Bulgarian Businesses Urge Govt To Fight Shadow Economy, Help Exporters

Maintaining financial stability, fighting corruption to recover the trust of foreign investors, and reforming the public sector should be key priorities for the government on the path to pulling the economy out of the crisis, the head of the Confederation of Employers and Industrialists in Bulgaria (CEIBG) Ivo Prokopiev told the Fourth annual meeting of Bulgarian business and government officials hosted by the Capital (www.capital.bg) weekly.

"Before it was like this: if you make reforms, you lose support rating. Now it is: if you fail to make reforms, you lose everything," Prokopiev said.

According to Prokopiev, Bulgaria should move in tune with the top five trends in the world economy in order to achieve sustainable economic growth: developing green energy resources called for by the threat of global warming; the new order in the world economy and the "Century of Asia"; the Internet revolution; the knowledge-based economy and the outsourcing.

World Bank Vice President Kristalina Georgieva told the same meeting that Bulgaria should 'hook up" to the growth potentials of China and India and commit itself to the fight against climate change.

Bulgaria can become an entry point for China's expansion into Europe and attract Chinese capital into logistics and port projecs, investment in the financial sector, and corporate and export financing, Prokopiev said. According to him, the country can benefit from the global outsourcing market, which is relatively small with revenue of $30 billion (20.5 billion euro) a year but has high growth rates of some 25%. Bulgaria now ranks first in Europe and 13th in the world as an outsourcing centre, according to global consultancy A.T. Kearney.

Georgieva also pointed at the need for businesses and the government in Bulgaria to find offset factors which should compensate for low domestic demand and shrinking investments which were the key growth engines before the crisis hit. She also said the society should join forces around one key goal: increasing the competitiveness of the Bulgarian economy through improving both the physical and institutional infrastructure.

Business officials said the government should promote export-oriented companies through its Development Bank.

"There is plenty of what can be done in Development Bank," Prokopiev said. "Exports will be one of the engines that will take us out of the crisis."

The Bulgarian Development Bank, formerly Encouragement Bank, provides lending to small and medium-sized enterprises, aiming to promote their exports.

The meeting between the businesses and the government was held on the day when the minority cabinet of Prime Minister Boyko Borisov marked its first 100 days in office.

Borisov pledged support for the private sector but said there will be no compromise with the rules.

"Everybody is trying to find a way not to obey the rules. [...] Big investors think that when they come to Bulgaria they can make projects without rules. [...] But there are tenders," Borisov said.

DYANKOV'S NEXT 100 DAYS

Finance Minister Simeon Dyankov, who also spoke at the conference, pledged reforms. He highlighted 10 priorities of the cabinet in the next 100 days in office: achieving a balanced budget this year and next, maintaining the fiscal stability through the currency board and entry into the eurozone; fighting against tax evasion and smuggling firstly through restructuring of the Customs Agency and the National Revenue Agency; reform of the state administration, which has been already been launched with the closuer of two ministries and several state agencies; improved management of state assets; and ensuring transperency of public procurement tenders.

On the list of priorities also are: amending the Public Procurement Act to allow small and medium-sized enterprises to bid for government orders; reforming the government's asset-selling body, the Privatisation Agency, and particularly the Post-Privatisation Control agency which can be closed down; reforming the healthcare sector; securing financing for infrastructure and environment protection projects; and changes in tax legislation aimed at alleviating the tax burden on businesses, Dyankov said.

The government has no plans to raise taxes unlike many European countries did in times of crisis, Dyankov added. 

It is also considering a cut in value-added tax (VAT) after Bulgaria exits the crisis and creating a "golden registry" of impeccable VAT payers, to which VAT will be reimbursed faster, in about a week, he added. A faster amortisation of assets like computers and buildings is also being considered by the government as a way to support local businsses, Dyankov said.