SOFIA (Bulgaria), June 27 (SeeNews) – Foreign direct investment (FDI) in Bulgaria will grow in 2011 despite the outflows registered through April, the head of the country's investment agency said.
"I think [an FDI of] 2.0-2.5 billion euro [$2.9-3.6 billion] will be realistic in 2011," Borislav Stefanov, executive director of the Invest Bulgaria Agency, told SeeNews in an interview.
He expects around 1.0 billion euro of FDI in the finance, real estate and retail sectors, and around 1.5 billion euro in the other sectors of the economy this year, a forecast that implies a resurgent investor interest in the former.
In the years before the global financial crisis hit Bulgaria, the financial, real estate/construction and retail/wholesale sectors used to account for 70-80% of FDI. In 2010, their share dropped to 24% out of the total FDI of 1.6 billion euro.
"These sectors do not depend so much on the Bulgarian economy. [...] The calming down of the financial markets and the opportunity to raise capital at more attractive rates is already happening. This will undoubtedly have a positive effect on FDI and not only in these three sectors," Stefanov said, adding that real estate and construction have already registered growth in 2011.
"As in the previous years, there is a share of the FDI which is relatively stable – these are investments in the processing industry, energy, telecommunications and some other types of services."
FDI in Bulgaria decreased by 62.5 million euro through April, compared to an increase of 378.9 million euro a year earlier, according to official figures from the central bank.
Three companies accounted for a combined 437 million euro or 43% of FDI outflows through April, Stefanov said, giving no names. "Several big companies are responsible for both investments in and out of the country worth 300-400 million euro in each direction."
One of the large firms which moved investments out of Bulgaria is a subcontractor in one of the big local infrastructure projects, Stefanov added. He explained the outflow with the firm paying back capital in 2011 to the parent company, based in the Netherlands, which was registered as an FDI outflow.
"The second company is a German investor that paid off a significant intra-company loan [...] but it is still one of the big investors in Bulgaria," Stefanov said.
The third example is a leasing firm which also had to pay back funds to its parent company.
Over the same period, there were nearly 850 companies which invested in or moved investments out of the country, including 550 that contributed to Bulgaria's FDI inflow.
"A great many of the incoming investments before were intra-company loans. Statistically, this is indeed FDI […] but on the other hand, this is not real investment because it does not lead to new jobs, know-how, and improvement of labour productivity."
NO GREEK FALLOUT, U.S. CO EYES SOFIA AIRPORT
"Honestly, I have not seen any significant outflow of Greek investments from Bulgaria yet," Stefanov said, pointing out a new local outsourcing investment involving several hundred new jobs announced a month ago by the Coca-Cola Hellenic Bottling Company.
Stefanov confirmed information that an unnamed U.S. company is showing interest in the concession of the Sofia Airport, adding that other foreign investors have turned up as well.
In April, the Bulgarian government said it has mandated the Transport Minister to start the preparations for the award of the Sofia airport concession.
"The good thing is that any foreign operator will most probably bring to the airport new airlines and new direct flights," Stefanov said.
Commenting on Bulgaria's strong points when it comes to drawing new investors, Stefanov highlighted the combination of the quality of the labour force and the cost of doing business, as well as the political and economic stability.
He pointed out, however, that one of the reasons why the country does not have as many investments as it should is the lack of enough marketing activities.
($=0.7004 euro)