COPYRIGHT, U.S. & FOREIGN COMMERCIAL SERVICE AND U.S. DEPARTMENT OF
STATE, 2001. ALL RIGHTS RESERVED OUTSIDE OF THE UNITED STATES.
This the Executive summary of the Country Commercial Guide (CCG), which
presents a comprehensive look at the Republic of Bulgaria’s commercial
environment, using economic, political and market analysis.
Bulgaria is a market that deserves closer attention by U.S companies for
its trade and investment potential. Bulgaria has been blessed with and
has worked hard to preserve its economic and political stability in the
midst of ongoing Balkan turmoil. It has greatly expanded its commercial
ties with Western Europe and the United States and is continuing to work
hard to attract foreign investment. Over half of Bulgaria's exports
currently go to Western Europe, and the United States is currently one
of Bulgaria's top foreign investors. A small nation of 8 million mostly
ethnic Bulgarians located on the Black Sea south of Romania, north of
Greece and northwest of Turkey, with FYR Macedonia and Yugoslavia to the
west, Bulgaria has aspirations to join the European Union and NATO over
the next several years. The Soviet Union's staunchest ally in the
Communist bloc until 1989, Bulgaria's current commercial climate is a
great contrast to the woes presently facing the Russian Federation.
Former President Clinton’s visit to Sofia in November 1999 heralded the
start of a mutually more productive, more rewarding U.S. relationship
with Bulgaria. The visit was the best evidence that U.S.-Bulgarian
relations have never been better. Former Secretary of Commerce William
Daley was also in Bulgaria that autumn to host a regional conference of
350 representatives from the six-country South-eastern Europe region,
along with 100 U.S. companies. This was the largest and most impressive
trade promotion the U.S. Government has ever staged in Bulgaria. It
helped to demonstrate that there are business opportunities in Bulgaria
and that the U.S. Embassy and Commercial Service in Sofia are prepared
to follow up and assist those companies new to Bulgaria to get
Bulgaria has followed a sure path towards a market economy since former
Prime Minister Ivan Kostov of the Union of Democratic Forces (UDF) took
office in April 1997. Since 1997 the lev stabilized and inflation was
tamed. Confidence in the banking system is starting to return with very
credible and well-endowed corporate banks coming on the scene. The Gross
Domestic Product (GDP) was $12 billion in 2000 and real GDP grew by 5.8
percent. Official statistics underreport economic activity, with an
unofficial market representing an additional 20 to 30 percent of the
official GDP. However, with a per-capita GDP of only $1,500, Bulgaria’s
citizens’ dissatisfaction with their economic situation was a major
factor in the defeat of the UDF by the National Movement Simeon II (NMSS),
led by new Prime Minister Simeon Saxe-Coburg, Bulgaria’s last king until
his forced removal from the throne in 1946 after the Communist takeover.
In the election, the UDF dropped to 51 seats in the 240-seat National
Assembly compared to 120 for the NMSS, which has formed a governing
coalition with the 21-seat National Rights and Freedom party.
The new government has pledged to continue a conservative fiscal policy
and maintain a zero budget deficit. It also plans to cut taxes, work to
attract increased foreign investment, and take steps to combat
Bulgaria has a leading role to play in regional economic and
infrastructure integration: more efficient border crossing stations to
promote regional trade, European Corridor 8 road transport links, rail
links, and a number of energy and telecommunications projects will keep
Bulgaria and some of its neighbors unrelentingly busy improving the
overall image and economic prosperity of Southeast Europe.
Transparency in general has improved, and recent developments show that
Bulgarians have rededicated themselves to achieving high standards of
ethical business practices. For example, Bulgaria was the first non-OECD
nation to ratify the Anti-Bribery Convention. However, corruption
remains a serious problem in Bulgaria, as do bureaucratic delays and
barriers to economic activity including investment.
Additional market-oriented changes have been made to the laws governing
foreign investment, taxation and land ownership by international
The pace of privatization of thousands of state-owned enterprises, from
the very largest to hotels and resorts, must continue, since
privatization is the only practical way for Bulgaria to restructure its
economy, create new jobs, and introduce new technology. Privatization is
also crucial to efforts to attract foreign investment, halt the slide in
production and increase exports to generate revenue to support needed
imports. The Bulgarian government has also recognized the importance of
small and medium sized enterprises in creating jobs.
While Bulgaria’s consumers have limited purchasing power for relatively
expensive U.S. products, Bulgaria's work force offers attractions to
manufacturing investors for its good education, especially in
engineering and foreign-language ability, and the low cost of labor.
With the improved economic climate, a wide variety of products of all
types can now be found in Sofia's increasing numbers of shops, and the
Bulgarian government and some large state-owned enterprises can finance
priority imports by themselves. Bulgaria has an active trade show
calendar attracting exhibitors from all over the world. Bulgaria is
moving forward on $2 billion in transport and environmental remediation
projects. Nonetheless, international financing of major infrastructure
projects remains essential, and Bulgaria is still very dependent on
financing from multilateral banks and other non-Bulgarian sources.
Financing from the Export-Import Bank of the United States (Eximbank) is
now available to finance certain U.S. exports to both state-owned and
private Bulgarian enterprises. A recent agreement to finance a nuclear
safety upgrade involving Westinghouse Electric and Citibank represents
the first Eximbank project in Bulgaria in more than thirty years.
The Stability Pact, a comprehensive regional plan for economic
development, democratization and security, will lead to new and expanded
trade and investment opportunities in Bulgaria over the long term. The
U.S. Government vigorously supports efforts to bring Stability Pact
benefits to Bulgaria.
Despite the current international situation, many American high
technology, industrial, and consumer products whose only substantial
competition is European do offer significant price and quality
advantages and enjoy good markets in Bulgaria. U.S. technology and
know-how are widely respected and financing very much needed. The price,
quality, technological leadership and reputations of U.S. companies are
often viewed in Bulgaria as effective counterweights to pressure from
European Union (EU) companies to "buy European."
The industry sectors with the best prospects for U.S. firms include
electrical power generation equipment, building materials,
telecommunications equipment and services, computers, software and
information technology, pollution control equipment, automotive parts
and service equipment, agricultural equipment, and medical equipment.
Country Commercial Guides are available for U.S. exporters on the
website of the Commercial Service, http://www.usatrade.gov. U.S.
exporters seeking general export information/assistance and
country-specific commercial information may also contact the U.S.
Department of Commerce, Trade Information Center by phone at
1-800-USA-TRAD(E) or by fax at (202) 482-4473, or contact Commercial