Bulgaria Urged to Triple Exports to Russia in 5 Years

Business | November 6, 2010, Saturday // 19:35| Views: | Comments: 2
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Bulgaria: Bulgaria Urged to Triple Exports to Russia in 5 Years Borisov and Putin pictured during their only official meeting to date, Gdansk, Sept 2009. EPA/BGNES

The Bulgarian-Russian Chamber of Commerce and Industry has come up with measures to boost Bulgaria's exports to the Russian Federation.

"Bulgaria must set the following as a goal – to increase its annual exports to Russia to USD 1 B, and to start attracting 500 000 Russian tourists annually," said Zhelyu Dobrev, chair of the Governing Board of the Bulgarian-Russian Chamber of Commerce and Industry, as cited by Darik Radio.

Dobrev presented the recommendations of the Chamber ahead of the visit of Russian Prime Minister Vladimir Putin's visit to Sofia on November 13, 2010, and in the wake of indications by Bulgarian Prime Minister Boyko Borisov that the Cabinet must take measures to regain the positions that Bulgarian foods, drinks, cigarettes and consumer goods had on the Russian markets as Russians still have memories with cherished Bulgarian products from the communist period.

The Bulgarian-Russian chamber has urged the government to negotiate with the Russian authorities the exports of Bulgarian products under the federal and regional programs of the Russian Federation.

It pointed to the City of Moscow as an example, saying that its residents spend USD 3-4 B on consumer goods annually, and buy almost 1 million tonnes of meat.

Other measures proposed by the chamber to boost the Bulgarian exports to Russia include cooperative ventures and mergers of Bulgarian and Russian entities, and increased activity on part of the Bulgarian business and government sector in registering firms in Russia and opening commercial representations.

Bulgaria traditionally has an overwhelming trade deficit with Russia based on the fact that it imports 100% of its natural gas, much of its crude oil, and nuclear fuel from Russia.

Any progress Bulgarian foods, wines, cigarettes and cosmetics products, for example, might have been able to made on the Russian consumer market (which indeed appears to be opened for Bulgarian products for cultural reasons) is highly insufficient to offset the negative trade balance.

Thus, in 2008, Bulgaria exported to Russia goods for BGN 807 M, while its imports amounted to BGN 7.05 B, a negative balance of BGN 6.247 B. In 2009, the balance was negative BGN 3.9 B for Bulgaria, with Bulgarian exports amounting to BGN 574 M, and imports from Russia – to BGN 4.4 B, data of the National Statistical Institute in Sofia shows.

In the first seven months of 2010, Bulgarian exports to Russia exceeded BGN 500 M, registering a growth of almost 40% year-on-year, while its imports from Russia grew by more than 20% year-on-year.

Even if Bulgarian export to Russia triples to reach USD 1 B, Bulgaria will not be anywhere near closing the gap any time soon, as Russia is expected to remain a primary energy source for it.

While Putin's upcoming visit to Sofia will be dominated by talks on the three major energy projects - the South Stream gas transit pipeline, the Belene Nuclear Power Plant, and the Burgas-Alexandroupolis oil pipeline, the Borisov government has clearly indicated it will approach the Russian leadership about the expansion of Bulgarian exports to Russia.

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Tags: Russia, Vladimir Putin, consumer products, exports, export, Bulgarian-Russian Chamber of Commerce and Industry, Zhelyu Dobrev
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» To the forumComments (2)
#2
DrFaust - 7 Nov 2010 // 12:55:33

The announcement by the Chamber of Commerce to increase exports to Russia to 1 billion USD in the next years seems to be realistic.

Although - as a result of Bulgaria's dependence on gas and oil imports from Russia - the trade balance with Russia is extremely negative, there has been a considerable increase of exports in the last years, from 125.1 million USD in 2004 to 418.7 million USD in 2009.

Also the structure of exports changed a bit. The three biggest export commodities in 2004 were medicaments (68.3 million USD), machinery (29.3 million USD), and wine (22 million USD). In 2009 the three biggest export commodities for the Russian market were medicaments 123.4 million USD), machinery (HS 84) (79.9 million USD), and electrical machinery and parts thereof (HS 85) (31.4 million USD). It is obvious that the potential of Bulgaria to gain a strong position on the Russian market is not in the agricultural or food processing sector, which is of minor importance regarding the trade value.

#1
Dino the Athenian - 6 Nov 2010 // 21:04:48

Oh, absolutely.

I think the target for BG exports to Russia ought to be closer to $2Bil.

I think boyko should set up a joint trade commission of 6 BG and 6 RU counterparts whose exclusive task would be to boost bilateral trade with an eye of leveling off the playing field.

Can BG's naval shipyards handle some of the new vessel construction for the Russian navy or the Russian commercial fleet?

How about parts manufacturing for Russian civilian aviation?

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