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Greek investments in Bulgaria soar since 2005

Saturday, Mar 29, 2008

Globul, Postbank (now Eurobank EFG Bulgaria), United Bulgarian Bank, Delta, Chipita and Thrace, Coca-Cola HBC Bulgaria, Global Finance, Germanos, Intralot, Intracom. This is just a snapshot of Greek landmark investments in Bulgaria. Spanning finance, telecommunications, food and beverages, apparel and paper through to retail trade, they represent sectors in which Greece is seeking an international presence. All attest to the diversity of business permeation between the two neighbours.
Probably because of its proximity and similar business mentality, Bulgaria is a natural point of interest to Greece. This interest has risen sharply since 2005 when Bulgaria’s accession to Nato and forthcoming EU membership started sounding investment security bells to Greek business.
In a sign of growing confidence in Bulgaria’s economic potential, Greece also set up the Hellenic Business Council in Bulgaria (NBCBG) in 2005. This private non-profit organisation, which aims to intensify Bulgarian-Greek business ties and investments, has on its board Greek-born CEOs running companies and financial institutions in Bulgaria and about 50 Greek-owned corporate members.
Close scrutiny shows that Greek representation in Bulgaria comprises Greek companies, both small and large, and the Greek arms of international giants. Bilateral trade and foreign direct investment (FDI) over the past three years also attest to Greek companies’ robust entry in Bulgaria.
Greece has remained Bulgaria’s second-largest partner in South Eastern Europe after Turkey and the third-largest EU partner after Germany and Italy. Collectively, the three countries hold more than 60 per cent of Bulgaria’s foreign trade turnover, according to preliminary figures from the National Statistical Institute (NSI) for 2007.
Bulgaria exported goods worth 2.39 billion leva (in FOB prices) in the 12 months to December 2007, a 13.8 per cent year-on-year increase from 2.1 billion leva. Greek imports to Bulgaria during the same period totalled 2.65 billion leva (in CIF prices), up 16.5 per cent on the year from 2.28 billion leva, the NSI said.
Principal export items remained metals such as copper and steel, wheat, apparel (knitwear) and steel, whereas the main imports consisted of metals, apparel and cars, motorbikes and bicycles.
The investment figures draw an analogous-to-trade chart.
Last year, Greek FDI in Bulgaria totalled 543.0 million euro, 512.4 million euro in 2006 and 324.2 million euro in 2005, according to statistics from Bulgarian National Bank (BNB).
The three-year investment bonanza comes after a decade of cautious Greek encroachment into the Bulgarian market. Yet, even if cautious, Greece remained one of the countries vesting the highest trust in Bulgaria. With a total investment backlog in excess of two billion euro, Greece ranks as the fourth-largest investor in Bulgaria, lagging only behind Austria, the Netherlands and the UK.
Since, during the same time period, Bulgaria became a hotspot for speculative investors (more than 60 per cent of FDI last year went to real estate and tourism) and Greece falls into the category of long-term investors, the uptick of Greek FDI did not have a substantive effect on the overall FDI structure.
For years, Greece’s share of overall FDI has remained steady at eight to nine per cent (8.89 per cent in 2007). Nonetheless, its share in investments related to new technologies and expertise has soared in recent years, local analysts said, adding that Greek investment mainly fell into that 40 (non-speculative) per cent of overall investments. Bulgaria’s southern neighbour invests primarily in machinery and equipment and finances brand/product launches of its subsidiaries in the services sector. This means that Greece – while busy building its business outreach in Bulgaria – has had a solid impact on its neighbour’s effort to build a sustainable economy. In doing so, the country raises industry standards, creates new jobs and helps Bulgaria catch up with other EU economies, according to sources from The Sofia Echo.
Yet Greek investment in Bulgaria has not always been so smooth. A privatisation attempt by Greece’s largest electricity utility, the state-run Public Corporation of Greece (PPC), met a sticky end in Bulgaria. In 2004, PPC emerged winner in a tender to buy Bobov Dol thermal power plant. Soon afterwards, however, Bulgaria’s Privatisation Agency (PA) recalled the privatisation procedure as flawed. Though the PPC is still contesting this decision in court, its chances of winning the litigation are slim. While the PA ventured to re-sell Bobov Dol a fortnight ago, the PPC responded by shelving its investment plans for Bulgaria. PPC told top executives at Maritsa-Iztok, another Bulgarian lignite coal extraction and power producing complex, it would not line up as an investor of a new power facility in the complex, but would remain a coal buyer. Yet analysts claim that PPC’s case is more of an exception than a rule, stemming from local factors rather than from any general Bulgarian reluctance to do business with Greece.
Bulgaria’s investments in Greece are on a smaller scale but have also been rising in the past three years. Dimitrios Zofas, the first economic and commercial affairs adviser with the Greek embassy in Bulgaria, told Pari daily that Bulgarians were primarily interested in speculative purchases of land and real estate in northern Greece as well as in financial instruments traded on the Athens stock exchange. He also believes that Bulgaria will follow Greece’s pattern in Bulgaria and will soon venture into investments in other sectors as well.
According to local experts, Bulgarian-Greek business ties are yet to reach their peak. The steady increase in bilateral trade and investments over the past few years certainly indicates an upward trend.

Source: www.sofiaecho.com