazine AmCham Bulgaria number of both companies and brokers says. On the micro level, the economic up to 20,000 Euro declined from 44.8 cover story

percent in 2012 to 40 percent in 2013, loans in the range of 20,000 to 80,000 Euro increased 0.9 percent to 2.3 per- Eurostat: Bulgarians cent. It can be presumed that the biggest “winners” from the improved economic performance were the people among biggest with higher education, which allowed them to keep their jobs and/or increase homeowners in EU their incomes. More than half of the people in the EU member states have their own homes, a Although the average residential prices Eurostat analysis of the type and status of homes in the EU in 2011 shows. The larg- in the country continued decreasing in est share of homeowners who are not burdened with a mortgage exists in Romania 2013 on an annual basis, the pace was (97 percent) and Bulgaria (95 percent). The two countries also have the smallest twice slower than the year before. share of people who rent a home: between 2 and 3 percent. There was a positive change too: a rise in the average prices in some of the The share of people who rent a home is the largest in Switzerland (about 56 percent) larger cities and especially in Sofia, and it is well above the share of homeowners. where a slight increase in residential Other countries where renting a home is popular are Germany (about 30 percent), prices was registered in three consecu- Denmark, the Netherlands and Sweden (about 25 percent). tive quarters of 2013. That shows higher interest in the purchase of residential About 66 percent of the people in Sweden live in homes with a mortgage or loan. The estate and an even bigger potential for situation is similar in Norway and Iceland (around 63 percent), the Netherlands (605), mortgage loan growth in the coming Denmark (52 percent) etc. Sweden, Switzerland, Norway and the Netherlands are months. the EU countries with the smallest share of people living in their own homes without a mortgage or loan: between 5 and 10 percent. The data show that the real estate market Around 40 percent of the people in the EU live in apartments, a little more than a third grew 53 percent in 2013, (35 percent) in detached houses and 25 percent, in semi-detached houses, the European statistics show. year on year, which is a clear sign of The share of people occupying apartments is the biggest in Spain, Latvia and coming stabilization. On the whole, Estonia: about 65 percent. The share in Bulgaria is 47 percent with Bulgarians own- Bulgarians bought mainly two-bedroom ing more than 2.5 million homes in the cities and nearly 1.3 million homes in the vil- apartments. Such apartments cost lages. around 45,800 Euro in the capital city and between 42,000 Euro and 49,000 The biggest share of people occupying detached houses is in Croatia (71 percent), Euro in the coastal cities of Varna and Slovenia (66 percent), Hungary (64 percent), Romania and Denmark (about 60 per- Burgas. In 2014, the interest rates on cent). mortgage loans are expected to fall, which will further encourage property Although Bulgaria and Romania have the highest rate of home ownership, people in deals in the bigger cities of the coun- the two countries cannot boast high-quality living conditions in terms of number of try. rooms and residents. Dwelling overcrowding is the highest in Romanian (54 percent), Bulgaria, Poland and Hungary (47 percent). Another encouraging trend on the real AmCham Bulgaria Magazine May 2014 estate and mortgage loan market is The lowest levels of dwelling overcrowding are observed in the Netherlands (1.7 the increase in new construction and percent) and Belgium (2.2 percent), while the EU average indicator is 17 percent. the number of residential property per- mits. That is a sign of starting recovery According to another housing quality indicator – availability of basic sanitary condi- in residential construction, as it is the tions – some 38 percent of Romanians and 25 percent of Bulgarians do not have fist time since the beginning of the indoor flushing toilets, compared with an average of 3 percent in the EU. In addition, crisis that there has been such an 36 percent of Romanians and 15 percent of Bulgarians have no bath or shower in increase. their home. In Spain, the Netherlands, Sweden and the United Kingdom such hous- page ing problems are practically zero. 5 In the beginning of 2013, the tenants of residential estate in the capital city Crime, violence or vandalism in the local area is perceived as a problem by an aver- were also more active. Demand was age of 14 percent of Europeans. The indicator is 27 percent in Bulgaria, 20 percent concentrated mainly in the center of the in the United Kingdom and Greece, 18 percent in the Netherlands, 16 percent in city, the southern regions and Mladost Romania. The highest risk of losing one’s dwelling because of poverty is seen in residential district. The average rent Romania (53 percent of the population), Hungary (40 percent), Bulgaria and Latvia ranged between 150 and 250 Euro a (35 percent). The risk of losing one’s home because of poverty is virtually non-exis- month; the main motive for closing tent in Switzerland, the Netherlands, Norway, Ireland and Iceland, Eurostat reports. deals was the availability of a repaired cover story

bathroom and kitchen.

The rental market can get a manifold boost if tenants decide to make minor improvements in the offered apartments, brokers say. Bulgarians are the most crammed for room as compared with the other Europeans,

surveys show. The residential area per person in the country is the smallest on the Old Continent: about 15 sq. m. By comparison, people in Hungary live on 20 sq. m, and in Germany, on 41 sq. m. In Bulgaria, there are more than 50,000 homes with four or more people living in. 70 percent of homes are occupied by a single family.

According to different assessments, a person needs about 30 sq. m of area to live comfortably. The recent trend in residential purchases is for more spacious homes. Developers are also following an entirely different policy from that before the boom, which was followed by the crisis. The quality criteria are now higher and the time of small box-resembling homes is over. The apartments designed now are some 30 percent larger and many of them have higher ceiling. People in the industry say that

rough construction is in More than 10 percent of the transac- construction). Half of the apartments demand again tions in the first quarter of 2014 were in the highest-quality buildings were closed before the building obtained sold before that stage. There was also on the residential property market. the so-called Certificate No 14 (rough a rise in the inquiries for financing for Agricultural land market The price of agricultural land in Bulgaria will continue to rise, despite In 2007-2009 a total of 360,000 hectares of fields were sold in the drop in the number of deals that was reported in 2013. This is nearly 374,000 deals. The average market price at the end of the the conclusion in the analysis of the land market in 2013 published period reached 3,000 Leva per hectare. A total of 494,000 trans- by the Ministry of Agriculture. According to the authors of the analy- actions for 515,000 hectares were conducted in 2010-2013. The sis, the agricultural land market in Bulgaria remains among the most average price reached 3,820 Leva per hectare, which was an 6 attractive and dynamic ones. That is due to the implementation of increase by 27 percent compared to the preceding period. the Common Agricultural Policy of the EU and the constantly rising size of subsidies. Agricultural producers have been the most active On the whole, the agricultural land market was extremely active market players for the past three years. By acquiring property they in 2010-13 with prices going up. At the beginning of the period solve many of the issues related to the renting of land and the par- the average market price in the country was 3,210 leva per hect- ticipation in subsidy schemes under the European funds. Surveys are, while 2013 saw an increase by 34 percent. There remained conducted by the System for Agricultural Market Information (SAPI) a considerable difference in land prices by region. Rental agree- since 1998 show a dynamic increase in the number of deals, as well ments were relatively stable. The level of rental payments

AmCham Bulgaria Magazine May 2014 May Magazine AmCham Bulgaria as in the market prices and rental payments. increased but not as much as the prices of deals. cover story

homes in construction. In most cases that happened at the stage of Broker profession gradually gaining Certificate 15 (suitable for occupa- tion). Banks provided smaller financ- popularity in Bulgarian education system ing for buildings at an earlier stage, for Brokerage is a lucrative business but there is no education qualification for that. instance Certificate 14, so clients pre- Everybody can try their power and skills and all they have to do is register a com- ferred to wait until they got Certificate pany. During the years of the property boom the unofficial number of brokers was 15 or Certificate 16 (right to use). nearly 10,000 and now it is between 3,000 and 4,000. According to brokers buyers are well informed about the risk they take when The broker profession is gradually gaining popularity in the Bulgarian education sys- buying an apartment under construc- tem: starting from high school, to higher schools (four universities) and to vocational tion. They are interested in safe proj- training centers (more than 10). ects of proven developers. High schools started teaching brokerage after in 2009 the sectoral ministry started One of the main groups of buyers of developing state educational standards, which were published in 2012 in their final apartments under construction is fami- form as an ordinance. There are currently nine schools in the country that teach lies who already have a home but brokerage: in Sofia, Varna, Plovdiv, Kardzhali, Montana, Blagoevgrad, Dobrich, want more living space. Another group Veliko Tarnovo and Pleven. A total of 1,157 future professionals are trained in 49 is parents buying apartments for their classes, data of the Ministry of Education show. The initiative is most often taken by children. They expect to have an apart- the vocational schools on construction, architecture and geodesy. ment ready for moving in after a few years, when their child will seek inde- Four universities in Bulgaria prepare staff for the real estate sector. Economic University pendence. They find the solution to in Varna introduced Real Estate Economics in 2005; the same specialty was opened in their problems in the new buildings University of National and World Economy in Sofia in 2007. University of Architecture, that differ from those built in 2006- Construction and Geodesy launched a bachelor’s program on Planning and Management 2008. The most active buyers remain of Land and Property in 2006. A few years ago St Kliment Ohridski University of Sofia the people 25 to 45 years-of-age who started a master’s program on Facility Management (a complex of building management are looking for a first home – usually processes). Interest in the specialty is strong with 110 students having been admitted for simpler apartments worth 40- 50,000 the last two years. The employment potential is quite good: from property agents and Euro. Their expectations are for little credit consultants, to public administration experts and appraisers. cheaper mortgage loans – with interest starting from 5.9 to around 6.5 or The vocational training centers are the third group of organizations preparing staff. 6.75 percent. There already more than 10 licensed schools that have right to train brokers. The structures have a national association, as well as agencies such as Address, Mirela Residential prices and Toniko. They organize courses that are followed by exams and the candidates remained unchanged who pass them receive certificates.

in the first quarter of 2014. The aver- around 480 Euro per sq. m of residen- districts of Lyulin, Nadezhda, Mladost, age price in Sofia was about 660 Euro tial area. During the period there was Ovcha Kupel, Borovo, Druzhba, per sq. m, similar levels were regis- a rise in prices in certain more pre- Krasna Polyana, Lozenets, Svoboda tered in Varna. The levels in Plovdiv ferred districts. Inquiries in the capital and Strelbishte. Calculations of were about 500 Euro and in Burgas, city are made mainly for the residential Bulgarian Properties on the basis of attractive and dynamic AmCham Bulgaria Magazine May 2014 In 2013 there were 117,727 deals for 116,529 hectares. As com- size of the leased land was 2.2 hectares per owner and 19.4 pared with 2012, the number of deals dropped 20 percent. The hectares per leaseholder. The predominant rent was of the mixed average market price in the country was 4,290 Leva per hectare, type and varied in a wide range. The average rate was 250 to or 4.6 percent more than in 2012. 300 leva per hectare. The leading payment indicator for in-kind rents is the average wheat harvest: from 10 to 25 percent of the page The biggest number of deals for the period were closed in the harvest. Many of the rental contracts specify a fixed amount of 7 North-Western Region of the country: 31,267 deals for 33,149 grain to be given as payment: from 300 to 800 kilos per hect- hectares. The average market prices in the region was 3,800 are. leva per hectare. The year 2013 saw an increase in the deals intended to change A total of 131,552 rental contracts for nearly 290,000 hectares of the use of land. A total of 5,412 deals were closed in 2013 or 9 agricultural land were closed in 2013. In comparison with 2012, percent more than in 2012. The land sold in those deals was the number of deals decreased 15 percent and rentals fell 10 4,957 hectares, up 3 percent year on year. The average market percent. There were 15,084 leaseholders in 2013. The average price was 16,330 leva per hectare in 2013. cover story

national statistical data show that the average prices of apartments in the regional cities in the first quarter of Tax authorities scrutinize 2014 increased a real 1.79 percent real estate deals (after inflation), year on year. The commission fees of brokers from every second deal are not reported to the state. Nevertheless, In this way the large broker agencies hide incomes and save on the taxes due, calculations of the tax authorities show. In 2013 alone the National Revenue Agency property prices in Sofia (NRA) conducted more than 100 check-ups and audits of real estate agencies and are the lowest as individual brokers believed to be at risk of tax evasion.

compared with other The mass inspections were prompted by hundreds of complaints by clients of real countries in Europe. estate agencies who had not been given a receipt or any other document for the commission fees they had paid. In 80 percent of the cases the inspections confirmed Even the capitals of neighboring countries the taxation breaches. – Belgrade, Skopje and Bucharest – have higher prices. While standard apartments There were even cases when the fee reached 2,500 Euro but the property buyer and in Vienna start from 2,500 Euro per sq. m, the agency did not have a contract signed, nor a document was issued for the paid in Sofia they start from 750 Euro. There sum. The penalty for legal persons who fail to issue a receipt is 2,000 but it can reach are also top offers: the most expensive up to 10,000 if the company does not have a cash register or if the cash register is house in Bulgaria that is currently up for not connected to NRA’s system, the revenue administration reminds. sale is asking for 4 million Euro. During the inspections the tax authorities established that deals were regularly The Russians remain prime buyers of reported at a much lower price. In principle brokers advised their clients to certify the property in Bulgaria. They dominate the sale at the notary’s office at a price slightly above the tax appraisal of the property. market along the Black Sea coast, In this way buyers and sellers saved on the fees and taxes due to the notary and the making 95 percent of the purchases municipality. At the same time brokers also reported a commission fee on the lower there. Interest in buying second homes amount. has been recently shown by people from Ukraine, Belarus and Kazakhstan. Nearly 700 million leva turnover has been hidden by the sector for the last five years, Around 20 percent of foreign buyers a NRA analysis shows. belong to the group of “others”. They include citizens of many European however, prove that the Bulgarian mar- with the rise in activity expected to countries: France, Germany, the ket is steadily positioned internationally reach 5 or 10 percent. A crucial factor Netherlands, Belgium, as well as more as a destination for second-home pur- for Bulgaria will be the sanctions that exotic and distant destinations such as chases. There is interest in village the EU may impose, because the cli- the United States and Canada. None of houses and apartments in the ski ents come mainly from Russia and the these nations, however, shows as resorts and the coastal holiday villages. property market depends on their pos- steady presence as the Russians for The forecasts for the vacation property sibility to travel and freely buy homes in whom this is a trend. Those 20 percent, market are for a successful year 2014, this country.

8 AmCham Bulgaria Magazine May 2014 May Magazine AmCham Bulgaria

interview Shopping Malls and Office Buildings to Dominate the Deals This Year Says Tanya Kosseva-Boshova, Executive Director, European Trade Center By Irina Bacheva - Do you see signs of recovery in the residential real estate and construction market in Bulgaria?

- There are clear signs that the residential real estate market and the construction in general are slowly recovering. The degree of recovery varies across the different cities in the country and across several segments. Whereas in Sofia and Bourgas there is significant surge in the development of new projects, other cities see modest signs of or no recovery at all. A good manifestation of the recovery is the development of the largest residential project in the country to date in the district of Mladost in Sofia by an international construction company and developer which opened its office in Sofia recently. In addition, brokerage companies have reported an increase both in the number of transactions and the rates at which they are con- cluded.

- What would be the most wanted and popular deals in 2014?

- The first investment deals that we will likely see to unfold will be for shopping malls and large-scale office buildings as they have some good track record and high occupancy levels; the time has come for the ‘secondary’ market to materialize.

In addition, when it comes for speculative development – investors will likely focus predominantly on offices and industrial projects as demand is gradually starting to outweigh supply.

- Can you name some of your recent successful proj- services related to the construction process documentation, ects? filing inquiries, procuring cadastral sketches, etc. Moreover, an issue which many of the developers and the Association of - European Trade Center comprising of five Class A office Commercial Buildings Owners, established recently, have buildings is a very successful project enjoying strong interna- been quite vocal about is the inability to reclaim VAT on invest- tional tenants and occupancy levels exceeding 95 percent. ments in state or municipal infrastructure such as local roads which developers are forced to make in order to add value to - Which towns/regions in Bulgaria are most preferred for their projects. new projects? - What is your vision and strategy for the development of - Sofia and Bourgas are the cities which currently enjoy the Sofia: a cultural capital, green city, city of growth, smart 10 greatest number of new developments either in the planning city? stage or already in construction. Recovery in the other big cities will probably follow but with some lagging and not with the - As a capital, Sofia is an economic power that drives the stan- same intensity. dard of living in a country where many cities have poor economic performance indicators. It is therefore of paramount - What are the regulatory issues that in some way hamper importance that the strategy of the development of the city is your business? predominantly focused on growth and further economic development, especially in the services sector and preferably in the AmCham Bulgaria Magazine May 2014 May Magazine AmCham Bulgaria - There is definitely room for improvement in the field of online high-value-added industries.

interview Sofia is Preferred Office Location, Plovdiv and Varna - Good for Production and Logistics Says Olga Stoichkova, Commercial Manager for Tishman International Companies

- Do you see a recovery in the residential real estate and construction market in Bulgaria?

- We see a slow recovery, driven mainly by second-home foreign buyers and young-family first-home buyers. The prices have been stable over the last two years and are not expected to grow significantly in the short term.

- What would be the most wanted and popular deals in 2014?

- In general, the market as we see it now is more mature and the good deals will be those fulfilling the requirements of both parties.

- Can you name some of your recent successful projects?

- Of course, we can say that our office building A2 is perform- ing successfully on the office real estate market. Our development Sofia Airport Center has received several prestigious international and local awards, as well as LEED® Gold certificate as a recognition for its sustainability and unique environment. All that is appreciated by our tenants and we expect to start new buildings shortly.

- Which towns/regions in Bulgaria are most preferred for new projects?

- It depends on the specific real estate. For offices and residen- infrastructure or the way the waste collection tax is calculated. tial buildings Sofia definitely remains a preferred location. ˪For We believe that all such problems can be overcome with dia- production and logistics - Plovdiv, Varna, Bourgas are among logue and reasonable efforts from the interested parties. the options for investors. There is a good potential for office developments in the university cities. - What is your vision and strategy for the development of Sofia: a cultural capital, green city, city of growth, smart - What are the regulatory issues that in some way hamper city? your business? - My preference is for a smart and green city and we all should - They are quite a few, but we can name some like VAT on develop projects in this direction. Three professionals from Tishman are Certified Property Managers®

12 Three Tishman International managers, who successfully complet- training, which covered several mod- Companies property managers ed the specialized training required to ules within a two-year period. During received their certificates from the qualify for this recognition. his visit to Bulgaria, Greenblatt visited World President of the Institute of Sofia Airport Center (SAC), one of the Real Estate Management (IREM) Nikola Ignatoff, Malinka Marinkina and most sustainable and modern business Joseph Greenblatt at a ceremony held Olga Stoichkova were officially award- parks in the country. His tour provided last month at Crystal Palace Hotel, ed the Certified Property Manager® him with the opportunity to see first- Sofia. During the event, he congratu- (CPM®) certification, as a result of hand the high professional standards successfully completing the rigorous

AmCham Bulgaria Magazine May 2014 May Magazine AmCham Bulgaria lated the first 10 Bulgarian property used by SAC property managers. interview

Employees require a lot more than sufficient technical equipment Says Nikola Ignatoff, Property Manager -You are one of the managers who -We all know that certified buildings maintain the trust of our tenants. We have been awarded the prestigious provide a healthier working environ- achieve this through an open two-way CPM® title. How do you feel about ment, which increases the effective- communication process. Second, we receiving this recognition? ness and the comfort levels of the are constantly informing ourselves employees. The most reasonable way about the needs of our tenants and - Alan D. Levy, chairman of Tishman to manage sustainable properties is to provide them with timely responses to International Companies, has held the have seasoned managers, who imple- their requests. Additionally, we are prestigious certification for nearly 50 ment the best practices and increase conducting series of studies aiming to years. As a result, most of our compa- the value of the assets. There is an identify the most important factors of ny procedures and methods are upward trend in building certification, the working environment, which make already in accordance with the best but tenants are becoming more employees feel more comfortable and practices. Of course, we have expand- demanding not only to their offices but highly motivated. One of the key find- ed our knowledge about the managing also to the quality of the property man- ings is that employees require a lot process of real estate properties dur- agement services. Having said that, I more than sufficient technical equip- ing this course. We are very proud of believe that we will see increasing ment. They want sports facilities, main- this achievement and I believe that this number of specialists willing to obtain tained green areas for walks and relax- will be beneficial for all our existing and professional certification. ation, variety of dining facilities and future tenants at Sofia Airport Center. indoor parking. In the light of these - Which are the ways to meet tenant findings, I assume that the need of -How important is the professional requirements? How do you achieve sustainable business complexes as real estate management for a sus- this at your business park? our LEED Gold certified Sofia Airport tainable development as Sofia Center is significant and will be increas- Airport Center and in general? - First, it is our priority to earn and ing in the upcoming years. AmCham Bulgaria Magazine May 2014

page 13

The awarded managers of Tishman, from right, Olga Stoichkova, Nikola Ignatoff and Malinka Marinkina. interview Bulgaria’s Growth Rate and Efficient Allocation of Capital are Vital for Real Estate Business Says Michaela Lashova, CEO, Forton

- Do you see a recovery in the residential real estate and construction market in Bulgaria? In what direction?

- All indicators that we track point to general recovery in the market – economic growth, investor sentiment, buying and leasing activity across both the residential and the commercial real estate segments. The signs have so far spread to genuine demand, that is, demand from end users of real estate, private individuals and corporates. This has yet to filter into investment and construction activity. Both have been bottoming out throughout 2013, more so in the residential and office sectors albeit from very low levels. As confidence rebuilds over time the numbers of active developers and investors will gradually increase. It just takes time to assess sional service providers and willing sellers exists projects can be the opportunities, to agree on pricing and arrange the acquisition successfully revived. As exclusive leasing agent and property of yielding asset or development land. That said, we expect stron- manager we helped Panorama Mall open at 80 per cent occu- ger investment activity this year as international and local buyers pancy on April 12 and attracted almost 30,000 visitors in its first recognize that competition in some segments such as offices and day of trading. industrial space is at historic lows and persistent demand should spur rental growth for the right projects and locations. -Can you name your recent successful projects?

- What would be the most wanted and popular deals in -Besides Panorama Mall we have been either exclusive leasing 2014? service provider or property manager or both on a number of development projects, including Paradise Center, which is the - Residential is back for private individuals who are trying to get biggest shopping center in Bulgaria with 80,000 sqm of gross ahead of the market recovery. This has already prompted stron- leasable area, successfully trading for more than a year now, ger demand for development land in 2013. From the enquiries Polygraphia Office Center, Litex Tower and many others. from homebuilders we judge that demand is growing for well-located real estate. A recent sales procedure in a prestigious neigh- But we do not limit ourselves to developments. For us, every borhood we cannot mention attracted as much as 14 bidders. successful corporate occupier lease or purchase, every valuation according to the International Valuations Standards is itself a suc- We also see an active land market for industrial real estate. The cess. Our alliance with Cushman & Wakefield, the largest non- lack of modern available buildings has pushed new corporate public commercial real estate services company globally, allows occupiers in the secondary market but this opportunity is already us to act as a two-way gate, linking Bulgaria’s and the world’s diminishing. This means that they will either have to purchase economies. We are constantly speaking to and convincing inter- land and develop it on their own or to find someone to do it for national companies to come to Bulgaria and take advantage of its them within the build-to-suit model. This also means that there will position within the European Union and its skilled and competitive be opportunities for industrial and logistics real estate developers labor force. By this measure every successful foreign investment to start new projects. In the office sector, acquisitions of opera- with our participation is a success not just for our business but for tional buildings are on the radars of both international and domes- the country as a whole. tic investors. While internationals would look at income-generating assets, the local players have so far shown higher risk tolerance, - Which towns/regions in Bulgaria are most preferred for new often indulging in transactions of distressed or vacant real estate. projects? Both trends are expected to gain strength towards the second half 14 of this year as a number of new and existing players actively - New developments focus on the capital and the next three big- screen the market. gest cities – Plovdiv, Varna and Burgas. While the office segment has concentrated in Sofia where most of the corporate headquar- On the distressed front, retail is another segment which is coming ters are located smaller cities and regions can claim their fair to the spotlight. The reason is that demand from international share of real estate development in residential, retail or industrial occupiers is relatively stable, at least in bigger and in less satu- real estate. That said, most recently, there has been a growing rated markets, meaning opportunistic investors could profit from interest in second-tier cities from office occupiers in the business turnaround situations. Panorama Mall in Pleven already demon- process outsourcing sector. Sooner or later office developers will AmCham Bulgaria Magazine May 2014 May Magazine AmCham Bulgaria strated that where a combination of committed investor, profes- follow them. interview

A similar pattern is observed on the manufacturing side of the flows in the country, domestic or foreign, the higher the potential industrial and logistics sector where occupiers are export-oriented output of the economy, hence higher real estate utilization and and cost-sensitive. value.

In retail, the big cities have been more or less saturated with - Your vision and strategy for development of Sofia: cultural modern shopping centers so acquisitions of operational assets capital, the green city, the city of growth, the smart city? are more likely than new developments. That said, a part of the market would most probably focus on projects whose construc- - Perhaps any of the above could define the future of Sofia in their tion is currently on hold or which have high vacancy rates. own ways. But from a free market perspective the city of growth looks most plausible and in line with what Sofia’s and Bulgaria’s -What are the regulatory issues that in some way hamper citizens would expect. First of all urbanization is a global trend your business? which is here to stay. Cities are where talent meets capital to produce positive outcomes to the benefit of both the individual -Real estate accompanies nearly every material human activity and society. Contrary to the overall negative demographic back- so it is subject to a large number of regulations, directly or indi- drop Sofia and the next three biggest cities have seen positive rectly. From a purely land use point the sometimes lengthy population growth over the last ten years. They will continue to procedures, the lack of consistency and predictability in urban attract the most talented and skilled professionals, entrepreneurs planning, the lack of transparency on the city’s strategic deci- and innovators, as well as international and domestic capital sions could all hinder a project or turn down an investor or chasing new opportunities. developer. Yet we should not overstate their significance although they could have spared us some of the boom-period But urban growth does not come without challenges. Higher pol- excesses in development. In fact, the market has not been lution levels, traffic, crime, not to mention terrorism threats could much regulated in the recent past and neither it is now. What constrain and put at risk the potential rewards. They are already really affects real estate business in a profound way is the over- prompting the search for sustainable solutions in and out of the all output of the country, its growth rate and the efficient alloca- built environment that we operate in. This is Forton’s raison d'être, tion of capital in productive ways. This is where the market to help companies sustain growth and minimize risks by selecting needs more institutional and public efforts. The more investment right operational setting to maximize their footprint and profits. New Housing Declines By Miglena Ivanova, Investor.bg Construction of new housing becomes more limited in Bulgaria, according the National Statistical Institute (NSI). The newly built and commissioned residential buildings continued to decline last year. Because of the crisis and oversupply in some areas of the country the developers have greatly reduced their activity.

Last year in the country were commissioned 2,199 residential buildings - 200 fewer than in 2012. This number is even

smaller that the new buildings placed in AmCham Bulgaria Magazine May 2014 service in 2010 - the worst year for con- in the capital - last year they were only buildings decreased to 427 in 2013 from struction industry and the real estate 284 compared to 634 in 2012 and 443 last year. The number of the com- market (2,350 buildings) according the nearly 1,200 in 2011. In comparison, missioned houses increased to 2,329 data of the statistical institute. in 2013 the new housing in areas such compared to 1,944 a year ago. as Pleven, Veliko Turnovo, Dobrich Meanwhile the number of the newly con- and Haskovo was more than in the In Bourgas a smooth decreasing trend structed houses dropped to 9,250 in capital. has been registered in the number of

2013, starting from 9,970 in 2012, 13,953 newly built residential buildings in the page in 2011 and 15, 711 in 2010. The data show that there is pressure on last four years. During the past year the 15 the new construction in Varna, Bourgas number of new residential buildings The new housing construction in Sofia and Plovdiv, but the dynamics of the decreased by 61 to 322, and housing - City has dropped by nearly half in a year. activity in the sector is not as sharp as in with less than 200 to 2,732. Last year 76 new residential buildings Sofia. The seaside market is strongly were put into operation against 132 in supported by the demand from Russian- In Plovdiv the new commissioned house 2012 and 174 in 2011. speaking customers. buildings constantly increase over the last four years, but the number of the houses Similar is the trend of the new homes In Varna the number of the new house reduces, the statistics showed. analysis Raising Incomes Hyped, Maligned Inequality and low living standards threaten the social peace, trade unions say. A rapid rise in wages will ruin the economy, the government argues By Marina Tsvetkova

President of Bulgarian Confederation of Independent Trade Unions Plamen Dimitrov shakes hands with chairman of BSP Sergey Stanishev. Socialists Prime Minister Plamen Oresharski during a meeting with Laslo Andor - promised to raise the minimum wage in Bulgaria till the end of the term of European Commissioner for Employment, Social Affairs and Inclusion. They current government. discussed in Sofia the employment and income issues in EU and Bulgaria. It is a disturbing fact that nearly half of the Bulgarians are police officers are better paid. Following are doctors and threatened with poverty. Statistics are unequivocal. In terms judges, who get above 1,000 Leva. The average working of incomes, the Bulgarians are lagging behind the rest of the wage in Bulgaria is 808 Leva (405 Euro). According to data Europeans. The speed at which they are trying to catch up of the Confederation of Independent Trade Unions in does not suggest they will reach the average EU living stan- Bulgaria (CITUB) more than half of the employed have not dards soon.

About 1.6 million people in Bulgaria live on 251 Leva (about Statistics 130 Euro) per month, Eurostat data show. Trade unions and Eurostat data show that labor costs in Bulgaria in 2013 were the business have failed to find a common point on the mea- lowest in the EU: 3.70 Euro per working hour. That is 6.5 times sures for increasing wages in the private sector. At the same below the EU average (23.70 Euro) and nearly 11 times below time Prime Minister Plamen Oresharski supports the policy the costs in Sweden (40 Euro), which is at the opposite pole. In of a gradual income rise, saying that if revenue allows, the terms of labor productivity, Bulgaria is again at the bottom of the minimum wage will reach 450 Leva a month by the end of ranking with an even more pronounced difference. Compared the government’s term. with an average of 32.2 Euro per working hour in the EU, output in Bulgaria is 4.8 Euro, i.e. 6.7 times less, and more than 11 Offhand calculations times below labor productivity in best performer Denmark. Nevertheless, even during crisis Bulgaria has the fastest growth The minimum working wage at present is 340 Leva (174 in labor costs and, respectively, in incomes in nominal terms. For Euro) per month and some 38 percent of the gross domestic the five-year period since 2008, labor costs have increased by a product (GDP) is spent on wages. Trade unions insist that total of 44.1 percent, compared with an average of 10.2 percent the minimum wage should rise to 400 Leva (202 Euro), in the EU. For comparison, the highest growth rate among which means that 50 percent of GDP will be spent on Eurozone countries is recorded in Austria (18.9 percent). At the wages. What’s more, they set 2017 as a deadline. The busi- same time labor productivity has also increased but at a more ness calls that “fantasies.” 16 moderate rate: 10 to 15 percent.

The trade unions have their arguments to demand a sub- As a whole, Bulgaria does not move from the last place with stantial income increase. labor costs and productivity remaining at very low levels and country's catch-up rate is very slow. One reason is the extreme- Bulgaria has the lowest wages in the European Union, ly low starting base as a result of the macroeconomic catastro- according to Eurostat data. Textile workers, librarians, phe of 1996-97. Another is the fact that Bulgaria produces shop assistants and nurses receive well below the average mainly raw materials and goods and services with a low added wage in the country. Their wages are about 400 Leva.

AmCham Bulgaria Magazine May 2014 May Magazine AmCham Bulgaria value and market price in the global economy. Public transportation drivers, construction workers and analysis

received a wage increase in the last five years. The minimum working wage today is less than 90 percent of what it List of European countries by was 24 years ago when the changes started. With a difference of 6.1 times, Bulgaria ranks among the top three average monthly wage countries in income inequality between the rich and the State net $ net € date poor. Liechtenstein 5850 5166 2008 Monaco 6077 4436 2012 Inequality and low incomes threaten the social peace, Switzerland 5600 4047 2011 CITUB President Plamen Dimitrov said. That is a global Norway 4900 3527 2013 problem and solving it requires a real economic environ- Luxembourg 4230 3189 2010 ment with minimum labor and social life standards. Denmark 4275 3113 2012 United Kingdom 3460 2496 04/2013 For that reason trade unions have demanded that wages San Marino 3274 2390 2014 should rise 10 to 15 percent a year in the next couple of Finland 3180 2321 3Q2013 years in order to keep the young and the qualified staff in Sweden 3261 2268 2012 the country. “We insist that in 2017 the average working Andorra 3055 2230 12/12 wage should reach 40 percent of the EU-28 average,” Ireland 2916 2160 3Q2013 Dimitrov said. “Now it is 25 percent. Besides, the minimum Netherlands 2671 2136 3Q2012 wage should be at least 50 percent of the average one. As France 2953 2128 2013 early as in 2015 wages in all budget-subsidized systems Austria 2796 2114 2012 should jump 15 to 20 percent.” Germany 2824 2054 3Q2013 Belgium 2627 1946 2013 Prime Minister Plamen Oresharski in turn supported a more Italy 2610 1898 05/2013 moderate income rise, saying a more pronounced increase Iceland 2617 1895 2012 in labor costs would trigger unemployment warnings from Cyprus 2500 1833 3Q2013 the business and higher inflation. He recalled that a mea- Spain 2220 1615 05/2013 sure had been introduced to refund taxes on the minimum Malta 1486 1092 2Q2013 working wage. Slovenia 1310 1000 12/12 Estonia 1368 986 08/13 In a number of cases the unmeasured large-scale wage Turkey 1 244 895 2012 increase triggers an inflation pressure, which then devalues Portugal 1090 805 11/12 the currency and renders the nominal wage increase use- Greece 964 804 2013 less, Oresharski explained. The payment level in Bulgaria Croatia 959 712 02/13 depends on the payment in neighboring countries and in Czech Republic 980 705 2013 countries with similar economic development, he added. Poland 945 681 4/2013 Slovakia 887 638 2013 Oresharski underscored that the low income taxation par- Russia 833 637 03/2014 tially cushioned the big wage gap between Bulgaria and the Lithuania 720 524 4Q2013 EU countries. Also, the development of the global crisis Latvia 691 504 12/13 showed how countries that had allowed a fast wage rise lost Hungary 680 492 02/14 in economic performance. Montenegro 661 486 12/13 Serbia 585 436 12/13 The wage level in Bulgaria is among the lowest in the EU Bosnia and Herzegovina 567 422 08/13 and that explains its dynamic increase. The situation is Kazakhstan 548 421 2013 AmCham Bulgaria Magazine May 2014 similar when seen as a relative share of the value added, Romania 534 395 12/13 said the prime minister and explained that Bulgaria was not Albania 436 370 Q3 2013 a Eurozone member but its currency had been pegged to Belarus 521 353 11/2013 the Euro for 16 years, which placed it in the position of one Macedonia 475 346 01/14 of the poor countries admitted to the Eurozone. Bulgaria 461 333 Q4/2013 Moldova 263 181 12/12 Officially Ukraine 230 164 02/14

According to Bulgaria’s Convergence Program for 2014- The state-regulated incomes, however, will be increasing. page 17 2017, which is due to be sent to the European Commission The minimum working wage will reach 380 Leva from 2015, (EC), labor incomes in Bulgaria will be rising almost insignifi- 420 Leva from 2016, and 450 Leva from 2017. From July 1 cantly, by an average of 3.5 to 5.5 percent a year in nominal every year pensions will be updated according to the Swiss terms in the next three years. Government experts say that rule but no exact calculations have been made. the high unemployment levels will continue to restrain labor income growth. Forecasts show that unemployment will drop The Convergence Program also provides for an increase in by just 0.1 percentage points to 12.8 percent this year. In the the contributions for second-pillar pension from 5 to 7 per- next three years the situation will improve gradually and in cent from Jan. 1, 2017. The document does not specify 2017 unemployment is expected to fall to 10.9 percent. whether that will be done by reducing the contributions to analysis

Bulgaria will keep the expenditure on agriculture, transport, communications and energy at a relatively high level, 4.9 Intentions percent in 2017, but the money for education will decrease to 3.4 percent. The share of healthcare expenditure will An additional 100 million Leva will be allocated to wages, remain unchanged at 4.6 percent of GDP. healthcare and municipalities each in 2015. That is envisaged in the 2015-2017 budget forecast of the Ministry of The country will continue lagging behind the European trend Finance. As much as 4.2 billion Leva is budgeted for wages in defense financing. In the next three years the government in all ministries, agencies, municipalities, courts of justice and does not plan raising the share of GDP for defense, which other institutions in 2014 and next year the amount will will stay at its current level of 1.1 percent. This is the small- increase to 4.3 billion Leva. The budget for health insurance est share of financing for the sector in recent years: even at payments and subsidies for the municipalities will increase by the peak of the crisis in 2009 it was 1.3 percent of GDP. In 100 million Leva each to 2.6 billion Leva and 2.5 billion Leva the EU countries, defense expenditure averaged 1.5 per- respectively. The municipalities can use the additional money cent of GDP in 2012 and the plans are for preserving that both for administration maintenance and for capital costs. level until 2017. The public investment program, Growth and Sustainable Development of the Regions, will continue to function next Revolutionary year with another 300 million Leva having been planned for municipal projects. The biggest increase in the 2015 budget The rapid income hike by some 20 percent is possible and is for pensions: by 255 million Leva to 8.38 billion Leva. can lead Bulgaria’s economy out of the current deadlock, say economists Hristina Vucheva (finance minister in 1994- The budget forecast also sets ceilings on the ministries’ costs 1995) and Mika Zaykova. To raise pensions, unemployment in the next three years. For most ministries the differences and social benefits and maternity and child allowances the from this year are not substantial. The bigger increases or government will have to borrow some 1 billion Leva, decreases for some are probably connected with pending Vucheva reckoned. It will have to float government securi- structural changes but they are not specified in the docu- ties on the Bulgarian or foreign markets. The problem is that ment. the debt will be more expensive than previous ones, which will be repaid at a bearable yield of 3 or 4 percent, she The 20-percent surcharge on electricity generated from wind said. and solar energy is envisaged to be preserved. The expected budget revenue from it is 150 million a year in 2015-17. The Theoretically, such an increase in the money supply can dividend income for the state in 2015-2017 is calculated on boost turnovers in the country by some 2 or 3 billion Leva the basis that the state will receive 70 percent of the profit of and set the wheel in motion. If the business achieves a good public-owned companies in 2015, 60 percent in 2016 and 50 growth rate, the loan will be repaid without dramatic conse- percent in 2017 with the projected income for the period quences. Hungary is such an example. Anyway, the govern- being respectively 146.6 million Leva in 2015, 150.3 million ment has to do something to overcome the economic stu- Leva in 2016 and 126.8 million Leva in 2017. The revenue por, the two economists said. As for the size of the debt and from privatization and post-privatization control is budgeted the income increase, that is a question of calculations that at 55.1 million Leva in 2015, 13.7 million Leva in 2016 and are not so difficult, Vucheva said. 36.7 million Leva in 2017.

According to her the government has fallen short of expec- the fist-pillar Pension Fund of the National Social-Security tations that it will draw up a real program and implement it. Institute or by increasing the aggregate social-security bur- Vucheva said, “They did not sit down and calculate what den of employers and employees. Important decisions will would happen if the salaries of doctors and teachers for have to be made by this year’s end: on raising the retire- instance were increased rapidly.” In her words what tran- ment age and the pensions of people in the first and second spires through the cabinet’s decisions and programs is labor category, as from Jan. 1, 2015 the pensions will have “Brussels’ wording, which is useless.” to be fully paid by the private occupational funds. Incomes in Bulgaria are despairingly low, Zaykova said. The The revised forecast shows a much more gradual increase country is full of working poor, who every year leave to cre- in pension expenditure in the coming years, which is mainly ate national product in other countries. That process should due to the higher retirement age. Pension expenditure will be terminated. When you are so far behind, you have to risk rise from 9.92 percent of GDP in 2010 to 10.60 percent in something to become attractive. 18 2060, compared with the previously planned 11.06 percent. At the same time the gap between pensions and wages will The low labor costs for now are part of the price of lagging be widening. The so-called replacement ratio will drop from behind and catching up, said Lachezar Bogdanov, manag- 45 percent in 2014 to 37.5 percent in 2060. ing partner at research and consulting firm Industry Watch. Poverty in Bulgaria is connected with the deficit of knowl- The biggest expenditure rise by 2017 will be for the mainte- edge and technology, equipment, patents, intellectual prop- nance and operation of the administration, the Convergence erty, infrastructure and capital. The way to catch up with the Program shows. The maintenance of the so-called general rest is to attract those who have more and make them invest AmCham Bulgaria Magazine May 2014 May Magazine AmCham Bulgaria public services will go up from 3.7 to 4.7 percent of GDP. in your economy.

analysis

Banks Have Earned BGN 77 mln in February This represents a 7% increase on a monthly basis and a 60% increase year-on-year By Svilen Kolev, Peter Neykov est amount of assets as at the end of February. UniCredit Bulbank, Bank DSK and First Investment Bank are still in the leading positions, followed by Corporate Commercial Banks have reported a profit again in February. The banking Bank and United Bulgarian Bank. What are the results system has sustained its high liquidity, the upwards trend in reported by each one of them we will know at the end of the deposit base continues during the first two months of the April when BNB will publish the detailed financial state- new year, while the demand for loans in February is driven ments and additional information regarding the performance mainly by companies, not households. of each bank during the first quarter of 2014.

This is happening on the background of the higher net inter- In February banks have added another BGN 77 mln to their est income (the difference between interest income and profits. The increase as compared to January is by 6.94%, interest expense), the lower accumulated impairment of and as compared to a year ago – by 60.42%. Thus, the total 20 assets as compared to one year ago, but also the higher net profit of banks in Bulgaria during the first two months of fees and commissions expenses of the financial institu- 2014 amounts to BGN 149 mln. tions. BNB data also show that as a result of the dynamics in No significant changes are noted in the structure of the bal- attracted funds the total assets of the banking system have ance sheets of the lending institutions, representatives of increased by BGN 271 mln. However, the amount added to the Bulgarian National Bank (BNB) have pointed out. the assets is 51% lower than that in January, when it grew by BGN 556 mln. Nevertheless, the assets of financial insti- AmCham Bulgaria Magazine May 2014 May Magazine AmCham Bulgaria There is no change in the top five banks reporting the high- tutions have increased by 4.48% as compared to the prior analysis

year, or by approximately BGN 3,711 bln up to BGN 86,574 Loans to companies have increased by 0.5% during this bln. month as compared to January, or by BGN 291 mln. The increase in corporate loans by BGN 369 mln (1%) is accom- The net interest income – the difference between the banks' panied by a decline in the other loan portfolio segments, interest income and interest expenses – in February has indicates the statistic information of BNB. gone up by 5.57% year-on-year, reaching BGN 422,509 mln. According to the statistic information, however, banks The exposures of individuals are at the very opposite. In incur increasing fees and commissions expenses. They February the demand for loans still decreases at a pace have increased by 12.45% as compared to the prior year, similar to the one during the first month of the year, namely while fees and commissions income is down by 2.64%. – by 0.2 percent. Consumer loans are down by BGN 23 mln, and residential mortgage loans – by BGN 17 mln. Banks generate interest income and fees and commissions income mainly based on their lending activities. This refers Impairments amounting to BGN 111 mln were accrued dur- mainly to interest on loans paid by households and compa- ing the prior month compared such amounting to BGN 151 nies. However, with the entering into force of administrative mln in February 2013. The liabilities of the lending institu- amendments banks may suffer twofold. First – decreasing tions have increased by BGN 184 mln. During the second fees and commissions income, and second – decreasing month of the year BNB reports a trend different than the one net interest income, due to the higher interest expenses that noticed in January with respect to this indicator – funds banks pay on deposits, for example. attracted by the banks increase although slightly (by BGN 33 mln), while those attracted by institutions other than the The administrative amendments envisage the introduction lending institutions report a decrease (by BGN 50 mln). of a limit of expenses on loans and cancellation of some fees and commissions, such as fee for early repayment after The Central Bank data indicate that the free bank resourc- the first year. As a whole the decision is that bank services es are invested in debt instruments – such as available- are to be based on a market principle. We are still to find out for-sale and held to maturity instruments. The dynamics in what effect these will have on the financial performance of the sources of financing and the assets do not have mate- the banks, but currently they are doing well. rial impact on the banking system's liquidity position – it remains high and as at 28 February 2013 the liquidity ratio Companies have sought more loans during the past month. is 29.69%. AmCham Bulgaria Magazine May 2014

page 21 amcham events

Mayor of Sofia Yordanka Fandukova meets with Valentin Georgiev, executive director of AmCham (left) and Peter Lithgow, AmCham president. Sofia’s Mayor Announces New Projects Sustainable development of the City of increased collection of fees and taxes. two-level intersection on Yavorov Blvd. Sofia, EU funded infrastructure proj- and Dr. Tsankov Blvd. to the TV Tower ects, transportation system improve- Infrastructure and (2012); the two-level intersection on ments, waste disposal management, Transport Academic Geshov Blvd. and Georgi and public-private partnerships were at Sofiyski St. (2013). Projects under devel- the focus of the AmCham business With regards to the sensitive transporta- opment are crossings on the transporta- breakfast with the Sofia Mayor Yordanka tion and traffic issues, the mayor mention hub of Lion's Bridge and Peyo Fandakova. tioned two projects related to the subway Yavorov Blvd. – St. Mihaylovski St. construction. Currently the subway is 31 The event was attended by over 80 busi- km long with 27 stations, and its share in The mayor also said that in 2013 was ness representatives of AmCham mem- the system of public transport is 26 per- launched the program for renovation of ber companies and media. During the cent. Expansion of existing subway lines the main streets and boulevards. One of meeting the mayor stated that the and building of the new lines is among the major repairs in the program is Municipality is ready to work closely with leading infrastructure projects: Tsarigradsko Shosse Blvd. The munici- the AmCham business community. z “Tsarigradsko Shosse Blvd. - Sofia pality is currently executing works under Airport” section which has a length of the overpass G.M. Dimitrov Blvd. and According to Fandakova, a total of 47 4.9 km and four stations and it will be then it will work on the overpass Alexander 22 EU-funded projects worth 2.88 billion completed in April 2015. Malinov St. Leva are currently implemented in the z The “Mladost 1 - Boulevard Business capital. Moreover, in recent years the Park” section with 2.5 km in length, Other sites of the renovation program are Sofia municipality has achieved financial three stations and one underground the repairs on Nickola Mushanov Blvd. stability and maintained the capital’s parking, which is planned to be com- from Vazkresenie Blvd. to Zhitnitsa St., credit rating – BBB, which is equal to that pleted by April 2015. Botevgradsko Shosse Blvd, and G. S. of the country. The mayor underscored Rakovski St. the fact that the financial stability is a Among the other important projects in AmCham Bulgaria Magazine May 2014 May Magazine AmCham Bulgaria result of a strict financial discipline and Sofia mentioned by Fandakova were the Rehabilitation of the track on Boulevard amcham events

working draft of installation of mechanical biological treatment is currently revised.

The mayor provided some details on the exit installation’s capabilities:

z Recycled materials - about 39,043 tons / year (including metals, plastics and paper); z RDF - about 178 tons / year; z Compost material - about 399 tons / year; z Residues - about 76 tons / year; z Process losses (humidity) - about 115 tons / year Energy Efficiency Measures Mayor Fandukova has a word with AmCham board representatives during the business breakfast. Bulgaria from Vitosha Blvd. to Borovo is ment plant, plus some supporting infra- 95 percent of municipal kindergartens a component of the Project for Integrated structure. and schools have implemented partial Metropolitan Public Transport imple- energy efficiency measures. The win- mented with the financial support of In January 2014 installations for treat- dows in 117 schools and 137 kindergar- EU’s OP Regional Development 2007- ment of green and organic waste were tens have been replaced since 2006. 2013. commissioned on Han Bogrov site. A Fully renovated are 16 schools and 32

The project is executed under a contract for granting financial aid signed between the Sofia Municipality and the Ministry of Regional Development in August 2011. Environment and Waste Management

During the meeting Mayor Fandakova pointed out that the establishment of integrated system for waste treatment of Sofia is a leading environmental project. The municipality completed the first phase of an integrated system of facilities for treatment of household waste: the non-hazardous waste land- fill site Sadinata and wastewater treat- Mayor of Sofia Yordanka Fandukova. AmCham Bulgaria Magazine May 2014 kindergartens.

Solar panels heat the water in eight childcare facilities. In 2014 energy efficiency measures will be implemented in 23 kindergartens and three schools with funding from the international fund “Kozloduy.” page Healthcare 23

The mayor announced a technological renovation and repair of the specialized hospital for active treatment of cancer for 5.7 million Leva. The reconstruction envis- ages renovation of buildings and premises of health facilities, supply and installation Sofia Hotel Balkan hosted the business breakfast with 80 business representatives. of specialized medical equipment. member news Edenred Marks its 10th Anniversary in Bulgaria Edenred® and VM Finance Group® Create Joint Venture Edenred® celebrated its 10th anniversary in tioned that Edenred Bulgaria is now in a Bulgaria in the presence of Jacques Stern, position to provide innovative solutions Chairman and CEO of Edenred® and Vassil as it has reinforced its market position Mirtchev, Founder and Chairman of the Board and at the same time has reached more of Directors of VM Finance Group®. than 100 000 beneficiaries of its solutions in Bulgaria, which is also a great success On this occasion, a business cocktail gather- for the company. ing customers, business partners and stake- holders of Edenred Bulgaria was held at Vassil Mirtchev, Founder and Chairman Novotel Sofia on 14th April, with the support of of the Board of Directors of VM Finance the American Chamber of Commerce and Group®, also explained that Edenred® French-Bulgarian Chamber of Commerce. and VM Finance Group® share the same values and vision and highlighted the The event also served to officially celebrate From left: Vassil Mirchev, Jacques Stern. partnership with a global leader like the joint venture between Edenred®, the world leader in pre- Edenred as a clear recognition of success. paid corporate services, and VM Finance Group®, a major economic Bulgarian conglomerate, announced in the late In a few months, the venture, which is the result of combin- 2013. The business cocktail was honored by the presence of ing VM Finance Group’s Menew® business with Edenred’s more than 150 guests and provided opportunities for meeting business in Bulgaria has indeed acquired the status of a representatives of the Bulgarian business community and leader in the local market in the challenging yet promising establishing new business relationships. market of Employee Benefits and showed its clear ambi- tion to open up new growth opportunities. Jacques Stern, Chairman and CEO of Edenred®, gave a speech about Edenred’s perspectives and ambitions world- Edenred Bulgaria also rewarded customer loyalty present wide but also about how the joint venture with a reliable at his side since 2004 by delivering a special certificate to and recognized Bulgarian partner as VM Finance Group® four of them during the ceremony and a prepaid gift card will accelerate the development in the country and help to Compliments® Card – the first digital solution on the B2B better unlock the potential of the market. He also men- market, launched by Edenred in 2012.

24 AmCham Bulgaria Magazine May 2014 May Magazine AmCham Bulgaria From left: Arnaud Erulan, Vassil Mirchev, Jacques Stern, Medhi Benbouguerra, Herve Combal. member news

Mr. Quinto Di Ferdinando draws the name of the winner in the near miss and ContourGlobal Maritsa East 3 employees lay flowers at the Memorial Plate at hazards reporting competition. the power plant. Safety at Work – a Growing Priority of a Sustainable Business z Traditionally ContourGlobal Maritsa East 3 joined the ILO’s at the power plant paying homage to all the people who died World Day for Health and Safety at Work initiatives in workplace accidents in Bulgaria and abroad. Standing at the plate where the names of those who lost their lives in the fatal z The company also held the fifth edition of its Safety Focus accident at the power plant on October 10, 1994 are written, Day Campaign they promised not to allow any more accidents in the future, to change behavior and to address any unsafe behavior. How to stay healthy and safe while working with chemical substances – that was the topic of this year’s program of events at The program continued with the drawing of the Q1 winner of ContourGlobal Maritsa East 3 within the worldwide celebra- the near miss and hazards reporting competition. During the tions of the World Day for Health and Safety at Work. period there were more than 900 reports which were evaluated Traditionally, the program at the power plant at Galabovo as part of the quality control of the reporting. The winner, Municipality included an interactive seminar and a global webi- Marian Kunev, whose name was drawn by Quinto Di nar, awarding of the Q1 winner in the hazards and near miss Ferdinando, Plant Director, was awarded a voucher worth reporting competition, and honouring of the people who lost BGN 300. However, this was the only case in which luck their lives fulfilling their duties at work. played a decisive role in any initiative at the power plant. The competition which is held traditionally every quarter encour- “Safety at work is a goal that requires our ceaseless efforts and ages employees to share information and show that they have attention. As so many other businesses today we have no the feeling of ownership of the plant. It appeals for a more other choice but to be prudent in fulfilling our everyday duties secure and safer working environment and zero tolerance and conscientious in observing the adopted safety rules every towards dangerous behavior of both employees of the com- single minute”, said Garry Levesley, CEO of ContourGlobal pany and subcontractors. This is a particularly strong message AmCham Bulgaria Magazine May 2014 Maritsa East 3. “But staying safe at the power plant also on the eve of the repair campaign at the power plant. teaches us to stay safe at home, on the road, and with our families. Safety becomes part of our DNA, part of our cul- The local program was later expanded with a global webinar ture.” which presented ContourGlobal’s H&S performance year-to- date, as well as it is an excellent channel for best practices The 2014 initiative dedicated to health and safety in working sharing, cultural exchange, and increasing the knowledge with chemical substances combines in a unique manner two of among the company’s personnel globally. ContourGlobal Maritsa East 3’s leading values: ecology and safety. Moreover, it underlines the integrated essence and The Safety Focus Day is a global internal initiative introduced page 25 efficiency of the Environment, Health and Safety Management by ContourGlobal in the early 2013 and held every quarter. It System. aims at improving the safety indicators, raising the awareness of the company’s staff around the world and developing global As a part of the programme, the team at ContourGlobal safety culture. It is part of the vast Safety Communication Maritsa East 3 TPP participated in an interactive seminar Platform of ContourGlobal Maritsa East 3 TPP which focused which taught them how to work with chemical substances, gain on procedures, best practices, motivation, as well as on the command of spills, and act in case of burning with chemicals. prevention of occupational diseases, prevention of oncological diseases, introduction of the newly-adopted LOTO safety sys- In the morning the workers laid flowers at the Memorial Plate tem, etc. member news

43% of Employees Versus 63% of Top Managers Consider Themselves Recognized in the Company AON Hewitt presented in May the recent trends of work satisfaction most valuable asset of the company in which they work - 43%. highlighting difference in the opinions of managers and employees. The study covers the opinion of 16,000 employees and 400 top 69% of top managers say they treat employees as the most valu- managers in Bulgaria. In 2013 the average level of engagement of able asset of the company when measuring people focus. At the top management in Bulgaria is 77%, while employees’ rate is 53%. same time only 41% of employees believe that top managers refer The largest discrepancies between the satisfaction of the manag- to them as the most valuable asset. Regarding training and devel- ers and the employees are in terms of additional benefits and opment 72% of top managers believe that their company provides career opportunities. the necessary training and development opportunitiesin order to be successful within the organization, while only 52% of the employ- Each group shares its level of satisfaction with the working condi- ees support this statement. tions and working environment in 19 areas. The analysis shows 79% of top managers agree the additional benefits provided by the Top managers in Bulgaria are most satisfied with their everyday employer meet their needs, while the percentage of employees is work (84%), overall work satisfaction (82%) and the physical work only 46%. Additional benefits may include insurance, health ser- environment (84%). The other factors that receive the highest sat- vices, company transport, food vouchers and other. Largest bud- isfaction appraisal of the employees are: relations with line manag- gets for additional benefits are planned in the sectors of high tech- ers (62%), relationships with colleagues (63%) and physical work nology and outsourcing services. The discrepancy relative to the environment (65%). Almost same levels of satisfaction exist in satisfaction of benefits alerts insufficient expedient planning, imple- Central and Eastern Europe. Both top managers and employees in menting and communicating with employees. This means that Bulgaria follow the trends in the region. Management teams in CEE spending budgets for benefits can be optimized significantly with give the highest rate to every day work (83%), overall work satisfac- proper survey of employees’ views, characteristics of suppliers and tion (81%) and physical work environment (89%). Officials in the effective communication to employees. region are most satisfied with relations with line managers (62%), relationship with colleagues (64%) and physical work environment Regarding to career opportunities - 68% of top managers believe (68%). that the company provides good career opportunities to employees, but only 39% of employees say that career opportunities in the Aon Hewitt conducts the survey in our country for the eighth year company where they work are good. As comes to the recognition and compares data with 11 other European countries from Central - nearly 70% of top managers say that employees receive proper and Eastern Europe. recognition for their work. Divergence from the perspective of employees is indicative of how many of them actually feel like the new members Amway is one of selling brand of home water treat- agement and consultancy company, the World’s larg- ment systems. specialized in development of invest- est direct selling ment projects in the field of renewable Contacts: companies. Founded in 1959 by Jay energy sources (RES). Helios Power Ioana Enache Van Andel and Rich DeVos, Amway has incorporated a number of SPV General Manager Operates in more than 100 countries companies and each of them devel- Tel.: +40 21 2020000 and territories in Asia, Africa, Australia, oped and is currently operating a sep- 241A, Barbu Vacarescu Str. Europe and the Americas. Amway has arate photovoltaic project in Bulgaria Bucharest more than 21,000 employees around altogether totaling to almost 20 MWp the world. In addition, more than 3 mil- Helios Power is a installed capacity. Besides that, the lion Amway distributors sell the compa- Bulgarian shareholding company is holding several packages ny's products worldwide. More than 450 company (Identification of shares in different companies and unique, high-quality products carry the Code BG 130390856) joint ventures, specialized in different Amway name in the nutrition, beauty incorporated in the year 2000. The activities: general and investment con- 26 and home categories. Top-selling premises of the company are regis- sultancy, energy, construction, finan- Amway™ brands include: tered at the following address: Bulgaria, cial brokerage, etc. z NUTRILITE™, the world’s number 1000 Sofia, 96, Rakovski Str. Contacts: one selling vitamins and dietary sup- The registered capital of the company Ivo Ivanov, Chairman of BoD plements brand. is BGN 2000000 (about EUR 1023000) Tel.: + 359 2 401 81 00 z ARTISTRY™, among the world’s top distributed in 20000 ordinary shares Address: 96, G. S. Rakosvki Str. five largest-selling premium skin with nominal value of BGN 100 each. 1st floor care brands. 1000 Sofia Helios Power is an investment, man- AmCham Bulgaria Magazine May 2014 May Magazine AmCham Bulgaria z eSpring™, the world’s number-one

sports U.S. National Soccer Team for World Cup 2014 comes from… Germany and California By Tony Manfred/Business Insider z California (6 players): Michael Bradley, Joe Corona, Landon Donovan, Maurice Edu, Nick Rimando, Chris Wondolowski z Germany (6 players): Terrance Boyd, John Brooks, Timothy Chandler, Fabian Johnson, Julian Green, Jermaine Jones z Florida (3 players): Jozy Altidore, Alejandro Bedoya, Graham Zusi z Texas (2 players): Clint Dempsey, Omar Gonzalez z Norway (1 player): Mix Diskerud z Iceland (1 player): Aron Johannsson z Washington (1 player): DeAndre Yedlin z Kansas (1 player): Matt Besler z Illinois (1 player): Brad Guzan The U.S. men's national soccer team, like many squads z Indiana (1 player): DaMarcus Beasley throughout the world, has taken on a decidedly international z Missouri (1 player): Brad Davis feel for the 2014 World Cup. z Virginia (1 player): Clarence Goodson z Maryland (1 player): Kyle Beckerman The 30-man preliminary World Cup roster features players six z Arizona (1 player): Brad Evans players who grew up in Germany, a forward who grew up in z New Jersey (1 player): Tim Howard Iceland, and a midfielder who was born in Norway. It also z Massachusetts (1 player): Geoff Cameron includes multiple U.S.-born players who were eligible to play z Rhode Island (1 player): Michael Parkhurst for Mexico. Unsurprisingly, southern California dominates domestically, The team mirrors the multicultural nature of the country itself. putting them on par with Germany as the primary source of It's something Jurgen Klinsmann vowed to do when he took U.S. talent. The roster will be trimmed to 23 players before the over in 2011 after a series of high-profile American players team takes off for Brazil. snubbed the U.S. to play for the likes of Italy and Serbia.

More than a quarter of the roster (8 out of 30 players) grew up outside the U.S.:

Germany is the country that stands out here. There are six German-Americans on the 30-man roster. The explanation for this is simple: the U.S. has had tens of thousands of troops stationed in Germany for 60 years — creating a pool of U.S.- eligible kids who grew up in a soccer-mad culture.

Klinsmann is a German soccer legend. He won a World Cup for West Germany as a player in 1990, and coached the German national team to a surprisingly deep 2006 World Cup run. He made it a priority to identify Germans with U.S. eligibil- ity and recruit them into the national team once he took over the USMNT. This has been a source of controversy at times. For example, 18-year-old Julian Green — who was born in 28 Tampa but grew up in Germany — made the 30-man roster despite having virtually no top-flight professional experience.

It also created a rift in the team that went public after a poor result against Honduras in World Cup qualifying last year. But it also grew the player pool and gave the U.S. depth at a number of positions. AmCham Bulgaria Magazine May 2014 May Magazine AmCham Bulgaria Here's the state/country breakdown of all 30 players: