Informes Sectoriales OP - Icex

TOURISM AND RELATED SERVICES IN BULGARIA
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Duty-free movement of goods and services within a market of 550 million consumers.
Bulgaria has free trade agreements with the EU, EFTA, CEFTA, Turkey,
FYROM, Croatia and Israel;
55 double tax agreements and 52 on the mutual protection and promotion of foreign
investment;
Investment by foreigners receives equal treatment to investment by Bulgarian
residents;
Significant potential for hi-tech and Research and Development related ventures;
The Bulgarian Lev will remain pegged to the Euro until it can join EMU (2009 at
the earliest).
Looking ahead, in 2005 the Bulgarian Ministry of Economy retained Deloitte &
Touche to prepare a report on the country’s investment strategy. Three economic
sectors were chosen by the consultant to target attracting investment: ICT (incl. electronics),
outsourcing, and manufacturing of machines and electrical equipment.
Deloitte made a research among investors and determined the factors for taking a
decision to attract investments in the three target sectors. The research indicated
that Bulgaria has some important weaknesses and should address them as much as
possible. It is expected that making commitments to effect these improvements and
achieving an observable progress will be awarded with a sustainable increase of foreign
direct investment.
The measures to overcome the competitive shortcomings of Bulgaria can be grouped
as follows: education and training, infrastructure, management reforms, and incentives.
Education & training. Bulgaria’s labor force has qualities in some key areas that are
important for outsourcing, ICT and/or engineering sectors. The improved knowledge
and skills of the laborers (present and potential) in these sectors will make Bulgaria
more attractive for potential investors. Stepped up and more comprehensive training
could additionally enhance the investors’ interest in Bulgaria. Priority in the field of
training could be given to areas such as: foreign languages (especially English and
German), ICT (esp. IT maintenance, networks, telecommunications, and software),
management (esp. directed towards ICT and outsourcing).
Infrastructure has improved significantly for the last 5 years and there are plans to
continue building it in the near future. Nevertheless, infrastructure is a main constraining
factor for the investors in industry sectors. Both international transport
connections and many local roads and utilities need improvement.
Reform of the managerial / administrative environment. Investment climate in Bulgaria
as a whole is similar or better than that of Croatia and Romania, but not as
good as that in the five countries of Central Eastern Europe, showed the research
among investors. Foreign investors are not satisfied with the level of administrative
services and the level of transparency. It is necessary for the pace of administrative
reform in Bulgaria to at least correspond to those in the neighboring countries, otherwise
there is a danger for the country to be perceived as a difficult place to develop
business.
Incentives. It is recommended to develop the system of incentives in such a way as to
achieve two comprehensive goals: “compensating the investors for shortcomings” in
Bulgaria and encouraging investments in target sectors. “Compensating the investors
for shortcomings” in Bulgaria supposes focusing on financial incentives. Cur-
Spanish Economic and Commercial Office of the Spanish Embassy in Sofia 15