Sofia's Choice of Many
Business Park Sofia, a 35- building development in the Bulgarian capital city, is taking center stage in the country's FDI efforts, most recently attracting Hewlett- Packard's 1,000- job Global Delivery Support Center. Bulgaria beat out Romania, Slovakia and Russia for the project, which started up in June 2006 in 108,000 sq. ft. (10,000 sq. m.).
In October, automotive and services company Johnson Controls announced at the grand opening of its new R&D Center in Sofia that it plans to add another 150 people to the 320 already employed there. And in November, finance and accounting outsourcing firm Outsource Partners International announced its European service center project in Sofia, which will employ 125 people delivering services in at least nine languages. Nearly 80 percent of the university- educated population speaks at least one foreign language, while nearly 25 percent speak two or more foreign languages.
"While Bulgaria boasts an advanced education system and encourages the study of multiple languages at the university level, the cost of doing business and employing talented people is still relatively low," said Bruce Thew, European president of Outsource Partners International. "Given this unique situation, our clients are able to realize costs savings and efficiencies without sacrificing quality."
Among the country's other attributes: a corporate tax rate that dipped from 23.5 percent in 2003 to 15 percent in 2005; five- year average GDP growth of 4.9 percent; and a climbing credit rating. No wonder FDI rose from US$1.3 billion in 2002 to $2.9 billion in 2005, while unemployment dipped from 16.3 percent to 10.6 percent in that span. That has meant labor cost growth of 2.33 percent between 2004 and 2006, but still well within the affordable range compared to its European neighbors, even with an employer contribution to employee benefits that's between 23.6 percent and 24.3 percent. Top- level incentives and preferential treatments under the country's Investment Encouragement Law are achievable with an investment amount of $48 million or greater. According to the Bulgarian National Bank, greenfield and expansion investment in 2006 through September had already reached $3.5 billion.
Those first- class incentives may be sought now more than ever: In December, the Bulgarian parliament voted to cut the country's corporate tax rate to 10 percent beginning January 1, 2007, after officials determined that the country's salutary budget surplus allowed it to go lower than the planned 12 percent. The new rate will be the lowest in the EU (along with Cyprus) when the nation joins later this year, a full six points lower than fellow EU accession country Romania's rate of 16 percent.
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