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Books on Bulgaria
REPUBLICAN REFERENCE
Area(sq.k.m)
110,910
Population
7,537,929
Capital
Sofia
Currency
Lev
President
Georgi Purvanov
Private sector
% of GDP
40%
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Update No: 088 - (27/08/04)
New party emerges as a break-away
New Time leader, Emil Koshlukov, and 644 other members of the Saxe-Coburg's
National Movement Simeon II left the party on July 12, saying the former
Bulgarian king's government is not doing enough to attract foreign investment
and has not improved the way in which state asset sales are sold after years of
delays or cancellations.
"The Bulgarian government should create better opportunities for attracting
venture capital investments in the country,'' Koshlukov said in an interview at
his office in Sofia. "This is particularly important.''
Bulgaria, a Balkan country of 7.5 million people next to Greece and the Black
Sea, has had 11 governments since communism fell in fifteen years since 1989.
Saxe-Coburg came to power in 2001, promising to restore confidence in
government, to push entry into the NATO and the European Union and to boost
economic growth.
Between 2000 and 2003, Bulgaria has attracted just $3 billion in foreign direct
investment, a good deal less than neighbouring Hungary. Under Saxe-Coburg, the
$17.5 billion economy expanded by an average annual 5 percent, about the same as
under the previous government. The country has also joined NATO, taken part in
the war in Iraq and is working to join the 25-nation EU by 2007.
More FDI Needed
Still, that is not nearly enough, as Saxe-Coburg's Simeon II party has been
losing popularity in the polls and has not been able to maintain discipline in
his party, leading to its split-up.
Similar to voters in other East European nations such as Romania, Bulgarians
have swung from supporting post-communist socialists to parties that advocate
more of a free market economy, as cabinets failed to meet expectations or were
accused of corruption. Romania has had seven cabinets since the fall of
communism.
New Time, which supports EU entry, supports much of the same programmes
advocated by Simeon II. It would not take the government in a new direction, if
it ever wins elections, said Koshlukov.
"We will target a segment of 2 million people who voted for right-wing
parties in the past," Emil Koshlukov said. "We have not yet discussed
and appointed possible allies in the next parliament."
EU funding needed
The New Time does criticize the Simeon II party for not being more open about EU
funding and not being more successful in putting pre-accession EU programmes
into practice, Koshlukov said.
The new party also favours using public referendums to let the electorate have a
more direct influence on political and social issues after attempts to pass a
referendum law failed under the present cabinet. "We strongly recommend
that referendums be held when a group of 500,000 people have declared signatures
to protest or support a government policy, law or a particular decision,''
Koshlukov said.
The leader of the country's newest party will also seek to provide state
guarantees to companies that want to expand operations or set up businesses in
Bulgaria. Another area where Koshlukov's group has lobbied for changes is
introducing e- signature in Bulgaria's regulatory system.
Koshlukov also supports the Finance Ministry's policy of fiscal discipline and
continuation of the currency board that allowed the lev to be pegged to the
euro. "We will work closely with the Bulgarian government to improve
administration services at Bulgarian accounting and law firms to meet European
Union standards,'' Koshlukov said. "We will also continue to fight
corruption.''
No real surprise
Saxe-Coburg's party split-up did not come as a surprise and will not lead to
early elections, said Mira Yanova, a sociologist at Sofia-based research house
MBMD Consulting EOD. Elections will most likely be held in June 2005, when
Saxe-Coburg's term expires.
The country's next government will probably be led by the Bulgarian Socialist
Party, the country's largest left-wing group, according to latest polls from
MBMD.
"Bulgarian cabinets have completed their mandates despite loss of
popularity with society before,'' said Yanova in a telephone interview.
"The split is aimed at attracting people's attention more so than
destabilizing the government.''
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AUTOMOBILES
Porsche opens centre in Sofia
German high-class car producer Porsche has officially opened its new exhibition
salon in suburban Sofia. The building is still under construction alongside the
capital's Bulgaria Blvd. The cost is estimated at about €1.5m, and is due to
be ready by the spring of 2005, Sofia News Agency reported.
The company also plans to open soon a Porsche service centre in downtown Sofia.
The company's management declared that Porsche cars' prices in Bulgaria would
not differ from those in the rest of Europe. Currently, there are about 90
Porsches in Bulgarian possession, the company said to Sofia news agency. Porsche
hopes to sell 50 vehicles over the first year.
The high class Porsche cars will be traded in Bulgaria by the exclusive
distributor Orchid Sports Cars Bulgaria, established in January 2004 by its
managing director Mike Lewkowitz and partners with the help of Porsche team.
New car sales in the country of 8m people reached 10,190 in the first half of
this year, up from 7,516 for the same period of 2003. Bulgarian experts
projected that new car sales would continue to increase in 2004 after the
government doubled the import duties on second-hand vehicles earlier this year,
thus attempting to meet tougher EU environment protection standards.
New car sales are expected to reach about 20,000 in 2005 and even to double in
2007 when the country hopes to join the EU bloc of 25. Lucrative leasing schemes
and easier access to bank loans are other factors encouraging the rise in new
car purchases.
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ENERGY
Bulgaria to sell its 7 power firms for €693m
Bulgaria will sell its seven power utilities-distributors for €693.2m. The
country's Energy Ministry declared on July 15th that the buyers will be the
Czech Republic's CEZ, Germany's E.ON and Austria's EVN, Sofia news agency
reported.
Candidates were able to bid for all three pools, but can acquire only one. The
investor is to acquire at least 51% of each package. The remainder will be
shared out with a financial institution. Recently five European utilities placed
final bids for 6-7% stakes in the power firms, which Bulgaria is selling in a
bid to free its energy market ahead of planned European Union entry in 2007. The
€693.2m deal for 67% of the utilities will be completed in October when the
transfer of the shares will be finalised.
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EXPORTS
Bulgarian exports increase 11 percent during 2004 first half
Bulgarian exports in the first half of 2004 were 11.1 per cent more than this
time last year, according to early figures of the National Statistical Institute
released on August12th. January-June export totalled 7,066.6m leva, up from
6,359,7m leva in the first half of 2003, BTA web site reported.
Imports in the observable period stood at 10,418,5m leva, 17.3 per cent more
than this time last year.
The first-half commercial exchange was biggest with the EU member states and
included exports of 4,121.5m leva and imports of 5,682.5m leva. There was also
an increase in the trade with the countries of the Commonwealth of Independent
States - to exports worth 242.5m leva and import for 1,868m leva.
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FOOD & DRINK
Bulgaria thirsty for soft drinks
Latest data indicates that soft drinks have been dominating the Bulgarian
market this summer. Over January-June, sales jumped up 15% compared to the same
period last year. Currently, 750 different soft drinks are offered to Bulgarian
consumers and have a total market share of 55%, Sofia News Agency reported.
Mineral water ranks at the top of Bulgarian demands, with a 20% market share
increase over the first half of 2004. Beer has also been enjoying the same rank
in the country. For those 6 months beer sales have increased by 10% as compared
to 2003.
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FOREIGN ECONOMIC COOPERATION
Bulgarian, Croatian leaders discuss economic, political cooperation
Bulgaria and Croatia will be working for the promotion of cooperation in trade,
industry, transport and tourism, the two countries Prime Ministers, Simeon
Saxe-Coburg, and Ivo Sanader said at a news conference, BTA web site reported
after talks held at the Council of Ministers. Sanader was on an official visit
to Bulgaria.
There are no open political issues between Bulgaria and Croatia, but economic
relations are below the two countries' potential, the guest said. The sides had
discussed an opportunity to pursue development of transport along the River
Danube. The Bulgarian prime minister noted that river transport is cheaper and
environmentally sounder than road transport. Sanader said that Croatia is also
interested in development of Danube transport and, to this end, is remodelling
its Danubian port of Vukovar.
The two heads of government also discussed opportunities to launch a direct air
service between Zagreb and Sofia. "I will encourage the Croatian air
carrier to contact some Bulgarian carriers and consider an opportunity to start
a Zagreb-Sofia line because changing planes in a third country is indeed an
obstacle to links between the two countries," Sanader said.
The two prime ministers noted the need to invigorate trade cooperation.
According to Sanader, there is a potential to increase commercial exchanges, but
trade needs further liberalization, especially regarding agricultural goods. The
guest said that the Croatian defence minister will visit Bulgaria shortly for
the signing of a Bulgarian-Croatian agreement on protection of classified
information.
Croatia is interested in tapping into Bulgaria's experience of negotiating with
the EU, Sanader said. "We follow Bulgaria's progress with great sympathy
and congratulate it on its NATO membership and on the completion of negotiations
with the EU. In this respect, Bulgaria can serve as an example to us," the
prime minister said. Croatia will start negotiations with the EU in 2005 and,
according to Sanader, they can be completed within two years, but a decision on
membership will be taken by the EU. For his part, Saxe-Coburg noted that Croatia
could count on Bulgaria's support along its road to the EU and NATO. Sanader
suggested that Bulgarian experts share their experience of the accession
negotiations with the EU with their Croatian counterpart, the Bulgarian prime
minister added. According to Sanader, his country can use Bulgaria's experience
in negotiations on agriculture, tourism and the judicial reform.
The two prime ministers also discussed the situation in the Balkans.
"Bulgaria and Croatia border on countries where sustained political
stability has not yet been achieved, and they are ready to work towards a
solution to this problem," Sanader said. He invited Saxe-Coburg to visit
Croatia.
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FOREIGN ECONOMIC RELATIONS
Bulgarian president, German chancellor discuss economic cooperation
Business cooperation was a priority at the 13th August talks between Bulgarian
President, Georgi Purvanov, and German Chancellor, Gerhard Schroeder, during his
one-day official visit to Sofia. President Purvanov voiced expectations for a
stronger investor interest in Bulgaria on the part of the German business
community, said the Presidential Press Secretariat, BTA web site reported.
The president also voiced the hope that the German business will get more
actively involved in the construction of regional infrastructure because, as he
put it, investment in infrastructure is the best investment in peace and
stability in Southeast Europe.
The two leaders noted the good level of bilateral relations in all areas, and
expressed a shared hope for stronger cooperation in infrastructure, transport,
energy, trade and defence. President Purvanov raised the question of the five
Bulgarian nurses on Libya's death row for infection of Libyan children with
AIDS, and Chancellor Schroeder reiterated his promise to support their case
during an upcoming visit to Libya.
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TELECOMMUNICATIONS
UMTS licences in the offing
Bulgaria's telecommunications regulator will open a procedure for awarding
Universal Mobile Telecommunications System (UMTS) licences late this year or
early next year, Transport and Communications Minister, Nikolai Vassilev, said
on July 22nd, New Europe reported recently.
He was speaking after a regular government meeting adopted a strategy on the
introduction and development of UMTS in Bulgaria. The UMTS system provides for a
swift exchange of voice, pictures and high-speed mobile access to Internet for
mobile users.
The regulator will award two full licences with a frequency resource of 25 MHz
each. The state communications regulation watchdog is due to hold the tender
till end 2004 in accordance with the strategy for UMTS implementation adopted by
the cabinet recently.
As part of the strategy, the defence ministry will be required to make available
frequencies worth a total of 79.9m levs for the period between 2004 and 2008.
Bidding for the licences is expected to start from 70m levs for each, which
means that the licensing procedure could bring in 140m levs or more.
As a result, radio frequencies used so far by the defence ministry will be
released for exploitation by local mobile operators, building up the back-bone
of infrastructure for their third generation mobile services. The Bulgarian
Telecommunications Co, MobilTel and GloBul, Bulgaria's three telecoms operators,
are expected to show interest in the offer. New arrivals are possible but not
very likely, according to the transport and communications minister.
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