The home of yoghurt, as well as the oldest prehistoric town found to date in Europe, geography has marked Bulgaria as a crossroads of East and West. Emerging from the break-up of the USSR in the 1990s, this small yet diverse country on the Balkan peninsula at the southeastern end of Europe has forged a place for itself among the world’s political democracies and market economies. Having held its first multi-party elections since WWII in 1990, Bulgaria adopted a national constitution in 1991, joined NATO in 2004 and, along with Romania, joined the European Union (EU) in 2007.
Today, Bulgaria is a country on the move. Home to some 7.6 million people, its economy grew an average 6% per year from 2004-2008. Though it took a hit with the onset of the banking system crisis and global recession, the government, under the leadership of President Rosen Plevneliev, has remained steadfast in its commitment to economic liberalization and building a pluralistic political economy and society based on principles of sustainable development.
Bulgaria is actually better off fiscally and economically than some of its more industrially developed neighbors and counterparts. Public debt was a relatively low 17.9% of GDP in 2012, unemployment was in line with the EU average at around 11%, inflation was mild in 2012 at 2.4% and, with a Gini index score of 45.3, the distribution of income in Bulgaria is actually more equitable than it is in the United States. The literacy rate across Bulgaria’s 28 provinces is a high 98.4%, and residents benefit from good water, health, sanitation and energy infrastructure.
Bulgaria’s leaders are keen to see progress continue. The focus of their efforts is on diversifying the economy as a means of broadening socioeconomic opportunity.
Encouraging Foreign Direct Investment
Bulgaria enjoys good relations with the US. Then Prime Minister Borisso was the first European head of government to meet with President Obama after his reelection, leading a team of senior government officials on a tour of the US this past December.
Encouraging foreign direct investment is instrumental to the government’s strategic development plans. Successive governments have put together a legal and institutional framework that makes Bulgaria an attractive place for overseas businesses and investors.
GDP per capita in Bulgaria amounts to $14,200, with the services sector representing nearly 58% of national economic output. Industry accounts for 35.2%, while agriculture makes up just over 7%. The country exports clothing, footwear, iron and steel, machinery, equipment and fuels. It has been a net electricity exporter in the Balkan and southeastern European region for the past 20 years.
While comparatively low energy and labor costs make Bulgaria an attractive place to invest, it’s the flat 10% corporate and personal income taxes, along with a stable economic policy and political environment, that make the country particularly attractive to foreign investors, the Minister of Economy, Energy and Tourism explained in an interview.
Bulgaria: Energy and Infrastructure
Plentiful, affordable energy is key to any country’s socioeconomic development. Adding to this challenge is producing energy without increasing the carbon and greenhouse gas emissions that contribute to the Greenhouse Effect, global warming and degradation of air, water and land resources.
Bulgaria has done well in both regards. The government has been working to diversify natural gas supplies so the country isn’t so heavily dependent on natural gas from Russia. It has taken actions to promote domestic exploration and production by opening up concessions to multinational oil and gas majors, such as Exxon-Mobil, Total, Repsol and Austria’s OMB.
Outside of fossil fuels, Bulgaria has been at the forefront when it comes to green energy in the EU, which has committed to meeting 20% of regional energy needs from green energy sources by 2020. Bulgaria now produces 15%-16% of its electricity from clean, renewable resources.
Bulgaria: Tourism, Services and Manufacturing
In addition to growing investment in the energy sector, Bulgaria has seen growing foregin investor interest in manufacturing, particularly in automotive components. These include manufacturers of automotive leather seats, air conditioning units, cables and air bags.
Bulgaria is also keen to stimulate investment in the services sector. Building on the strength of its university language programs, businesses increasingly see Bulgaria as an excellent location for call centers, a trend the Economy Ministry intends to encourage further. The government is also keen to expand on this by developing Bulgaria as a center of shared business service operations.
Tourism and hospitality is another large and growing contributor to Bulgaria’s economy. The tourism sector has grown rapidly since EU accession in 2007. Now accounting for some 12% of GDP, tourism has been increasing between 5%-10% annually in recent years.
The number of foreign tourists visiting Bulgaria rose 4.6% to more than 6.3 million in 2011, contributing more than 2.75 billion euros (~$3.5 billion) to the national economy. The total number of visitors totaled over 8.7 million, a 4% year-over-year increase, according to Bulgaria Tourism Bureau statistics.
Nearly 4.5 million international tourists traveled to Bulgaria for vacation and relaxation in 2011, 6.1% more than did so in 2010. The number of visitors traveling to Bulgaria for business purposes rose 4.1%, exceeding 971,700.
Given its geographic location at the nexus of West and East, the extent and variety of its relatively unspoiled and diverse natural landscape, its rich cultural and archaeological heritage, wine production and geothermal spas, the potential is there for these strategic development goals to be realized, the Ministry believes.
Plans include stimulating development of convention and festival centers, upscale hotels and resorts, amusement parks and attractions, luxury spa and wellness facilities, marinas and golf courses. This should open up opportunities for international hotel, resort and tourism companies and investors, the Ministry believes.
With mountains and a long coastline, Bulgaria is home to popular summer and winter resorts. With a rich historical legacy with archaeological sites dating back more than 6,000 years, the Ministry of Tourism is keen to develop Bulgaria as a cultural tourism destination.
Spas have sprouted up around Bulgaria’s geothermal hot springs, and health and wellness is another segment of the tourism market the Ministry of Tourism wants to encourage further.
All things considered, Bulgarian government officials believe they are on the right track with the current policy mix and are cautiously optimistic about the future. One promising new development for foreign investors is the appointment of a personal project manager from the Economy Ministry to support and shepherd all Class A investment projects above 10 million euros through the government bureaucratic process.