Fri, May 28 2010 10:03 CET byClive Leviev-Sawyer 1393
Cumbersome bureaucracy and slowness in issuing licences and permits are the main obstacles facing foreign investors in Bulgaria and should be cleared away, the American Chamber of Commerce in Bulgaria (AmCham) says. The message came a few weeks after it emerged that foreign direct investment (FDI) in Bulgaria in the first quarter of 2010 came in at minus 21.9 million euro, a major decrease compared to FDI in Q1 2009, which was 926 million euro.
Earlier in May 2010, Bulgaria’s Cabinet said that it planned to lower the thresholds for incentives to prospective investors.
AmCham, which marked its 15th anniversary on May 27, held a business breakfast with journalists earlier in the week, at which executive director Valentin Georgiev revealed that two years ago, the chamber had started working with a company – he declined to give the name – that had been eager to pour $60 million into the Bulgarian economy.
As reported by Dnevnik, Georgiev said that the plan still had not been put into effect, in part because of the global financial crisis but also because of other obstacles.
Georgiev said that the company had got no help from investment promotion authority InvestBulgaria or from the local government in the town where the firm wanted to invest.
“The local government reacted in a very strange way. They told the company that they would provide no more assistance than required by statutory rules, there was no commitment to the project whatsoever,” Georgiev said.
Current law intended to encourage investment was good, but there was no initiative on the part of the state and municipalities to implement it, he said.
AmCham wanted to see a consultative council set up, bringing together Bulgaria’s major business organisations and the government, to assist in making decisions on changing the business climate, rather than just drawing up strategies.
US embassy commercial counsellor Scott Pozil said that Bulgaria should focus its efforts on investors already present in the country while providing incentives for potential investors.
Pozil said that an organisation should be set up to inform foreign businesses of the investment opportunities in Bulgaria and about the incentives at national and local level.
For companies already here, there should be a “one-stop shop”, he said. Proposals to stimulate potential foreign investors should be “more integrated,” Pozil said.
Earlier reports about the sharp downturn in FDI ascribed the trend in part to local branches of foreign processing and trade units paying back loans, as well as to profit distribution or write-downs from previous periods. The FDI figures for Q1 2010 were preliminary figures issued by central Bulgarian National Bank and could be revised later on.
Dnevnik quoted financier Lyubomir Hristov as doubting that the FDI downturn had been caused by write-offs, because this would have been specified in the statistics. Aliosman Imamov, deputy chairperson of Parliament’s committee on the budget, said that unless write-downs had been specified, the decrease in FDI was because of capital withdrawal.