According to preliminary data of BNB, foreign investments in Bulgaria showed an annual growth of 64.6% in January and reached EUR 158.8 million. Investments were almost entirely in the form of debt instruments. Equity proceeds amounted to EUR 19.9 million. No data is available on the reinvested earnings yet. The figures are to be revised after BNB receives reports from the companies.
Most foreign investments came from the UK (EUR 58.8 million), the Netherlands (EUR 20.8 million), Germany (EUR 20.1 million) and Liechtenstein (EUR 19.6 million).
Meanwhile, the Central Bank has updated the data for the previous two years. The foreign investments in 2016 were revised to EUR 1.08 billion from EUR 660 million, mainly due to an upward correction in reinvested earnings. The initially announced foreign investments of EUR 902 million in 2017 were revised to EUR 950 million, an increase compared to the preliminary forecast, but a decrease compared to the year before.
The country’s trade balance data have also been updated
Bulgarian imports totaled BGN 59 billion in 2017, showing a higher growth of 15.4%, compared to exports. Exports exceeded BGN 52 billion, an increase of 11%, compared to 2016. We exported most goods and services to Germany (BGN 5.6 billion), as well as to the Balkan Peninsula (BGN 13.7 billion), or 26 % of total exports.
We export machines, clothing, food and medicines, but the main engine is the production of automotive parts and IT products. These are also the two sectors creating the highest added value. About 170 companies manufacturing automotive parts and systems for large automobile manufacturers in Bulgaria create 4% of GDP and employ more than 40,000 people in the country. The information and communication technology sector generates a turnover of services in the amount of EUR 2.5 billion, with an added value of EUR 1.14 billion. According to Eurostat data, the sector records a steady and dynamic growth and employs 51,000 people.
Bulgaria ranks 58th among 115 countries in the world for enabling digital growth, according to the 2018 research from the leading trade credit insurer Euler Hermes. Its Enabling Digitalisation Index (EDI) analyses each country’s ability to provide the necessary environment for the business to succeed in an increasingly digitalized global economy.
The total score of each country (a score from 0=worse to 100=best) consists of five components – Regulation, Knowledge, Connectivity, Infrastructure and Size. Bulgaria scores best in terms of proactive digital regulation (Regulation) – 73.7 points. Its score is lower in the other four components: Knowledge – 46.1, Connectivity – 39.9, Infrastructure – 39.9, and Size – 0.5. Thus, Bulgaria’s overall performance is estimated at 40 points. The US tops the list globally with 87 points, followed by Germany – at 75.3 points and the Netherlands – at 74.3.
The EDI measures the conditions for companies to transform and thrive digitally. The score is made of the following 5 components:
Regulation: measures performance on regulations which matter for digitagility – ease of getting credit, investor’s protection and incentives
Knowledge: measures countries’ education and training score – secondary and tertiary enrollment rates, quality of the education system and the extent of employees’ training, as well as their efforts to boost innovation performance – stimulating R&D activities, collaboration between Universities and the private sector, intellectual property laws
Connectivity: measures the number of people using internet in % of population, mobile phone and fixed phones lines subscriptions per 100 people, and the number of secure servers per 100 people
Infrastructure: for this component Euler Hermеs uses the Logistics Performance Index tool by the World Bank as a proxy of soft and hard logistical infrastructure.
Size: measures the number of internet users, and their income (the component correlates with reducing digital inequalities)
The US is on top of the digital world with a score of 87 out of 100. The country benefits from a large market, a strong knowledge ecosystem and a stable business environment. In Europe, the best performer is Germany, ranking second best globally with a global score of 75.3 and leading the way in Europe.
Western Europe stands out when it comes to providing favorable environment for businesses to thrive in the digitalization era, with 16 countries ranked in the top 30 and four countries in the top 5: Germany, the
Women make up 44.6% of the workforce in Bulgaria’s technology sector, Financial Times wrote in an article dedicated to main statistical findings on the tech workforce in the EU. The technology sector is one of the fastest-growing in the country and holds the second-highest proportion of women as % of the total employment in the EU after Lithuania. The average for the bloc, according to Eurostat, the EU statistics agency, is 32%. In general, Eastern European countries have the highest percentage of women working in the sector of high-tech industry.
We now have lots of female C-level managers in the digital industry. They’re very visible in the tech community and in society, FT quotes Sasha Bezuhanova, Founder of the social innovation platform Move.bg. According to Ms Bezuhanova the country also has growing numbers of female founders of startups. Between 10 and 12% of Bulgarian start-ups are founded by women.
More statistical findings from Eurostat on the topic*:
In 2015, 2.4 million people were employed in high-tech manufacturing, corresponding to 1.1 % of total employment. Overall, roughly one out of three employees in the high-tech sectors was a woman in 2015. However, the share of women was different in manufacturing and services:
The number of persons employed as ICT specialists in the EU-28 grew by 39.5 % during the period from 2006 to 2016, which was more than 10 times as high as the corresponding increase (3.6 %) for total employment. In 2016, some 8.2 million persons worked as ICT specialists across the EU-28. Across the whole of the EU-28, ICT specialists accounted for 3.7 % of the total workforce in 2016; this was 37 % higher than the share recorded in 2006.
*Data extracted in December 2017. ICT specialists are defined as persons who have the ability
According to the Global Investment Atlas 2018 report published in mid-March, Bulgaria reports the highest annual growth of 153% in real estate investments among 60 countries in the world. The report was published by the international advisory company Cushman & Wakefield, which partners with Forton for Bulgaria. According to the report data, the value of the transactions reached EUR 856 million, ranking our country 32nd among the top 40 countries in terms of volume of new investments with cross-border capital. The good 2017 was primarily due to the large deals for commercial and business properties in Bulgaria from South African funds. Cushman & Wakefield’s experts believe that investment volumes will continue to go up in 2018, driven again mainly by the markets in Eastern Europe, which Bulgaria is also part of.
Positive outlook for 2018 on the back of strong market in 2017
2017 has been very successful for Europe. This refers especially to the office space segment, which registered a record investment volume of EUR 253 billion. This was 43% of the total investment volume and was an increase of 10% compared to 2016, according to data from BNP Paribas Real Estate. The market showed an upward trend in most major cities in Germany, as well as in Paris, London, Dublin, Warsaw, Madrid, Milan, Amsterdam, etc., where the percentage of utilized office space recorded a historical growth and the decline in vacant office space raised prices.
The region of Central and Eastern Europe also showed stable growth. Europe reported an increase of 8.3% in investment volumes for the year, according to experts of Global Investment Atlas 2018. The growth was mainly due to the Central and Eastern European (CEE) countries, which experienced an increase of 19.2% in investment property deals in 2017.
According to a report by Colliers with a forecast for 2018, investment in commercial real estate in CEE reached a new record of EUR 13.1 billion in 2017, with Bulgaria being the most liquid market. Profit levels in the Bulgarian capital were the highest compared to other capitals in the region – 7.25% for retail space, 8.25% for offices and 10.0% for industrial properties. According to the company’s 2017 analysis, the volumes of local investors were highest in the Czech Republic (EUR 1.08 billion), Hungary (EUR 708 million) and Poland (EUR 421 million). Bulgaria ranked fourth with local level investments worth EUR 110 million
Hungarian real estate holding Wing has acquired two office buildings in Mladost district in Sofia for EUR 9.85 million. The buildings are not new and were owned by different companies – Bulmag Real Estate and C.3.I. (С.З.И.?) Management, according to Capital newspaper.
The larger building is located in the area between Sofia Tech Park and Megapark and has an area of 8 000 sq.m. The other is a three-storey office building close to Mladost 1 metro station and has 770 sq.m of rental area.
About Wing Zrt.
Wing Zrt. is one of the largest private real estate developers in Hungary. For its 20 years of operation the company has made investments amounting to more than EUR 500 million in activities such as construction, reconstruction, rental, etc. The company’s portfolio comprises a total area of about 800 000 sq. m. for offices, industrial and logistics projects, hotels. Wing Zrt. also offers planning and design services, as well as facility management. This is the company’s first investment outside Hungary and is part of its strategy to further develop in foreign markets.
Canadian TELUS International Europe, the world’s largest outsourcing industry employer, announced its plans to recruit 2,000 new employees by 2020 at its hubs in Sofia and Plovdiv. Thus, the company, which currently employs more than 2,600 employees in the country, will increase its staff to nearly 5,000. The company’s management announced its growth plans at the official opening of the new head office of TELUS International Europe in the newly-built City Tower office building at Macedonia Square in Sofia.
TELUS International occupies 6 floors of the building, with a total capacity of 2,300 people. Currently, the company employs 1,500 people there. TELUS is the largest tenant in the new 23-storey business center built in accordance with the latest standards of sustainable construction. That is why the building will soon change its name from City Tower to TELUS Tower. The company will also retain its other office in Sofia, located in Infinity Tower, next to Bulgaria Mall, where another 1 200 employees will continue to work.
Telus is already the country’s largest employer in its field and the fact that it is taking the next step with an investment of BGN 5 million and the opening of 500 new jobs shows that the company feels good in Bulgaria, Alexander Manolev, Deputy Minister of Economy, said at the official opening, quoted by the press center of the ministry. According to Jeffrey Puriet, President and CEO of Telus International, over the last few years, the company has invested more than EUR 150 million in the Bulgarian economy in salaries, capital expenditures and taxes, and plans to double this investment by 2020.
In Bulgaria, Telus hires new employees every month, including foreign citizens from Europe, North America and other countries, as its divisions work with inquiries and customers from around the world.
To celebrate its new office, on March 23-24 TELUS International Bulgaria opened its doors for a 24-hour marathon with a midnight movie projections, a Go Guide special event, a learning & development session, a FIFA tournament, a brunch, board games, and many other events with open access. Photos from 24 Hours @Telus Tower are available on the Facebook page of the company for Bulgaria.
“City-to-City”, the new business agreement to support business between London and Sofia, is now a fact. On behalf of London, the program is implemented through the British Investment Agency London & Partners, and on the part of Sofia – through the Sofia Investment Agency.
The City-to-City program aims to encourage and facilitate the establishment of foreign businesses in London or British companies in partner cities. The common ambition is to build two-way, mutually beneficial commercial and investment ties, providing the necessary support for establishing business in new cities.
The agreement between Sofia Investment Agency and London and Partners regulates the terms and services that partner cities are willing to provide as necessary support for start-ups on their territory.
The encouraging measures make provision for:
– providing office desks in office spaces with a discount for a certain period of time;
– discounts for local accommodation partners;
– travel discounts for local public transport;
– getting acquainted with the local business and start-up environment;
– providing useful contacts in specific business areas;
– access to tourist attractions.
On the links below, you will find useful information related to:
– a short presentation of London & Partners;
– a detailed description of the types of assistance that foreign companies receive in the process of expanding their business in London;
– a 9-step guide to setting up a business in London;
– useful contacts of London & Partners.
Should you require further information, you may contact Nadia Soultanova – Head of Investment & Business Development Department.
Following the final reporting of economic growth and investment data for 2017, the forecasts for the indicators we expect in 2018 also started. Here you can see the forecasts of several key institutions for the economic growth and investments in Bulgaria, not only at a local level, but also in comparison to the indicators for the region of Central and Eastern Europe.
The European Commission’s outlook
EC sees an economic growth of 3.7% in Bulgaria in 2018 and 3.5% in 2019. As expected, the growth will be due to the economic upturn in the Eurozone as a whole and will affect the whole CEE region. In three countries, Poland, Slovakia and Romania, the forecast is for growth exceeding 4%.
The growth in our country will continue to be mainly enhanced by strong domestic demand. It is expected that the wage growth will boost private consumption and EU funds will further trigger public investment in 2018. Inflation is expected to gradually go up to 1.4% in 2018 and 1.5% in 2019 as a result of international oil prices that will continue to push energy prices up.
Forecast and recommendations by IMF
With its forecast of a 3.8% growth this year and a gradually slowing pace in the coming years to just under 2.8%, the IMF considers turning the continued economic recovery into a sustainable growth the greatest challenge, given the rising costs for the aging population, modest expectations on the volume of new investments and wage growth due to lack of quality personnel in emerging sectors.
According to the Fund, the economy will be boosted by low financing costs, EU funds absorption, decline in non-performing loans and corporate indebtedness as well as alleviated credit conditions. However, a key problem will be the aging population and decreasing productivity of the limited labor force. The IMF recommends excess revenues to be allocated now for costs for the elderly and curricula to be updated and education to be adjusted to business needs through vocational education programs in direct cooperation with companies. In addition, the Fund also recommended public funds to be used more efficiently and the management of state-owned companies to be improved in order to bring the incomes in Bulgaria closer to the average for Europe.
Industry Watch on foreign investment in Bulgaria and
The international rating agency Standard & Poor’s has affirmed its BBB- rating of Sofia Municipality. The S & P Global Ratings report noted that “there has been a significant rating event, namely the sale of the municipal share in Municipal Bank AD”. As a result, the assessment of the key factor “Contingent liabilities” has improved from “High” to “Moderate”, according to the agency’s document.
Sofia’s rating was raised in December last year from BB + to BBB- with a stable outlook and it is considered an investment rating. This will help to raise cheaper funds for the implementation of Sofia’s capital program. Standard & Poor’s acknowledges the good work of the municipal administration to maintain financial stability and a high level of own revenues of Sofia Municipality” said Doncho Barbalov, deputy mayor of Sofia.
According to preliminary data on Sofia’s budget implementation for 2018, the revenues in the municipal treasury in the first two months of the year rose by more than BGN 5.3 million, compared to the corresponding period a year ago. The total revenues for January and February, both tax and non-tax, amounted to BGN 87.2 million.
Revenues from property taxes amounted to BGN 46.6 million, including BGN 14.16 million from building tax and BGN 16.6 million from motor vehicle tax. This year the tax campaign for motor vehicles began on January 2, which had a positive impact on tax collection.
The tax on the acquisition of real estate has been increased by nearly BGN 4 million. In January and February, over BGN 14.3 million have been allocated to the municipal treasury under this item. According to statements of brokerage companies, the demand on the real estate market in Sofia is stable this year, which has a positive impact on the tax revenues when entering deals.
Currently, the household waste tax revenues total more than BGN 21 million, while the total non-tax revenues exceeded BGN 40.6 million for the first two months of the year.
A record-high growth was registered in the tourism sector in Bulgaria in 2017.
The revenue in the sector for the year exceeded, the unprecedented amount of 8 billion leva. The revenue from foreign tourist spending grew by 9%, while that of Bulgarian tourists – by nearly 30%, compared to the previous year. Nearly 9 million foreign tourists visited Bulgaria for both leisure or business in 2017, an increase of 7%. The revenue from foreign tourists amounted to 6.89 billion leva throughout the year, while local tourist spending was 1.14 billion leva. The largest share of the tourism revenues as registered in the summer months, between May and September of 2017.
The tourist spending of Bulgarians traveling abroad remained relatively stable at 450 to 490 million leva.
The growth trend is expected to continue in 2018 due to the increase in flight availability with the expansion of low-cost airlines in Bulgaria, the Bulgarian Presidency of the Council of the EU and the economic growth in the Eurozone is at its fastest rate in a decade.
In January 2018 alone, Sofia Airport welcomed nearly half a million passengers, an increase of 6.6% over the same period in 2017. Two-thirds of the passengers came through Terminal 2 of Sofia Airport, and the rest – through Terminal 1, for the nearly 4 500 flights to and from the Airport.
This month Sofia Investment Agency, together with Sofia Municipality and the Urban Mobility Center, launched its official participation in the European Commission’s special training and networking Digital Cities Challenge program. Sofia is one of the 15 European cities selected to participate in the project. The cities will receive strategic support in solving and implementing city-specific projects. The EC program will support Sofia in initiatives for digital transformation of the urban environment, society, business, entrepreneurial environment, policies and institutions.
In Brussels, Sofia Investment Agency joined the first of a series of seminars that shared successful practices from city leaders which have already been part of the program. The kick-off session gathered delegates from the participating cities of Sofia, Patras and Thessaloniki /Greece/, Yassi /Romania/, Lakila /Italy/, Ventspils /Lithuania/ and Granada /Spain/ with the so-called Blueprint Cities in the program – Amsterdam and Espoo, Finland. They will gradually share their experience as an example of successful digital transformation in individual economic sectors in the upcoming months as well as their experience in open data, interactive urban applications, technology centers, infrastructure, etc.
A special session in the two-day meeting was devoted to the importance of the program for the business – what kind of companies are building their business through digitization, what are the benefits of digitization for companies, what they need to succeed in their digital transformation, and how this change transforms the way of functioning of processes and people in the companies.
The next step in the project for Sofia is to bring together a team of people and organizations with appropriate attitude and experience that could be of use in the process of urban digital transformation. It is necessary to collect up-to-date data to determine the level of digital maturity of the city and to identify specific steps for progress as well as to measure the success indicators.
We expect the second wave of cities to join the second stage of application in the Digital Cities Challenge program, to reach a total of 15 European cities that will change the urban environment in accordance with their individual circumstances and phase of development.
More than 76% of the Bulgarian companies are looking for economic cooperation with partners abroad, according to a study of the Bulgarian Chamber of Commerce and Industry (BCCI). This aims mainly at increasing the exports of manufactured goods. At the same time, 36% of the companies are looking for import partners; 28% need partners for joint investment in Bulgaria and 12% are on the lookout for partners for investment abroad.
The most attractive destination for business contacts and trips is China, preferred by 54% of the respondents. The second and the most preferred country within the EU is Germany, followed by Italy, Serbia, Romania, Macedonia and Russia.
In terms of sectors, those who travel to find foreign partnerships are mostly engaged within the machine building sector – 40%. The next most active sectors are food and beverage production, textile and clothing, as well as electronics.
Most respondents say they do not know well enough the business and trading conditions in the countries where they want to establish business relationships. We remind you that the BCCI organizes practical trainings on the specifics of trade with countries around the globe and has experience in building sustainable business relationships. All upcoming business events organized by the BCCI are available here: http://www.bcci.bg/seminars.html and here: http://www.bcci.bg/payment_bcci/
The growing interest in exports to foreign markets is also demonstrated by the preliminary data for 2017 of the NSI. Total exports to third countries and the EU amounted to BGN 52 233 million last year. This corresponds to an increase of 10.7 % in exports, compared to the year before. The upward trend is also expected to remain in 2018, on the back of improved overall performance of the European economy and growing global trade.