Page 1

Bulgaria at a glance

Location and key data

• Area: 110,910 sq. km

• Number of inhabitants (2011): 7.4 mln

• Capital and largest City: Sofia

• Other cities: Plovdiv, Varna, Bourgas, Ruse, StaraZagora, Pleven, Veliko Tarnovo

• Natural Resources: oil, gas, coal, iron ore, copper, lead, zinc, antimony, chromite, gold, silver, magnesium, nickel, pyrite, marble, limestone, salt, arable land

• Major industries: electricity, water and gas supply; food, beverages and tobacco; machinery and equipment; base metals, chemical products, coke, refined petroleum

• Currency: Lev (BGN). Fixed exchange rate with Euro.

• EU Member since 2007, NATO Member since 2004

• Government type: parliamentary republic

• Last government elections: July 2009

Dobrudja

Sandanski

Bansko

Veliko Tarnovo

Belogradchik

Kozloduy NPP

Sofia

Bulgaria at a glance

Geography, landmarks and economic overview

Page 2

Maritza Iztok

Balchik

Varna

Sunny Beach

Sozopol

Rousse

Plovdiv

Macroeconomic indicators show consistent pre-crisis economic growth and quick post-crisis recovery

Real GDP Growth Inflation (HICP)

Unemployment FDI Inflow

Source: Bulgarian National Bank, Eurostat

1.7%

-5.5%

6.2%6.4%6.5%6.4%6.6%

20112010

0.4%

200920082007200620052004

3.4%3.0%2.5%

12.0%

7.6%7.4%6.0%6.1%

200620052004 20112010200920082007

10.4%9.1%9.1%

10.7%12.2%

20112010

9.2%

20092008

6.3%

2007

6.9%

200620052004

EU-27Bulgaria EU-27Bulgaria

2011

1,341

2010

1,209

2009

2,437

2008

6,728

2007

9,052

2006

6,222

2005

3,152

2004

2,736

€ mln.EU-27Bulgaria

Page 3

FDI in Bulgaria comes mostly from EU countries and is concentrated in four main sectors

Source: Bulgarian National Bank

FDI by host country, 1996-2011 (€ mln.) FDI flows by industry, 1996-2011 (€ mln.)

Telecom 2,260

Energy 2,699

Construction 2,705

Manufacturing 6,479

Trade 6,522

Finance 7,652

Real Estate 8,204

Other 2,664(10) Hungary 1,272

(9) Italy 1,279

(8) USA 1,283

(7) Russia 1,486

(6) Cyprus 2,257

(5) Germany 2,523

(4) UK 2,733

(3) Greece 3,664

(2) Austria 5,809

(1) Netherlands 6,018

Page 4

Why invest in Bulgaria?

• Political and business stability

– EU and NATO member

– Currency board

– Low budget deficit and government debt

• Low cost of doing business

– 10% corporate tax rate

– Lowest cost of labor within EU

• Access to markets

– European Union / EFTA

– Russia

– Turkey / Middle East

• Educated and skilled workforce

• Government incentives

Page 5

Government financial indicators are remarkable not only in the region, but on a pan-European scale

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

110%

120%

130%

Lithuania

Latvia

Cyprus

Italy

-6% -5% -4% -3% -2%-11% -10%

Average budget deficit/surplus (2006-2011)

16%15%1%0%

TurkeyCroatia Norway

-1%

IcelandUnited Kingdom

Sweden

Finland

Slovakia

Slovenia

Romania

Portugal

Poland

Austria

Netherlands

Malta

Hungary

Luxembourg

France

Spain

Greece

Ireland

Estonia

Germany

DenmarkCzech Republic

Bulgaria

Belgium

Source: Eurostat

Average government debt (2006-2011)

Page 6

Source: Eurostat, The Economist, National Statistics

Budget deficit for 2012, % of GDP

Bulgarian economy maintains its excellent performance despite global challenges

0.0%

0.0%

0.1%

-1.6%

-2.0%

-2.5%

-2.6%

-2.8%

-3.0%

-3.3%

-3.6%

-3.7%

-4.1%

-4.5%

-5.0%

-5.6%

-7.0%

-7.0%

-8.0%

-8.3%

-9.8%

-10.9%

BG

Egypt

Japan

United Kingdom

Spain

Greece

United States

India

Czech Republic

Italy

Hungary

Austria

Brazil

Turkey

China

Sweden

Switzerland

Germany

Euro Area

Denmark

Poland

Netherlands

France

Hungary

Greece

Estonia

Bulgaria

04/10

Turkey

07/10 10/10 01/11 04/1101/10 07/11 10/11

Lithuania

Ireland

Bulgaria was the only European country with increased credit rating by Moody’s in 2010 and 2011

Page 7

Bulgaria has one of the lowest business costs in Europe

Lowest corporate income tax rate in Europe

Source: Eurostat; Savills

Turkey 20%

Croatia 20%

Czech Rep 19%

Slovakia 19%

Hungary 19%

Romania 16%

Bulgaria 10%

Cost of electricity for industrial users is 70% of the EU average

0.080

Bulgaria 0.064

Estonia 0.062

Slovakia 0.123

Czech Rep 0.110

Hungary 0.104

EU average 0.092

Germany 0.090

Turkey 0.086

Romania

€/kWh, 2011

11,070

10,000Germany

Spain

UK 11,400

Poland 5,000

Czech Rep. 5,000

France 5,000

Greece 4,000

Hungary 3,000

Romania 2,000

Bulgaria 1,595

Lowest cost of agricultural land

in the European Union

€ / ha, 2008

Page 8

Bulgaria is only 3 hours flight from all major destinations in Europe, Russia and the Mediterranean region

Strategic geographic location Major transport corridors passing through Bulgaria

EU and EFTA

Rus

sia

and

CIS

Turkey and

Middle East

Page 9

The government supports specific industries under the Investment Promotion Act (IPA)

• Investments must be related to the following sectors:

– Manufacturing

– Research & development

– Education

– Healthcare

– High-tech services

– Warehousing and logistics

• Minimum investment amounts must exceed €10m

– €3.5 in regions with high unemployment and €2m for

investment projects in high-tech services

• Benefits for certified investors include:

– Shortened administrative procedures

– Preferential acquisition of state or municipal land

– Financial support for professional training / education

– Infrastructure subsidies

– Labor cost subsidies

– Individual administrative services

Page 10

• Services:

– Transport and Logistics

– Information technologies

– Outsourcing of business processes

– Health and tourism related to healthy

lifestyle

• Industry:

– Transport equipment and machine

building

– Electronics and Electrical engineering

– Chemical industry

– Food and Agriculture

• Resources:

– Mining

– Oil

Attractive FDI sectors

Page 11

Investing in Bulgaria conference6 December 2012, London

GLOBAL INVESTMENT DATA

ANALYSISPresentation by Courtney Fingar, Editor, fDi Magazine

About fDi Intelligence

The Financial Times Ltd’s dedicated division for FDI:

• fDi Magazine: reporting on the business of globalization

• fDi Markets: crossborder investment monitor

• fDi Benchmark: corporate location assessment tools

• fDi Reports: customised reports and data research

• fDi Atlas: investment incentives navigator

• Bespoke FDI events and investor roundtables

• www.fDiIntelligence.com: online portal

About the data

• Focus on greenfield FDI using the fDi Markets database

• Greenfield FDI is defined as new or expansion FDI projects which create

investment and jobs and is the main target for most IPAs globally

• Greenfield FDI is different to official FDI flows data (ie, UN, IMF), which includes

capital crossing borders typically with 10%+ stake in a foreign entity (ie, M&As)

• Data analytics becoming more important both as a means for corporates to identify, and justify, expansion decisions and also as a means for government agencies to present fact-based arguments for why a company should invest in their location

• Advanced methodologies like location assessment matrices are essential

Global FDI trends

• Global recession hit FDI hard in 2009 with a steep decline in FDI

• FDI project levels slowly recovered in 2010 and 2011; capex and jobs still at 2006 levels

• Europe holding back a bigger FDI recovery

• BRICS: India and China saw growth last year (15%, 3%); Russia saw decline

• Canada and Australia booming as source countries for FDI

• Software and IT the top sector by projects (+18% growth in 2011); metals the top sector for capex; renewable energy the fastest growing sector

• Greenfield FDI set to decline in 2012

Source: The fDi Report 2012

Global FDI picture

Source: The fDi Report 2012Figures for 2011

Renewableenergy

Project numbers

increased 6x

since 2003,

+20% since 2010

$91bn capex

US: top recipient

as well as source

country

Figures for 2011

Expansions: a growing part of FDI

• Since the global economic crisis, expansion projects have become more important

• Accounted for 23% of global capital

investment in 2011 – the strongest share

since fDi data began in 2003

• Expansions seen as a lower-risk and

lower-cost approach than new facilities

Figures for 2011

Europe

Europe FDI:

-3% over 2010

Top sector:

Renewable

Energy

CEE/CIS:

-4%

Bulgaria:

+15%

Figures for 2011

FDI in CEE and CIS region: 2003-2012

• Through October 2012, total of 21,140 FDI projects recorded –

a 14.6% share of global FDI

• Total capital investment: $670 billion; average investment size of $98 million

Source regions for CEE/CIS investment

Top destination countries in the region

Top industry sectors for FDI in the region

FDI in Bulgaria

• FDI projects peaked in 2008

• Domestic market growth potential is the top motive cited by companies (50% of projects), followed by skilled workforce availability and natural resources

• Top source countries: Germany, US, Spain; but UK does largest investments

• Alternative energy provides the largest overall volume and highest average investment, at $220m per project

• In 2012 (TBC), decrease in projects #s and capex; increase in jobs created