"Concrete projects must be proposed that we know beforehand will be intriguing to investors we want to attract. Thus the opportunity for our message to reach its target is much bigger than if we just present the conditions for doing business in Bulgaria. For example, airports in Stara Zagora and Ruse, the regions with a concentration of mineral springs or the opportunities which the National Company Industrial Zones are only part of the projects we can put forward for potential investors." These are part of the conclusions of InvestBulgaria Agency's new CEO Stamen Yanev in his interview for Novinite.

Yanev is a lawyer specialized in mergers and acquisitions as well as investment. His career has made him part of big international consultancies among which are subdivisions of some of the four biggest auditing companies in the world. He is also a member of the Sofia Bar Association and a Senior Assistant at the Bulgarian Academy of Science's Institute for Legal Studies.

Mr Yanev, InvestBulgaria Agency has recently handed out the 2014 Investor of the Year awards. How did you choose the winners?

On February 4 I had the pleasure of opening the awarding ceremony of the 9th edition of the Investor of the Year competition. This is a competition which has turned into a tradition for Bulgaria. This is the most valuable forum in our area. This has been proved by the investors' interest in the competition, which inspires with their respect, and the strong competition. This is why InvestBulgaria Agency approaches to the assessment of nominations with responsibility so that determining the winners lacks subjectivity. This year the projects were assessed in accordance with a set of indicators: value of the investment, number of opened jobs, measures to protect the environment and measures for staff training. The big "Investor of the Year" award for its achievement in 2014 was won by Devnya Cement, of Italcementi Group, for the completion of its new plant, one of the biggest and state-of-the-art facilities in Europe. The investment in 2014 alone was BGN 114 M. The entire project is worth BGN 325 M. In the past year there have been 3067 new vacancies, and nearly all subcontractors are Bulgarian companies from the region. All this has taken Devnya Cement to the forefront, despite the strong competition. [You can read more about the awards here or on InvestBulgaria's website].

What, in your opinion, is the reason for the drop in foreign direct investment for most of 2014? As a new head of InvestBulgaria Agency, do you think the agency has had any role in this negative development?

Talking about a drop in investment, we should make a very distinct clarification as to the basis we are using to draw a comparison. If we compare to the 2007-2008 period and prior to that - speaking of such a trend is well-founded. With over EUR 9 B in 2007 and over EUR 6 B in 2008, the 2010 level of EUR 1.5 B in 2008 and of EUR 1.1-1.2 B in the years after are indeed of concern. The global economic and financial crisis, however, had its impact on economic development of the whole world. It is impossible for Bulgaria to turn into a haven. Over the past years we have had no big privatization deals.

Over the last year there has been one more factor which influenced not only the direct surge of investment, but also has indirect importance to the process. On June 31, the Regulation 800/2008 of the European Commission of August 6, 2008, that stipulated the procedures for granting state subsidies, expired. A vast part of the measures in the Investment Promotion Act are described as a state subsidy. In order for the certification and, respectively, giving grants (defined as state subsidies) to investors to take place, the new Regulation 651/2014 of the EC of June 17, 2014 has to be incorporated into the Bulgarian legislation, and the Investment Promotion Act is to be changed. You know that there were elections, and thus 6 to 8 months were lost for the process of certifying. At the InvestBulgaria Agency there are about 30 projects awaiting for it to be renewed.

Also unfavourable to the overall process of attracting investment was the general financial instability on a global scale. This is made evident in the following graphics:

Here the trend of investment sinking after 2008 is visible - both in Romania, Serbia and Greece and at home. Nominal values, of course, are different. The scale of Romania's market cannot be compared to that of Bulgaria. The trend in the investment flow, however, is the same for all countries.

Due to the slowdown of the Eurozone economies, companies in these countries refrain from investment. The conflict in Ukraine and the Middle East, which are quite close to us, also impact investment decision-making in Bulgaria.

None of this is to justify the developments, but just the objective picture of the circumstances under which we are to attract investment. A day ago the Bulgarian National Bank [BNB] made public the data on investment in the January-December 2014 period [you can read more here]. This is preliminary data. It points to EUR 119.6 M of new investment in December which make a total 2014 amount of EUR 1.181 B. Usually for a month or two, and this is also what happened in September 2014, the BNB revises yearly data based on new information. After the September 2014 update the final volume of investment in 2013 and 2012 went up. In order to make final conclusions we should wait for the final data to make the respective analyses and comments.

Measures are needed to reverse the trend. We need a brisk surge in investment to boost GDP growth and to ensure BIGGER employment of Bulgarian citizens. Even though the expectations of the [European Central Bank] ECB, the [European Bank for Development and Reconstruction] EBRD, and the European Commission suggest a retention and even a slowdown of investment growth, we have to help turn Bulgaria into a preferred investment destination. A GOOD? sign is that in its latest forecast the EU Commission raised its GDP expectation for Bulgaria from 0.6 percent, as much as the year before, to 0.8 percent, the estimates in the Finance Ministry's budget. But you see it for yourself, this is not enough at all.

In mid-January you revealed that a new investment promotion strategy is being prepared. What will this document include? Will there be any focus on boosting economy in troubled regions? What is it that Bulgaria needs, including from a legal perspective, to become a destination for long-term investment?

Our purposes are divided into three groups - short-term, mid-term and long-term. As for the short-term plans, they include an analysis of the process of drawing investment in the past 10 years. Creating the strategy comes in the mid-term plan. My understanding is that this strategy has to comprise the efforts of all clusters which are involved in the process of attracting investment and in Bulgaria's economic development - executive and legislative powers, local authorities, business NGOs, international auditing and consultancy firms. To elaborate measures which would really turn Bulgaria into a preferred European investment destination we have to base them on a detailed analysis. Even now our country has a lot of advantages, but they are not well-known enough among investors. The way of making a proactive investment marketing has to change. What this includes is targeting investors' interest to certain economic sectors and to certain regions. Concrete projects must be proposed that we know beforehand will be intriguing to investors we want to attract. Thus the opportunity for our message to reach its target is much bigger than if we just present the conditions for doing business in Bulgaria. For example, airports in Stara Zagora and Ruse, the regions wit ha concentration of mineral springs or the opportunities which the National Company Industrial Zones offers are only part of the projects we can put forward for potential investors.
Over the past year there is notably an increased investment interest into Bulgaria and this is to a large extent explained with the new incentives introduced with the changes to the Investment Promotion Act (IPA) of February 2013. With these coming into force, the investment thresholds needed for the issuance of an investment certificate have been significantly lowered. This makes it easier to receive encouragement measures on behalf of the state. New economic activities from the services sector were included that could make use of incentives under the IPA - the issuance of program products, accountancy and combined office space activities, the offering of shared services ("Call Centers and Outsourced Financial and Accounting Services"). Opportunities were also introduced for investors to be able to restore their social insurance expenditures for a period of 2 years, or 17.9% of the worker's gross income.

Besides as many as 24 forums were held last year to make the country more popular. The first campaign was directed at Bulgarians abroad. Our compatriots in 13 cities across the globe were invited to come back and to work in their country, the development opportunities offered here were pointed out. There are already Bulgairans who have returned, who work here motivated by these forums. In the autumn, 10 investors' forums were made in seven countries including EU members, the US an Asian countries. There was also one in Rome, Italy. At those events more than 2500 potential investors were made familiar with the advantages for investment and doing business in Bulgaria. And those marketing campains reflect on Bulgaria's conversion into a better known and more interesting country. All that said, we have to change the means in order to yield better results.

In which areas Bulgaria will hold, in your opinion, the biggest potential for drawing investment in 2015 and should we expect any changes to the structure of investment compared to 2014?

Among the Ministry of Economy's key priorities is precisely investment promotion in sectors with high added value in which Bulgaria has its traditions. High-tech production, which is the locomotive/ENGINE? of every economy, are also a goal for us when seeking to attract investment. Within the 1996-2013 period, the main sectors in which most investments have been made are the refining industry, financial intermediation and real estate operations. Even though it is early to make forecasts, it is most likely for these same sectors to remain among the most preferred ones this year. However, effort will be put in to draw investment in sectors with are traditional for Bulgaria for which there are specialists and capacities - food, textile, clothing industry, etc.

How does the overall situation in the Eurozone affect investment? One might suggest some investors would prefer countries outside the euro area like Bulgaria...

In general the situation in the Eurozone does not have quite an unfavourable meaning for our country. The flow of foreign direct investment in the 2010-2014 is stable. Our desire is to significantly boost the volume of attracted direct investment in Bulgaria. But no substantial animation is expected in the European economies. According to the European Commission's winter forecast, the EU's GPD will grow 1.7% this year, and in the Eurozone the rate will be 1.3%. In 2016, growth is expected to speed up at 2.1% and 1.9% respectively, due to the stronger domestic and external demand, the flexible monetary policy, the generally neutral fiscal position, as well as the expected impact of reform. We might also expect that competition on behalf of our neighbors, in the first place Romania and Turkey, will go up. It is true that some investors prefer countries such as Macedonia and Serbia due to the fact that they offer no EU-sanctioned restrictions on incentives, state grants and tax relief. This is something Bulgaria, as an EU member, finds hard to afford. But I am convinced we hold the potential to introduce appealing measures in order to attract investors who at the moment have not planned any investment into Bulgaria.

How big a risk does Bulgaria run of a dip in foreign investment given the situation in Russia and Ukraine? Can there be measures to make up for a potential drop?

There are such analyses. The data is preliminary, but if we compare Russian investment at home in the January-November 2013 period, amounting to EUR 97.1 M, and that for the same period in 2014, EUR 179.1 M, we see the volume was twice as big last year. The pace of Ukrainian investment also remains stable. However, you known that in today's globalized environment investment flows are looking for the easiest way. This means a Russian company willing to invest in Bulgaria would find the most profitable path to carry out its plans. And it is quite often that this money enters Bulgaria with a designation of another origin. A substantial volume of Russian investments into Bulgaria actually don't count as Russian, according to statistics. The same problem emerged at forums held not long ago in Italy - a vast part of Italian investment do not count as Italian in our statistics and this puts Italy further behind in the ranking of countries investing here though it is the tenth-biggest since investment statistics began.

In other interviews you have mentioned the political change in neighboring Greece as an opportunity for Bulgaria to turn into a magnet for investment for our southern neighbor. In our opinion, does the political result give ground for such a comment and how could Sofia make use of such an opportunity?

Greece has always been an important trade partner to Bulgaria. Foreign direct investment in Bulgaria is at EUR 3.5381 B for the 1996-2013. Greece is ranking third in the volume of investment into Bulgaria. Not long ago Prime Minister Boyko Borisov invited me to take part in a meeting with the organization of Greek businesses in Bulgaria. Concerns were voiced there by Greek entrepreneurs that the economic situation in their country could deteriorate after the elections. It is normal and logical to expect that part of them will relocate their business to Bulgaria, the nearest EU member state. But I would like to wait for the new Greek government to give shape to its economic policies. Their might be measures to curb trans-border investment. Our countries are traditionally close in a trade an economic sense. As the Prime Minister put it at this meeting, afte we build the Struma highway, the volume of bilateral trade will certainly increase.

For years there have been reports of investment appetites from China, but to what extent China and the countries from the region might turn into successful investors here? What does Bulgaria to promote itself in Asia?

The interest of Chinese companies in Bulgaria is substantial. However, it is not currently reflected in the data about real investment flow. The level of Chinese FDI for the 2010-2013 period is just EUR 121.7 M. Chinese investment have quite a different philosophy when taking decisions from the European and American one we know. They are still making their first steps in moving businesses out to the rest of the world. Even though Chinese Prime Minister [Li Keqiang] called on Chinese companies to globalize themselves, they have it very difficult to take such decisions. Chinese companies usually want to take part in projects guaranteed by the state in order to be sure about their investment. Apart from this, they need many permits, which makes things much slower.

In the last year there were high-profile visits [to China] - Prime Minister, Parliament Chair and President, as well as many business delegations. In 2014 InvestBulgaria Agency organized two investment forums in Beijing and Shanghai and one in South Korea. The interest was huge and InvestBulgaria managed to present investment opportunities into Bulgaria and into more specific sectors of the economy as information technologies, transport and logistics, engineering, electronics or SPA tourism.

There are some features which have to be taken into consideration while introducing Bulgaria as a good investment destination in China. For instance, promotional materials have to be in Chinese; it is good that correspondence should be in Chinese; interpreters are needed; cultural, philosophical and characterological distinctions have to be taken into account during negotiations. But it is our main goal to have more investment from the Americas, Europe and Asia as soon as possible.

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