BULGARIA: An Introduction to Corporate/Commercial
Investment Opportunities in Bulgaria
General notes
Practice shows that when assessing actual investment opportunities, investors take into account the specific conditions they find or are provided with in a given country.
Investment opportunities correspond directly to existing general legal frameworks and to the level of enforcement of the rule of law, to the existence of investment zones supported by the State (such as industrial parks and duty-free zones), as well as to the existence and successful implementation of legislation directly supporting investment.
Of course, as in other countries, there are already prioritised areas for investment in Bulgaria, which have been recognised in recent years.
Industrial parks and duty-free zones
In parallel with the development of the necessary legal framework in Bulgaria, which has involved largely harmonising its laws and regulations with those of the rest or the EU, industrial parks and duty-free zones have been very successful in the country. Through them, the business environment has been significantly improved: they provide the opportunity to seamlessly concentrate financial, production and human resources in the modern infrastructure developed, as well as the opportunity to use all the facilities related to planning, permits, technical and organisational conditions.
According to the law, parks must have an area of at least 300 hectares, and when investing in them administrative procedures are significantly shorter. Also, the State helps with elements of the necessary technical infrastructure, reimburses part of the cost of social security contributions for some of the staff, and facilitates the purchase or lease of land (without auction or competition) at tax assessment prices that are much lower than the market ones. To date, 18 industrial parks have been built and are operating.
In addition, six duty-free zones have been built in Bulgaria and they are located not only near border crossing points (Dragoman, Svilengrad) but also in large cities such as Plovdiv, Burgas and Ruse.
In the territory of the duty-free zones, no taxes and duties are charged when carrying out business activities (production, trade, services, warehousing, loading and transport processing of uncustomed goods, banking and insurance activities, etc), while at the same time investors are supported with everything they need, including with finding workers.
Priority sectors for investment
Computer technology
Given the large number of IT specialists in Bulgaria, and their concentration in the IT outsourcing sector (around 30% of IT specialists are involved in outsourcing), the opportunities for the country to become a centre for the development of Industry 4.0 when the EU’s Artificial Intelligence Act is transposed are enormous.
The development of information and telecommunication technologies, digitalisation and the correct use of artificial intelligence provide a huge potential for the development not only of sectors such as mechanical engineering, electronics and electrical engineering, but also of light industry and agriculture, which are also well-represented in Bulgaria.
About 35,000 specialists now work in this sector in over 3,000 companies. which are mainly concentrated in Sofia, Plovdiv, Varna, Burgas and Ruse.
Energy
Given that over the next ten years more than 5,000 MW of coal-fired power generation in Bulgaria must be replaced with renewable energy, green hydrogen and other alternative low-carbon sources of electricity, around EUR30 billion of new investment will be needed.
This is not only a challenge, but also a huge chance for foreign investors to get involved with their experience and capabilities in this field.
Agriculture and food processing industry
The agriculture and food processing sectors, which were previously a traditional part of the Bulgaria economy, are now gaining importance again in view of the growing interest in sustainable and ecological agriculture and food production.
Mechanical engineering and transport equipment
Other priority areas for investment are transport equipment and mechanical engineering, and the production of spare parts for cars, the production of electric cars, electric engines and electric bicycles turned out to be particularly suitable in view of the experience and availability of personnel.
Transport, logistics, healthcare and pharmaceuticals
Transport and logistics should not be overlooked either, as well as healthcare and pharmaceuticals, which have also shown steady growth in recent years.
Bulgaria’s excellent conditions for balneotherapy and the existence of numerous mineral springs significantly support this trend.
As a result of legislative reform, including a successful tax reform and significant privatisations (over 70 % of the nation’s economic activity is now in private hands), GDP in 2022 increased by 300% compared to 2007, growing over this period from BGN56 billion to BGN168 billion, and in 2023 it is expected to reach BGN200 billion.
This growth, in itself, is evidence that Bulgaria is a reliable investment destination.
State support
In accordance with the Investment Promotion Act, the Minister for the Economy issues Class A and Class B certificates, as well as certificates of a “priority investment project”, depending on the size of the investment. The volume of state assistance depends on the type of certificate.
In any event, however, the state provides administrative services within shorter time periods, individual administrative services, easier acquisition of property, financial support for infrastructure and training, as well as partial reimbursement of the social security contributions paid by the employer in respect of workers and employees.
Along with the already mentioned facilities which the state provides in the industrial parks themselves, it allocates a lot of funds to create in advance the best conditions for possible future investors.
The electronic register of industrial parks helps investors to become better oriented in this area.
Concluding remarks
Bulgaria is often described by some observers as a country on the periphery of Europe, which can lead depress interest among foreign investors.
Increasing numbers of entrepreneurs from Europe and the wider world realise that, because Turkey, Ukraine and Moldova are of increasing economic interest for the European Union, and Serbia and North Macedonia also act as a centre of attraction, Bulgaria, especially considering its EU membership, is at the very centre of events, neighbouring as it does other EU member states such as Romania and Greece.
The proactive role of the state in financing the construction of industrial parks and duty-free zones, including with funds from the Recovery and Resilience Plan and additional support from European structural and investment funds, is highlighted as a key positive.
Investors are increasingly taking this into account when looking for the most suitable location.
Therefore, the favourable legal conditions, the consolidation of the rule of law and the proactive support from the state through various facilities are convincing more and more entrepreneurs and investors that Bulgaria, although often underestimated, is an excellent place to invest.
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This article has been condensed. Please see the full version on the Penkov, Markov & Partners website.