IT, Biotech and Mining Most Attractive to Foreign Investors

Road Show in the US Promotes Opportunities in Bulgaria

Bulgaria must work on becoming an attractive investment location, advised U.S. Ambassador James Warlick during a conference titled “New Perspectives in the Trade and Economic Relations between the United States and Bulgaria.” The event was organized by AmCham and U.S. Commercial Service in Bulgaria on June 7, 2011 at the Hilton Sofia hotel. The United States is going to be once again the biggest investor in Bulgaria in 2011, Warlick added.

The forum featured the May AmCham/Ambassadors’ roadshow in the United States, which was meant to promote investment in Bulgaria. In front of Prime Minister Boyko Borissov, Minister of Finance Simeon Dyankov, Minister of Environment Nona Karadjova, many businesses, and journalists, Ambassador Warlick talked about five lessons learned during the U.S. trip. In the first place, he said it is important to pay special attention to small and medium sized enterprises in the United States, and not only to large corporations. It is also essential to receive feedback from CEOs about the business climate in Bulgaria. Third, if the successful Bulgarians in the United States spread their know-how, that would be an added value. He further said the largest plumbing and sewage company in the United States is managed by Bulgarians, and he had proposed to its director to think of ways to bring back investments to Bulgaria, adding that all business representatives must do the same. In the fourth place, Bulgaria must make more efforts to be a competitive investment destination as U.S. investors are looking for opportunities to enter the EU market. Warlick noted that Bulgaria can no longer count only on its attractive tax policy and qualified labor, but must showcase its advantages before other countries. “”Nothing, however, can replace human interactions,”” the ambassador said as his final lesson.

Prime Minister Borissov pointed out that in the last two years of severe financial and economic crisis, Bulgaria managed to keep the lowest taxes in the EU, while now the so-called Financial Stability Pact, prepared by the government, will become a warrant for all future investments.

“We want to prevent the future arrival of populists, who will spend the money in one year. That is why we need strong fiscal policy and good investment climate,” the prime minister stressed. He named the largest U.S. investments in Bulgaria such as Hewlett-Packard (Global Delivery Center), The Coca-Cola Company (Bankya Mineral Water Factory), and the AES Corporation (Maritsa East 1 Power Plant project).

Minister Dyankov presented before the forum his brainchild, the so-called Financial Stability Pact. He noted he had received positive assessments on the project from U.S. academic circles, pointing out that while the United States has a lot to offer to Bulgaria, and Bulgaria has also a lot to offer to the United States in terms of regulatory solutions for fiscal stability and sustainability. Minister Karadjova, noted the clear rules, transparency and alleviated regimes as an advantage for those wishing to invest in Bulgaria. Evgeny Angelov, deputy minister of economy, energy and tourism, presented a detailed sector strategy for attracting of foreign investments to Bulgaria.

He said the country has a number of advantages it could promote. As a member of EU and NATO the country has a political and economic stability. Bulgaria also has the lowest budget deficit in the EU and its credit rating was improved recently by Moody’s. Geographically the country is located in the center of Southeast Europe with a growing market of 122 million consumers. There is an easy access to the markets of EU, Russia, Middle East and Africa. Among other positive advantages, Angelov pointed out the excellent traditions in engineering and electronics.

Bulgaria’s information technology (IT), biotech and mining sectors are among the industries with the largest potential to attract investors from the United States, according to participants in the forum. “Mining is the rising star of the Bulgarian economy,” said Alex Nestor, head of corporate and external relations at Chelopech Mining. The company is owned by Canada’s gold mining company Dundee Precious Metals, which is active in gold extraction near the village of Chelopech, western Bulgaria. The sector is promising because it is not well-developed, Nestor said. According to Georgi Randelov, manager of Microsoft Bulgaria, information technology has the potential to draw many more investments, given IT’s widespread use. In addition, the country has already attracted a vast number of large companies active in the sector, he said. The necessity of the development of e-government and effective public administration will also boost future flow of IT investments. The lack of systematic information on activities in research, as well as the worsening quality of education in Bulgaria, are among the obstacles to luring investors in that field, said Roman Vassilev, general manager of motor vehicle electronics company Johnson Controls.

According to Atanas Garov, executive director of Colliers International Bulgaria, the road show was a great first step, and all partners should capitalize on the best ideas in an active follow-up. AmCham needs to develop more activities and initiatives with AmCham business circles, academia and the Bulgarian community in US. During the business experience panel titled “Bulgaria: Strategic gateway to the region,” companies PPD, Ernst&Young Bulgaria, Amgen Bulgaria and Adecco Bulgaria presented their success stories in Bulgaria.

Eric Alexander, U.S. consul general in Sofia, elaborated on how to qualify for the E2 visa during the panel on the long-term visas for investors and their employees. A legal perspective on the subject was provided by Richard Goldstein, U.S. immigration attorney, during a satellite session from London.

The forum was kindly supported by AES Corporation, Amgen, Colliers International, Dundee Precious Metals, Ernst&Young, Johnson Controls, McDonald’s Bulgaria, and Microsoft.

AES Galabovo TPP officially starts commercial operations of Maritza East 1

AES officially started commercial operation of its Maritza East Galabovo Power Plant on June 3, 2011, which was marked by a dedication event held at the plant’s Galabovo site. The event was attended by Prime Minister Boyko Borissov along with AES President and CEO Paul Hanrahan, and AES Managing Director for Bulgaria Peter Lithgow. Guests also included other members of the Bulgarian government, the National Assembly, partners, diplomats, and journalists.

“Starting commercial operation of Maritza East Galabovo is a great achievement for both AES and Bulgaria,” said Hanrahan. “The local coal-fueled project modernizes electricity generation to meet EU environmental standards and contributes to the country’s economic development while enhancing its energy security.”

With its total cost of 1.2 billion Euro AES Galabovo is the largest foreign direct investment in Bulgaria in the past 20 years. Its financing was secured by a consortium of 29 local and international banks, led by EBRD, BNP, ING and Credit Agricole CIB. The 600 MW net plant will be utilizing approximately 30 percent of the Maritza East Mines’ lignite and will be securing approximately 9 percent of the total power capacity in the country.

Its projected output of 4.5 TWh per annum will be sold to the National Electrical Company (NEC) under a 15-year power supply agreement. The power plant’s total initial 420 MW net capacity at the start of commercial operation will be gradually increased to 500 MW in late summer and to the full 600 MW by the end of the year.

AES also financed and constructed its own 93-million-Euro waste disposal facility. The power plant and the waste disposal facility are in full accord with the most recent international environmental standards and feature a state-of-the-art technology and equipment.

AES invests in social and environmental initiatives through its CSR program, and has supported local business through contracts with some 400 Bulgarian subcontractors. During the construction phase of the project, an average of 2,000 jobs per month were created. The plant commercial operations will support 360 direct-hire jobs and another 2,440 jobs in the suppliers sectors. The project is a key asset in AES’s diverse and growing portfolio in Southeast Europe.

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Coca-Cola announces investments in Bulgaria

Coca-Cola in Bulgaria celebrated on May 13, 2011, the parent company’s 125th birthday with more than 500 guests, including customers, partners, media and government representatives. The party was attended by Bulgaria’s Prime Minister Boyko Borissov, Sofia Mayor Yordanka Fandakova, and U.S. Ambassador James Warlick.

The company had prepared many surprises for its guests who gathered in an elegant marquee in front of the National Museum of History in Sofia. The first of these were the news of upcoming investments announced by Mayor Fandakova and Ambassador Warlick.

Sofia was chosen among 14 European cities for an important investment by Coca-Cola Hellenic Group, i.e., the opening of Human Resources and Finance Shared Services Center in the fall of 2011. The center will enable some 200 young Bulgarians to start a career at a global company and develop their skills in these areas.

Ambassador Warlick announced the investment of 2 million Euro in the construction of new modern natural mineral water production facility in Bankya that will replace the current facility. Coca-Cola is the first company in the Bulgarian market since the 1960s to build a cutting-edge water production facility, which will be donated to the state after the concession’s end.

Guests had the opportunity to experience key moments of the history and development of the brand. They witnessed how pharmacist John Pemberton came up with the recipe for Coca-Cola back in 1886 in the authentic atmosphere of the famous Jacob’s pharmacy in which he marketed the first drink.

Another big surprise was the iconic “Happiness Factory” of Coca-Cola, in which sets and characters from the famous advertising come to life in front of the guests. On the occasion of the anniversary, a unique 3D screening on both the building of the National Museum of History and the walls of the Sofia Hilton Hotel took place for the first time in Bulgaria.

A great finish to the symbolic trip was part of the unique collection of one of the most avid Bulgarian fans of Coca-Cola, Vassil Enfedzhiyan from Plovdiv. Guests saw various Coca-Cola items that have been collected for over 40 years from around the world.