ExploringGlobalFrontiers - KPMG

BulgariaCountry SnapshotSize of the country 110,910 sq. kms.Population 7.6 million (2007)CapitalSofiaCurrencyLev (BGL)1 USD = BGL (average) 1.26 (2008)Sources: www.eiu.com, www.cia.gov, www.GoCurrency.comMain macroeconomic indicators:• GDP in PPP: USD 86.4 billion (2007 est.) 1• GDP per capita in PPP: USD 11,400 (2007 est.) 1• CPI: 5.8 percent (2007 est.) 1• Unemployment rate: 8.0 percent (2007 est.) 1• FDI stock per capita: USD 4,553 (2007 est.) 2Political Structure 1Bulgariahasaunicamerallegislature.The240-memberNationalAssemblyisconstitutionallythehigheststateauthority.Itsmembersareelectedbyproportionalrepresentation.AnewconstitutionwaspassedinJuly1991.Theheadofstateisadirectlyelectednon-executivePresident,underasystemofmajorityrepresentationeveryfiveyearsforamaximumoftwoterms.AVice-presidentassiststhePresident.BulgariaisamemberofNorthAtlanticTreatyOrganization(NATO),andtheEUsince2007.Thereare28provincesinBulgaria,whichmayhavedifferentincentivesforinvestment,especiallyduetothedifferingunemploymentratesacrossthecountry.Business and Investment ClimateForeign Direct Investment (FDI): FDIin2007wasUSD8.6billion,upfromUSD8.3billionin2006.Theforecastfor2008isUSD6.3billionduetotheeconomicslowdown 2 .GDP growth: EIUestimatesrealGDPgrowthtobe6.4percentin2008,butislikelytoslowdownto3.4percentin2009andaveragearound4percentin2010.Inflation: Inflationwas6.5percentonaveragein2005and2006,andfellto5.0percentin2007.Theaverageexpectedinflationin2008is6.0percent 3 .2008 (Rating/outlook)EIU's Sovereign Risk RatingStandard & Poor’s ForeignCurrency Risk RatingEase of Doing Business Rank(2009)Rigidity of Employment Index(2009)BBB / StableBBB / Negative / A­34529Sources: www.eiu.com, World Bank, Standard & Poor’sIT-BPO Scenario in the countryBulgaria’sIToutsourcingmarketearnedUSD256millioninrevenuein2007 4 .Morethan400companiesareprovidingoutsourcingservices,andemploycloseto8,000people 4 .Theseincludeatleast10BPOcompanies 5 .CallcenterandsupportservicesareamongthepopularservicessourcedfromBulgaria.TheBulgariansoftwareindustryhasbeengrowingatabout30percentperannum 3 .TheBulgarianAssociationofSoftwareCompanies(BASSCOM)representsITcompaniesinBulgaria.SofiaisthecapitalandanemergingcityfortheIT-BPOindustryinBulgaria.Government incentives 3AmendmentsweremadetotheInvestmentPromotionLawin2007,toincludethefollowingincentivesforcompaniesinthehightechsector,basedonthevolumeofinvestmentmeetingcertainminimumcriteria:•Corporatetaxrateof10percentasof1.1.2007•Zeropercentcorporatetaxratein141outof264municipalitieswithhighunemploymentratesSofia•TenpercentflattaxrateonpersonalincomesasofJanuary2008•Increaseddepreciationrateto50percentforpurchasingnewproductionandtechnologyequipment,machinery,softwareandhardware.Emerging Destination1 www.eiu.com, various pages, December 2008 3 www.investbulgaria.com/BulgarianCallCentersSector.php, December 20082 Vienna Institute for International Economic Studies, Foreign Direct Investment in Central, East 4 Ukranian Hi-Tech Initiative, CEE IT Outsourcing Review, 2007and Southeast Europe, June 20085 DTZ Research, 2007©2009KPMGInternationalisaSwisscooperative.MemberfirmsoftheKPMGnetworkofindependentfirmsareaffiliatedwithKPMGInternational.KPMGInternationalprovidesnoclientservices.NomemberfirmhasanyauthoritytoobligateorbindKPMGInternationaloranyothermemberfirmvis-à-visthirdparties,nordoesKPMGInternationalhaveanysuchauthoritytoobligateorbindanymemberfirm.Allrightsreserved.KPMGandtheKPMGlogoareregisteredtrademarksofKPMGInternational.84