Minister Bogdan Bogdanov: Industrial zones should be profiled

Minister Bogdan Bogdanov: Industrial zones should be profiled

I expect from the new leadership of SCC to start building, a good part of the enterprises in the holding are operational, with good market potential. We need a vision of where El B Bulgaricum will develop, the focus should rather be on the innovative part of the process, on the expansion on international markets, perhaps diversification into other sectors.

This is what Minister Bogdanov said in an interview with the newspaper Capital:

What do you expect from the new board of directors of SCC that you appointed for 6 months, what will be its main tasks and how do you expect to improve transparency?

– Let’s start building. The problems are clear and most of them are related to ineffective management, because a significant part of the enterprises in the holding are operational, with good market potential. I expect a full analysis of each of the companies under the SCC umbrella to be done within the next month through the new board. First, we need to limit costs at the level of the SCC. Salaries, and they are one of the main items, are not linked to real economic results.

It is also important to have a general idea of what each company’s goals are. In more than half of the enterprises we do not have a business programme. So the first step is an analysis of the current situation, the second step is the preparation of business programme for 2024-2026, which has to be done by the end of November.

The other problem is the lack of a monitoring system. A holding company, which has a capital of over 1 billion BGN, can’t function without an effective management and monitoring programme.

How will this monitoring be carried out?

– There are standard platforms that we will use to control management and business processes. The idea is to first implement it at the level of the Ministry of Economy and Industry, to have visibility of what is happening in the SCC. The SCC should then have a similar tool to monitor the development and the specific business performance of subsidiaries. The aim is to have traceability and if we see a problem – be it with the efficiency, be it with financial flows, be it with the management of certain assets, delays in payments, to be able to react at the earliest stage.

Another important reason for having a completely new team is that we need to restructure certain financial processes, mainly because of the credit exposure of SCC to the Bulgarian Development Bank. I expect the program itself to be initiated in the next month or so, so that by the end of the year to have a substantial reduction in the credit exposure of SCC and at the same time to reduce its expense for interests. Our other objective is to release some of the assets that are currently used as collateral.

What is happening with the government complex in Sofia Tech Park, for which SCC paid money to the builder in advance?

– There is one aspect that needs to be cleared up – is there a need for this type of facility. It is good to have some confidentiality at the moment to protect the state interest.

In what direction do you expect El B Bulgaricum to develop, given that the potential for licensing activity is underdeveloped, while at the same time the company relies on dairy production?

– The “EL B Bulgaricum” is a good example of inefficient management. We are yet to present more data, that is what we expect from the SCC board once they have done their work. We have several problems and one is the lack of vision – where should El B Bulgaricum develop, should we focus on production and increase the 2% market share that we have at the moment, should we work on new bacteria, what are our relationships with our key partners like Meiji for example that we have developed over the years. At the moment, this vision does not exist. What worries me the most is that we have a management team that changes quite often, we have a know-how that in my opinion is not protected at the moment, patents have a certain validity. If we don’t work on new strains, if we don’t produce new products with the bacteria that have already been patented by El B Bulgaricum, this limits us.

We are currently doing an analysis around the operational activities of the company, but we have serious concerns around the way of working, the pricing, the negotiation of quantities. The focus of El B Bulgaricum should rather be on the innovative part of the process, on the expansion of international markets, perhaps diversification into other sectors – not only the food industry, the pharmaceutical industry also has a great application for El B Bulgaricum products. And now for the traditional products that the company produces, we have to rely on quality, on a shortened supply chain to the end users, on guaranteeing quantities, because when prices were reduced, there was a lot of increased demand, but we could not meet it.

You also changed the management of the National Company of Industrial Zones. What do you expect from it and how will the state industrial parks become more attractive for investors?

– I will repeat myself, but here again the problem is the lack of planning and vision for the development of specific industrial zones. This is also seen in “Bozhurishte”, which is the main project of the NCIX. I’m not referring to one leadership or another, I’m talking about the whole period of development of the zone, this is perhaps a cumulative mistake of all. When developing such a park, there should be a very clear idea of what industry it will target, what it requires in terms of provision. From a production zone “Bozhurishte” turned into a logistics zone. There is no problem with that, we need to have logistics, serious investments have been made, but when we attract logistics companies and we do not plan and build the infrastructure to secure this process, we end up with a situation where the zone does not function effectively.

The case of “Bozhurishte” is exactly that. Ten years after starting the process of building the zone, we are in a situation where it has only one entrance, which is quite limited, there are kilometres of traffic jams in the morning and in the evening. According to the information we received from the new NCIZ team, there is currently an average of about 10 thousand vehicles per day. We are making the zone, but we don’t have a road, we don’t have public transport to it, we currently have problems with the sewage treatment plant, we don’t have the necessary electricity to cover the needs of the enterprises. If we really want to reverse the trend and become more attractive to investors, all these things have to be planned in advance, that is the standard that investors expect.

At the moment there is an average of about 10 thousand vehicles per day to the zone in Bozhurishte.

What are the options for access to the zone in Bozhurishte and when is it realistic to make them happen?

– There are two alternative routes. One is the route that would exit onto the E80, which is currently Blvd. “Europe.” This is the shortest route, but a traffic model needs to be done. The other option is to “Okolovrastno shose”, but there we need about a minimum of 2 years, because there are procedures for expropriation, which for me is an extremely long period. We have talked to colleagues about at least doing the design to get the whole process started and ready to go once we secure the funding. For these about 3 km more than 50 million BGN will be needed. The option to Blvd. “Europe” is yet to be calculated. It could be done faster there because of fewer procedures for expropriation, but there is also a slightly more complicated connection with the road, we also have a railway line.

What specialization do you see for the remaining industrial zones?

– We expect to be presented with a thorough analysis and business program by the leadership of NCIZ. We have, of course, certain guidelines. For Dobroslavtsi, the focus will be the automotive industry, as there are such specific investment intentions at the moment. The vision is that the zone will be set aside for 3 different investor profiles – one larger investor that produces components for electric cars and has about 1000 employees, possibility for 2 or 3 medium investors – about 300-400 employees and production with a built-up area of 30-50 thousand square meters, and a significant part of the zone will be aimed at micro, small and medium-sized enterprises, mostly Bulgarian, but not only, which will become suppliers to medium and larger companies. Our aim is to be linked to the main investor so that we can also develop a supply chain that is close to the main larger producers.

The interview was taken by Iglika Filipova