The Bulgaria 2011 Review: Business and Trade

Business | Author: Nikola Petrov |January 6, 2012, Friday // 17:56
Bulgaria: The Bulgaria 2011 Review: Business and Trade Bulgarian Finance Minister Simeon Djankov (right) during the ceremony for the opening of the first store of Swedish company IKEA in Bulgaria on September 20. Photo by Sofia Photo Agency

In January 2011, it was made clear that Japan was interested in expanding its imports of certain agricultural products from Bulgaria. The Balkan country also signed an agreement with Brazil for cooperation in the IT sector.

Bulgaria's first and biggest mobile operator M-Tel has wrapped up the deal for the acquisition of cable operators Megalan Network and Spectrum Net.

The Bulgarian government and syndicates started discussing a program for restructuring  the country's ailing railways, which was crucial in order to get an already promised World Bank loan of BGN 600 M.

In February, it was revealed that an Israeli holding, named Bulgarian Agriculture Properties, is planning to invest in the vegetables production and processing sector in the Bulgarian city of Yambol.

It was announced that Bulgaria has achieved the much desired restoration of its accreditation for the international trade with greenhouse gas quotas by the UN Committee for Compliance with the Kyoto Protocol.

Also in February, Bulgaria's Agriculture Minister Miroslav Naydenov and the EU Commissioner on Health and Consumer Policy, John Dalli, launched the start of Bulgaria's Food Safety Agency.

Japanese corporation Toshiba revealed that it would open a regional representation in Bulgaria that would handle its operations in Central and Eastern Europe, the Middle East, and North Africa.

The European Commission slated funds from the EU operational program Transport in the amount of EUR 250 M for the metro construction in the Bulgarian capital Sofia.

Later in February, the Bulgarian government  accepted a draft memorandum on economic cooperation with east China's Jiangsu province.

In March, the Bulgarian government started procedures for finding private operators of the cargo terminal of the southern Plovdiv Airport, and of the civilian airport Shtraklevo near the Danube city of Ruse.

The government also announced it would prepare a special recovery program for EU's poorest region – Severozapaden (Northwestern).

Also in March, a tender was announced for the construction of Lot 1 of the Struma Highway running along the major route between Bulgaria and Greece.

Representatives of the world's largest manufacturer of electric locomotives, China's CSR, said they considered investing in Bulgarian engine and car production facilities.

Later in March 2011, a leading Italian construction company, CMC di Ravenna, was selected by the Bulgarian government to build Lot 1 of the Maritsa Highway leading up to the border with Turkey.

At the end of March, supermarket chains "Piccadilly" and "Lidl" opened several new stores in Bulgaria.

In April 2011, Bulgaria's major maritime and river shipping companies have come together to set up a joint venture for ferry boat transport called "Varna Ferry" which will run the lucrative direct Bulgaria-Russia ferry line.

Also in April, Bulgaria's parliament approved conclusively a state loan for the Bulgarian State Railways (BDZ) totaling BGN 140 M, which was to be used for paying off debts to creditors and suppliers.

Gabrovo, located in the north-central part of the country, is Bulgaria's best city for doing business, showed a ranking compiled by the Sofia-based Institute for Market Economics (IME) in April.

Later in April, the Bulgarian government announced it was expecting major outsourcing and offshoring investments, with several new foreign companies declaring their interest.

At the end of April, Bulgaria's agency for privatization and post-privatization control gave the go-ahead for the privatization of the country's cigarette giant Bulgartabac Holding.

In May 2011, Bulgaria's Cabinet took steps in order to privatize the freight services of the state railway company BDZ.

The country's government also approved the inclusion of additional assets into the concessions of the Varna Airport and the Burgas Airport, arguably in order to facilitate the concessionaire's investment program.

Also in May, China's Tianjin State Farms Agribusiness Group Company declared its interest to buy or rent 12 000 decares in the Vidin District, and more land in the districts of Vratsa and Montana, also in the Northwest, which is the poorest region in the EU. In addition, the Chinese corporation declared its interest in some 40 000 decares of land in the Yambol District in the southeast.

On May 15 2011, Bulgarian PM Boyko Borisov officially launched the newly-finished Lyulin Highway linking capital Sofia to the E-79 international road to Greece. The 19-km highway connects the western arc of the Sofia beltway to the E-79, bypassing the Lyulin mountain from the west.

Capped maximum rates for taxi cabs come into force in Bulgaria on May 25 in a bid to prevent rogue taxi drivers from charging highly inflated prices.

In June 2011, Bulgaria's Bulgaria Air airline carrier was officially included in Embraer's portfolio of E-Jets costumers.

In the first week of the month, the deadly E. coli outbreak in Europe  affected the Bulgarian agricultural producers, with both  prices and demand dropping. However, Bulgaria's exports of protein-rich agricultural produce such as meat and milk registered a growth.

Also in June, the Canadian EurOmax Resources company has discovered new gold zones near the southwestern Bulgarian town of Trun during its drill program.

On June 22, Bulgarian telecoms operator Vivacom revealed its plans to invest BGN 600 M over the next three years to develop its fibre-optic internet network and improve its services.

On June 25, Bulgaria and China signed a memorandum on mutual cooperation in the sphere of Information Technologies.

At the end of June the European Commission allowed a 2-year extension of the construction of the bridge across the Danube set to connect Bulgaria's Vidin and Romania's Calafat.

On June 30, the Bulgarian company "Adval" JSC and the German Ed. Z?blin AG held the grand opening of the third largest tunnel in Germany, the "Blessberg" tunnel.

In the beginning of July, it emerged that some 800 Greek firms had been registered in Bulgaria in the first half of 2011, many of whom are said to have moved north because of the crisis in Greece.

On July 6, Bulgaria's Cabinet voted to turn the defunct military airport near the Black Sea town of Balchik into an active civilian airport serving the nearby sea resorts.

The country's Parliament approved the founding of a State Company "Strategic Infrastructure Projects", a mega-structure to be in charge of the construction of three largely neglected highway projects – Struma, Hemus and Cherno More.

The concessionaire of the Bulgarian Black Sea airports Varna and Burgas Fraport Twin Star Airport Management plans to invest BGN 170 M in their modernization in the next 3 years, company CEO Dirk Schusdziara announced on July 8. The company started the construction of new passenger terminals at the two Bulgarian Black Sea airports in mid-November 2011.

It was also announced that several of the so called "high-speed roads" will be added to the list of highways under construction as priority infrastructure projects of the Bulgarian government.

In July, Luxembourg-based international logistics service provider Logwin started a Bulgarian subsidiary.

On July 21, Bulgaria's Vivacom telco sold the last 50% of its transmission company NURTS to Bluesat Partners Ltd for an undisclosed fee.

At the beginning of August, Bulgaria officially launched the construction of Lot 1 of its Maritsa highway. The segment Orizovo-Dimitrovgrad is 31.4-km long and is part of the trans-European highway, connecting Central and Eastern Europe with the Middle East and Asia.

On August 8, Unilever Central and Eastern Europe bought out "Darko", the second largest distributor and producer of ice cream in Bulgaria.

Also in August, it was revealed that Bulgaria's agriculture sector has achieved a higher wheat yield in 2011 than was originally expected, according to Agriculture Ministry data.

A total of 15 Bulgarian and foreign companies applied in the tender in August to build Lot 4 of Bulgaria's southwestern Struma Highway.

At the end of August, Bulgaria's Cabinet  declared the road from the Danube city of Ruse on the Romanian border to the Makaza Pass on the Greece border to be a project "of national importance" in a long-awaited move. September 1, 2011 saw the beginning of the long-anticipated construction of the key section .

The government also assigned the management of the future civilian airport at the Black Sea town of Balchik to the Sofia International Airport.

In the beginning of September, it was announced that Swedish brand H&M, Hennes & Mauritz AB, known across the globe for its fashion retail for women, men and teens, is opening its first store in Bulgaria in March, 2012.

Later in September, Lufthansa Technik Sofia, a joint venture between Germany's Lufthansa Technik and the Bulgarian Aviation Group, said it would invest BGN 20 M in the construction of new facilities for aircraft overhaul and maintenance near Sofia Airport.

On September 14, a flight of Qatar Airways made its first ever landing in Bulgaria's Sofia Airport. Sofia, together with Bucharest, Budapest, Brussels, Stuttgart, and Venice, became one of the new European destinations of Qatar Airways.

On September 16, The World Bank has refused for the time being to a grant a life-and-death restructuring loan for the Bulgarian State Railways BDZ.

On September 20, Swedish furniture giant IKEA opened its first store in Sofia, which is also its first ever store in Bulgaria. The IKEA store in Sofia with a total area of about 30 000 square meters is located at 216 Beltway road. It features a parking lot with 1 200 spaces as well as a restaurant with 600 seats. In December 2011, IKEA Bulgaria received the first Investment of the Year award of Forbes Bulgaria.

At the end of the month, Bulgaria's Commission for Protection of Competition gave a go-ahead to Vienna-registered BT Invest to acquire the country's tobacco monopoly, cigarette maker Bulgartabac Holding.

In the beginning of October, a large business forum was organized on the occasion of the visit of Brazilian President Dilma Rousseff, who is in Sofia as part of her European tour. Energy, aircraft engineering and agriculture were highlighted as key partnership sectors for the two countries.

On October 11, Bulgaria's State Railway Company BDZ suffered a huge blow, as the German bank KfW has demanded back 50 diesel and electric trains that the Bulgarian government has bought after 2003. The 50 Siemens diesel and electric trains in question are the only modern trains of BDZ, and if it becomes devoid of them, the state company, which is vastly mismanaged and ridden with massive debts anyway, will be reduced to using solely Soviet-made trains from the 1970s.

On October 13, the European Bank for Reconstruction and Development (EBRD) has signed a EUR 3 M equity investment in CallPoint New Europe, a major services outsourcing company operating in Bulgaria.

In mid-October, Bulgaria's Cabinet unveiled an ambitious new plan for EUR 9 B in infrastructure investments in 2014-2020. The Bulgarian ministers made it clear that the projects in question are part of the projected trans-European transport network – TEN-T.

Some 20-30% of Bulgaria's economy is in the shadowy sector known as grey economy, according to a study revealed at the end of the month by the economics unit of the Bulgarian NGO Center for the Study of Democracy.

In the beginning of November, the deeply indebted Bulgarian State Railways BDZ announced it would lay off 2 000 workers and reduce its daily number of trains servicing the routes in the country by 150 in order to avoid bankruptcy. As a result, on November 24, BDZ workers started a massive railway strike, which was also fueled by the Transport Ministry's intention to sell BDZ Freight Services – the one profitable unit of the state company. The strike ended 23 days later, on December 18, 2011, with the syndicates and BDZ management sealing a new collective labor contract.

On November 16, Bulgaria announced plans to hold a tender for yet another multiplex in an apparent effort to prevent legal action by the European Commission, irked by the previous shady deals.

The end of November saw the installment of the very first electric car charging station in the Bulgarian capital Sofia.

On December 1, a contest to pick the Bulgarian businessman with greatest contribution to the country's economy in 2011 triggered a fierce controversy after the head of Corporate Commercial Bank, Tsvetan Vasilev, surprisingly grabbed the award. Tsvetan Vassilev is majority owner and chair of the Supervisory Board of Bulgaria's Corporate Commercial Bank, which holds nearly half of the money of strategic state-owned companies and is believed to finance the media group of mogul Irena Krasteva, a near monopolist, fawning to the center-right government of Boyko Borisov.

Several major transport infrastructure projects in Bulgaria – including the expansion of the Sofia Metro to Sofia International Airport – will be funded with EU money from Operational Program Transport, the Bulgarian government announced in the first week of December.

In the beginning of December, Bulgarian environmental organizations challenged in court the decision of the environment minister to grant a go-ahead to Dundee Precious Metals' plans for a big open-pit gold mine near the town of Krumovgrad.

Later in December, two deposits of gold, whose geological reserves are estimated at over 100 tons, were found near the Bulgarian towns of Tran and Rakitovo. The deposits are studied and developed by two subsidiaries of the Canadian "EuroMax Resources."

On December 16, Bulgaria's telecoms watchdog announced it has awarded permits to three companies for the vacant frequencies in the 1800 MHz range, which could be used to establish GSM, UMTS, LTE or WiMAX mobile networks. Max Telecom OOD (for 2 х 8 MHz), 4G Com EAD (2 х 8 MHz) and Bulsatcom AD (2 х 5 MHz) will provide public electronic communications services in the1800 MHz range of the radio frequency spectrum for ten years, the Communications Regulation Commission (CRC) said.

At the end of 2011, the Bulgarian government vowed it will concentrate its efforts in improving conditions for business in the country in 2012.

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