STEN ASK : POTENTIAL FOR SWEDISH INVESTMENTS BRIGHT

Novinite Insider » INTERVIEW | March 1, 2002, Friday // 00:00| Views: | Comments: 0
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H. E. Sten Ask has been Sweden's Ambassador to Bulgaria since 1998. He has substantial diplomatic experience. He has doctor's degree in Economics from the University of Stochholm. Before coming to Bulgaria, he was director of the department of European Integration with Sweden's Foreign Ministry.

H.E. Ask was very kind to answer in writing to questions, sent to him by Martina Iovcheva. Following is the full text of the interview:


Q: What are the main economic factors that would attract more Swedish companies to invest in the Bulgarian economy?

A: There are a number favourable economic factors in Bulgaria which should be clearly communicated to foreign investors. Bulgaria offers a competitive cost structure, in particular relatively low labour costs. Bulgaria's location as a crossroads between Asia and Europe makes it an interesting and strategically important market. It has an excellent climate and is rich in fertile soil and mineral resources, which could be profitably exploited. A stable macroeconomic framework is in place and a clear membership perspective for both EU and NATO will further decrease the political risk premium.

My message to Swedish business people is perfectly clear: Bulgaria offers plenty of interesting business opportunities, which should immediately be utilised. It is true that the business environment is gradually improving but Bulgaria can do better. The investment climate is still far from optimal.

Following the fundamental logic of a globalised economy, capital and investments are channelled to countries and businesses with high expected returns. Presently, there is no lack of risk capital in the world economy. However, competition among governments to attract investments appears to have increased in recent years as barriers to international investment have fallen over the last few decades. Another reason for this is the large number of developing and emerging markets - comprising the three quarters of humanity - that have moved to more open and market-friendly policy regimes. They are now actively seeking to attract direct foreign investments, which have made this area more competitive.

The amount of Swedish long-term investments to Bulgaria will mainly be determined by the quality of its human capital and infrastructure - how the Government and the society evaluate, innovate, deregulate and adapt to a changing world. This argument leads to another crucial factor, namely the degree of openness - i.e. integration with the network of ideas, technologies and markets in today's world.

Bulgaria can attract more foreign investments by significantly lowering transaction costs, i.e. cutting red tape and decreasing bureaucratic procedures, combating corruption and improving the infrastructure in a determined way. A modern and well functioning judicial system of European standards is also fundamental for a vital market economy. The Bulgarian Government has taken important measures in this direction. The ambitious reform plans must now be effectively implemented.

Q: Are there big Swedish companies, besides the ones that have already stepped into the Bulgarian market, that are willing to invest in the Bulgarian economy?

A: The potential for Swedish strategic investments in Bulgaria has never been brighter. Every week I have concrete discussions with Swedish business people who want to initiate or expand activities in Bulgaria. I have great hopes that the most important Swedish strategic investment in Bulgaria so far will soon be realised. SKF is very close to signing a privatisation deal for the ball bearing factory (VMZ) in Sopot. I would also like to announce that the well-reputed company Swedtel AB has expressed strong interest in participating in the bidding procedure for the privatisation of BTC. Just to mention a few examples.

We are now witnessing how a new scientific landscape is emerging in Sweden, which will affect Swedish investments in Bulgaria. Speed, interaction and globalisation are key elements in this process, which requires both cross-border and inter-company cooperation. Some more valuable contributions that Sweden is bringing to the new world of research includes an international openness, non-hierarchical structures and a technical curiosity. Another leap ahead is around the corner. Traditional scientific disciplines such as chemistry, physics and biology are converging into a new science, where lengths are measured in thousandths and millionths of a millimeter. Micro- and nanotechnologies are set to drive developments within several important areas of the 21st century such as information technology and biotechnology.

Sweden has historically excelled in technological innovations and is recognised as a world leader in IT and telecommunications. I am therefore convinced that Swedish knowledge and investments in Bulgaria in the IT-sector can be of great importance in the medium-term perspective. A constructive dialogue with the Bulgarian Government on these issues has already been initiated. Biotechnology is the other strategic area where Sweden has huge research and development potential, which can also be harnessed in the pharmaceutical industry in Bulgaria. The tourist industry, environment-friendly technology, energy and the agricultural sector are other areas where the potential for intensified economic relations is promising.

Q: What do you consider the most important contribution to the development of Swedish-Bulgarian relations during your mandate as Sweden's Ambassador to Bulgaria?

A: The strengthening of the bilateral relations between Sweden and Bulgaria has already exceeded my high expectations. A key impetus in developing our bilateral relations was given by the visit of Prime Minister Gцran Persson in the spring of 2000 - the first visit of a Swedish Head of Government since our nations established diplomatic relations in 1914 - and the state visit of the Swedish Royal Couple in November of the same year. Another notable aspect is the fact that about 60 000 Swedish tourists visited the Bulgarian Black Sea Coast in 2001. No other foreign destination for Swedish tourism has had a stronger growth than Bulgaria during recent years. A Swedish Honorary Consulate on the Black Sea Coast will be established in Varna in this spring. This decision reflects the massive influx of Swedish tourists and our efforts to promote business relations. In 2001 the trade exchange reached record levels. There are clear indications that our economic relations will be further strengthened this year.

Equally important, we have actively built widespread networks between companies, institutions and citizens in our two countries. This should be a profitable investment for the future and we are looking forward to harvesting concrete results from these ties that draw us ever closer together.

Q: What should be Bulgaria's top priorities on its way towards EU membership?

A: The Bulgarian Government has presented an ambitious plan to speed up EU accession. It focuses on measures to strengthen its efforts to establish an independent, impartial and efficient judiciary, improving the situation of the Roma population, combating the high level of corruption and establishing a competitive market economy. Another major problem is the actual implementation and enforcement of the adopted EU legislation. Furthermore, measures to improve the administrative capacity - to build skill and efficiency - is high on the agenda.

The reform of the judiciary is of strategic importance. It is not only essential in itself but also essential to live up to other membership requirements. It concerns getting rid of the political dependence of the legal system and to identify to what degree the constitution should be changed. It is also imperative to allocate sufficient resources to the reform. Special efforts should also be made to fulfil the second economic criterion, which is about the ability to compete in the Union's single market. With weak competitiveness, the social price for joining the EU can be very high, in particular in the form of a higher rate of unemployment. The Bulgarian Government should be encouraged to develop a consistent strategy about how Bulgarian companies should be prepared for increasing globalisation of business activities.

Favourable economic development will obviously make it easier for Bulgaria to fulfil the conditions for EU-membership. A nation`s competitiveness depends on the capacity of its industry to innovate and upgrade. The only meaningful concept of competitiveness at the national level is productivity. The principal goal of a nation is to produce a high and rising standard of living for its citizens. The ability to do so depends almost entirely on the productivity with which a nationґs labour and capital are employed. What we must understand is the determinants of productivity and the rate of productivity growth, not on the economy as a whole but on specific industries and industry segments.

A productive and growing economy requires educated, safe, healthy, decently housed workers who are motivated by a sense of opportunity. In order to strengthen the competitive edge of the Bulgarian economy it is of particular importance to pursue a policy that facilitates the establishment of new firms, enables companies to adopt new technologies, and creates the foundation for more modern education in management and marketing.

Q: How can Bulgaria participate in the debate on the future of the EU and prepare itself for EU membership?

A: On February 28 the debate on the future of Europe will be launched, leading up to the 2004 Intergovernmental Conference, where both present EU members and the candidate countries will take part. The task is to prepare the Union for further challenges beyond enlargement. It will be a Union not of fifteen, but of some twenty-seven members. The official Bulgarian representatives from the Government and the National Assembly, Ms. Kuneva, Mr. Vulchev and Mr. Mladenov, have important roles to play in this debate. As the enlargement process is rapidly advancing it is also of crucial importance for the candidate countries to engage themselves in the goals and procedures of the Lisbon Process with its bold ambitions concerning economic reform, social modernisation and environmental protection. For Bulgaria, it is urgent to address the adverse demographic development in the framework of the Lisbon Strategy.

All parts of the Bulgarian society should be encouraged to form an opinion about the European Union, about how it should develop and what the consequences of Bulgaria becoming a member will be. An impact analysis of Bulgarian membership would probably show that accelerated structural reforms in the agricultural and transport sectors together with more extensive environmental regulation would put serious pressure on some parts of the Bulgarian economy. It is evident that all applicant countries must reform their agriculture sectors and reduce the number of people involved in them.

Strong public support is crucial for a successful enlargement. One day the Bulgarian citizens will certainly ask themselves: What is in the EU-integration for my family and me? Are we a winner or loser when Bulgaria joins the Union? Then, I do hope that they will not see EU-membership in a narrow perspective, just calculating the value in leva and stotinki, but will judge it in a broader perspective. The EU is first and foremost a peace project but, they should also take into consideration , in particular, the benefits with its single market of more than 500 million consumers and the free circulation of people. Sweden has unilaterally declared that its borders will be open for the free movement of workers from all candidate countries by their respective date of accession.

Bulgaria has now advanced so far in the accession process as it is time to think more ambitiously about its future role in the Union. The time is ripe to consider how Bulgaria can maximise its national interests when it becomes an EU-member. This requires a deep analysis of the consequences of a full-fledged membership, particularly in key sectors, from which practical conclusions can be drawn.

Bulgaria should also make more practical preparations for its EU-membership. As an EU-member, the institutions have to recruit hundreds of the most qualified civil servants from Bulgaria. Education and training on a broad base is therefore needed in order to fill these posts. The Bulgarian civil servants will certainly act independently and stay above any national agenda. Nevertheless, they will serve as a useful injection of cultural knowledge and better understanding of Bulgaria to the different institutions of the Union.

Bulgaria is making good progress in the EU-negotiations and the road towards membership is irreversible. Sweden will soon be seated on the same side of the negotiation table as Bulgaria. The Treaty of Nice stipulated that Sweden and Bulgaria will have the same number of votes (ten votes each) in the Council of Ministers. I am assured that small countries like Sweden and Bulgaria can have a strong influence in an enlarged EU through constructive and innovative initiatives and creation of strategic alliances with like-minded member states.

Q: What are your forecasts, fears and hopes, concerning the Euro? Why did Sweden choose to retain its own currency for the time being instead of introducing the Euro?

A: The Swedish Government has welcomed the successful introduction of the Euro. The fundamental economic principles are in place to qualify Sweden to join the Euro. However, it is clear that the will of the people will determine this historical decision. The EMU cannot merely be seen as a purely economic project, it has also huge democratic implications. Swedish public opinion has shown that the people are reluctant to join the EMU. The Swedish decision not to participate in this project was therefore taken on very legitimate grounds. However, there is now a major shift in Swedish opinion in favour of the EMU. During 2003 a referendum is likely to be held on Sweden's joining the EMU. In this light, I venture to predict that Sweden will be a member of the EMU before Bulgaria. But it is better not to be too certain.


Q: How will Sweden continue to back Bulgaria's efforts to join the European Union?

A: Sweden's political support for Bulgaria's EU-membership is unequivocal and clear: Bulgaria's road to the EU is highly desirable. Bulgaria will become a member when it is well-prepared - the sooner, the better. Like all the other candidate countries Bulgaria has to meet the membership criteria. This process will be guided by the main principles of differentiation and catching-up. Each country has to be judged on its own merits. This is a fair and transparent process.

Sweden is primarily channelling its aid to Bulgaria through the mechanisms of the EU Commission. In this context, it is important to note that Sweden is giving the highest net contributions per capita to the EU of all member states.

Q: Can you describe Bulgaria in three words?

A: Bulgaria for me is a society true to its values - devotion to family and nature, a vivid national culture and a fine tradition in education and science. I am privileged to have met and made friends with so many of this country's warm and committed citizens.
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