After the completion of the ordered inspections, work will begin on the rehabilitation and restructuring of the public enterprises under the Ministry of Economy and Industry
Two investment projects in the automotive sector worth over BGN 100 million are being launched this month in the regions of Stara Zagora and Ruse, where two new plants will be set up to produce high-tech, critical components for cars. This was announced in an interview with BTA by the Minister of Economy and Industry Bogdan Bogdanov. The investors are a Dutch and a German company, which will invest a total of BGN 120 million. (BGN 60 million each) in new production facilities in Bulgaria. The two companies are expected to create nearly 700 new jobs in Ruse and Stara Zagora.
The Minister of Economy pointed out that for the first four months of this year there has been an increase of more than 60 per cent of foreign direct investments in the country compared to the same period last year and it is expected that by the end of 2023 most of the projects that the Bulgarian Investment Agency has been working on will be announced and launched.
The Minister said that work has started on creating a clear strategy for the development of industrial zones in Bulgaria, based on a regional principle. In his words, the development should be linked to specific sectors and be bound to the expectations of investors in these sectors, as it happened with the industrial zone ‘Dobroslavtsi’, focused on the automotive industry. The development of the zones should also be bound to the provision of appropriate infrastructure, in particular green energy production facilities close to the zones. It is also necessary to ease the administrative procedures related to the construction of infrastructure for the zones, which should be built in advance and prepared according to the specific needs of the sector and investors, the minister said. The aim is to shorten the time for the implementation of investment projects — up to a maximum of 6 months to ensure the possibility to start construction on the investment project, which can be completed within 24 months and the investor to start paying social security contributions and taxes to the state. At present, the process to start construction on a project sometimes takes 3 years. The Minister said that the development plans for the zones managed by the National Company Industrial Zones, which are currently missing, will be prepared. Emphasis will be placed on Northern Bulgaria, where there is potential for the development of industrial zones, with the aim of helping the region to catch up with its economic gap with Southern Bulgaria, the minister said. Moreover, with Bulgaria’s upcoming accession to Schengen, northern Bulgaria will be among the main beneficiaries of investment projects because better logistics links between the North and the South will be ensured, the economic minister added. He said these areas could become logistics or manufacturing hubs in partnership with our key partners outside the country.
Regarding Bulgaria’s support for Ukraine in the field of the defence industry, the Minister expressed confidence that the potential of the country’s military-industrial complex is great and it is of great importance not only in economic terms, but also in terms of our national security, for the security in the region and in Europe. We can only be proud of our military industry. The aim is to upgrade the capacity, to make sure that the enterprises operate in a safe and secure environment, the minister added.
He expressed his expectation that the trend of growth in the export of defence industry products will continue this year and reminded that last year over 200 per cent growth of these exports was recorded, which, in his words, is an impressive result. We aim to open all possible channels for sales outside Bulgaria for our defence industry, whether we work with an end recipient or with an intermediary is a business decision, the economic minister further said regarding the inclusion of the Bulgarian industry in European orders for 155 millimetre calibre ammunition. The Minister reminded that even now regular tenders are announced at European level, in which businesses can participate independently or in cooperation with other companies. At the same time, Bogdanov pointed out that analyses have not stopped on how this industry will develop after the war and where it could be best positioned to ensure continued high demand, an influx of fresh investment and hence modernisation, as well as increasing the competitiveness of the sector.
The Minister of Economy said that currently the financial situation of Kintex is stable after the long period in which the company did not work well and there were no new orders.
The Minister also described the financial situation of VMZ-Sopot as very good and clarified that not 100 percent of the company’s profit for 2022 will be taken so as not to affect the company’s investment program. VMZ’s sales in the first half of the year grew by 78 percent compared to the same period of 2022, and the company’s profit also grew significantly. VMZ plans to expand its production capacity, as well as provide additional security systems and hire additional staff, the Minister of Economy said.
He also said that the Interdepartmental Council for Defense Industry and Security of Supply at the Council of Ministers had last met on May 19 and after the change of government and the updating of the structure of the body, the next meeting is expected to be on July 17. The Interdepartmental Committee, which deals with the authorisation of exports of defence industry items under the Ministry of Economic Affairs, has been meeting every month, the last one was in June and the upcoming one will be held by the end of July. In this sense, there is no delay in the work of the committee and if necessary, meetings can be held more often, the minister noted.
Sanctions against Russia and their impact on Bulgaria’s economy
Minister Bogdanov said that the effect of the European sanctions against Russia on Bulgarian business remains minimal. Mainly it is expressed in the reduction of our exports to Russia and by negligible percentages. There has been an increase in imports, which is mainly due to overstocking with petroleum products, which generally have a significant share in our imports from Russia. The leading positions in our exports to Russia are medicines and this growth is maintained. The Minister of Economy noted that the sanctions have had a positive effect on Bulgarian companies, which have already diversified their markets to a large extent and have oriented themselves towards other strategic locations, which is confirmed by the data of our national statistics.
State Consolidation Company
Regarding the audit of the State Consolidation Company (SCC) in the period after the last change of its management and the results of the inspection in LB Bulgaricum, the Minister said that everything has been submitted to the competent authorities and an investigation is underway. Minister Bogdanov said that an inter-departmental team will develop a programme for the rescue or restructuring of the subsidiaries of the State Corporation of Companies. An analysis of the efficiency and legality of the state funds spent on the dams and the pipeline that provided water to Pernik is also forthcoming. The full analysis of the SCC subsidiaries is expected to be ready by the end of September, the minister said, adding that for each inspection completed by the competent authorities, a programme will be prepared immediately to remedy the violations and rehabilitate the company concerned. Due to a request from the contractor of the new government complex project, which was selected without a public tender and on which the state is expected to recover the balance of about BGN 80 million, the meeting has been rescheduled from July 7 to July 19. The contractor is expected to present information on what has been done so far on the project and how the remaining resources will be reimbursed to the SCC and the Bulgarian Development Bank, which financed the project. Overall, the ministry’s ambition is to have full clarity by the end of the year on the state of the companies of which it is the principal and to start work on their recovery and restructuring.
The minister’s expectations are that by the end of the year the average inflation in Bulgaria will already be in single digits — between 8 and 9 percent, although there are some concerns about rising energy prices, and by the end of the year inflation will be below 6 percent on a monthly basis. The entry in Bulgaria of the expected fresh European financial resources under the delayed procedures under the Recovery and Resilience Plan and the Just Transition Fund will unlock new investments, improve the competitiveness of the business in the country, which will be an incentive for entrepreneurs to allocate funds for higher wages, the Minister of Economy said.