ECONOMY

Bulgaria moves to attract FDI

SOFIA (Reuters) – Bulgaria will step up efforts to attract more foreign direct investment (FDI) in production this year, after real estate pushed FDI to a record high in 2007, a senior government official said yesterday. Stoyan Stalev, executive director of the investment promotion agency, said the country attracted more than -5 billion ($7.35 billion) in FDI in its first year of European Union membership, up from -4.4 billion in 2006. «It’s been a good year. The foreign direct investment is estimated at -5.1-5.2 billion,» Stalev told Reuters in an interview. «We hope to keep that level in 2008.» He said investment projects launched in 2007 aimed to inject about 9 billion levs ($6.77 billion) over three years into the emerging economy and create some 27,000 jobs. But Stalev said that the one-sidedness of investors’ appetite – about 66 percent of the fresh capital went into real estate, commerce and tourism last year – was creating serious imbalances in the economy. «We were not very successful in attracting investment in the processing industry or production… It would be a real success if we increase their share,» he said. Investment in manufacturing is much needed for the country to boost its exports and help decrease its big current account deficit, which probably exceeded 20 percent of GDP last year, increasing Bulgaria’s vulnerability to external shocks. «We need to encourage long-term FDI in manufacturing to achieve a healthy balance between services and production,» Stalev said. High-tech, energy Stalev said investment in shopping malls, hotels and golf courses, which have mushroomed in the Black Sea country, was welcome, but his agency would focus on attracting more investors in the high-tech and energy sectors. Bulgaria has amended its investment encouragement law to offer support to only production-linked investors by building necessary infrastructure and co-financing the training of personnel for the high-tech industry. The agency has already helped with training about 400 people for US company Hewlett-Packard’s customer support center in Bulgaria. «We need to do that to keep a skilled work force in the country,» Stalev said. «The gap between education and business needs is still big.» The education system has suffered after decades of painful reforms and many Bulgarians have left the country to study abroad and seek better pay. Bulgaria’s average monthly salary of about -220 is the lowest in the EU.