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23 Apr

Invest Bulgaria Agency: FDI are up again, and changes around the Investment Promotion Law will make Bulgaria even more attractive


After several years of slumps, foreign direct investments (FDI) in Bulgaria finally went up again in 2013 when they totalled 1 092.4 million euro, up from 1 070.3 million euro in 2012, according the latest preliminary data by the Bulgarian National Bank, published on 17 March 2014. It is noteworthy that the FDI 5-year decrease trend did not only cease but even reversed in 2013 and the year was marked by an increase of 22.1 million euro. Only 203 years ago, there were slupms of over 40%.

The Invest Bulgaria Agency (IBA) expects that the total amount of FDI in Bulgaria will stay relatively flat year-on-year in 2014 and perhaps go up by up to 10-15% on the back of the torpid European economies and the competition with our neighboring countries, mostly Romanaia and Turkey.

By countries, the most significant foreign direct investments in Bulgaria in 2013 came from The Netherlands (815.2 million euro), Germany (135.5 million euro), The Czech Republic (80.7 million euro) and Russia (75.9 million euro). The largest net negative flows were from Austria (-58.8 million euro) and Switzerland (-51.5 million euro).

By industry, Transport, storage and communication marked a serious net FDI jump in 2013 versus 2012 (412.2 million euro), Manufacturing investments followed with 188.5 million euro, and Mining and quarrying went up by 110.8 million euro.

The IBA also saw a high growth in investment activities

in 2013. The investment certificates the agency issued increased by 1/2 in comparison with the previous year. The number of these certificates was 15, which corresponded to ta total of more than 1 000 new jobs.

According to the IBA, in the short term, foreign investments in Bulgaria will mostly be export oriented and will be in high-tech manufacturing and services, for example automotive production, information and communication technologies (ICT) and electronics, more specifically medical and electrical equipment, as well as outsourcing.

The largest foreign investors in ICT and business process outsourcing (BPO) in Bulgaria in 2013 came from The USA and The UK. The IBA has reported a redirection from IT support and call centers to more diverse services with more highly qualified employees and more added value.

The latest successful example

for this was the aquisition of Sofica Group by American giant TeleTech, which was aided by the agency. The new owner plans a triple increase of job positions in Bulgaria.

Recently, the IBA has issued Class A investment certificates to two companies. One of them is Experian Bulgaria with its project for optimization and development of business processes and high-tech solutions which created 150 new jobs. The other one is IBM Global Delivery Center with a project called Sears that opened 300 new jobs.

In ICT and outsourcing, the agency is currently working on five new projects

where investments are not very big but only within several months will create over 1 500 new jobs for highly qualified specialists. Service centers in the areas of accounting, finance, human resources and data base processing will open soon.

The growing interest of foreign companies to invest in Bulgaria is largely on the back of the new stimuli they got with the

changes in the Investment Promotion Law

in February 2013. These modifications were in several directions:

  • there was a drastic cut on the minimum sums for issuing investment certificates, which are a prerequisite for receiving the benefits of the state incentive measures;

  • new economic activities from the services sector were encompassed by the law, so that they can also reap these benefits. These included releasing program products, accounting and combined office activities and call center services;

  • investors received new options to recover their social insurance costs for a period of two years.

Furthermore, very soon the new

changes in the Rules for Applying the Investment Promotion Law

will enter into force. They are aimed at decreasing the administrative burden for investors applying for certificates for high-class investments or priority projects through relieving the requirements for the applicants, the investment projects and the application documents.

Following the changes, there will be a single application form that will include information about the investor, the project and the required declarations. In addition, there will be a new obligation for the IBA to immediately issue a statement that will help investors to get the necessary aid by the executive authorities.

Moreover, the minimum investment threshold will be lowered for priority projects in manufacturing and in building and developing industrial zones and tech parks, and the requirements to the applicants with industrial zone projects will also be releived.

After these changes enter into force, they will optimize the procedure for issuing investment certificates and will shorten the deadlines for reviewing projects, which even now are shorter than in some countries in Central and Eastern Europe, which compete with Bulgaria for attracting investments.

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