I fully grasp this concept. But a 10% mark up on a secured mortgage - secured against immovable property no less - what's going on there?
Is property in BG so overvalued? The economy so much up the creek? Or are banks just completely uncompetitive in BG? Monopoly perhaps?
"The Bulgarian National Bank (BNB) announced the highest basic interest rates since 2005 in December 2008, setting it at 5,77%."
I don't really grasp these things very well, but surely the interest rates in the Hyperinflation of the 90s must have been higher than 5.77%.
And if interest rates are 0.2% why are mortgages rates at, like, 10%?
You can believe what you want. Everyone* is cheating in some form or other. From that air con in the living room that is meant to be in the office, to paying the nursery 100lv to guarantee you a place, to cleaning the block entrances for undeclared income to not paying your NHS tax. Everyone is at it. Obviously in most cases it is trivial, but it is still happening and it is not even really a criticism, really it is cultural differences. A bit like football really. In southern countries if you can cheat and get away with it it's not considered unethical. More like it's considered clever and the stupid ones are those got caught or worse, didn't even try.
* OK, there are probably one or two grannies somewhere who don't, but I'm referring to the working population really.
""I doubt there's anyone in BG who doesn't cheat on taxes"
I can't support this statement. The corporate tax rate in Bulgaria is 10%,"
I'm not just talking about companies and corporation tax. I'm talking about individuals, VAT, social security everything. Every man and his Dog in Bulgaria is hiding money or doing something under the table or on the black market. I know this is partly the same in Greece and Italy and other southern countries - but look where that got them.
AND: certain taxes in BG are NOT low AT ALL. For example: employing a freelancer. The concept doesn't really exist. You need to offer them a grajdanski dogovor and get taxed as if they were you're employee - that's a 30% tax as most Bulgarians will expect the negotiated rate to be their net pay. In the UK you don't pay any taxes on hiring a freelancer. They have to pay their own taxes at the end of the year. This is one of the reasons freelancers are all working undeclared.
"I also don't see that Bulgaria is more bureaucratic than most other countries when it comes to opening a business or doing business in general."
Opening and running a business is indeed quite straightforward in BG. However one problem is finding out what the law is. There's little information about regulations (I mean in a manner so that you don't need to be a lawyer with access to special publications whose meaning only lawyers can understand).
"The problems nowadays are more deficits in the law enforcement, corruption, infrastructure and human resources"
Well, the first two go hand in hand. You get round the laws in BG by corrupting officials. That is a BIG issue for some companies because it means your competitor might have an advantage due the local inspector turning a blind eye in return for that flash Merc in his drive.
And pius's comments:
".taxi's that are killing the tourist industry"
Taxi's advertise their rate on the window. Make sure the meter is on. End of story, nothing to see here, move along now.
"police fines that go into their back pocket's"
I've been stopped by Police a number of times in my car. Never been fined or blackmailed once One one occasion they even had legitimate reason to confiscate my car, but let me go. Fact is that police treat foreigners better then the locals.
" while they look on at money exchange sharks on the streets of Varna swindleing people "
If you deal with exchange sharks on the streets you deserve what you get. If you need money changed: GO TO THE BANK!
"Sorry for your troubes Duncan but I'm not surprised ! .Dont give up .My experience in doing business in Bulgaria in the past three years is not good , The legal system needs a root and branch clean out , from solicitors to police who see foreigners as easy prey for fees and police fines that go into their back pocket's while they look on at money exchange sharks on the streets of Varna swindleing people ..taxi's that are killing the tourist industry before it gets out of the trap"
One of the biggest problems with people going on about how difficult it is to "do business in BG" is that they are cheating left right and center and pretend that nothing will come of it. To do business in BG without getting into trouble you need to respect a few things:
1. By squeaky shiny clean. Don't give them a reason to give you a fine or send an inspector round. Once they've found a fault you're in big sh!t and will end up paying all sorts of people all sorts of money in order to avoid an even bigger fine.
2. Don't cheat on taxes. I doubt there's anyone in BG who doesn't cheat on taxes. But see point 1.
3. Don't turn over too much money... I know this sounds unfair, but if you're turning over 100s of 1000s of levs a year you won't go unnoticed and someone will come round to make sure there's nothing they can find under points 1 and 2. And believe me there's always something to "find" under 1. If you're making that much money, set up your main business in a country where the laws are respected and outsource the bare minimum to BG. Don't expect this to turn out any cheaper than dealing with point 1 above, but it is probably less stressful unless you know how to handle it.
4. BG is a very beaurocratic country which is always a sign that corruption will be rife (yet that same corruption offers a way to get round the bearorcracy....). If you don't like dealing with beaurocracy, don't do business here. But before you slam BG laws, you might want to check the laws elsewhere - they are unlikely to be much different.
5. Yes, the legal system sucks. Bottom line: stay out of trouble.
And, as for Mr. Banbury's issues:
6. NEVER give ANYONE power of attorney in Bulgaria. You're signing your life away. If you can't be here in person to sort stuff out: DON'T BOTHER!
7. Don't expect to builld a mansion and not get noticed. See point 3 above.
8. The bit about the promisory note is obviously dodgy, since normally things have to be notarised and signed in triplicate in BG. So I feel for you on that one. You need to find a better lawyer.
"Robin, it is a very difficult task to make predictions for something that depends on numerous factors such as restoring confidence in a particular country, political & economical developments of that country, the global financial situation in the buyer’s countries, the situation of the remainder of countries involved. Plus so many smaller twists that come on the way. "
That's my point! Given that it is so difficult why do we time and again get bombarded with how things are going to turn out, especially that things are going to get better like, real soon, it's just round the corner.
Fact is, that things are so bad at the moment that "stabilising" is seen as a positive development. There're large developers here in Plovidiv who haven't sold a single new apartment in over a year. Only the ones with obvious connections to the council (Gerbera here in Trakia) are still building anything bigger than a 3 storey block.
How about getting rid of all these pointless doctors visits and checkups. As well ecnouraging/forcing/god knows-how-but-do-it doctors not to prescribe antibiotics at the sign of a runny nose - or maybe antibiotics are not subsidised by the state...
"In my opinion, in most sectors of the market the prices have bottomed out or are very close to the bottom and there will be no large further corrections in 2010,"
Possible, on the otherhand whenever someone with a vested interest in a certain sector claims "things have bottomed out or stabilised" you know it's likely to get worse....
This crisis is far from over, especially not in the BG property sector. All those Brits and Irish won't have any money to but too-good-too-be-true-yet-still-overpriced-property in BG for many years to come...
"European Union political leaders have sent a discouraging message regarding Bulgaria's ambition to adopt the single currency in the next two to three years."
Hardly surprising, given Bulgaria's record really is it. Bulgaria was only allowed to join the EU based on now broken promises. So just because BG balances it's books now does not mean it will do so a couple of years after joining the Eurozone. No, their not going to fall for that one again.... they've learned their lesson...
50% more Chinese Tourists in Bulgaria
Potentially Defective Aluminum was used by All Car Manufacturers in Japan