ECONOMY

Sofia expects rise in FDI

SOFIA (Reuters) – Bulgaria, buoyed by a real estate boom and an invitation to join the European Union on January 1, should attract a record 3.0 billion euros in foreign investment this year, the head of its investment agency said yesterday. Foreigners are building hotels, offices and shopping malls at a blistering pace, adding to investments in energy, banking and industry that are slowly lifting the poor Balkan state’s economy. Stoyan Stalev, head of the Invest Bulgaria Agency, said the EU executive’s decision last month to let Bulgaria join in 2007 – instead of ordering a one-year delay – should help boost investment over last year’s 1.9 billion euros. «I hope we reach 3 billion euros this year. I think it’s realistic, if we take into account that in the first half of the year we reached 1.5 billion,» he told Reuters in an interview. «Our experience is that the second half is always more dynamic… And next year I expect it will not slow down,» he said. Investors are attracted to Bulgaria’s cheap, well-educated work force – wages average around 160 euros a month – but often say corrupt officials and powerful local business interests prevent access to some sectors. Stalev said EU membership would help address these complaints and cut red tape as Bulgarian officials and companies become more accustomed to the wider European common market. «EU entry will improve the mentality of investors and local entrepreneurs and improve the strength of the state to combat unlawful competition developments,» he said. In 2005, foreign investment fell 18 percent and covered only 65 percent of Bulgaria’s 11.9 percent of GDP external gap. The deficit was 1.8 billion euros, or 7.6 percent of GDP, through July of this year, and is expected to double by year’s end. Companies warned Among other projects, Spanish real estate company Riofisa plans to invest 335 million euros in a commercial park in Sofia and French retailer Carrefour is building the first of several planned hypermarkets for 82 million euros. Non real estate deals include a $1.4 billion power plant launched by US energy firm AES and a $120 million refinery from Austrian Petromaxx Energy Group. Stalev welcomed the enthusiasm in tourism and real estate markets but said the sectors could be becoming saturated. He particularly warned companies to have realistic expectations from Bulgarian consumers, who will be the bloc’s poorest citizens when they join. «At a certain point, investors in this field should take consideration of the capacity of Bulgaria’s purchasing power so as not to be disappointed,» he said. EU funds will also provide a boost, although Stalev said regional and municipal officials were still not well prepared to tap the 11 billion euros earmarked for Bulgaria through 2013. And while signals from Brussels that EU enlargement may be put on hold after Bulgaria and Romania join may be bad news for candidates Croatia or Bulgaria’s neighbour Turkey, Stalev said it could only improve the investment climate here. «For a long period, we shall be a European state bordering big markets outside of the EU, including Russia, the Black Sea, Turkey, and the Middle East,» he said. «Bulgaria can be an attractive place to invest for exports to those areas.»