Банкеръ Weekly

Briefs

BULGARIA RATES NINTH IN THE WORLD IN RETURN ON INVESTMENTS

Bulgaria is number nine in the effectiveness of foreign direct investments for 2005 according to the World Investment Report of the United Nations Conference on Trade and Development (UNCTAD). The report, presented at the National Press Club (BTA) on Monday (October 16), showed that foreign investments in our country totalled USD2.223BN in 2005, marking a certain drop from 2004 when they stood at USD3.443BN. Then, however, several privatisation deals were effected in the country (the one for BTC for instance) which considerably influenced the that indicator's growth. According to Neil Buhne, Resident Representative of UN Development Programme in Bulgaria, the increase of greenfield foreign direct investments in 2005 is a success for this country. For comparison, data from the report show that foreign investments in Romania totalled USD.388BN last year, but it was then when our northern neighbour realized big privatisation deals.
In the UNCTAD report Bulgaria scores fourth for 2005 in attracting foreign investments among the ones in Southeast Europe and the former CIS states, following Russia, the Ukraine, and Romania. The entire invested amount in the region of Central and Eastern Europe is USD40BN. Russia attracted USD14.6BN, marking a decrease by BGN15.4BN from 2004. The highest growth was reported in the Ukraine, investments in that country going up from USD1.7BN in 2004 to USD7.8BN last year.
Investments abroad made by countries with economies in a transition period reached USD15BN, of which 87% are accounted for by Russia. About four fifths of the greenfield investments in Southeast Europe and the former CIS republics were made by EU members. They have already launched about three fifths of all new projects. USA's share is 10%-plus, and that of the former CIS - 5%-plus.
Between 2004 and 2005 the share of developed countries in the purchase of companies (both privatisation deals and investments in private firms) rose to 90 per cent. The Netherlands ousted Austria from the top position by acquiring the Ukrainian Kryvorizhstal from Mittal Steel against USD4.8BN. This is the biggest deal in the Post-Soviet environment so far. Austria became the second largest investor in that country by the purchase of Aval Bank from Raiffeisen International against USD1BN, resold in 2006 to Hungary's OTP bank.
Globally, the report marks the highest level of foreign direct investments since 2000 - USD916BN. There has been an upwards trend since 2001.
Foreign investments constitute almost 50% of the Gross Fixed Capital in Bulgaria, but there are still many challenges ahead of this country, connected with its January 2007 accession to the European Union, the report reads. In the 1998 - 2004 period Bulgaria's tailoring industry attracted foreign direct investments of USD226MN. However, attractiveness of that sector due to the low payment of labour will be gradually decreasing with Bulgaria's future EU membership coming near, Mr. Neil Buhne projects.

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