Bulgaria struggles to absorb record FDI to rebuild infrastructure and train workers
SOFIA – Bulgaria will attract record foreign direct investment in 2007 after hefty inflows last year, but is already struggling to accommodate new production capacity, Economy Minister Rumen Ovcharov said. Foreigners are piling into Bulgaria hoping for long-term economic stability after it joined the European Union on January 1, as well as to capitalize on cheap labor and real estate. Much of the cash is going into the energy sector and the booming tourist industry, as investors build new hotels along the Black Sea coast and ski resorts in Bulgaria’s Balkan mountains. Still, some are held back by corruption, crime and red tape as well as the poor state’s shabby infrastructure and dilapidated transport network. Ovcharov said last year’s direct investment amounted to a record -4 billion, or about a fifth of the economy, and it could rise to -5 billion in 2007. «The Bulgarian economy is doing very well… (but) the biggest worry is how to use this money,» Ovcharov told Reuters in an interview. «The money is coming, there are factories, but we are not finding the right people to work there… or we have no railways (to export production),» he said. About one in 10 Bulgarians has left the country since the end of communism in 1989 to find better pay in the West and the country is joining the ranks of many Eastern European states struggling with a lack of skills in the work force. Romania, which joined the EU together with Bulgaria on January 1, is beginning to import labor from China to plug a rising shortage of workers in its vibrant textile sector. Bulgarian officials worry that while a mass exodus of workers is unlikely to follow EU accession, highly skilled people will continue to emigrate to seek better pay. At -180 a month, average wages are the lowest in the EU. The country also hopes to spend billions of euros on infrastructure projects in coming years, but it will have to rely on European Union funds and analysts expect Sofia’s Socialist-led government to struggle to attract sufficient cash due to inefficient administration.
