Benefits of abolishing land checks could reach BGN 1.3 billion a year, says Dr Nikolov in an interview with “24 hours”
– The debate “for” or “against” the euro has intensified again. Is there a benefit for Bulgaria to become a member of the eurozone, Mr Nikolov?
– Absolutely yes. The introduction of the euro will be proof of Bulgaria’s deepening European integration. Among the benefits is an increase in the country’s credit rating. The single currency will reduce transaction costs for businesses and will also have a positive effect on foreign investment.
I would like to emphasise that, in times of crisis, a strong European monetary policy has the tools to contain inflation in the euro area countries and keep it low. At the same time, the ECB supervises the banking system and thus ensures its sustainability.. .
The caretaker government continued intensive work on the country’s practical preparations for euro area membership. We also approved the draft law on the introduction of the euro at a meeting of the Council of Ministers.
– Are there measures in the law to protect people from attempts at speculation?
– Yes, there are measures to protect consumers. These include requirements for the correct conversion of prices from levs into euros, the indication of prices of goods and services in both currencies.
It is important to me as a minister that the transition from the lev to the euro is smooth and in-form so that the benefits of membership are felt by all. This process must be transparent and fair. The Consumer Protection Commission has an important role to play here, and will ensure that traders comply with their obligations to correctly recalculate and double mark prices.
To ensure consumer protection, specific measures are included such as monitoring of commercial practices, checks and mechanisms for a rapid response when infringements are detected. The CPC will provide consumers with clear, accurate and timely information on the principles, rules and procedures for the presentation of prices of goods and services to consumers.
– The country must also meet the inflation criterion. Will we succeed?
– Currently, meeting the inflation criterion remains a challenge for Bulgaria and efforts are needed to achieve it. We see that, according to the latest data, the National Statistical Institute is reporting deflation for the third month in a row. Monthly inflation for June was -0.2% and annual inflation was 2.5%. So we expect to meet this criterion by the end of the year.
The benefits of abolishing land checks could reach BGN 1.3 billion a year
– There are indications that Bulgaria will join Schengen by land at the end of this year. What will be the benefits for our country?
– According to a BAS report, prepared at the request of the Ministry of Economy and Industry, the direct losses from Bulgaria not being in Schengen and by land amount to BGN 845.2 million a year. With our accession, the benefits could reach BGN 1.3 billion, adding BGN 544.9 million in lost downtime for heavy goods transport. Saving about 350 thousand days and the corresponding 34.9 million BGN in monthly salaries and time of Schengen citizens visiting Bulgaria would lead to potential financial effects of 121.6 million BGN and 147.2 million BGN in tax revenues for the state budget. The total effect could thus be BGN 1.7 billion per year.
The positive results of Bulgaria’s accession to the Schengen area are not a one-off effect, but will increase with deeper economic integration between European countries. This means that delay will cause greater foregone benefits, which is why accession is a key priority. That is why we are extremely positive that Hungary has made the admission of Bulgaria and Romania to Schengen by land one of the priorities of its Presidency I.
It is no coincidence that our full admission to Schengen, the OECD and the euro area are among the most important prerequisites for our economy to continue to develop and for us to achieve high economic growth.
– You mentioned the OECD, how far have our negotiations for membership of the so-called ‘Schengen’ come? The Club of the Rich, as the organisation is known?
– The Ministry of Economy and Industry is among the most involved institutions in the process of Bulgaria’s accession to the Organisation for Economic Co-operation and Development (OECD). Our responsibilities are related to corporate governance, trade and consumer policy.
In May, our country received high marks in the technical reviews by the OECD thematic committees. The Ministry of Economic Affairs has the lead role in 4 and partner role in 9 out of 25 technical reviews of Bulgaria. A total of 41 reviews will be conducted in 2024, 12 of which have already been completed. All are expected to be completed by the end of 2025.
Our country’s accession to the OECD is a major national priority that is not affected by the dynamics of the domestic political context. This is an additional incentive to accelerate the process, as Bulgaria’s accession to the organisation receives consistent political support from all governments and parliaments.
– Have the recent frequent elections had an impact on foreign investment in the country?
– Rather yes, but despite the fact that we are a caretaker government, we are actively working to attract foreign investors and create conditions for business in all regions of the country. Our policy is aimed at stimulating investment in high-tech industries, innovation and new technologies, resource-efficient and low-carbon industries.
We pay particular attention to the even development of all regions of the country and to attracting investment in high value-added activities. Europe has all the prerequisites to become one of the leaders in high-tech sectors, and Bulgaria can play an important role in the mechatronics, electronics and microelectronics sectors.
– Is there interest in industrial zones?
– In the last two months alone, four new investors have been attracted to the state industrial zones with projects worth a total of nearly BGN 40 million. Negotiations are underway with several investors, the largest of which are companies from Germany, Abu Dhabi, Turkey, and Bulgaria. The investments of only two of these companies have a total value of over 155 million BGN and will create over 500 new jobs. In the Sofia-Bozhurishte Industrial Park there are also two final contracts for investments by Bulgarian small and medium-sized companies with a total value of nearly BGN 10 million.
These are real projects that will create new jobs. I sincerely believe that our country is a good place for investment, but we are working to improve the conditions for business and to promote the competitiveness of Bulgarian companies as well.
– What will the forthcoming national industrial strategy contain?
– The Ministry is developing a national industrial strategy with the support of the European Commission. It covers two key sectors – manufacturing and extractive industries. It will identify the actions needed for the green transition – reducing
reducing the carbon footprint, increasing the digitalisation of production, improving resource and energy efficiency, introducing innovative and circular production models, etc. The aim of the future strategy is to create conditions for the development of industry in a new, modern and innovative way, with a more efficient use of resources and energy.
But whatever goals we set ourselves, we cannot achieve them without also developing human potential. Highly skilled and trained people are the long-term solution to the major challenges facing business. In the medium term, we are considering active dual education programmes, targeted with priority at areas where there is a need to create new jobs and those that are changing their economic profile.
– There has been a decline in Bulgaria’s exports due to the slowdown in European economies. How is the search for new markets going?
– Yes, there is a decline, that is why one of our main tasks during these months was to intensify foreign economic cooperation and find new markets for Bulgarian business.
We are planning intergovernmental committees to discuss priorities with third countries outside the EU. Here is the place to recall that for the first time in almost 10 years, a session of the Bulgarian-Vietnamese Commission for Trade, Economic, Scientific and Technical Cooperation was organised. We signed a protocol at the session, which lays a good foundation for the development of economic ties.
With Hungary, we discussed the possibility of organising a meeting of the bilateral intergovernmental commission as soon as possible. We are also in the process of organising a Japanese business delegation, which will arrive in Bulgaria in October.
The Ministry’s team is also directly involved in the issue of labour migration and finding highly qualified staff from third countries. An action plan on labour migration in 2024 has been prepared, including business proposals for concrete measures on legislative initiatives and administrative procedures. The Trade and Economic Affairs Offices (TEAO) of Bulgarian embassies and consulates abroad will also be involved in attracting highly qualified personnel.
– The defence industry appears to be in very good shape. Is it really?
– Yes, it is. The policy of the Ministry of Economy and Industry is aimed at actively supporting and stimulating cross-border cooperation of our defence sector. We are reporting a 30% growth in exports in 2023 compared to the previous two years. This is due to the good quality and competitive price of Bulgarian products and government support.
Bulgarian defence enterprises are innovative, high-tech and competitive. Bulgarian companies actively participate in NATO tenders and its structures. Last year alone, they executed contracts worth more than EUR 40 million for NATO’s two largest agencies – Communications and Information (NCIA) and Support and Procurement (NSPA). These results show that Bulgarian companies can fully meet the EU’s high criteria and expectations.
In order to ensure the competitiveness and sustainability of the defence sector, a new approach to innovation and in particular to the so-called disruptive technologies is needed. There must be closer interaction between the civilian, military, research and innovation communities.
Bulgaria must exploit the advantages already available to our defence industry, which specialises in the production of small arms, ammunition, communication systems, armoured protective technical equipment, optical equipment, etc.