Galery

1

Another important sector that is rapidly developing in Bulgaria is the contracting out of a company's internal services and activities, or the so-called outsourcing. This sector employs over 15,000 people and tends to grow. A good example of outsourcing is Coca-Cola Hellenic, which has outsourced a large part of its internal operations in Bulgaria. If I am not mistaken, Coca-Cola Hellenic operates in over 20 countries and a major part of the activities of the company is performed from Sofia. In Bulgaria, there are many companies providing services in the field of accounting, finance and control for international corporations. Currently, a number of major international corporations have contacted us to establish a centre for internal activities in Bulgaria, as in the model of Coca-Cola.

According to the chairman of the Athens Chamber of Commerce Konstantinos Mihalos, the model of Bulgaria is not very successful. He says that the very low level of wages in the country is limiting the purchasing power in the domestic market and this prevents large investors from entering the Bulgarian market. (Mihalos says that when an investor enters a specific market, he wants to sell 70% of production in the domestic market and to export only 30%). Do you agree with this statement?

I cannot fully agree with this statement. This definition of 70% domestic consumption and 30% exports is quite conditional. Companies such as Hewlett Packard employ five thousand people in Sofia, but all their customers are in foreign markets, for example. Or I do not think that Volkswagen prefers Slovakia, because the country has a large domestic market.

On the other hand, I cannot but agree with the fact that Bulgaria remains one of the poorest countries in the European Union. This could be a problem in attracting investors, who are interested in the domestic market. These type of companies would prefer to invest in a rich or a large country instead of in Bulgaria. For example, in a country like Russia, wealth per capita is not high but the market is huge and it attracts the interest. Or a country like Switzerland, which is small in size but the population is rich, may be preferred. These types of investors are primarily active in the service sector, such as banks, retailers and other companies of this type. Bulgaria remains a competitive environment for attracting manufacturing companies. I do not think that the Bulgarian market is a big problem. An example of this is the fact that the largest companies present in the country are not interested in the Bulgarian market. We are part of the European Union and if something does not sell in the local market, it can be easily launched in Germany, for example.

Do you agree with the statement of the chairman of the budget commission in the Bulgarian National Assembly Menda Stoyanova that the tax on the interest profit will stimulate investment?

Theoretically, reducing savings will increase investment or consumption. Actually, it's hard to comment on because they compare interest rates on deposits of citizens to investments made by companies. The fact that some people keep money in the bank to earn interest does not mean that they will put it into investments after taxing it. The truth is that savings in Bulgaria have been at record high levels in recent years and it is common for savings in banks to increase in times of crisis. When people are not sure what might happen in a few months, they prefer to keep their money and not to spend it. It's better to put the money into production or consumption, because it moves the economy, but I would refrain from assessing the specific issue.

How has the European debt crisis affected investment in Bulgaria? Have Greek investments dropped?

Investments in Bulgaria have substantially declined since 2009, but this is a consequence of a change in their nature, as noted earlier in our conversation. The money put previously into finance, trade and real estate was reported as investments by statistics, although ordinary people imagine plants and machinery when they hear the word investment. The funds invested in the construction of shopping malls, financing of banks and the development of commercial sites are gone but the investments in manufacturing have remained and the debt crisis has not affected them seriously. It has probably affected large-scale projects for over several hundred million euro.

Massive realignment of the financial sector in Greece is expected. A merger of banks with a strategic position on the Bulgarian market has already begun. How will this affect our market?

As far as the Bulgarian market depends on Greek banks, I could say that if the branches in the country were receiving funds from the parent companies in previous years, now the total investments in the financial sector as a whole are dropping. If pre-crisis investments in the banking sector were between one billion, and one and a half billion per year, which was largely due to Greek banks, these amounts have recently fallen to 200-300 million annually. This means that there is a reduction of investments in general.

What are the main steps that must be taken to attract a businessman to invest in a specific market, according to the Bulgarian experience?