In recent years, the overall share of investment in Bulgaria has fallen below 20 percent of GDP, lagging behind the average investment levels in CEE and EU countries.
Foreign direct investment grew by nearly 10%. This is what the Bulgarian National Bank reported for the first quarter. Faster capital accumulation can be achieved by removing barriers to private investment and improving the quality and efficiency of public investment. Lack of infrastructure, industrial parks and high-level government commitment appear to be among the main reasons why foreign companies bypass our country.
"What foreign companies cannot understand is why when they build a factory they have to put some of their capital into foreign infrastructure. They cannot agree to pay for a gas canal and any infrastructure that is outside the boundaries of their property. They are more willing to pay a higher fee for a building permit. It's not an escape from paying money, but they wouldn't agree to work something that is the role of the state," said Georgi Kirov, partner and director of capital markets at an investment management firm.
"There are many areas of the country that are depopulated, where nothing is happening, if the state invests in the development of infrastructure in all cases these places will become attractive for foreign investment," said Alexander Konev, commercial director at an Austrian company.
In recent years, the overall share of investment in Bulgaria has fallen below 20 percent of GDP, lagging behind the average investment levels in CEE and EU countries. This compares with around 25% in Romania and over 30% in the Czech Republic and Hungary. Even for the current investments, the state makes a small contribution, the BIA said.
"This inflow of investments is rather the result of international events and external conjuncture, including the transfer and withdrawal of investments from some countries," said Silvia Todorova, Director of the Entrepreneurship Centre, Bulgarian Industrial Association.
Bulgaria can attract structurally decisive enterprises in the sectors of chemistry, metallurgy, building materials, mechanical engineering. Foreign investors also expect energy from renewable sources, skilled workforce and high-level government commitment. In Bulgaria, for example, entrepreneurs communicate only with representatives of the Investment Agency.
"In Turkey, the investment agency, the investment unit is under President Erdogan, i.e. there it is at the highest level and really, when the investor says this is what I want and the other side says - yes you will get it, really all the authorities, local administration, ministers - are working," said Georgi Angelov, senior economist at the Open Society Institute.
Another example can be learnt from Ireland, where there is a fixed budget to attract investors, how many jobs are opened, how many suppliers and sub-suppliers are engaged, BNT reports. Taxes are low, but the country has the highest minimum wages in the EU. Private investment can be encouraged by removing obstacles stemming from factors such as unfair competition, low skills, governance weaknesses and red tape.
