PLOVDIV INVESTMENT DESTINATION
2020/2021 INVESTMENT DESTINATION PLOVDIV
PUBLISHED BY PLOVDIV MUNICIPALITY
COPYRIGHT 2020 PLOVDIV MUNICIPALITY WELCOME TO PLOVDIV
‣ Plovdiv is the biggest industrial center of Bulgaria with over 74 000 jobs in manufacturing.
‣ Trakia Economic Zone hosts over 200 multinational and local producers. Zdravko D"m"trov Mayor of Plovdiv ‣ A local economy with predominant business profile – close to 70% of all value added is created in As the mayor of Plovdiv, I am proud manufacturing and B2B services. to introduce the 2020 edition of the “Investment Destination Plovdiv” ‣ IT&BPO are the fastest growing catalogue. sectors - outnumbering 7000 jobs This may be your first encounter and a 10,6% annual growth of with Plovdiv or you may be update productivity. previously known facts about the ‣ City’s pool of talent is steadily region. In any case, it is just the first expanding - about 34 000 step of a journey that I and my team students, positive migration will join you in. balance, growing expat community.
1 TABLE OF CONTENTS
KEY FACTS 1 WHY CHOOSE PLOVDIV, BULGARIA
DOING BUSINESS IN BULGARIA 2 ECONOMIC FREEDOM IN A RISING EU MEMBER
INVESTOR INCENTIVES SINGLE POINT OF CONTACT FOR AN EASY SETUP 3 OF OPERATIONS
LOCAL ECONOMY ONE OF THE BIGGEST MANUFACTURING CLUSTERS 4 IN CENTRAL & EASTERN EUROPE
LABOR MARKET POSITIVE NET MIGRATION FUELS AN EXPANDING 5 POOL OF TALENT
MANUFACTURING GROWTH DRIVEN BY AUTOMOTIVE & OTHER 6 DISCRETE MANUFACTURING SECTORS
2 MAJOR INVESTORS LIST OF MULTINATIONAL & LOCAL INDUSTRIAL 7 COMPANIES
EDUCATION DIVERSE ECOSYSTEM OF HIGH SCHOOLS AND 8 UNIVERSITIES
IT&BPO FASTEST GROWING SECTOR ATTRACTS GLOBAL 9 TALENT TO THE CITY
PROPERTY MARKET NETWORK OF WELL DEVELOPED INDUSTRIAL 10 PARKS AND OFFICE CENTERS
PUBLIC SERVICES 11 FAST IMPROVING UTILITIES INFRASTRUCTURE
QUALITY OF LIFE AFFORDABLE COST OF LIVING AND RICH 12 POSSIBILITIES FOR SPORTS & LEISURE
3 KEY FACTS BULGARIA IS A 1.1 MEMBER OF:
EUROPEAN UNION SINCE 2007
ERM II & HAS A FIXED RATE TO €
EU BANKING UNION SINCE 2020
NATO SINCE 2004
Vienna 1 156 km Bucharest 386 km Danube River
VII IX
Munich Port of Russe 313 km 1 480 km Varna Port 368 km IV X
VIII Sofia Airport 146 km Burgas Port 256 km
PLOVDIV Istanbul 419 km Durres (Ferry to Italy) 700 km Port of Haydarpasa 424 km Thessaloniki Port 334 km Alexandroupoli Port 237 km
4 KEY FACTS 1.2 WHY PLOVDIV?
CENTER OF А REGION WITH A HIGH QUALITY OF LIFE AND GREAT POPULATION OF 770 000 AND WORK-LIFE BALANCE 18 000 EXPATS
#1 INDUSTRIAL LEADER IN HIGHLY DEVELOPED CLUSTER OF BULGARIA WITH OVER DISCRETE MANUFACTURERS 74 000 JOBS
LEADING UNIVERSITY CENTER INTERNATIONAL SPOTLIGHT FOR WITH OVER 34 000 STUDENTS INVESTORS AND DIGITAL NOMADS
SINGLE POINT OF CONTACT AND SECOND BIGGEST IT CENTER WITH AN ALL-IN SERVICE PACKAGE FOR SOME 7000 JOBS INVESTORS
AMONG TOP 10 MID-SIZED CITIES WITH BEST FDI STRATEGY AND COST-EFFECTIVENESS fDi Intelligence
5 DOING BUSINESS IN BULGARIA 2.1 MACROECONOMIC NUMBERS €60.7 billion 3.4% 70.1% GDP CHANGE EMPLOYMENT RATE GDP
€38.6 €36.5 124% billion billion EXPORTS AND IMPORTS EXPORTS IMPORTS (as % of GDP)
ERM II THE LAST STEP BEFORE ACCEPTING THE EURO Bulgaria is expected to join the Eurozone in 2023
BANKING UNION HELPS TO CREATE A MORE TRANSPARENT, UNIFIED AND SAFER MARKET FOR BANKS Allows for the consistent application of EU banking rules
€ FIXED EXCHANGE RATE SINCE 1997 To stay in place until Bulgaria joins the Eurozone
Governments maintain fiscal policy with low deficits or even surpluses
20.4% 2.1% 3.1%
GOVERNMENT DEBT BUDGET SURPLUS INFLATION (as % of GDP) (as % of GDP) 2nd lowest in EU 3rd highest in EU
Source: NSI, BNB, Eurostat, 2019
6 DOING BUSINESS IN BULGARIA 2.2 INVESTMENT CLIMATE
10% 34.8% FLAT CORPORATE & TAXES ON LABOR AS % 5% PERSONAL INCOME OF LABOR COSTS WITHHOLDING TAX TAX RATE ON DIVIDENDS DISTRIBUTED TO NON EU/EEA 20% €18 400 COMPANIES MAXIMUM ANNUAL VAT SOCIAL SECURITY BASE
37TH (out of 162) ECONOMIC FREEDOM OF THE WORLD Fraser Institute, 2019
21ST (out of 190) TRADING ACROSS BORDERS DB Index 2020, World Bank
49TH (out of 141) GLOBAL COMPETITIVENESS INDEX World Economic Forum, 2019
Cost of enforcing contacts (% of claim)
18.6% 21.5% 26.6% OECD EUROPE & BULGARIA high income CENTRAL ASIA
Source: Doing Business database, 2020
7 INVESTOR 3 INCENTIVES
Financial incentives representing regional state aid
FINANCIAL SUPPORT FOR CONSTRUCTION OF TAX RELIEF TECHNICAL INFRASTRUCTURE ELEMENTS (used exclusively by the investor)
FINANCIAL SUPPORT OF UP TO 25% FOR THE PROVIDING A GRANT OF UP TO 10% OF THE VOCATIONAL TRAINING FOR OBTAINING TOTAL INVESTMENT COST PROFESSIONAL QUALIFICATIONS
ACQUIRING OWNERSHIP RIGHTS OR LIMITED REIMBURSEMENT OF LABOR COSTS OWNERSHIP RIGHTS OVER REAL ESTATE AT A PAID BY THE EMPLOYER FOR A PERIOD OF PRICE LOWER THAN THE MARKET UP TO 2 YEARS (but not lower than the tax assessment)
INTRODUCING EXEMPTION FROM THE IMPORTING ASSETS WITHOUT EFFECTIVE OBLIGATION OF PAYING AN AGRICULTURAL PAYMENT OF IMPORT VAT LAND TRANSFORMATION FEE
Construction of public infrastructure elements, that can also be used by other investors, is not considered a regional state aid
Non-financial incentives
INDIVIDUAL ADMINISTRATIVE AND ADMINISTRATIVE PROCEDURES SHORTENED INFORMATION SERVICES
INTERDEPARTMENTAL TASK FORCE FOR ACQUIRING REAL ESTATE WITHOUT TENDER INSTITUTIONAL SUPPORT PROCEDURE OR COMPETITIVE BIDDING
ESTABLISHMENT OF PUBLIC-PRIVATE PARTNERSHIPS WITH MUNICIPALITIES, UNIVERSITIES AND OTHER ORGANIZATIONS
8 Maximum financial incentives intensities under European Commission regulation
For projects with expenditures 50% below €50 million OF THE TOTAL INVESTMENT COST
MAXIMUM AID AMOUNT = For projects with expenditures 50% x (50 + 0.5xB + 0.34xC) above €50 million B is the part of eligible costs between €50-100 million C is the part of eligible costs above €100 million
MAXIMUM AID AMOUNT = Example: OEM with 500 million 50% x (50 + 0.5x50 + 0.34x400) = total investment cost €105.5 million
Thresholds for special investment status
Priority Class A Class B
€25.6 €5.1 €2.6 million million million
Plovdiv Municipality provides investors a ✔ single point of contact & an all-in package ✔ ✔ of services, including preliminary ✔ researches and consultations, staff recruitment support, local media promotion, etc.
In the coming years Plovdiv municipality will implement projects making the industrial parks easily accessible & faster, including:
✓ Modernizing the railway to support high-speed international trains ✓ Completion of the road, which connects Plovdiv & nearby villages in the Rhodope area ✓ Completion of the Plovdiv ring road ✓ Construction of a road underpass under the Plovdiv Railway station
9 LOCAL ECONOMY 4.1 VOLUME & STRUCTURE
South-central Plovdiv district region Bulgaria
TURNOVER €14.3 €20.2 €150.4 billion billion billion
OUTPUT €8.8 €13.7 €92.5 billion billion billion
NUMBER OF 222 401 2320 JOBS thousand thousand thousand
Plovdiv has a well developed business service sector, which provides all the high-quality services a manufacturing company might need
Local economy structure (by added value)
0 IT, BPO & B2B 27.9% 0 Public services & regulated markets 11.9%
Consumer services 10.8% Manufacturing 0 39.9% Construction 5.5%
0 Others 4.1% 0
Source: Trakia Economic Zone based on NSI (data on district level for 2018)
10 LOCAL ECONOMY INVESTMENTS & 4.2 PRODUCTIVITY
€4.5 €6700 6.6% billion ANNUAL GROWTH GDP PER CAPITA GDP (2010-2018 average)
Rise of productivity €319 million €953 is ensured by million CUMULATIVE FDI FIXED CAPITAL abundant capital EXPANSION FOR THE EXPENDITURES IN 2018 investment LAST 3 YEARS
Source: NSI (data on district level for 2018)
Industrial space & warehouse construction enhance the rapid development of Plovdiv as a manufacturing leader and logistics hub
430 000 m2 557 000 m2 (4.6 million ft2) (6 million ft2) APPROVED FOR APPROVED FOR NON-HOUSING HOUSING CONSTRUCTION IN 2019 CONSTRUCTION IN 2019
16.2% 13.5% OF ALL PERMITS IN THE OF ALL PERMITS IN THE COUNTRY COUNTRY
Source: NSI (data on district level for 2019)
11 LABOR MARKET 5.1 POPULATION
772 000 45 MIN. FROM INDUSTRIAL ZONES
535 000 30 MIN. FROM DOWNTOWN
Population by age in wider Plovdiv (distance 45 min.)
Under 20 20-44 45-64 65-74 75+
151 000 247 000 213 000 91 000 70 000
Plovdiv has the biggest net annual 7500 1800 change among the NEW INHABITANTS NET ANNUAL CHANGE (city) (city) Bulgarian cities, besides the capital
6.3‰ 17 900 3300 NET MIGRATION EXPATS INTERNATIONAL 10-29 YEARS (residing in the district STUDENTS (district) for more than 3 months)
Source: Data from universities, Ministry of interior, NSI, 2019
12 LABOR MARKET 5.2 WORKFORCE
More than any +17 900 70.3% (15-64 years) other region in the WORKFORCE GROWTH EMPLOYMENT RATE country SINCE 2010 (EU average: 68.5%)
Source: NSI (data on district level), Eurostat, 2019
Local economy structure (by number of jobs) 49 800 Plovdiv is the region IT, BPO & B2B 49 800 with most people 36 400 working in Consumer services 36 400 manufacturing companies in Construction 11 400 221 800 Bulgaria payroll jobs 11 400 Others 6300 6 300 Manufacturing74 700 Public services & 74 700 regulated markets 43 200
43 200 53 600 38 200 313 600 PART-TIME FREELANCERS & TOTAL EMPLOYMENT EMPLOYEES FAMILY WORKERS
Industrial labor pool in closest districts
Stara Zagora Pazardzhik Haskovo
35 900 21 400 14 900
Source: NSI (data on district level for 2018)
13 MANUFACTURING INDUSTRY 6.1 SNAPSHOT
Discrete manufacturing as % of manufacturing employment
2018 2010 The foreign capital 70% 64% 65% inflows are shifting from58% 47% 47% 63% 47% 41% 57%
mass production to a 35% 38% 38% “leaner” and in some 23% 32% cases craft custom and12% 0% small series productions Plovdiv Bulgaria Romania Slovakia Germany
Source: Trakia Economic Zone with NSI and Eurostat data for 2010-2018
Change in number of jobs for the past 8 years
Discrete manufacturing Other manufacturing Non-manufacturing sectors
+10 300 -1000 +4100
Share in discrete Discrete Share in local manufacturing at manufacturing Volume manufacturing national level
FIXED-CAPITAL €132.8 EXPENDITURES billion 42.9% 16.2%
OUTPUT €1.9 billion 40.1% 17.6%
NUMBER OF 35.4 JOBS thousand 47.4% 15.7%
Source: Trakia Economic Zone with NSI and Eurostat data for 2018
14 Structure of manufacturing (by number of jobs)
Plovdiv district has a well-developed ecosystem of discrete manufacturing such as machine-building, automotive, home appliances, electronics, medical equipment, etc. 13 700 Food, beverages & tobacco 13 700 10 700 Discrete manufacturing Apparel 10 700 35 400 Heavy processing (basic metals, chemicals, glass) 6700 74 700 6 700 Light processing (paper, textile) 5700
5Furniture, 700 wood & 35 400 others 2500 2 500
Source: Trakia Economic Zone based on NSI (data on district level for 2018)
Plovdiv is #1 industrial center in Bulgaria The local economy advances in its development through investments in discrete manufacturing & creation of more productive jobs
Manufacturing Turnover Output Number of jobs
€5.2 VOLUME €4.8 billion billion 74 700
SHARE IN LOCAL ECONOMY 36.3% 54.9% 33.7%
Source: NSI (data on district level for 2018)
15 MANUFACTURING 6.2 WAGES
Wages in manufacturing in Plovdiv, €/Month (2021 forecast)
ENTRY LEVEL JOB SKILLED WORKERS
Total labor cost Gross wages POSITION Gross wages Total labor cost
PRODUCTION ASSEMBLY 630 530 WORKER 690 821
714 600 CNC MACHINE OPERATORS 860 1023
WELDERS, LATHE AND METAL 844 710 WORKERS 1130 1344
892 750 ELECTRICAL ENGINEERS 1060 1261
FIRST-LINE MANAGERS, 999 840 SUPERVISORS, TECHNICIANS 1150 1368
951 800 ENGINEERS - CONSTRUCTORS 1230 1463
ENGINEERS - INDUSTRIAL 951 800 MACHINES AND SYSTEMS 1140 1356
Total labor costs include gross wages plus 18.9% mandatory social security contributions paid by the employer Source: Trakia Economic Zone based on survey of net pay among employers
Competitive salaries create Wages in discrete manufacturing = 100 Other manufacturing opportunities for attracting and Non-manufacturing industries qualifying workers from other sectors of the local economy 86.1 88.9
Source: NSI (data on district level for 2018)
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