Informes Sectoriales OP - Icex

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TOURISM AND RELATED SERVICES IN BULGARIA 7. <strong>OP</strong>PORTUNITIES AND RISKS FOR SPAN- ISH COMPANIES The expected accession of Bulgaria to EU, scheduled for 1 January 2007, will entail a stream of EU funds to the country. This development presents an opportunity for both Bulgarian and Spanish companies to jointly participate in tenders and projects supported by EU funding. In February 2006, Finance Minister Plamen Oresharski announced that it would be a big success if Bulgaria manages to implement 35% of EU funds in 2007 during a discussion of the National Development Plan 2007 - 2013. Within these seven years Bulgaria will be implementing over EUR 11 bln from European funds. The money from the Cohesion Fund which is around EUR 2.8 bln will be evenly distributed between the Environment and Transport programs. The percentage share will be determined by Bulgaria. The EU structural funds are the fund for regional development and the social one. Around EUR 4.5 bln are expected to come from these funds. The most money is allocated to agriculture and rural areas because they will be financed by the structural funds and by the specific funds – the agricultural and fishing ones. The Competitiveness program is geared to the development of small and medium enterprises. The personnel, who will be preparing the projects to apply for the other programs, will be trained with funds from the Administrative Capacity program. Distribution of EU funds (the expected budget is EUR 11 bln for 2007 – 2013, and without the money for agriculture and fishing) SMEs Competitiveness 22.6% Human resources (education, training) 22.6% Transport (airports, railroad freight, road rehabilitation, ports) 8.3% Environment 8.3% Regional development (municipalities, tourism) 34.6% Administrative capacity 3.5% Source: Finance Ministry Spanish Economic and Commercial Office of the Spanish Embassy in Sofia 82
TOURISM AND RELATED SERVICES IN BULGARIA Below is a brief SWOT analysis of Bulgaria’s tourism. Certainly, the perceived strengths present opportunities for both domestic and incoming tourism, incl. from Spain, and Spanish tour operators and tour agents, respectively. More interestingly, most of the weaknesses present specific investment opportunities, e.g. Spanish companies could participate in projects to improve the infrastructure, quality of facilities, etc. Among the opportunities, there is potential for high ROI as the Bulgarian tourism market is far from (over)saturation. Forming joint ventures with local companies or establishing other forms of co-operation may allow Spanish companies to apply for some forms of EU funds. Money from the grey economy may pose serious competition to foreign companies. Also, the peculiarities of the local bureaucracy / administration still allow for corruption practices, e.g. in issuing licenses. Strengths Weaknesses ♦ Picturesque scenery; ♦ Poor infrastructure; ♦ Rich cultural and historical heritage; ♦ Low quality of many hotels and other ♦ Generator of employment; facilities; ♦ Dominant and increasing share of private ownership; ♦ Scanty diversity of product and services; ♦ Tax and other incentives. ♦ Low qualification of the labor force; ♦ Lack of appropriate marketing policy; ♦ Poor architectural and engineering solutions; ♦ Deterioration of ecological balance (pollution, neglect for the environment when developing tourist facilities). Opportunities Threats ♦ Potential for high return on investment in short terms; ♦ Grey economy accounts for most of the investments; ♦ Bulgaria’s forthcoming EU membership and implementation of EU best practices; ♦ Corruption in licensing; ♦ Opportunities for financing from structural, pre-accession and cohesion funds directly related to infrastructure development. Further below, there is a short description of major Bulgarian resorts that appear to provide investment opportunities. The town of Bansko in Pirin Mountain Despite the progress made, there are some problems related to the infrastructure – sewerage and water supply systems, the road and street network. In 2006, the local municipality is ready to invest BGN 10 mln in infrastructure improvement but this is just 1/5 of the needed amount. Spanish Economic and Commercial Office of the Spanish Embassy in Sofia 83
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