Банкеръ Weekly



Nikolai Vassilev, Deputy Premier and Minister of Economy, to the BANKER weeklyMr. Vassilev, now that a year has past since the Government of the National Movement Simeon II (NMSII) took office, the attention of various economic analysts is primarily focused on the progress of two important processes - privatisation and foreign investments. It is curious that the appraisals are diametrically opposed and there are no conservative estimates. Why? - Foreign investments are coming into the country in three ways. The first one is the greenhouse investments. In the last three months of 2001 alone, after the NMSII came into power, these investments reached USD200MN, double the amount in the second quarter of last year. However, I have to admit that the net investments in the first three months of 2002 are comparatively low. But we should bear in mind the adverse impact of the terrorist attacks against the USA on September 11, 2001, which certainly influenced the processes in our economy, too. Neverthelss, I believe that greenhouse investments in Bulgaria for the whole of 2002 won't be less than last year.Proceeds from privatisation is the second way for the attraction of foreign capitals. You know very well there has been no other big divestment deal in Bulgaria after the sale of BULBANK. We did not inherit from the former managerial team of the Privatisation Agency any deal of that scope. We should close four deals this summer and all of them are progressing well. These are the forthcoming sales of the Bulgarian Telecomminications Company (BTC), the State Insurance Institute (DZI), Bulgartabac Holding and Biochim Commercial Bank. Most probably all four of them will be closed with foreign buyers. Thus, the forign investments attracted through privatisation are expected to be considrable in the third quarter of 2002. Proceeds from divestment in the first few months of 2002 exceeded USD100MN but most of the deals were on small enterprises, acquired by local entrepreneurs. This decreased the potential of foreign investments. The capital market is the third way for the attraction of foreign investments.The Government was often criticized that occupying itself with the drafting of the new Privatisation Act and the overall reconstruction of the PA, it practically delayed the divestment process.- I don't share the view that we have deliberately stopped the privatisation. Just the opposite. Have a look at the new law. We put on the table everything slated for sale. Should I ask why the above-mentioned big divestment deals on Biochim, BTC, DZI and Bulgartabac were postponed so many times by the former governments. According to me, we are presently more criticized than we desreve.What in privatisation gratifies you personally?- As a radically thinking minister I believe it is a big mistake that the large Bulgarian companies were not privatized in the last ten years. They should had been sold long ago - in the 1990-1995 period. It's a fact that this did not happen and we are presently handling these deals at a maximum speed. Look at the excellent procedures we held for companies such as Alen Mak, Gorubso-Zlatograd, Pharmachim and some hydroelectric power stations. The list is long, but these are comparatively small enterprises and that is probably why their divestment is rarely mentioned. Three months after the finalization of the big privatisation deals the situation regarding foreign investments in Bulgaria will be quite different.This is wonderful, but you are probably aware that Bulgarian entrepreneurs are not cheering and are discontented mainly with the Government's policy because it does not grant sufficient tax concessions in order to encourage their buisness.- Bulgaria is one of the countries in Europe with the lowest direct taxes. The ceiling of the personal income tax is 28 per cent. The profit tax for companies is 15% plus the municipal tax, and we'll be reducing it in the future. But have you heard a businessman say: Thank you because I'm paying the lowest taxes in Europe. No tax is charged on the capital profits. But again nobody said thanks for that or promised to invest in the stock exchange because he won't be paying taxes. Bulgaria is still among the few countries with a zero tax on the interest yields and this won't be changed. The Finance Ministry has also proposed to lift the tax on the profit of investment companies as of January 1, 2003.

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