A m e r i c a n C h a m b e r o f C o m m e r c e i n B u l g a r i a

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is Key to Growthis Key to Growth

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IT Must Turn and Face IT Must Turn and Face the Strainthe Strain

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Analyses:Analyses:

Green Light for New Green Light for New Bulgarian DebtBulgarian Debt

Ukraine: Ukraine: Half War, Half Peace, Half War, Half Peace,

Full MessFull Mess

A m e r i c a n C h a m b e r o f C o m m e r c e i n B u l g a r i a

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Some tense times, aren’t they? The conflict in the Ukraine does not show any signs of abating, the U.S. dollar-to-Euro exchange rate is as unpredictable as the March weather, and ISIL’s presence is becoming more and more noticeable in other regions of the world. We should note that on this background – barring a few weather-related emergencies – the situation in Bulgaria seems almost eerily calm.

The financial stability seems all but assured with the new debt, which was voted in the Parliament albeit amidst some controversy (read more about it on Page 14). The government carried on some personnel and organizational changes in the national security sector. Two key ministers – those of justice and health – seem hell bent on conducting long delayed reforms in their respective fields. This is encouraging.

A bit of hope can be gleaned from the ideas that President Rossen Plevneliev discussed with EC’s Jean-Claude Juncker in Brussels recently. Bulgaria’s head of state reassured that the country is a reliable EU member with an enviable level of stability in its fiscal system; Bulgaria boasts perspectives for economic growth, particularly in the new technologies and innovations.

Just in time, American Chamber of Commerce organized two related events. First came a presentation of the Transition Report by the European Bank for Reconstruction and Development, which highlighted the key impor-tance of innovations (read more on Page 4). Mark Yates, research manager with International Data Corporation, touched on the same issue through the significance of the IT sector for the growth and development (more on Page 8).

AmCham Bulgaria Magazine has embraced on multiple occasions the position that IT, new technologies and inno-vations are the key to building Bulgaria’s economy. We are unlikely to be able to compete credibly with the agri-cultural powers in the EU such as Italy and Spain, or take the tourists from Greece. A small, pretty country with relatively preserved nature, which throws all it’s efforts into IT, new technologies and innovations. This sounds great, doesn’t it?

Sincerely,

Milen MarchevEditor-in-Chief

Dear Reader,

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Publisher American Chamber of Commerce in BulgariaBusiness Park Sofia, Mladost 4 AreaBuilding 2, Floor 6, Sofia 1766, BulgariaTel.: +359 (2) 9742 743Fax: +359 (2) 9742 741e-mail: amcham@amcham.bgwww.amcham.bg

Editor-in-ChiefMilen Marchev

Deputy Editor-in-ChiefChristopher Karadjov

Senior Editor:Irina Bacheva

ISSN 1312-935X

Writers:Boyko Vassilev, Marina Tzvetkova, Mina Georgieva, Panayot Angarev, Yuliana Boncheva

AdvertisingAmCham Bulgaria: Nadejda Vakareeva, nadia@amcham.bg

AmCham Bulgaria Magazine:Milen Marchev, milen@milenmarchev.com

The AmCham Bulgaria Magazine reaches a broad audi-ence of AmCham members, leading US, Bulgarian and international companies, US and Bulgarian decision-mak-ers, all AmChams around the world.Subscription is free of charge. If you would like to sub-scribe to AmCham Bulgaria publications, please contact the AmCham Bulgaria office.

AmCham Bulgaria Magazine is a primary forum for political and economic analyses, news, viewpoints as well as for the presentation of new business opportunities. The articles in the AmCham Bulgaria Magazine express the opinions of the authors and do not necessarily reflect the position of the American Chamber of Commerce in Bulgaria.

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Contentsc o v e r s t o r y

EBRD Transition Report: Innovation is Key to Catch up with Growth . . . . . . . . . . . . . . . . 4

Ch-ch-changes – IT Must Turn and Face the Strain. . . . . . . . . . . . . . 6

Mark Yates, IDC Research Manager

a m c h a m e v e n t

AmCham Ski Tournament Bows to Nature . . . . . . . . . . . . . . . . . . . . . . . . . 9

100 Jobs Project Takes Off . . . . . . . . . . . . . . . . .10

Art Cocktail Highlights Sculptors, Painters . . . . . . . . . . . . . . . . . . . . . .12

a n a l y s i s

Green Light for New Bulgarian Debt . . . . . . . . . . . . . . . . . . . . . .14

By Marina Tsvetkova

Half War, Half Peace, Full Mess . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18

By Boyko Vassilev

Personal Bankruptcy - Principles and Practices in USA and EU . . . . . . . . . . . . . . . . . . . . . . . . .21

m e m b e r n e w s

BEPS Project. Global Tendencies and Local Impact . . . . . . . . . . . . . . . . . . . . . . . .22

m e m b e r s u r v e y s

Managers in Bulgaria Face Difficulties Finding the Right Talents for Key Positions Within Their Organizations . . . . . . . . . . . . . . . . .24

m e m b e r n e w s

ContourGlobal Maritsa East 3 Awarded for “Responsible Company - Responsible Employees” . . . . . . . . . . . . . . . . . .26

World Transport Overseas is an Official Agent of Jas Worldwide . . . . . . . . . . . . . .28

n e w m e m b e r s . . . . . . . . . . . . . . . . . . . . .28

EPAM Systems

EQE Control

SYNCHRON-S

3M Bulgaria EOOD . AA KRES EOOD . Abbott Products EOOD . AbbVie EOOD . Actavis Bulgaria . Adecco Bulgaria ltd. . Advance International Transport EOOD . AES Corporation . AFA OOD . AGORA-IN Ltd. . AHNtech Branch Bulgaria . AIG Europe Limited (Bulgaria Branch) . AIMS Human Capital . Air Berlin PLC & Co. Luftverkehrs KG . Albena AD . Alfred C. Toepfer International Bulgaria EOOD . ALICO Bulgaria ZhZD EAD, a MetLife Inc. Company . All Channels Communication . Alliance One Tobacco Bulgaria . Allied Pickfords Bulgaria . Alpha Bank Bulgaria . America for Bulgaria Foundation . American College of Sofia . American English Academy . American Research Center in Sofia . American University in Bulgaria (AUBG) . Amgen Bulgaria EOOD . Amway Romania Marketing Srl . Anglo-American School of Sofia . AON Bulgaria . APOLO Ltd. . Arexim Engineering . Ashtrom International Ltd. . Association Srednogorie Copper Industrial Cluster . Astra Zeneca Bulgaria EOOD . AT Engineering 2000 Ltd. . Atlantic Club Bulgaria . Atos IT Solutions and Services EOOD . Attica Media Bulgaria Ltd. . August Research . Aurubis Bulgaria AD . Auto Bavaria Ltd. . AVON Cosmetics Bulgaria . AW-Tronics . Axway Bulgaria EOOD . Baker Tilly Bulgaria . Balkan Star Automotive EOOD . Ballistic Cell Ltd. . Baxter Bulgaria EOOD . BC Serdon . Berlitz Schools of Languages . BG Radio . BICA International Ltd. . BMG Ltd. . BMW Vertiebs GmbH - Branch Bulgaria . BNP Paribas S.A. - Sofia Branch . BOYANOV & Co. . Braykov's Legal Office . British American Tobacco Bulgaria . Brown Forman Beverages Worldwide Sofia Branch LLC . bTV Media Group . Bulgarian American Enterprise Fund . Bulgarian Charities Aid Foundation (BCAF) . Bulgarian Executive Search Association . Bulgarian Property Developments EOOD . BulPros Consulting JSC . Bulstrad Life Vienna Insurance Group . Business Intellect Ltd. . Business Park Sofia EOOD . Carat Bulgaria . Castello Precast OOD . Center for the Study of Democracy . Chaos Group . Cheque Dejeuner Bulgaria Ltd. . Chevron Bulgaria Exploration and Production EOOD . Cisco Systems Bulgaria . Citibank Europe Plc, Bulgaria Branch . Club 50 Plus . CMS Cameron McKenna LLP - Bulgaria Branch . Coca-Cola Enterprises Services Bulgaria EOOD . Coca-Cola HBC Bulgaria AD . Coface Bulgaria Credit Management Services EOOD . COLLIERS International Bulgaria . Comverse . Congress Engineering Ltd. . Construction Management Group . Contitrans M Ltd. . ContourGlobal Maritsa East 3 AD . Credit Agricole Bulgaria EAD . Curtis / Balkan Ltd. . Dalkia Bulgaria EAD . Danailov, Mihaleva, Nedelchev & Co. . Delchev & Partners Law Firm . Deloitte Bulgaria EOOD . denkstatt Bulgaria OOD . Deutsche Bank AG . Devin AD . DHL Express Bulgaria Ltd. . Diamed Ltd. . Dimitrov, Petrov & Co. . Djingov, Gouginski, Kyutchukov, & Velichkov . Dobrev & Lyutskanov Law Firm . Dr. I.S. Greenberg Medical Center . Drujba Glassworks SA . Dundee Precious Metals Inc. . DuPont Pioneer . EcoPack Bulgaria AD . Edenred Bulgaria . Ekoterm Proekt EAD . Ekotoi - Service Ltd. . Ekzotika EOOD . Electron Progress EAD . Elevat Ltd. Legal House . Eli Lilly and Company . Eltrak Bulgaria Ltd. . EMC Computer Systems Austria GmbH . Emerson Process Management . EnergoService AD . Engineeringservice Sofia Ltd. . Enterprise Communications Group OOD . EOS Matrix Ltd. . Ernst & Young Bulgaria EOOD . EPAM Systems . EQE Control . ESRI Bulgaria Ltd. . Etap Adress . Eurobank Bulgaria . Eurohold Bulgaria . European Bank for Reconstruction and Development (EBRD) . European Trade Center EOOD . Expat Capital . Experian Bulgaria EAD . FairPlay International . Fama Consulting OOD . Flying Cargo Bulgaria Ltd. - Licensee of FedEx . Force Delta Ltd. . Forton International AD . Foundation Glob@l Libraries - Bulgaria . Fox International Channels Bulgaria EOOD . GAEA - Green Alternative Energy Assets EAD . Galardo EOOD . Gasstroymontaj Jsc . General Electric International . Georgiev, Todorov & Co. . Geostroy AD . Geotechmin OOD . Geotrading AD . Gi Group . GIFTA . GlaxoSmithKline . Grand Hotel Sofia . GTC Bulgaria . Helios . Power Hewlett-Packard Bulgaria Ltd. . HILD Asset Bulgaria Jsc. . Hilton Sofia . Honeywell EOOD . IBM Bulgaria . ICAP Bulgaria JSC . Ideal Standard - Vidima AD . Incotex Group Ltd. . Industrial Holding Bulgaria . InterConsult Bulgaria Ltd. . Interdean Relocation Services . Interlang Ltd. . International Data Corporation (IDC) . Intertek - Moody . Intracom Bulgaria EAD . Investbank JSC . Investor BG AD . IP Consulting Ltd. . ITT Exelis . Japan Tobacco International Bulgaria . Jobs.bg EOOD . JobTiger Ltd. . Johnson & Johnson Bulgaria EOOD . Johnson Controls Electronics Bulgaria . Junior Achievement Bulgaria . Kalamaris group Ltd. . Kaliakra AD . Kamenitza AD . Katilin Popov Enforcement Officers . Kempinski Hotel Grand Arena Bansko . Kempinski Hotel Zografski Sofia . KPMG Bulgaria OOD . LANDMARK Property Management AD . Lexim Sofia Ltd . Lindner Immobilien Management EOOD . Lirex BG Ltd. . M3 Communications Group, Inc. A Hill & Knowlton Associate . Maria Vranovska, MD, MBA . Mars Incorporated Bulgaria EOOD . Marsh EOOD . Maxi I AD . MB Communications . MBL| Part of the CBRE Affiliate Network . Megatron EAD . Mellon Bulgaria EAD . Merck Sharp & Dohme Bulgaria . Microsoft Bulgaria . Miltech Ltd. . Minstroy Holding Jsc . Mobiltel EAD . Monbat Plc. . Mondelez Bulgaria AD . Moten Sport . Moto-Pfohe Ltd. . Movex Relocations . Mr. Alex Nestor . Mr. David Hampson . Mr. Jean Talmon . Ms. Anelia Tatarova . Ms. Kalinka Kovatcheva . Ms. Margarita Radeva, CPA . Municipal Bank Plc . Musala Soft AD . NDB Ltd. . Nemetschek Bulgaria . NEXTDOOR Ltd. . Nicholas Galabov . Novacon Bulgaria Ltd. . Novotel Sofia MHQ . Nu Boyana Film Studios . Office for Mining Industry and Metallurgy Ltd. . On Bulgaria Ltd. . Oracle East Central Europe Limited - Branch Bulgaria . Orak Group Europe Ltd. . Orbit Ltd. . Orkikem Ltd. . Panchim Ltd. . PANDA - IP Ltd. . Pedersen & Partners . Penev LLP . Penkov, Markov & Partners . Pfizer Luxembourg SARL Branch Bulgaria . Philip Morris Bulgaria EOOD . Philips Bulgaria Ltd. . PMB EOOD . PPD Bulgaria EOOD . Premier Luxury Mountain Resort . Premier Tours Ltd. . Prestige 96 AD . Progress CAD R&D Centre Ltd. . Provident Financial Bulgaria Ltd. . PSG Payroll Services Ltd. . PwC Bulgaria . Quadrant Beverages JSC . Radisson Blu Grand Hotel . Red Devil Catering Plc . Regus Bulgaria Ltd. . Renault Nissan Bulgaria SRL . Right Rental Ltd. . RSM BX Ltd. . S&T Bulgaria . Sanofi - Aventis Bulgaria EOOD . Sb Accounting and Consulting . Schenker EOOD . Schneider Electric Bulgaria . SECTRON . Sensata Technologies . Shell Bulgaria EAD . Sherita M Ltd. . Siemens EOOD . SIENIT Holding . Sitel Bulgaria EOOD . Sodexo Pass Bulgaria EOOD . Sofia Hotel Balkan . Sofita . Sogelife Bulgaria IJSC . Sopharma AD . Sopharma Trading JSC . St. Sofia Golf Club & SPA . Stanton Chase International Bulgaria . Steelcase International . Stefan Dimitrov, Norman Realestate Co. Ltd. . Sunfoods Bulgaria EOOD - Development Licensee of McDonald’s in Bulgaria . Sutherland Global Services Bulgaria EOOD . Synchron-s . Tavex EOOD . TBI Bank EAD . TechnoLogica EAD . Telelink EAD . TELUS International Europe . The Coca-Cola Company Bulgaria . Tishman Management Company EOOD . Titan Zlatna Panega Cement . TMF Services EOOD . Tocheva & Mandazhieva Law Office . Totema Engineering JSC . UniCredit Bulbank . UniCredit Leasing EAD . Unimasters Logistics Plc . Unique Estates . Unisys Bulgaria Branch . United Bulgarian Bank . VAPTECH Ltd. . Videolux Holding / Technopolis . VISA Europe . VIVACOM . VMware Bulgaria EOOD . VSK Kentavar - IZ Dinamika EOOD . VUZF University Higher School of Insurance and Finance . Walltopia Ltd. . Welcome to Bulgaria . Westinghouse Energy Systems Bulgaria Branch . World Courier Bulgaria Ltd. . World Transport Overseas Bulgaria Ltd. . WorleyParsons Nuclear Services JSC . Wrigley Bulgaria EOOD . Xerox Bulgaria Ltd. . Yastrebets Hotel Wellness & SPA . Zlatina Ruseva-Savova, LL.M., MBA . Zobele Bulgaria EOOD

Board of Directors of the American Chamber of Commerce in Bulgaria

President Mr. Peter Lithgow AES Corporation

Vice President Mr. Alex Nestor Individual Member

Vice President Mr. Daniel Berg European Bank for Reconstruction and Development (EBRD)

Treasurer Ms. Petya Dimitrova Eurobank Bulgaria

Members Mr. Plamen Zhechev Cisco Systems Bulgaria

Mr. David Butts CMS Cameron McKenna EOOD

Ms. Diana Pazaitova Fama Consulting

Mr. George Brashnarov Nemetscheck Bulgaria

Ms. Krassimira Chemishanska Amgen Bulgaria

Mr. Sergey Koynov Forton International

Mr. Solomon Passy Atlantic Club Bulgaria

Mr. Venislav Yotov AIG Europe Limited (Bulgaria Branch)

Ex-Officio Member Mr. Thomas Bruns Senior Commercial Officer, U.S. Embassy

Executive Director Mr. Valentin Georgiev

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Innovation at the company and national level is a powerful force to galvanise growth in emerging countries and to pro-vide a stimulus for economic conver-gence in transition economies, according to the latest Transition Report by the European Bank for Reconstruction and Development (EBRD), which was pre-sented in Sofia February 4th, 2015. Why does firm innovation matter? Because it helps countries get unstuck!

Piroska Mohácsi Nagy, Director for Country Strategy and Policy in the EBRD’s Office of the Chief Economist, commented: “Despite progress, innova-tion in Bulgaria is still less widespread than in most other central European countries and has a wide potential to boost growth. Consequently, innovation can have a high pay-off in Bulgaria.”

In fact, in recent years Bulgaria has seen the emergence of a new class of innova-tive companies in sectors such as infor-mation and communication technology. Successful exporting companies are

those that are able to adopt new pro-cesses and new technologies.

The Transition Report 2014 also dis-cusses the need for a supportive environ-ment for innovation, especially in more advanced transition countries, including

Bulgaria. Innovative companies often lack sufficient access to finance, both at the start-up phase and also when rolling out new technologies.

Furthermore, the supportive environment should extend to areas such as good

EBRD Transition Repor t: Innovation is Key to Catch up with Growth

t

The chart shows how innovation intensity of exports and per capita incomes evolved between 1993-94 (start

of each arrow) and 2010-11 (end point).

Firm innovation gets countries unstuck…

Kalin Mitrev, EBRD, Ognyan Zlatev, European Commission Representation, Bojan Markovic, Lead Regional Economist, EBRD, Piroska Nagy, Director Country

Strategy, EBRD, Bozhidar Loukarski, Minister of Economy and the AmCham leadership.

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governance and infrastructure. “These findings are in line with the EBRD strat-egy,” said Daniel Berg, EBRD Director in Bulgaria. “The EBRD is in constant dia-logue with the authorities on ways to improve access to finance and also access to good infrastructure.”

The report entitled “Innovation in Transition” examines the role innovation has in an economy’s success and, going one step further, analyses how compa-nies adopt and foster innovation to ensure their success. The report draws on unique data to examine why some companies are more innovative than oth-ers and shows what drives innovation and what stands in its way.

The report also demonstrates that indi-vidual efforts at the company level have a significant impact on a country’s overall macroeconomic performance. “As firms move along their transition path (by adopting new techniques and new tech-nologies), so can the countries in which they are based,” the Transition Report states.

The presentation followed the launch of the EBRD’s latest Regional Economic Prospects in mid-January, which released the Bank’s most recent macroeconomic forecast for its regions. On average, EBRD countries are now expected to see a contraction of 0.3 per cent in 2015, after a growth forecast of 1.7 per cent in September.

For Bulgaria, the EBRD expects growth in 2015 to continue, albeit at moderate rate of 0.8 per cent. The positive effect of a fall in commodity prices will be more than offset by continued low domestic and regional demand. The resolution of last year’s difficulties in the banking sec-tor is likely to somewhat limit fiscal space and credit growth in the current year, with domestic demand further constrained by

somewhat lower investments resulting from the cancellation of the South Stream gas pipeline project. Demand for exports is likely to remain limited due to contin-ued weakness in the eurozone and the recession in Russia.

The share of innovative enterprises in the EU shrank to 48.9% in the period 2010-2012, according to Eurostat. Only 27.4% of the companies in Bulgaria reported

innovation activity during the period 2010-2012, placing Bulgaria among the three lowest-performing EU Member States by this indicator, the other two being Romania (20.7%) and Poland (23%). However, Bulgaria is among the 5 countries to register an increase in the share of innovative enterprises com-pared to the period 2008-2010, the other four being Malta, the United Kingdom, Hungary and Latvia.

a

Innovative firms more sensitive to the business environment

Right mix of horizontal vs. vertical policies

According to Innovation Union Scoreboard 2014 of EC, Bulgaria is a `modest innovator`, along with Latvia

and Romania, with innovation performance well below that of the EU average.

Daniel Berg, Director EBRD Bulgaria moderates the questions from the audience.

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About 50 C-level Executives gathered at the IDC Predictions 2015 held on February 26 in Sofia Hotel Balkan to discuss how technology innovation is driving new ways for engaging with customers, improving process efficiency and business agility, while often disrupting business models. The annual IDC visionary event was co-organised with the American Chamber of Commerce in partnership with HP Bulgaria.

Welcome speeches were delivered by Neli Vacheva - IDC County Manager for Bulgaria and Daniel Berg -

EBRD Director in Bulgaria and Vice President of AmCham Board of Directors. Bojan Markovic, Lead Regional Economist, Southeast Europe, EBRD and Georgi Stoeff, Founder and Managing Partner, Industry Watch presented the regional and local economic outlook of investment perspectives. The IT perspective of the digital transformation of the enterprise and the innovation era was delivered by Mark Yates, Research Manager, IDC Verticals/Insights, IDC CEMA and Iravan Hira, Managing Director, HP Bulgaria.

Automation is the watchword of the emerging business era. From spot weld-ing and the packaging of products to automobile assembly and warehouse retrievals, routine physical tasks can be done by machines and robots. And from search query predictions and just-the-numbers report writing to diagnosis and legal research, routine cognitive tasks can be handled by powerful processors and information services.

In this software-mediated world, the driverless car serves as a potent sym-bol. On the one hand, the technology is amazing. Real-time data collected from sensors, GPS devices, the mechanics of the car, other cars, and infrastructure is aggregated and processed within the car and via online algorithms. It can improve fuel efficiency, reduce acci-dents, and free drivers to discuss busi-ness, watch films, or get much needed sleep. On the other hand, driverless vehicles will displace workers who depend on driving to earn a living. It will upend the auto insurance industry by radically reducing the need for individual insurance and by shifting liability from drivers to manufacturers. And it will change the way consumers approach auto ownership, opening the door to car clubs and services that could substan-tially reduce annual auto sales.

The same type of disruption has already

occurred in other industries. Digital cam-eras have destroyed former powerhous-es such as Kodak, while file sharing has pulled the rug out from under the music and movie industries. Hotel and restau-rant review sites such as Yelp and Trip Advisor combined with price compari-son sites and discount airline portals have rendered surviving travel agents anachronistic anomalies. Online shop-ping has generated an entirely new paradigm for retailers, with an omni-channel experience aimed at maintain-ing customer loyalty rather than improv-ing same-store sales. And banks can no

longer operate without online and mobile services.

With or without you – the firm can live

While one might expect IT teams to be at the center of these transformations, this is not always the case. For both Central and Eastern Europe and the U.S., around 60% of line-of-business managers fund their own IT projects. Many also manage their own IT proj-ects, with little to no oversight from IT teams. This speaks to the increasing

Ch-ch-changes – IT Must Turn and Face the Strain

Based on a presentation and discussion at IDC's Predictions Event, Sofia, February 26, 2015

Mark Yates, IDC Research Manager

Mark Yates is a research manager with IDC. He spoke at the IDC Predictions 2015 event in Sofia on

February 26, 2015.

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technical savviness of non-IT staff. As little as 10 (and sometimes 5) years ago, getting approval for, say, a CRM system depended on a detailed busi-ness plan and lots of arguing with IT teams about schedules and functions. Today, off-the-shelf CRM systems are delivered via the cloud, with no IT input required. Moreover, they are easy to acquire. Because nothing has to be built from scratch, large upfront costs are eliminated. Marketing and sales direc-tors can use OPEX rather than CAPEX, enabling trial runs, scaling up or down as needed, and quick termination if a better option comes along.

That is a single example of a ready-to-go solution. Pick your industry – finance, telco, manufacturing, business servic-es, education, government, transporta-tion, healthcare – and you will find scores, sometimes hundreds, more. Many are delivered via the cloud, mak-ing them easier to use and maintain. This does not mean organizations will dispense with servers and proprietary solutions. For sensitive data and appli-cations, client-based servers and pri-vate clouds will be de rigueur. But it does mean the way in which IT environ-ments are planned and connected must change.

Rising up, straight to the top – Bulgaria (and CEE) moving up the value chain

This is as true in Bulgaria as it is any-where in the world. One thing Central and Eastern European (CEE) countries

currently have going for them is the low cost of labor coupled to acceptable lev-els of quality, especially in manufactur-ing. Though still higher than in China, that low wage has attracted consider-able investments, with many of the region's markets becoming workshops for the Western European automakers. Companies such as Huawei and Foxconn have also recognized the potential and have been opening facto-ries in CEE. In Bulgaria, manufacturing has been the main beneficiary of the cost component, with industrial produc-tion rising by high single digits for the textiles, chemicals, and electronics industries in 2014. Rubber and plastic production has jumped by around 12% last year. Meanwhile motor vehicle and auto parts production has soared by nearly 35%.

But cost alone is not enough for long-term success. It also requires economic diversification, the embrace of change, and an innovation mindset. In its 2014–2015 report on competitiveness, the World Economic Forum lists Bulgaria as an efficiency-driven economy. The Czech Republic, Slovakia, Slovenia, and Estonia are all classified as innova-tion driven. Croatia, Hungary, Poland, and Russia are on their way.

Little things mean a lot

Broadly speaking, this is good news. It means Bulgaria has room to create entrepreneurial frameworks and "cre-ative mindsets" that power economic development. This may happen through the right combination of economic poli-cies, fiscal stimuli, and education and training. It might also happen out of sheer necessity, with supply and demand forces pushing organizations to change.

And there is more good news: Innovation does not have to happen on an epic scale. As Bojan Markovic from the European Bank of Research and Development pointed out at the IDC Predictions event co-hosted by AmCham, we are so used to hearing about large disruptive players and tech-nology that we forget that innovation can also occur on proverbial tabletops. After a trip to Italy, a restaurateur rede-signs the décor to attract more custom-ers. An analyst programs an Excel plug-in to improve work quality and speed. A factory floor manager cooperates with an IT director to create solutions that

Bojan Markovic, Lead Regional Economist, European Bank for Reconstruction and Development.

Georgi Stoeff, Founder and Managing Partner, Industry Watch.

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make the line and distribution more effi-cient.

Look in the mirror and make that change

Information Technology is now the crucial component of innovation in most organi-zations. The primary components of what IDC calls the 3rd Platform (cloud, mobility, big data analytics, and social business) have created a foundation for accelerating change. In Bulgaria, for instance, the mar-ket for cloud-based services is going through the roof, and will maintain strong double digit growth for the foreseeable future. Pretty much every firm is using or will soon be using some combination of these technologies.

To ensure competitiveness, IDC recom-mends both IT and non-IT leaders do the following:

Assess industry IT expectations and your place within it

Firms need to undertake IT audits and compare the results with larger assess-ments of their primary sectors. IDC sug-gests breaking such assessments into stages (ad hoc to optimized) and com-ponent parts (intent, data, technology, people, and processes) to better identify where the organization is ahead of the game and where improvements are needed. It is also a good idea to focus on key technology areas, rather than on technology in general. For instance, a municipality would limit its focus to smart-city projects, while a utility might

focus on analytics.

Listen to and design systems for the "new user"

The software-mediated world means people engage through screens. Apps and smartphones are the future (and the present in many instances). But kiosks, ATMs, schedule boards, tablets, televi-sions, and classic PCs will also be important. Users also expect systems to make predictions on everything from basic text messaging to health diagno-ses to future buying behavior. And users expect interaction. Posts on walls and message boards must be responded to; customer service IM windows must be available on websites; and phone calls must be answered by people.

Ask users what works and what could be better

The good old days of designing an application, bug testing it, then present-ing it to people are largely over. Even the commercial sector now beta tests upgrades and new applications before general release. For task specific appli-cations developed in house or with a partner, it is crucial to survey users, find out which functions work, which func-tions could work better, and what might be added in the future.

Be customer focused not product focused

Every company thinks it is customer focused. Few actually are. Too often, large global players create products and do everything they can to sell those products. An internal IT team tends to be better, but it can still get too attached to its approach or to the functions it feels should be in a solution rather than the ones users may be asking for. IT profes-sionals need to consult users directly as often as possible, keep pain points and primary responsibilities in mind, and educate users on new processes that may emerge (and which can be radically different from old methods) from an IT solution.

All of this requires considerable effort. And it is easy to continue with what we know rather than what is needed. But technology won't allow it. Embracing IT-mediated change is now essential to remaining competitive.

Neli Vacheva, IDC Country Manager for Bulgaria.

Iravan Hira, Managing Director, HP Bulgaria.

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Too much of the white stuff can ruin even a winter sport event. AmCham ski tournament 2015 in Pamporovo did not take place this March but turned into a snow adventure both for the organizers and the participants. The Chamber tried to do its best and make the contest happen on March 7-8.

For two days mass disruptions of electricity in the Rhodopi Mountains halted ski lifts at Snezhanka II and Stenata ski runs. The unfavorable weather conditions and safety con-cerns forced AmCham to cancel the contest.

Heavy snow continued to fall for almost three days without stopping. Management of Pamporovo Ski Resort worked constantly to open the roads to and from the hotel. Many cars were buried under the snow that reached a depth of 1.70 meters.

More than 150 keen skiers were blocked at the Orlovets hotel keeping their fingers crossed for a miracle that did not happen. The special guest of the tournament - Samantha Bernos, snowboard free ride champion of France, could not make the sched-uled demonstration even though she gathered a group of enthusiastic members.

As compensation the cozy hotels Orlovets and Perelik created good opportunities for networking among the members and their families. The gala dinner in the evening of March 7 at Perelik hotel gathered some 170 participants. The guests enjoyed the performance of the dance ensemble “Zarenitsa” of Smolyan.

AmCham appreciates the support of members for the tournament – Aurubis Bulgaria, Nissan, Adecco, and Nemetschek Bulgaria.

AmCham Ski Tournament Bows to Nature

The skiers in hesitation which way to go on the snowy Saturday morning.

Members enjoyed the dinner at Perelik hotel.

Back on the road from Pamporovo to Sofia: heavy snow and fallen trees.

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The first “job speed-dating” event for 2015 took place on Feb. 24, 2015, at the American Corner Sofia. Ten AmCham members participated in the initiative: AIG,

August research, AVON, Hilton, Experian, Mobiltel, Philip Morris Bulgaria, PPD, Proxiad and Vivacom.

Around 50 socially disadvantaged university students run for more than 20 available positions in the companies. The candi-dates have been chosen by BCAF based on their motivation, academic background and merit.

BCAF’s pool of candidates varies from IT, Finance, Science, Business Studies, Law, Engineering to Media and PR, Medicine, Pharmacy, and Language Studies . The candidates have exhibited excellent academic success, perusing their degrees in the Sofia University, the University of National and World Economy, the Technical University and the Medical University in Sofia. Before the speed-dating event the young people also took part in training on the job interviewing process with the HR experts from Catro.

The “100 Jobs” project was developed in 2014 by BCAF and Forton under the umbrella of AmCham. The overall goal of the project is to employ 100 disadvantaged young people in AmCham member companies either as full time, part-time employees or as an internship.

There will be more job speed-dating events to follow this spring. All companies willing to join the project can contact the organizers.

100 Jobs Project Takes Off

AmCham BoD member Sergey Koinov welcomes 50 young university students

who participated in the contest.

The candidates met with AmCham member companies at the American corner premises.

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The law firm Penkov, Markov & Partners brought numerous guests to their office premises for a long planned art cock-tail. The event, co-sponsored by AmCham, presented mod-ern Bulgarian artists and sculptors.

This cultural and networking event was attended by more than 120 guests, including many officials among which Swiss Ambassador in Bulgaria Dennis Knobel, Deputy Chief of the U.S. Mission Bruce G. Berton, Thomas Bruns, U.S. commercial ataché, Counselor and Head of the Economic Service in the German Embassy in Sofia Tomas Phanne, CEO of the German-Bulgarian Chamber of Commerce (GBCIC) Mitko Vassilev, Roberto Mascali, Director Confindustria, President of the Italian Chamber of Commerce in Bulgaria Marco Montecchi and its General Secretary Rosa Cusmano, Executive Director of the Hellenic Business Council in Bulgaria Minko Gerdjikov, President of the CCI France in Bulgaria Stéphane Delahaye, institutional repre-sentatives and CEO-s of AmCham members.

Sculptors Ivaylo Savov and Andrey Moskov, and painters Iliya Zhelev and Plamen Petrov displayed more than 30

pieces of their art during the cocktail. The guests had the chance to buy these on preferential prices.

Valentin Georgiev, executive director of AmCham, recog-nized the law office for being an active member throughout the years in completing the commercial register project; participating in the AmCham position on renewable energy; supporting all charity events.

Vladimir Penkov, managing partner of PM&P, welcomed the guests by highlighting that the Bulgarian artists unite people and business. He said that the great achievements of the artists show that harmony is possible, independently of race, views, outlooks, tastes. Only through personal efforts, vision and hard work great results in each sphere could be achieved, Penkov added.

Since its establishment in 1990, Penkov, Markov & Partners has one of Bulgaria’s leading law firms, providing the high-est quality legal advice and representation. Since 1996 Penkov, Markov & Partners has been the Bulgarian member of Lex Mundi, the world's leading association of indepen-dent law firms, allowing it to provide legal support to clients throughout the world.

Ar t Cocktail Highlights Sculptors, Painters

Managing Partner Vladimir Penkov (middle) with foreign envoys and

AmCham.

Works of art at display at the premises of the law office.

Among the guests: Stеphane Delahaye, Prеsident, French-Bulgarian Chamber of

Commerce and Industry (middle) and Georgi Ruichev, BBLF in the fully packed

hall with art admirerers.

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Though using the principles of one and the same mathematical system, the politicians of the ruling coalition and the opposition reach different conclusions but that is not disturbing. It is not the topic about figures that should divide them but the interpretation of figures. Politicians are clear about it but they all use occasions like financial decision-making to back their electorate, includ-ing through protests.

Bulgarians will not get poorer next year with the new 16 billion Leva debt, because most of it is not a new debt. That is a routine procedure from an eco-nomic point of view but the stakes are entirely political. It is a question of small political dividends and a question of choice whether the political parties will make policy: some of them showed financial maturity, others started proph-esying cataclysms.

As a matter of fact, the Bulgarian gov-ernment cannot spend more money than envisaged in the state budget, which is approved by the parliament. Which means that in the coming years each lawmaker will have the chance to see the financial plans of the cabinet. The amount of 16 billion Leva is the ceil-ing that can be reached if necessary in the budgets for 2016 and 2017. Besides, the debt will be used to roll over matur-ing debt.

Poor communication and inadequate presentation of the debt deal before the public is the main mistake of ruling party GERB and Finance Minister Vladislav Goranov, the incumbents themselves admit. In a normal state with a good political class such a procedure is never the subject of disputes. If the parliament does not approve the new debt, Bulgaria may have to declare a moratorium on

debt payment. This warning was given by Parliamentary Budget Committee Chairwoman Menda Stoyanova.

Ratification on knife’s edge

The parliament finally ratified the agree-ment with four dealer banks to issue 16 billion Leva debt until 2017. Out of 223 MPs present, 161 voted for the bill, 50 were against and 12 abstained. The decision was backed by the parliamen-tary groups of GERB, the Reformist Bloc, the Movement for Rights and Freedoms, ABV party and Bulgarian Democratic Center. The Patriotic Front, which pledged support for the govern-ment at the beginning of its parliamen-tary term, abstained, and the Bulgarian Socialist Party and Ataka voted against. Voting was postponed by a week because of the Patriotic Front and ABV.

Green Light for New Bulgarian DebtAfter nine years of government spending in excess of revenues, the Bulgarian

parliament approved a 16 billion Leva borrowing plan

By Marina Tsvetkova

The screen in the Bulgarian Parliament shows the result from the MP’s vote for adopting a new government debt. The decision Bulgaria to take another 8 billion

Euro passed with a significant majority of votes.

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After consultations with the finance min-ister, their leaders were adamant they would not back the ratification. The Movement for Rights and Freedoms also said they would vote against. The Bulgarian Socialist Party and Ataka were also against, the Patriotic Front abstained.

After heated debates, broad support for the bill finally became possible as ABV and the Movement for Rights and Freedoms changed their position. They gave one and the same reason for that: that they were satisfied with the answers given by Finance Minister Vladislav Goranov. He explained that 16 billion Leva was the maximum ceiling and Bulgaria might not raise the whole amount.

“I believe in the reformist capacity of this government and I assume the commit-ment that at least 2 billion Leva of the amount, which we have calculated as the sum of the maturing debt plus the planned shortfall, will not have to be used,” Vladislav Goranov said.

The rationale of the Council of Ministers, which proposed the bill, reads that the aim of the agreements is to create a mid-term program for raising debt on the interna-tional capital markets. The maximum nominal size of the debt that can be assumed under the program is 8 billion Euro. The total volume of debt for each separate year will be limited to the amount set in the annual budget laws of the Republic of Bulgaria. The maximum matu-rity term of the bonds will be 30 years. The document also sets a maximum coupon of 10 percent, which is well above the cur-rent interest paid on Bulgarian bonds, read the proposer’s reasons.

The dealership contract is signed between the Republic of Bulgaria and Citigroup Global Markets, HSBC Bank Plc, Societe Generale, and UniCredit Bank AG. The time is good for borrow-ing. Given the financial situation in Europe, Bulgaria will get a good price for the debt, the incumbents claim.

The finance minister also said that if the parliament had not allowed the govern-ment to raise new debt, the only alterna-tive was printing money, which he would not do. This emerged during the debates on the ratification of the dealership agree-ment with the four international banks on

raising an 8 billion Euro debt to cover maturity payments and bridge the planned budget deficits until the end of 2017.

The minister presented a detailed analy-sis of the condition of the fiscal reserve, which amounted to a little more than 5 billion Leva by the middle of February. Of the total amount, however, the gov-ernment can only use 500 million Leva, as the rest is held in dedicated funds: the Silver Fund, the nuclear funds, and a deposit with First Investment Bank. Goranov underscored repeatedly that Bulgaria had been living on borrowed money for years.

The new debt is needed to stabilize the country and avoid “a rating collapse,” Prime Minister Boyko Borisov pointed out. He explained that 12 billion Leva of the total amount was maturing debt that was due for payment.

A collapsed economy and urgent need for foreign debt – that is how Boyko Borisov described the current situation. According to him the country’s present condition was the result of public money siphoning and debt accumulation. This will inevitably lead to collapse if the debts of the National Electric Company are not paid.

Experts on the new loan

“When you live on borrowed money, the amounts owed pile up. Twelve of the 16 billion Leva debt is actually deficits

accumulated since 2009; the benefit of the long debate on the debt is that the wide public will understand the risks to the state’s financial health,” said Georgi Ganev of the Center for Liberal Strategies. This will make it easier for the finance minister to say “no” to the many requests in parliament for more money for certain areas not only next year but in the next three-year period.

“Bulgaria is trying to step on the global financial markets and raise debt under better conditions and thus demonstrate predictability and stability,” former finance minister Muravey Radev said. “What is happening in parliament is not debt ratification but mandating dealer banks to service the future debt in the next three years. There is such a proce-dure every year. Some debt matures. We risk ruining a good initiative in a purely Bulgarian manner.”

According to the economist Lyubomir Datsov, who was deputy finance minis-ter between 2001 and 2009 in the gov-ernments of Simeon Saxe-Coburg-Gotha and Sergey Stanishev, not a sin-gle political party in parliament currently backs a policy of strict budget limita-tions. Therefore the political show is unnecessary.

“We are not talking about raising new debt but about ratification of a mid-term agreement, Datsov said. “As for debt raising, that will happen within the frame-work of this program, year for year,

PROS: Bulgaria’s external debt is not increasing; the raised funds will be used to roll over maturing debt and to bridge the budget deficit;

The three-year term of the contract with the four banks allows for more flexibility and better interest terms;

The agreement will boost investors’ confidence;

Otherwise, spending will have to be curbed;

If necessary, a smaller debt can be raised.

CONS: The amount of 16 billion Leva is too big, it is not clear how it will be used;

Setting a high interest rate of up to 10 percent causes concerns;

There is no guarantee that the banks’ agency will be cheaper than a direct state promotion before potential investors;

The money does not have to be borrowed at once: it will be borrowed year for year depending on the needs;

New loans are taken without reforms and without closing the loopholes that cur-rently allow money drainage.

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when concrete ceilings are approved with the state budget laws.” According to him the approval of the contracts with dealer banks on a new 8 billion Euro external debt for a three-year period is an instrument that gives the Finance Ministry more flexibility and relieves it of unnecessary administrative burden, so that no parliamentary ratification will be required for each separate debt issue in the next three years.

“The story about “the new debt” is politi-cal trickery of the opposition, combined with poor communication on the part of the Finance Ministry,” Democrats for Strong Bulgaria’s leader Radan Kanev

stated. “Don’t be fooled by political mes-saging. There is no change in the debt to be raised in 2015, no budget revision, no deficit increase. There is a dealer contract for a debt that has been already approved for 2015 and a maximum debt expected to be raised in 2016 and 2017. More than 6 billion Euro of it is old maturing debt that will be rolled over. So the expected overall increase in debt for a future period is up to 2 billion Leva for two years and that can only happen if we vote it with the 2016 and 2017 bud-gets. The topic about debt is important but it is decided together with the bud-get; October will see the difficult debates on whether a new debt is necessary and

how much of it. What we are hearing now is just opposition attacks.”

President Rosen Plevneliev, too,

withered the hopes of new debt critics:

“Today’s decision of the parliament is not a decision to raise new debt; it does not entail the direct borrowing of billions. We have a budget that clearly sets the debt limit for 2015, it will be observed, and there will also be a budget for 2016. As head of state I will decide whether the 2016 budget is realistic and if not, I will do what I have done in the past.”

The president added that he would watch closely the next steps of the gov-ernment as concerns its commitments for reserve, transparency in spending and the promise not to tap 2 billion Leva of the 16 billion Leva ceiling.

“I want to encourage the government and to make the parliament understand that interest rates are at a 200-year low. It is not just Bulgaria – every country in the European Union is doing the same. Every family and company will do it. Improving the conditions, introducing a clear three-year framework, hiring glob-ally renowned companies, seeking the confidence of the market – I hope per-formance will be good too. Up to now the parliament has shown we have chances for good performance,” Plevneliev said.

Bulgaria’s gross external debt exceeded 39.5 billion Euro at the end of December, Bulgarian National Bank data show. General government’s gross external debt totaled 6 billion Leva and was the main reason for the overall increase. Banks’ and compa-nies’ external debt declined from end-2013. A more noticeable drop was registered in banks’ debt, which fell 5.6 percent. Companies’ debt decreased a touch above 1 percent.

General government’s gross external debt, however, grew by 2.6 billion Euro, or 76.8 percent on end-December 2013.

Gross external debt service in 2014 amounted to a touch above 5 billion Euro, compared with more than 7 billion Euro in 2013. Net external debt dropped to nearly 14 billion Euro at end-De-cember, mainly due to an increase in gross external assets.

Government debt amounted to nearly 9.6 billion Euro at the end of November, the Finance Ministry said. The bulk of it was borrowed on foreign markets and the trend will be pre-

served in 2015.

Government debt increased by nearly 182 million Euro in November, mainly due to two bond issues on the domestic market. The larger part of the debt is denominated in Euro and Leva and dollar-denominated debt is below 10 percent of the total amount. The Finance Ministry reports that the main part is fixed-interest debt. Government-guaranteed debt totaled 338.3 million Leva at end-November and was mainly connected with enterprises in the energy and transport sectors.

The Finance Ministry plans to raise 6.9 billion Leva of new debt on foreign markets. The form, currency, maturity and volume of transactions will be determined depending on the market envi-ronment over the year. Interest-bearing government securities worth 950 million Leva are projected to be issued on the domes-tic market. Treasury bills will also be issued during the year. The debt issue policy aims to maintain Bulgaria’s macroeconomic and fiscal stability, the Finance Ministry says.

BNB: Gross external debt tops 39.5 billion Euro at end-December

Bulgarian President Rossen Plevneliev explained the reasons for the new Bulgarian debt to the President of

the European Commission Jean-Claude Juncker during a meeting in Brussels and expressed hope that

Bulgaria will keep its financial stability and economic growth.

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Europe has adopted this banal wisdom in its desperate attempts to stop the war in Ukraine, which – from a purely geographical point of view – is located at the absolute center of the continent. The climax of the efforts was the Minsk agreement of mid-Febru-ary. German Chancellor Angela Merkel and French President Francois Holland made the presidents of Russia, Vladimir Putin, and Ukraine, Petro Poroshenko, sit down at the negotiating table there.

So they did. But the war never stopped.

Soon after Minsk the Donbass separatists captured Debaltseve, a strategic railway hub in eastern Ukraine. The Ukrainian army had to surrender it long ago under the pressure of the more pow-erful enemy. But it tried to avoid the humiliation at the cost of huge losses – and in the end it swallowed both the humiliation and the losses.

The Ukrainian army could have defeated the separatists if they had been alone – and it was on its way of doing it in the summer of 2014. Russia’s help, however, official or unofficial, with “volunteers” or equipment, changed the situation half a year later. “To lose is always painful. It’s a hardship espe-cially when you

lose to yesterday’s miners and tractor drivers,”Putin said. He did not specify how the tractor drivers had supplied themselves with multiple launch rocket systems and rocket artil-lery that left the army of a 46-million state almost without military aviation. Today the Ukrainian army is stressed, hurt and depressed. Its morale is kept mainly by the volunteer battalions, which consist of radical nationalist and even foreigners. But a state and an army are not built overnight when they have been subject to destruction for decades.

In this state of affairs there are two ways out. The West can either arm Ukraine with heavy weaponry or negotiate with Putin on the basis of mutual compromise. The first option has a lot of support-ers in the United States, including the new Secretary of Defense Ashton Carter. The second one is the Merkel option.

Let’s have no illusions: Germany and its chancellor have not for-given Putin. On the contrary, they are criticizing Moscow with harshness unseen for the past few years to the dissatisfaction of the so-called Russland-Versteher, the Russia understanders, who believe too much criticism is no good. But even Merkel, who speaks Russian (the natural partner of Putin, who speaks

Half War, Half Peace, Full Mess By Boyko Vassilev

A local woman holds a Ukraine f lag during a rally asking international community to help defend the Ukraine`s territorial integrity in downtown of Mariupol,

Ukraine in March 2015. Ukraine has handed over a list of heavy weapons that have been withdrawn from the front line with separatist rebels. The withdrawal is a

key part of the peace agreement signed between Ukraine, Russia, the separatists and the OSCE in Minsk one month ago.

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German), and her Foreign Minister Frank-Walter Steinmeier (the closest aide of former chancellor Gerhard Schröder, believed to be a „Russland-Versteher“), cannot forgive the Russian president for having lied to them about Crimea. They remember how Putin was ensuring them that Russia had nothing to do with it – and then awarded the „little green men“ medals for their conduct.

So the German stand is not motivated by some pro-Russian complex or by the North Stream gas supplies. The key here is the responsibility Germany has to take for Europe without being quite ready to do it – or quite enthusiastic about it. That is why Merkel had to stop two things in order to prevent a third one. On the one hand, she had to thwart the armament of the Ukrainians; on the other, she had to stop the separatist offensive in eastern Ukraine. All that had to prevent the escalation of the conflict that threatened to throw the heart of Europe into a long war.

Did she succeed? I would say she only partly did. There is an agreement and, except for Debaltseve, most of its clauses are observed.

It is good that no-one is happy about Minsk. The leaders of the so-called Donetsk and Luhansk “people’s republics” were firmly convinced that if the military offensive had not been stopped, at least the port city of Mariupol would have fallen. Many Ukrainians in turns see Minsk as bearing some

resemblance to Munich 1938,

the shameful peace of Chamberlain and Daladier with Hitler: the West agrees with another aggressor by acknowledging his con-quests on the sly. At the time Churchill said: “You were given the choice between war and dishonor. You chose dishonor and you will have war.” A year ago the Polish intellectual Adam Michnik reminded me about this quote; today a lot of Ukrainians cite it.

It is true that there are hardly many Ukrainians today who believe they can regain Crimea. As far as Donetsk and Lugansk are con-cerned, the prospects are gloomy too: a frozen conflict like the one in Transnistria; a lasting solution delayed by years, probably decades; destruction, poverty and hatred in the meantime.

What is left for Ukraine then? Frustrated army, territorial losses, stupendous military expenditure and ruined human lives. Despite the calls of George Soros and a few other dreamers, the West is not ready to inject tens of billions into Ukraine to turn it into a new Cold-War showcase – something like West Berlin of the 21st century.

The situation is so critical that some Ukrainians are already trying to find the good about the bad. A Ukrainian intellectual who declined to be named told me that the loss of Crimea and even Donbass could relieve Ukraine, cement its new identity and free if from Russian influence. “Surveys show that now only 3 percent of the Ukrainians want to live in one country with Russia,” he told me. “In the [formerly pro-Russian] Southeast, Donetsk and Luhansk excluded, the share is just 5 percent and it was 80 per-cent.” In other words, the war and trials are strengthening the Ukrainian identity. Even if it has been weak, the pressure will inevitably strengthen it.

Probably that is only wishful thinking. Or probably the Ukrainians are just looking for a way out in some only possible optimism. By the way, the Russians are doing the same: “Yes, oil prices are falling, the ruble is depreciating and the economy is collapsing but Crimea is ours.”

Regretfully, the Ukrainians, the Russians and the West have all suffered wounds. And if they want to live in the real world and not in a fantasy one, they have to admit it.

Ukraine has to redefine fully its state to survive. If one group of oligarchs replaces another, all will have been in vain and Maidan will turn into a symbol of failure. The whole

Ukrainian state needs a fix-up:

starting from the bloated bureaucracy and reaching to the energy leakages. Besides, Ukraine has to quell its own radicals. They tasted war, lost friends and suffered wounds and death. They have to understand that it is not patriotic to turn your compatriots into hostages.

The same holds true for Russia. It is unwittingly entering another Afghanistan-like plot of military trauma – and getting filled with

A handout picture made available by the German federal government shows

German Chancellor Angela Merkel (R) talking to Ukrainian President Petro

Poroshenko (L) at a window of the Chancellery in Berlin, Germany, March 16,

2015. Poroshenko was in Berlin for talks on the implementation of the Minsk

agreement and the reform agenda of Ukraine.

Ukrainian activists gathered around a mock funeral plate with the image of

Russian President Vladimir Putin depicted like former Nazi dictator Adolf

Hitler, during their performance in front of Russian embassy in Kiev.

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desperate young people with military experience who have no other job but war and violence.

How dangerous such a spiral is can be seen if the theory about a Chechen link in the murder of opposition leader Boris Nemtsov is proven true. The Chechen leader and Putin’s ally Ramzan Kadyrov has created an impressive battle corps that swears allegiance to Putin, the Koran and the Chechen military traditions. Those young people are children of another war – Chechnya of the 1990s. They took it in with their mothers’ milk. It makes no dif-ference to them whom they serve, as long as blood is shed. Today Putin is their inspirer; tomorrow he could be their victim. If the situation in Ukraine (where Chechens are fighting on both sides) gets tough, we can multiply the danger by ten. The anti-Western aggression that the confrontation has aroused in Russia can turn into a tick-ing bomb.

But that is not the only danger. The weak-ening Russian economy will hardly be able to maintain its increasing geopolitical ambition. Moscow will no longer be able to influence Kiev – and a pro-Russian party will not be able to form a Ukrainian gov-ernment in the foreseeable future. As for

Donbass, Russia’s interest is to control it, not to feed it. The more so that today it is mainly ruins. The famous industrial power of eastern Ukraine is in ruins. Separated from its western market, it will not recover easily.

The West, however, is not a winner either. Barack Obama is entering his lame-duck period when everyone is trying to figure out who the next occupant of the White House will be. The European Union can-not prevent

the war in its backyard.

What’s more, it is now clear how easy it is to challenge the Europeans and remain unpunished. They easily yield to the argu-ments of force and their famous economic power easily yields to Putin’s energy gifts.

Germany is still a hesitant leader. On dif-ficult cases like Ukraine, there is no una-nimity, no unity, not even a simple attempt at a common position. Awakened by the financial crisis, European egoism has not yet retired for its winter sleep. That is prob-ably why European Commission President Jean-Claude Juncker has put the idea about a common European army on the

table. What would happen with NATO then?

The dilemmas are difficult. Where the present is silent with fear, we ask history. It is 200 years this year since the famous Congress of Vienna, when the so-called Concert of Europe of the great powers set the order on the Old Continent for a cen-tury after the Napoleonic Wars. For the occasion, Vienna is organizing exhibi-tions, conferences and celebrations. The hint is clear: Europe needs a new under-standing and agreement.

I am not sure, however, whether we are taking into consideration a small detail. The long meeting of the Congress of Vienna was broken for a short time when Napoleon returned from St Helena Island and regained power for another one hun-dred days. Then he was defeated at Waterloo and removed from Europe for-ever. Only then did the Congress make its notable decisions.

My point is the following. There are no winners and losers in today’s crisis. Each side is a little of both. In such conditions, an agreement is hard to achieve – very, very hard. Because peace comes when the war has finished for certain.

Volunteers of the Sich Battalion sing the Ukrainian national anthem during a ceremony in downtown Kiev before being sent to eastern Ukraine. The pro-Russian

separatists in eastern Ukraine are not fully complying with the Minsk peace accord, German Chancellor Angela Merkel said on March 16.

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Larger consumer protection, limiting the powers of the creditors, chance for “a new start in life”, stimulating new consumption. These are different aspects of the laws declaring individuals in insolvency, known as "personal bankruptcy". Recent proposal to introduce a law on protec-tion against over-indebtedness of individuals in Bulgaria opens the topic of this type of legal instrument need, its application, the goals and the results.

The draft law has yet to be discussed by the interested parties which are mostly citizens, traders, banks.

The topic of such a law requires the comparison mainly with European practices, but also with the longer experi-ence of the United States. Construction of Bulgarian law must be in accordance with the development of the judicial system, the banking sector and the labor market and espe-cially - the quality of bank assets, the credit demand and toleration of responsible lending.

Comparing the legal regimes declaring individuals bank-rupt in US and several countries in Europe, the Centre for European Policy Studies in Brussels (Center for European Policy Studies, or CEPS) observed a number of differenc-es. The US approach is rather aimed at consumers. Procedures are less stringent and lengthy. Under certain circumstances individuals may be exempted from the obli-gation to pay their debts only within a few months.

In Europe regulations give priority to creditors. The laws of some states allow recovery of most of the claims often through stricter requirements and longer period of good behavior on the part of consumers. Ireland is an example of a country whose law provides a 12-year waiting period before the person may be released from its obligations.

US practice

Legislation declaring personal bankruptcy in USA is defi-nitely oriented towards consumers. Once launched, bank-ruptcy protects consumers in several ways, for example by demanding release, but allowing them to retain a large share of their assets.

It is likely that consumers apply for bankruptcy and request cancellation of their debts if they know that they will keep

most of their assets. This occurs because of the existing exceptions that cause people to take advantage of every opportunity.

US law allows debtors to receive remission of duties up to four months if no property is evicted. In this case, the debtor may pay fine. Furthermore, state laws provide for the debtor to keep much of his property, but the creditor does not release him from the duties immediately. Instead, the debt is re-organized with a view a new repayment plan to be concluded.

Practice in UK

In England and Wales each debtor or creditor may file for bankruptcy if the debtor cannot make payments. Once the court decides to issue an order for the bankruptcy of a debtor's assets, they are transferred to a trustee.

British borrowers certainly not benefit from the same pro-tection of debtors in the US, because it is much more likely to lose any property or other assets whose value can satisfy the creditor.

Germany – no debts after 6 years

Procedures in Germany go through three phases. First, the obligation of-court settlement between the debtor and the creditor, the second - the trial stage, and third - chance to start a period of good behavior, which ended with debt relief.

The first phase is mandatory. If in the second phase no agreement is reached, the debtor filed an application before the court. If the court decides, the debtor must fulfill several conditions in the six years of good behavior. During this period, a significant amount of income the debtor is transferred to a trustee, who will forward it to the creditors. The property can also be revoked. At the end of the sixth year the court decides whether the debt will be forgiven, but such forgiveness is an opportunity once every 10 years.

In Italy there is no legislation to govern personal bankruptcy

The only large Member of the EU, with no legislation to govern personal bankruptcy, is Italy. The introduction of such a law is in the government's plans for several years, but so far there is nothing voted yet.

Personal Bankruptcy - Principles and Practices in USA and EU

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During recent years the G-20 countries have sought to counter harmful tax practices as well as prevent the granting of Double Tax Treaty (DTT) benefits in inappropriate circumstances. The main goal has been to mitigate or even eliminate double non-taxation through implementing new models by means of amend-ments to the legislation of participating countries, as well as amendments of existing Double Tax Treaties and Multinational conventions.

As a result, in July 2013, upon request of these countries, the Organisation for Economic Cooperation and Development (OECD) adopted an action plan containing 15 points called Base Erosion and Profit Shifting (BEPS). Each point of the BEPS proj-ect reflects a certain item or area which OECD has identified as needing either further improvement or elimination. In this regard, OECD started producing separate reports containing recommen-dations on each point. Initial reports have been published on most of the points and for the time being are subject to commentaries from taxpayers, mostly multinational companies.

The main areas OECD intends to improve are digital economy; hybrid mismatch arrangements; debt and equity treatment; intangibles; low-value intragroup services, as well as transfer pricing documentation.

In this regard OECD recommends several steps to be under-taken such as determination of the place of supply of digital economy companies; harmonisation of national legislation with respect to interest and dividends tax treatment; elaboration on rules for an actual transfer of an intangible as well as a method-ology to define the substantial activity requirement in the context of intellectual property regimes; identification of a wide category of common intra-group services fees which command a very limited profit mark-up on costs, as well as application of a con-sistent allocation key for all recipients.

With respect to transfer pricing documentation OECD recom-mends a new, 3 step approach to be undertaken in order to

enhance transparency for national tax administrations by provid-ing them with adequate information to conduct transfer pricing risk assessments and examinations. Thus, OECD recommends that transfer pricing documentation consists of a Master file, providing a general overview of the business; a Local file, pro-viding detailed information by groups of transactions; and Country-by-country reporting, providing detailed information about the activity in the respective jurisdiction, as well as the financial and tax results.

The main problems OECD aims to resolve are DTT abuse and DTT shopping; artificial transactions and structures as well as artificial avoidance of Permanent Establishments.

In this regard OECD recommends several measures such as inclusion in DTTs of a specific rule, similar to the US Tax Treaties limitation of benefits clause; addition to DTTs of a more general anti-abuse rule based on the principal purposes of transactions or arrangements; update of the DTT definition of a Permanent Establishment; introduction of definitions at a local level to pre-vent artificial structures.

The final action 15 of the BEPS project is aimed at developing a multilateral instrument to modify bilateral DTTs.

Although Bulgaria is not an OECD member country, the Bulgarian tax rules generally follow the OECD guidelines and recommendations. In fact, some of the BEPS recommendations already exist in the Bulgarian legislation, e.g. beneficial owner-ship definition, as well as a legal presumption that companies in territories with preferential tax regimes are considered related parties with respect to the Bulgarian payers of the incomes. In addition, Double Tax Treaties recently concluded by Bulgaria contain beneficial ownership concepts as well as exchange of information clauses. In their practice the Bulgarian tax authori-ties try to scrutinise the substance behind certain transactions as well as identify the ultimate owners behind transparent or conduit companies.

However, currently certain areas subject to BEPS actions still need to be developed at a national level such as tax treatment of Permanent Establishments and transfer pricing documentation.

Therefore, both multinational businesses in Bulgaria, and the Bulgarian tax administration, can be expected to follow, in gen-eral terms at least, the BEPS guidelines, as practice in this area develops.

As a conclusion, it can be anticipated that the impact of BEPS actions will have an increasing local impact in Bulgaria. Certainly, however, this is only the beginning of a long process and it is hoped that an ongoing dialogue between businesses and the fiscal authorities will result in a workable and reasonable out-come.

BEPS Project . Global Tendencies and Local Impact

Ivaylo Angelov, Manager, Tax Services, PwC Bulgaria was a guest speaker at

the AmCham Tax Committee business breakfast held at the Grand Hotel Sofia.

The event was titled: Global development on related parties’ transactions: Possible

future developments in Bulgaria.

By Ivaylo Angelov, Manager Tax Services, PwC Bulgaria

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More than half of the respondents are optimistic for the economic situation in Bulgaria for 2015, despite the instability in the country. This comes out from a recent survey conducted among top managers of local and international com-panies in Bulgaria in December 2014. The survey aimed to identify current trends in the business environment in the country, as well as the most important drivers that motivate managers in Bulgaria for change. It is conducted annually by Stanton Chase Bulgaria – a global executive search company operat-ing in Bulgaria since 2006.

Although participants in the survey feel the political instability in Bulgaria had negative impact on the business in 2014 (76%), companies tend to keep their positive atmosphere (65%). In addition, there is a distinct feeling of distrust in the government – more than 58% stated they will not rely on the state for open and constructive dialogue.

Top managers outline the most important actions in order their companies to be successful in 2015 - sustaining stable cash flow remains as top priority (60%) together with human factor - discovering talents (56 %) and employee retention (46%). Employees remain a major asset for companies, and salary and benefit cuts (1%) and employee dismissal (0%) come last in this list.

In terms of growth during 2014, Technology, Telecommunications and Outsourcing/ BPO are pointed out as leaders. When asked how business developed, respondents report slight (51 %) to huge growth (20%).

In terms of the general requirements for C-level managers and where they face difficulties, the majority of the respon-dents (88%) shared their companies find it challenging to identify qualified candi-dates for key positions within their orga-nizations. According to the survey, com-panies use executive search mostly for top (44%) and senior managerial posi-tions (51%); middle management and

expert roles with specific expertise are also within the scope of executive search.

When asked in which senior functions top managers think there is shortage of leadership talent in Bulgaria, respon-dents consider namely General Management (47%), followed by Sales (14%), HR (10%) and manufacturing industry (9%). In that context, managers

are expected to be good leaders (87%) with strategic thinking (78%), flexible/adaptable (63%) and with knowledge of change management (49%) - quite an impressive combination to pursuit as a CEO.

The survey shows that managers tend to consider change in the following cases: difference of values – their personal and the company ones (43%) and dissatis-

Managers in Bulgaria Face Right Talents for Key Positions

In your opinion, what is the most i mportant action to do for business to be successful in 2015 business year?

How optimistic are you for the economic situation in Bulgaria for 2015?

Sustaining stable cash flow 59.41%Discover ing talents 56.47%Employee retention 46.47%

Business restructuring 44.71%Collecting due receivables 36.47%

Cost reduction 24.12%Keeping the existing level of salaries 9.41%

Salary and benefit cuts 1.18%Employee dismissal 0%

Not optimistic 28.82%

Somewhat optimistic 63.53%

Optimistic 7.06%

Very optimistic 0.59%

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faction with senior management/share-holders (41 %). Responsibility without authority, lack of career advancement opportunities and/or training and devel-opment (34-35%), together with poor financial performance of the organization (34%) are also considered as serious reasons to start looking for new opportu-nities.

Motivation for relocation, both within the

country and abroad, seems to be grow-ing – 72 % of the participants are open to take such steps.

As a whole, more than half of the partici-pants share they are open for new oppor-tunities.

Despite all that, the majority (72%) stated they find perspectives for development in their current companies.

The survey was conducted among more than 200 top managers (General Managers, Board members, managing Directors, CEOs, Country managers and representatives, etc.) from companies in all economic sectors, including both Bulgarians and expats working in the country. 71% of the respondents were men and 29% - women. The majority (77%) are over 35 years of age and almost half (47%) have more than 10 years of experience on senior managerial roles. The majority come from the following sec-tors: Consumer Products & Services (18 %), Technology & Telecommunications (16 %) and Industrial (12%). More than half of the respondents come from big compa-nies with more than 5 000 000 Euro turn-over and more than 50 employees.

Stanton Chase International is one of the top 10 executive search companies worldwide with 72 offices worldwide in 45 countries. Stanton Chase Bulgaria was founded in the beginning of 2006 to focus purely on retained executive search. The Sofia office specializes in all economic sectors - Consumer Products & Services, Technology, Financial Services, Life Sciences & Healthcare, Industrial Natural Resources & Energy, Logistics & Transportation, Professional Services & Government, Government, Education & Non Profit.

Difficulties Finding the Within Their Organizations

How interested are you in new career opportunities?

Which sectors do you think have had the biggest growth in 2014 in Bulgaria?

Not interested at all 7.32%

Interested in longer term 20.73%

Not interested in the next year 10.37%

I am open for new opportunities 52.44%

I am actively searching for new opportunities 9.15%

Outsourcing I BPO 67.47%

Technology & Telecommunications 49.40%

Consumer Products and Services 19.88%

Life Sciences and Healthcare 19.28%

Financial Services 14.46%

Logistics and Transportation 12.65%

Natural Resources and Energy 10.84%

Industrial 9.64% Professional Services 9.64%

Other 5.42%

Government, Education and Non profit 3.61%

m e m b e r n e w s

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ContourGlobal Maritsa East 3 was awarded the 2014 Responsible Company-Responsible Employees Annual Sign on a charity event in the end of February. The award is given to companies which have put significant efforts last year in motivating and stimulating its people to donate money, time, and other resources to causes they love.

The Awards are established by professional organizations which are leaders in their sphere: the Bulgarian Charities Aid Foundation, the Bulgarian Association for People Management, and the Bulgarian Public Relations Society.

The award acknowledges the companies which focus on its people engagement and relationship, and which have devel-oped programs to increase the awareness, improve internal communication, and to make joint projects support external social causes.

Only ContourGlobal Maritsa East 3 and two other compa-nies received the 2014 Responsible Company-Responsible Employees Annual Golden Sign because of their good, pro-ductive, and well-structured volunteering programs.

The Pay Roll Donation of ContourGlobal

ContourGlobal Maritsa East 3 started its pay-roll donation project in March 2014 after approval of its CSR Committee, and careful planning which included internal survey, selec-tion of causes, guidance with an external charity experts, and broad internal coordination with Legal, Finance and Tax, HR.

The “Week of Good” kicked-off the project. It was a spe-cially designed event at both the power station, and the Sofia Office, where all the pre-selected causes presented themselves to the employees. They had the chance to meet

the causes’ representatives, speak with them, to seek answers which helped to reduce doubts and hesitations about donations. Today there are 56 people who make monthly donations.

The first to join were 37 people with a total amount of BGN 801 (EUR 410) spread to five causes. Everyone joined vol-untarily with no pressure neither from the employer or line mangers, nor from the CSR Team. At the end of the year the number of volunteers reached 56 people, and the amount collected in December was BGN 2,116 (EUR 1,082).

The total amount donated by the employees for 2014 is BGN 17,290 (EUR 8,840) which the company matches 1:1.

The synergy between the employees’ willingness to do good and the company’s support shows one of the strengths of this project: the people have the opportunity to donate to well-selected and noble causes, to meet the real beneficia-ries, and the company doubles their donations to make the cause be sustainable.

Volunteering in ContourGlobal

Since 2010 Spring and Autumn Volunteering Days have been conducted annually by the company. During them companies’ employees work voluntarily in various organized activities, which often include their family members. In 2014 some 31 employees took part in them.

Two independent initiatives that are particularly uniting and inspiring are conducted around the most cherished family holidays – the Christmas and the Easter workshops. They are carried out together with the Daycare Centre for people with Mental Disorders St. St. Kozma and Damyan, Stara Zagora and 21 employees and their families took part in them in 2014.

ContourGlobal Maritsa East 3 awarded for “Responsible Company-Responsible Employees”The annual award is given to companies that have motivated their employees

to donate in inspiring causes in the past year

More than 30 companies were awarded at BCAF ceremony.

The former PR manager Daniel Kiryakov received the award for ContourGlobal

Maritsa East 3.

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Since May 2014 World Transport Overseas Ltd has been an official agent of the international, US based, freight forwarding company - Jas Worldwide. WTO is Jas representative not only for Bulgaria, but also for Slovenia, Croatia, Romania and Serbia. This partnership is seen as strategic by the company and is expected to significantly strengthen its position in air cargo transportation and not only. Besides air cargo transport, strategic cooperation with JAS Worldwide covers transport of full containers and groupage shipments, an area, where World Transport Overseas is one of the leaders in Balkans.

Jas Worldwide network offers vast global reach with 47 subsidiar-ies, 35 exclusive agents, and +3,500 employees. Every JAS loca-tion uses state-of-the-art technology and systems to ensure worldwide transparence and efficient supply chain solutions. All this ensure that communications are optimized in real time, and with the assurance that your information is protected.

The quality of JAS worldwide team elevates the company beyond the level of their competitors. World Transport Overseas

as a part of JAS teams is dedicated to serving their clients by providing quality customer service. WTO Ltd is proud of its strong corporate culture, and pledge to deliver value to each other with the other members in Jas network and to their custom-ers as well.

World Transport Overseas is an Official Agent of Jas Worldwide

n e w m e m b e r s

EPAM Systems is a multinational company, lead-ing provider of

complex software engineering solutions and technology services with headquarter in New Jersey, USA. Since 1993 we are achieving our success line-by-line hand crafting of complex solutions. From soft-ware products to core business applica-tions, EPAM has provided expert consult-ing, development, testing, support and infrastructure services to many of the world’s leading organizations.

Full end-to-end enterprise & custom solutions development

Technology Consulting Product & Application Development Quality Assurance and Testing Maintenance & Support Application Systems Management & Infrastructure Services

Contacts:Stanimir Nikolov

Global Delivery OfficerTel.: 070020273www.epam.com

69 Bulgaria Blvd., fl. 101404 Sofia

EQE Control is a company of ABS

Group established in 2000, licensed to exer-cise design and con-struction supervision.

EQE Control is one of the leading com-panies in the project management of international and national public pro-curement projects, one of the first to work with FIDIC Conditions of Contract, ISO 9001:2008, EN ISO 14001:2004 and OHSAS 18001:2007 certified. The company has supervised TPP 600 MW AES Galabovo, 156 MW St. Nikola Wind Farm, more than 200 000 sq m luxury buildings, KNPP projects. EQE Control OOD is one of the founding members of the BACEA, a full member of FIDIC & EFCA.

Contacts:Evgeni TzvetanovManaging Director

Tel.: +359 2 4392138; 4392133http://www.eqecontrol.com

1, Christo Smirnenski Blvd.1164 Sofia

For 23 years to this day SYNCHRON-S has been a leading company on the

Fire Protection market in the field of Passive and Active Fire Protection sys-tems as well as in development of unique tailor made solutions to specific industrial applications. The company’s main goal is to safeguard the property and business of our clients. The focus of our activities is directed to preven-tion of fire incidents as well as to limit-ing fire damages. In this way our cli-ents receive several times lower risk of fire losses and minimal business inter-ruption to restart their production pro-cess. The company carries out full engineering of fire protection systems – project design, authority approval, installation and maintenance of Sprinkler extinguishing systems, Water mist extinguishing systems, Powder and foam extinguishing systems, Gas extinguishing systems, Fire detection and alarm systems with application in industrial sites, logistic centers, server rooms and large commercial and administrative buildings.

Contacts:Nikolay StoytchevGeneral Manager

Tel.: 02/ 944 14 04www.synchron-s.com

19A, Krakra St.1504 Sofia

Right Rental Ltd. is leader in event management, logistics and equipment rental for corporate events, weddings, sports events, exhibitions and concerts. We have national and regional coverage, delivering both equipment and

event services to neighboring countries – Greece, Romania and Serbia.We offer the most advanced tent solutions and aluminum structures produced by the leading Belgian company

Veldeman Structure Solutions.No event is too big or small, too far or too unusual for Right Rental.

Our team of professionals with over 10 years of experience is ready to meet any challengeable event!

Right Rental Ltd. Tel: 0700 13 700 www.rightrental.net office@rightrental.net

RIGHT TIME, RIGHT PLACE, RIGHT NOW

32А Cherni Vrah Blvd, 2nd floor, Aries Office Building, 1407 Sofia | Tel: +359 2 988 12 75 | Fax: +359 2 986 75 49 | www.aes.bg