ABSTRACTED from Reuters

By Michael Winfrey

Once a pillar of Soviet industry, Eastern Europe saw its steel, arms and heavy machinery industries crumble after communism fell as orders from the east dried up and socialist managers could not cope with real competition.

Foreign firms have taken up a lot of the slack, by buying into state-owned firms that were struggling under bad management or by setting up their own ``greenfield'' projects.

BARRIERS STILL EXIST

But investors do not always find doors held wide open, as bureaucratic hold-ups, badly enforced laws, corrupt officials and inefficient local governments and agencies can often delay investment to the cost and frustration of western businessmen.

Horror stories abound, particularly when one goes further east to countries like Croatia, Romania, and Bulgaria, which has attracted only $4.0 billion in FDI since 1992.

``It is absolutely not easy to do business in Bulgaria and the main reasons are the lack of transparency and lack of institutional structures,'' said Ken Lefkowitz, country director of the Vienna-based investment bank EPIC, which has invested in the tobacco industry and cosmetics in Bulgaria.

Other complaints include the lack of local suppliers for factories, and also that, despite capitalism's slow infiltration, speed and reliability can't be taken for granted.

``The first word that we learned in Slovak was 'zajtra', which means 'tomorrow'...Business can sometimes take much longer than we are used to in Germany,'' said Matsushita's Niemeyer.

``But for the risk that we took and the results that we see, we are very satisfied.''

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