Business in Bulgaria

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If you are considering Bulgaria as a potential destination for your investments, you might be interested in checking out the current report providing useful information about doing business in Bulgaria.

The report is written by William Sullivan, a Fulbright Scholar in Bulgaria during 2009-2010, who was formerly Program Coordinator and Research Associate at the Center for Strategic and International Studies.


In the summer of 2009, the head of a prominent public relations consulting firm in Brussels told me that he had once tried to work with Bulgaria in the 1990s. After two years, however, the leadership of the firm concluded that Bulgaria was not yet ready to seriously engage with Europe, and they abandoned their attempts to work with the country. Since that time, Bulgaria has gained European Union membership while the same public relations head has gone on to successfully represent governmentlevel interests of other Eastern European states that are not EU members to this day. I was curious about this disconnect. Was this a function of the time that had passed and the progress that Bulgaria had made since the 1990s? Had this firm simply failed to read the tea leaves properly on Bulgaria? As I looked more deeply into the issue, however, it became clear that the story of Bulgaria in the late 20th and early 21st centuries is not so straightforward. Transitioning politically, geographically prone to conflict, new to capitalism and rife with corruption and organized crime, post-communist Bulgaria seemed to be a new Wild West – with all the same risk, but perhaps the same rewards, too.

I headed to Bulgaria in the fall of 2009 to carry out an assessment of the country as an investment destination and to explore some of the many contradictions that Bulgaria seemed to present. The real effects of the global economic crisis were just reaching Bulgaria at about the same time that I arrived in August 2009. Bulgaria was just coming off of about five years of unprecedented economic growth as cash that was piling up in leading economies from Western Europe, Russia, the United States, Japan and beyond looked for places to go. Bulgaria’s trusted currency peg (to the euro), low corporate taxes and permissive operating environment attracted billions of dollars in new investment throughout this period. By the fall of 2008, however, the party was over in America, and most of the rest of the world was soon to follow. The socialist party in power in Bulgaria at the time repeatedly assured their voting public that Bulgaria, somehow, was “immune” to the crisis, so not to worry. The writing was on the wall, however, as exports began to fall, liquidity began to dry up and Bulgaria’s expanding middle class began to recognize – acutely – that the crisis had reached their shores. The socialists fell from power on July 5 2009, bringing the pro-Europe and self-styled reformist “GERB” party to power. It would now be their job to manage the crisis while fulfilling campaign promises to route out corruption and tackle crime in the Balkan nation.

Yet as Warren Buffet once said, “It's only when the tide goes out that you learn who's been swimming naked.” Likewise, the macro economic picture in late 2009 and early 2010 – while disastrous for businesses and individuals in the country – presented a rare opportunity to look under the hood of Bulgaria’s political and economic systems during a painful moment of truth, as the effects of the crisisforced a level of transparency not seen in Bulgaria for years. It was in this environment that I set out to explore the contradictions between the Bulgaria that was “not yet ready to talk to Europe” and the Bulgaria that was already formally integrating into Europe’s political and economic structures; between the Bulgaria deemed by various development watchdogs and corruption-watchers as an average, atbest, place to do business and the Bulgaria that made the unofficial short-list of “it” places to invest your money during the go-go days between 2003 and 2008. In the process, I hoped to uncover a narrative that might serve to clarify the country’s profile as a destination for investment and to iron out at least some of the contradictions that persisted.

I began this process, before and after arriving in Bulgaria, with a series of interviews with high-level professionals with business in, or pertaining to, Bulgaria: CEOs and country managers at firms investing in Bulgaria; EU staff involved with Bulgaria’s accession and integration processes; consultants working with European and Bulgarian interests in Sofia, Brussels, Washington and elsewhere; Bulgarian think tank personnel, academics and policy practitioners; Bulgarian industrialists and entrepreneurs; and various Bulgarian professionals involved in the process of securing and applying EU funds in the country. From these interviews, I was able to establish a baseline of what the biggest issues are today for business in Bulgaria. I stress-tested these findings with the necessary research and plowed through current and archival news coverage of events to flesh out the broader themes uncovered during my interviews. The resulting report examines Bulgaria as a business destination by dividing the country intothree broad categories: culture, climate and outlook. Within these categories, I attempt to comprehensively cover the themes that I have come to understand as vital considerations for anyone thinking of investing their money in Bulgaria.

If you are reading this introduction, it is likely because you are someone who is either already invested in Bulgaria, is considering investing in Bulgaria or is at least interested in the notion of Bulgaria as an investment destination. As such, this report is intended to serve as a primer on what you have ahead of you, should you choose to move forward. This report looks at where Bulgaria is today – and how it got there – as well as some of the key challenges that the country will face ahead. Driven by journalistic recounting of events, enhanced with first-hand anecdotes and supported by the relevant data, the following sections seek a narrative intended to facilitate a relaxed read for the actively interested audience. The aim of this report is to leave the reader with a more inherent understanding of the realties and challenges that investors should expect to face when placing their money in Bulgaria, and with a stronger framework for tackling the important decisions that lie ahead.

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