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InvestBulgaria Agency www.investbg.government.bg

Bulgaria – your gateway to EU. Bulgaria-Korea business forum, 14. December 20 10, Sofia. Dimitar Nikolov Marketing Director. InvestBulgaria Agency www.investbg.government.bg. Strategic location Why Bulgaria Macroeconomic Indicators FDI Inflow Korean Investments in Bulgaria

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InvestBulgaria Agency www.investbg.government.bg

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  1. Bulgaria – your gateway to EU Bulgaria-Korea business forum, 14. December 2010, Sofia Dimitar Nikolov Marketing Director InvestBulgaria Agency www.investbg.government.bg

  2. Strategic location Why Bulgaria Macroeconomic Indicators FDI Inflow Korean Investments in Bulgaria Highly Skilled Labor Force Comparison between Bulgaria and Europe Business Sectors of Highest Potential for Investors Investment Promotion Act Investment Incentives in Bulgaria InvestBulgaria Agency Structure of the Presentation

  3. 9 4 7 10 8 Pan-European Transport Corridors

  4. Bulgaria – strategically located as a bridge between Europe and Asia Russia and CIS EU and EFTA Turkey and Middle East Strategic geographic location Major transport corridors passing through Bulgaria

  5. Why Bulgaria • EU membership and NATO membership • Currency board • EU’s most favourable taxes: • 10% corporate income tax rate • 0% in high-unemployment areas • 10% flat tax rate on personal income • Europe’s most competitive operational costs • Well-educated and highly-skilled labour force • 45,000 Bulgarian students in Europe • Government financial support for priority investment projects • Linking Europe and Asia • Excellent climate, natural scenery, food and hospitality

  6. Bulgaria at a glance GDP Growth, % Inflation, % 2009 * October 2010 Unemployment, % FDI inflow, EUR Mio. * October 2010 * Preliminary Data * October 2010 * Preliminary Data Source: Bulgarian National Bank

  7. 0 Remarkable government financial indicators on regional and even on a pan-European scale Bulgarian government debt is 3rd lowest in Europe Budget surplus / deficit has consistently outperformed regional and European averages Estonia 7% Bulgaria 15% Romania 24% Czech Republic 35% UK 68% Bulgaria Germany 73% Hungary 78% Euro Area Euro area 79% CEE average Greece 115% 2005 2006 2007 2008 2009 Source: Eurostat

  8. Credit rating Source: Ministry of Finance

  9. Record FDI inflow in 2006– 2008, EUR m * Preliminary Data Source: BNB, IBA

  10. Decreasing FDI inflow in 2009-not a Bulgarian phenomenon 45 SEE level Global level FDI decrease.% FDI decrease,% Bulgaria USA Romania Japan Russia France Czech Brazil Ukraine China Serbia India Source: UNCTAD

  11. Bulgaria leads CEE countries in terms of FDI to GDP indicator FDI to GDP, %, 2008 – 2009 Source: BNB, Bank Austria Creditanstalt

  12. FDI stock by country,1996 – 2009, %, EUR m Source: BNB, IBA

  13. FDI stock by sector, 1996 – 2009, %, EUR m 22% 19% 18% 17% 7% 6% 5% 6% Source: BNB, IBA

  14. Korean Investments (1996 – Q3 2010) - 34.3 EUR Million; according to the FDI Stock by countries Korea is ranked 52th The biggest Investments in Electrical Engeneering, Renewable Energy, Trade Bilateral Treaty on encouragement and reciprocal protection of investments between Bulgaria and Korea Convention for the avoidance of double taxation between the two countries Korean investments in Bulgaria

  15. Trade between Bulgaria and Korea (BGN m) * October 2010 Source: NSI

  16. Hyundai Heavy Industries Co. • 1997 Hyundai Heavy Industries Korea privatized Bulgarian well-known manufacturer of Power Transformers and Tap Changers “Elprom Trafo” • Manufacturer of electrical components: power transformers, tap changers, equipment for photovoltaic power stations • 80% export of the production, mainly to Russia, Romania, USA etc. • About 650 employees • 2009 the company won a project granted by European Funds for improvement of competitiveness of large enterprises

  17. 0 Educated and skilled workforce – one of the key advantages of Bulgaria Almost 60,000 students graduate every year from over 50 universities Bulgaria has one of the highest proportions of students abroad from all European countries Iceland 17.8% Business 19,480 Ireland 14.2% Social sciences 8,372 Slovakia 10.2% Engineering 7,178 Bulgaria 8.3% Education 3,677 Greece 5.8% Health 3,166 Austria 4.7% Law 1,553 Germany 3.1% Architecture EU-27 average 2.8% Agriculture Romania 2.2% Other 12,684 Czech Republic 2.1% Source: NSI

  18. Language education in upper secondary general schools by city, 2008/2009 Source: National Statistics Institute

  19. Corporate income tax rate, 2010 Comparison between Bulgaria and Europe * 0% for manufacturing companies in areas with high unemployment Source: IBA

  20. Comparison between Bulgaria and Europe Average monthly wages, Q2 2010, EUR Source: CEIC, Eurostat

  21. 0 Bulgaria has one of the lowest business costs in Europe Bulgarian cost of electricity for industrial users is 67% of the European average Office rents in Bulgaria are among the lowest in Europe €/kWh, 2009 € / sq. m / year, Q1 2010 Sofia Estonia Estonia 0.059 0.059 Zagreb Bulgaria Bulgaria 0.064 0.064 Bucharest Romania Romania 0.081 0.081 Budapest EU average EU average 0.095 0.095 Prague Germany Germany 0.098 0.098 Warsaw Czech Rep Czech Rep 0.106 0.106 Istanbul Hungary Hungary 0.122 0.122 Athens Slovakia Slovakia 0.142 0.142 Moscow Source: CB Richard Ellis, Eurostat

  22. Manufacturing

  23. Focus on innovations

  24. Energy Sector

  25. ICT & BPO

  26. Investment Promotion Act • Promotion for initial investment in the following sectors: • From industrial sector: • Manufacturing • From the sector of services: • Computer programming, consultancy & information services activities • Scientific R & D and activities of head offices • Education • Human health care activities • Warehousing and support activities for transportation

  27. Investment classifications under the investment promotion act, (€ Million) Investment classes A and B depending on the value, region and sector allocation of the investment

  28. Incentives under the InvestmentPromotion Act • All classes (A&B) • Information services and shortened administrative services • Preferential treatment upon acquisition of a right of ownership and limited real rights over real estate – private state or private municipal property • Financial supportfor vocational training of employees for the needs of the investment project • A class • Individual administrative services • Infrastructure support to the borders of the investment project site

  29. Priority Investment Projects • All sectors of the economy, with the exception of the restrictions imposed by EU Regulation 800/2008 • Council of Ministers approval • Conditions – priority status depending on the value, jobs created and region allocation of the investment

  30. Criteria for classification of the priority investment projects

  31. Priority investment projects – incentives • All the incentives for class A and B • Special Incentives for priority investment projects: • Institutional support • Financial grants up to 50% for R&D and high-tech • services and up to 10% for manufacturing projects • State tax exemption for changing the land zoning • Possibility for acquisition of real estate private state or private municipal property without a tender and at a price, not lower than the tax assessment of the property • Possibility for public-private partnership with municipalities, universities and public companies

  32. 10%corporate income tax; 0% for manufacturing companies in areas with high unemployment 10% personal income tax, flat rate Opportunity for R&D expenditure write-off Depreciation of 2 years for computers and new manufacturing equipment 2-year VAT exemption for imports of equipment for investment projects over € 5 million, creating at least 50 jobs 5% withholding tax on dividends and liquidation quotas (0% for EU tax residents) Up to 1 year minimum salary and reimbursement of social/health care security for employing young people and disadvantaged people through the Employment Agency Investment incentives in Bulgaria

  33. InvestBulgaria Agency InvestBulgaria Agency is a Government investment promotion arm, part of the Ministry of Economy, Energy and Tourism. IBA services: • Macroeconomic data on Bulgaria • Legal advice • Data on operational costs • Regional information: industrial zones and infrastructure, data on unemployment, skilled labour force and level of education • Recommendation of investment project sites • Identification of potential suppliers, contract manufacturers and joint-venture partners • Personalized administrative servicing • Liaison with central and local governments • Liaison with branch chambers and NGOs

  34. InvestBulgaria Agency Sofia 1000, 31Aksakov Str. Phone: (+359 2) 985 5500 Fax: (+359 2) 980 1320 E-mail: iba@investbg.government.bg Web: www.investbg.government.bg

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