SOFIA (Reuters) - Bulgaria aims to attract 1.9 billion euros ($2.1 billion) in foreign direct investment this year, its investment promotion agency said on Monday, maintaining last year’s 20 percent growth rate but still well below levels seen before the global crisis.
“Our goal is to keep the growth rate achieved in 2015,” Stamen Yanev, head of the InvestBulgaria Agency, said in an interview in Sofia for the Reuters Eastern Europe Investment Summit. “It means we can expect up to 1.9 million euros in foreign direct investment (FDI) this year.”
Bulgaria, the EU’s poorest country, drew 1.6 billion euros in FDI in 2015, up 22.5 percent from 2014 but a far cry from 6-7 billion seen before the global financial crisis in 2008-09 put an end to a construction and real estate boom.
Yanev said 20-25 percent annual growth in investment was a realistic goal and would boost economic growth and help lift living standards in Bulgaria to closer to those of wealthier western European countries.
Yanev said InvestBulgaria has 21 projects in the pipeline that have been agreed, mainly car parts producers and outsourcing companies, and hoped this new investment will create 7,200 jobs in the next three years.
The government also expects strong foreign investor interest in a tender to operate Sofia airport, which it hopes can be sealed this year and bring in about 500 million levs ($285 million) as upfront payment.
In recent years, cheap labor, low taxes and an educated workforce in Bulgaria have encouraged dozens of car parts producers and IT and business outsourcing companies to set up in the Balkan country, creating thousands of jobs.
Last month, U.S. car parts producer Sensata Technologies (ST.N) opened its third plant in Bulgaria. In March, German lighting manufacturer Osram Licht (OSRn.DE) began construction of a new factory and warehouse, while Coca-Cola Hellenic Bottling CCHB.UL plans to open a new plant in the country.
Chinese companies are considering investments in luxury property developments, an airport and a metals mine in Bulgaria that could amount to more than 2 billion euros ($2.2 bln) in total, an advisor to the projects told Reuters on Monday.
Still, FDI dropped 37 percent in the first three months of the year from a year ago, central bank data showed and investors have warned that Bulgaria needs to carry out judicial reforms to ensure rule of law and cut corruption and red tape that are deterring inflows.
“Bulgaria has a lot of strong points - political stability, its membership in the European Union, the strategic geographical position, low tax and cheap labor. But at the same time we have to challenge the inefficient bureaucracy,” Yanev said.
The average monthly salary in Bulgaria is about 480 euros, the lowest in the 28-member EU and many Bulgarians have left the country to study abroad and seek better pay.
Bulgaria expects its economic growth to slow to about 2.-2.5 percent this year from 3 percent in 2015, mainly due to an expected drop in EU-funded investment and a decline in exports to key markets such as Turkey and Russia.
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Reporting by Angel Krasimirov; Editing by Susan Fenton