VZCZCXYZ0002
RR RUEHWEB

DE RUEHSF #0181/01 0440944
ZNR UUUUU ZZH
R 130944Z FEB 07
FM AMEMBASSY SOFIA
TO RUEHC/SECSTATE WASHDC 3191
INFO RUCPDOC/USDOC WASHDC
RUCPCIM/CIMS NTDB WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC

UNCLAS SOFIA 000181 
 
SIPDIS 
 
STATE FOR OFFICE OF INVESTMENT AFFAIRS EB/IFD/OIA AND USTR 
 
SIPDIS 
 
E.O. 12958:  N/A 
TAGS: EINV EFIN ELAB ETRD KTDB OPIC USTR BU
SUBJECT: BULGARIA 2007 INVESTMENT CLIMATE STATEMENT 
 
Ref:  05 STATE 202943 
 
¶1.  Bulgaria - 2007 Investment Climate Statement 
 
------------------------------ 
Openness to Foreign Investment 
------------------------------ 
 
Bulgaria has a liberal foreign investment regime; a top 
government priority is to attract foreign investment, especially 
American.  The government focuses on developing promising sectors 
of the economy for foreign investment, including energy, 
information technology, transportation, telecommunications, and 
agriculture.  Bulgaria provides considerable incentives for job 
creation.  Many municipalities are prepared to grant concessions 
or other favorable treatment for significant investments. 
Bulgaria has a well-educated workforce, low labor costs, and its 
geographic position places it at the crossroads of Europe, the 
Middle East, and the CIS.  Bulgaria joined NATO in April 2004 and 
joined the EU on January 1, 2007. 
 
Investment Trends and Policies 
------------------------------ 
 
Continuing economic progress and political stability have 
enhanced Bulgaria's ability to attract respected international 
investors.  The precautionary Stand-by Arrangement with the IMF, 
which expires in March 2007, signaled to foreign investors that 
the Bulgarian government would pursue a responsible economic 
policy in the run-up to EU membership.  Bulgaria's international 
credit rating is stable and improving, reflecting the country's 
positive economic prospects and prudent fiscal policies. 
 
The Investment Promotion Act, last amended in August 2006, 
stipulates equal treatment of foreign and domestic investors.  It 
creates conditions for improved administrative services and 
includes an investment incentive package.  The law encourages 
implementation of investment projects over a period of up to 
three years.  The law explicitly recognizes intellectual property 
and securities as a foreign investment. 
 
Common Forms of Investment 
--------------------------- 
 
The most common type of organization for foreign investors is a 
limited liability company.  Other typical forms are join stock 
companies, joint enterprises, business asociations, general and 
limited partnerships, and ole proprietorships. 
 
The main controlling bodie of law are: the 1991 Commercial Code, 
which reglates commercial and company law, including the 
reation and rights of legal entities, and the 1951Law on 
Obligations and Contracts, which regulatescivi transactions. 
These laws are deemed generaly adequate and neither limits 
foreign participaion in legal entities. 
 
The 2003 Law on Special urpose Investment Companies allows for 
public inestment companies (SPIC) in real estate and 
receiables.  Since a SPIC is considered a pass-through 
structure, at least 90 percent of its net income ust be 
distributed to shareholders, who are taxe on the dividends 
received.  Prospective U.S. investors should consult appropriate 
legal counsel for up-to-date legal information and conduct due 
diligence before making any obligations. 
 
Investment Barriers 
-------------------- 
 
Problems most often encountered by foreign investors in Bulgaria 
are: government bureaucracy; poor infrastructure; corruption; 
frequent changes in the legal framework; low domestic purchasing 
power; and a protracted privatization process.  In addition, a 
weak judicial system limits investor confidence in the courts' 
ability to enforce ownership and shareholders rights, contracts, 
and intellectual property rights. 
 
EU accession requirements have led to the adoption of a 
constitutional amendment which will allow EU citizens and 
entities to acquire real property, while all other foreigners 
will be able to do so only on the basis of an international 
agreement ratified by the Bulgarian Parliament, thereby favoring 
EU investors over those from the US.  However, there are no legal 
restrictions against acquisition of land by locally registered 
companies with majority foreign participation. 
 
Privatization 
-------------- 
 
The Privatization Agency (PA) administers the privatization of 
 
all state-owned companies.  The privatization methods include: 
public auction, public tender and stock exchange.  Foreign 
companies, including state-owned ones, may purchase Bulgarian 
state-owned firms.  The government's stated privatization goals 
are to establish transparent, quick, and effective privatization 
procedures, providing for equal treatment of all investors.  The 
program is intended to make the economy more efficient by 
divesting state-owned enterprises and to cover the current 
account deficit with privatization revenues. 
 
Three major privatization deals were concluded in 2006: the sale 
of Boyana Film Studios, Bulgaria Air, Yuri Gagarin BT tobacco 
plant and Thermo Power Plant in Varna.  The government's 
privatization will continue though most of the significant assets 
available for privatization have already been transferred to the 
private sector 
 
The 2002 Privatization and Post-privatization Act instituted a 
Post-privatization Control Agency under the authority of the 
Council of Ministers tasked to oversee the implementation of 
privatization contracts.  This body will attempt to ensure that 
non-price privatization commitments (employee retention, 
technology transfer, environmental liability and investment) in 
the privatization selection criteria are honored.  In addition, 
creditors are no longer required to claim their receivables 
within six months from the start of the privatization.  While the 
government maintains that the six-month period had discriminated 
between creditors, the new policy could endanger the successful 
development of privatized companies and lead to lower 
privatization prices.  However, no such problems have yet 
appeared. 
 
Concessions 
------------ 
 
Under the new 2006 Law on Concessions, the state is authorized, 
on the basis of a concession agreement, to grant private 
investors a partial monopoly.  Concessions are awarded only on 
central and/or local government property.  While the law does not 
mention specific activities for which concessions can be granted, 
it determines three main subject categories: construction, 
services, and mining and exploration.  Potential fields for 
concessions may therefore include the construction of roads, 
ports and airports, power generation and transmission, mining, 
petroleum exploration/drilling, telecommunications, forests and 
parks, beaches, and nuclear installations. 
 
Concessions are awarded on the basis of a tender and are issued 
for up to 35 years.  The concession period may not be extended 
beyond this time limit.  The new Concessions Law permits Qbuild- 
operate-transfer" deals, giving priority for mineral exploitation 
to the holders of exploration licenses, and reconciles 
conflicting procedures for privatization and concession. 
 
------------------------------------ 
¶2.  Conversion and Transfer Policies 
------------------------------------- 
 
In 1999, Bulgaria replaced much of its outdated and fragmented 
foreign currency legislation and liberalized current 
international transactions in accordance with IMF Article VIII 
obligations.  Under amendments to the 1999 Foreign Currency Act, 
approved by Parliament in 2003, anyone may take up to BGN 25,000 
or its foreign exchange equivalent out of the country without 
documentation.  However, the export of between BGN 8,000 and BGN 
25,000 or its foreign exchange equivalent must be declared at 
customs.  Export of amounts larger than BGN 25,000 must be 
accompanied by a declaration about the source of these funds and 
supported by documents certifying that the person does not owe 
taxes.  No tax certificate is required for foreigners exporting 
the cash equivalent of BGN 25,000 or greater provided the amount 
is equal to the amount declared (or less) when imported.  The 
import of more than BGN 8,000 or its foreign exchange equivalent 
must be declared at customs. 
 
The law also stipulates that payments abroad may be executed only 
through bank transfers.  Transfers over BGN 25,000 for current 
international payments (imports of goods and services, 
transportation, interest and principal payments, insurance, 
training, medical treatment, and other purposes defined in 
Bulgarian regulations) must be supported by documentation showing 
the need and purpose of such payments. 
 
---------------------------------- 
¶3.  Expropriation and Compensation 
----------------------------------- 
 
According to Article 17 of the Bulgarian Constitution, private 
real property is protected by law.  Depending upon the purpose, 
expropriation actions may be undertaken by the Council of 
Ministers or the regional Governor, provided that the owner is 
adequately compensated.  Monetary compensation at market price is 
the primary method.  No tax is levied on the expropriation 
transaction.  Expropriation actions of the Council of Ministers 
can be appealed directly to the Supreme Court on the basis of the 
expropriation action, the property appraisal, or the size of 
compensation.   Regional Governor's expropriation actions can be 
appealed to the local court.  In its Bilateral Investment Treaty 
(BIT) with the U.S., Bulgaria committed itself to international 
arbitration in the event of expropriation and other investment 
disputes. 
 
---------------------- 
¶4.  Dispute Settlement 
---------------------- 
 
 
The Judicial System. 
 
Bulgaria's 1991 Constitution serves as the foundation of the 
legal system and creates an independent judicial branch. However, 
the judiciary has been suffering from systematic flaws, serious 
backlog and opaque procedures that hamper the swift and fair 
administering of justice, In 2002, the Bulgarian Parliament 
passed a series of amendments to the Judicial Systems Act aimed 
at improving the quality of the judiciary, increasing the 
efficacy of the court system, and preventing corruption in the 
justice system.  The Constitutional Court declared most of the 
amendments unconstitutional in December 2002.  As a result, 
judicial reform in Bulgaria has been delayed and many key issues 
remained un-addressed. 
 
In a new effort to strengthen judicial independence and 
accountability the Parliament passed in 2003 amendments to the 
Constitution which limited the immunity of the magistrates, 
extended the period for getting tenure, and introduced a 5-year 
term in office for judicial heads.  Further Constitutional 
changes, aimed at implementing judicial reform, were passed in 
March 2006, although, concerns remained that some of the 
provisions' ambiguity might impact the independence of the 
judiciary.  Parliament is currently considering another set of 
constitutional revisions as well as a new Judicial Systems Act, 
intended to increase further the efficiency of the court system 
and help prevent judicial corruption.  Corruption remains a 
serious problem with public opinion polls indicating that bribes 
are most commonly paid in the justice sector. 
 
There are three levels of courts.  117 regional courts exercise 
jurisdiction over administrative, civil, and criminal cases. 
Above them, 29 district courts (including the Sofia City Court) 
have original jurisdiction in civil cases where claims exceed 
10,000 BGN, in serious criminal cases, and in other cases as 
provided by law.  The district courts are also courts of 
appellate review for regional court decisions.  The five 
appellate courts may review the decisions of the district courts. 
On the highest level are the Supreme Court of Cassation and the 
Supreme Administrative Court.  On issues of law, the Supreme 
Court of Cassation has appellate jurisdiction over all civil 
cases involving claims over 5,000 BGN and criminal cases.  The 
Supreme Administrative Court rules on the legality of acts by the 
Council of Ministers and the ministries.  The Supreme Courts hear 
cases in three-judge panels, whose decisions may be appealed to a 
five-judge panel of the same court.  Decisions by the five-judge 
panels are final and binding. 
 
The Constitutional Court is not integrated into the rest of the 
judiciary.  It issues final interpretations of the constitution, 
rules on constitutional challenges to laws and acts, rules on 
international agreements prior to Parliamentary ratification, and 
reviews domestic laws to determine their consistency with 
international legal norms. 
 
Bulgarian law provides for jurors only in criminal cases.  Under 
Bulgarian procedural law, first-instance civil cases are brought 
before one judge in the regional or the district court, depending 
on the case.  Administrative sanctions may be appealed to the 
regional courts and one judge reviews such appeals. 
Administrative acts are subject to administrative and court 
appeal. The new Administrative Procedure Code, adopted in April 
2006, introduced the establishment of 29 courts throughout the 
country specialized in reviewing appeals of administrative acts. 
 
Bankruptcy 
 
The 1994 Commercial Code Chapter on Bankruptcy provides for 
reorganization or rehabilitation of a legal entity, attempts to 
maximize asset recovery, and provides for fair and equal 
distribution among all creditors.  The law applies to all 
commercial entities, except public monopolies or state-owned 
companies established by a special law.  Bank bankruptcies are 
regulated under the Bank Bankruptcy Act, while the 1996 Insurance 
Act regulates insurance company failures. 
 
Under Part IV of the Commercial Code, the debtor or creditors can 
initiate bankruptcy proceedings.  The debtor must declare 
bankruptcy within 30 days of becoming insolvent.  Once insolvency 
is determined, the court appoints an interim trustee to represent 
and manage the company, take inventory of property and assets, 
identify and convene the creditors, and develop a recovery plan. 
At the first meeting of the creditors a trustee is nominated; 
usually this is just a reaffirmation of the court appointed 
trustee. 
 
Non-performance of a money obligation must be adjudicated (res 
judicata) before the bankruptcy court can determine whether the 
debtor is insolvent.  Additionally, amendments passed in 2003 add 
a presumption of insolvency when the debtor is unable to perform 
an executable obligation, has suspended all payments or when the 
debtor can only pay the claims of certain creditors. 
 
Creditors must declare all debts owed to them within one month of 
the start of bankruptcy proceedings.  The trustee then has seven 
days to compile a list of debts.  A rehabilitation plan or a 
scheme of distribution (in cases of liquidation) must be proposed 
no later than a month after the date on which the court approves 
the list of debts.  The court must grant approval of the plan by 
the creditors within seven days. After creditors' approval the 
court endorses the plan and terminates the bankruptcy proceeding. 
The lack of trained trustees has been a problem in the past.  The 
June 2003 amendments provided for examinations for individuals 
applying to become trustees and obliged the Ministers of Justice 
and Economy to organize annual training courses for trustees. A 
Regulation on the procedure for appointment, qualification and 
control over the trustees, developed by the Ministries of 
Justice, Economy and Finance was published in June 2005. 
 
The methods of liquidating assets were also revised by the June 
2003 amendments.  The main objective was to establish a legal 
framework for selling assets that accounts for the character of 
bankruptcy proceedings, thus avoiding the need to apply the Civil 
Procedure Code.  The new regime includes rules requiring a 
greater degree of publicity for asset sales.  The amendments 
limited the rights to appeal judicial decisions made during 
bankruptcy proceedings. 
 
Execution of Judgments 
----------------------- 
 
To execute judgments, a final ruling must be obtained. The court 
of first instance must then be petitioned for a writ of execution 
(based on the judgment).  On the basis of the writ of execution, 
a specialized category of professionals, execution agents, seize 
the assets or ensure the performance of the ordered action.  In 
practice, Bulgarian and foreign observers caution that the 
proceedings for the execution of judgments and other enforceable 
claims under the Code of Civil Procedure remain slow and 
unpredictable.  A new draft of Civil Procedure Code is currently 
being debated in Parliament, which should address these 
deficiencies. 
 
Also, the civil servants who are currently responsible for 
carrying out execution are viewed as extremely inefficient. Thus, 
problems are procedural, as well as systemic. In May 2005, 
Bulgaria addressed the systemic issues by adopting the Private 
Execution Agents Act, which created a profession of private 
execution agents to parallel the state one. Hopes are that these 
private professionals will actively seek to protect the 
creditor's interest. The new profession became operational in 
2006 though it has so far been unable to effectively address the 
current problems. In addition, procedural impediments to 
execution of judgments still remain to be addressed through 
amendments to the Civil Procedure Code. 
 
Foreign judgments can be executed in Bulgaria.  Execution depends 
on reciprocity, as well as bilateral or multilateral agreements, 
as determined by an official list maintained by the Ministry of 
Justice.  The U.S. does not currently have reciprocity with 
Bulgaria; so Bulgarian courts are not obliged to honor decisions 
of U.S. courts.  All foreign judgments are handled by the Sofia 
City Court, which must determine that the judgment does not 
violate public decrees, standards, or morals before it can be 
executed.  There are also cases defined by the Civil Procedure 
Code (certain real estate issues and Bulgarian precedents), in 
which judgments cannot be executed even if they conform to 
Bulgarian laws and morals. 
 
International Arbitration 
-------------------------- 
 
Pursuant to its Bilateral Investment Treaty (BIT) with the United 
States, Bulgaria has committed to a range of dispute settlement 
procedures starting with notification and consultations. Bulgaria 
accepts binding international arbitration in disputes with 
foreign investors. 
 
The most experienced arbitration institution in Bulgaria is the 
Arbitration Court (AC) of the Bulgarian Chamber of Commerce and 
Industry (BCCI). Established more than 110 years ago, the AC had 
been competent to hear civil disputes between legal persons at 
least one of them being seated outside Bulgaria.  It began to act 
as a voluntary arbitration court between natural and/or legal 
persons domiciled, respectively seated in Bulgaria since 1989. 
 
Arbitration is regulated by the 1988 Law on International 
Commercial Arbitration, which complies with the United Nations 
Commission on International Trade Law (UNCITRAL) Model Law. 
According to the Code of Civil Procedure not all disputes may be 
resolved through arbitration.  Thus, disputes regarding rights 
over real estates situated in the country or individual labor 
disputes may only be heard by the courts.  Additionally, under 
the Code of Private International Law of 2005, Bulgarian courts 
have exclusive competence over industrial property disputes 
regarding patents issued in Bulgaria. 
 
As regards arbitration clauses selecting a foreign court of 
arbitration, the Code of Civil Procedure mandates that these 
clauses would only be admissible if at least one of the parties 
has its seat or residence abroad.  As a result, foreign-owned, 
Bulgarian-registered companies having a dispute with a Bulgarian 
entity can only have arbitration in Bulgaria.  However, under the 
Law on the International Commercial Arbitration, the arbitrator 
himself could be a foreign person.  Under the same act, the 
parties can agree on the language to be used in the arbitration 
proceedings.  Arbitral awards are enforced through the judicial 
system.  The party must petition the Sofia City Court for a writ 
of execution.  Having obtained a writ however, the creditor needs 
then to execute the award using the general framework for 
execution of judgments in the country, which, as discussed above, 
is rather inefficient. Foreclosure proceedings may also be 
initiated. 
 
Bulgaria is a member of the 1958 New York Convention on the 
Recognition and Enforcement of Foreign Arbitral Awards and the 
1961 European Convention on International Commercial 
Arbitration.  Bulgaria is also a signatory of the International 
Center for Settlement of Investment Disputes (ICSID) convention 
and the Convention on the Settlement of Investment Disputes 
between States and Nationals of Other States.   There is a Court 
of Arbitration -- an ADR center for domestic business disputes -- 
at the Bulgarian Industrial Association (BIA). 
 
Mediation 
--------- 
 
Businesses wishing to use mediation to solve their disputes in 
Bulgaria may find it difficult to locate experienced mediators. 
Mediation as a practice has only recently begun to develop in the 
country following the adoption of the Mediation Act in the end of 
¶2004. BCCI and the American Chamber of Commerce (AmCham) 
responded promptly by opening commercial mediation centers.  The 
mediators at these centers have been trained with USAID 
assistance. 
 
------------------------------------------- 
¶5.  Performance Requirements and Incentives 
-------------------------------------------- 
 
Bulgaria does not impose export performance or local content 
requirements as a condition for establishing, maintaining, or 
increasing an investment.  For most categories of expatriate 
personnel from countries outside the EU a work permit is 
required.  Residence permits are often difficult to obtain.  A 
1:10 ratio requirement between foreign, non-EU residents and 
Bulgarian employees is applied.  A June 1999 law regulating 
gambling imposes license requirements on foreigners organizing 
games of chance. 
 
The Invest Bulgaria Agency (IBA) (www.investbg.government.bg), 
the government's coordinating body for investment, provides 
information services, individual administrative services and 
assessment of qualification to receive investment incentives. 
First-class investments (investments over 70 million BGN, about 
USD 47 million) are deemed to be priority investment projects. 
At the request of investors receiving first-class investment 
certificates, IBA can recommend that the competent authorities 
grant them free real estate (either state or municipal property). 
For first-class investments, the Council of Ministers may provide 
state financing for critical infrastructure deemed necessary for 
the investment plan's implementation.  Additionally, IBA 
represents first and second-class investors (investments of USD 
27 - 47 million) before all central and territorial executive 
authorities and the local self-government authorities, and 
processes all administrative documents.  Third-class investors 
(investments of USD 6.7 Q 27 million) receive customized 
information services. 
 
The government policy for promotion of investment is not 
applicable to banks and other financial institutions, insurance 
companies, investment companies, companies with special 
investment purpose, pension and health insurance companies, 
gambling companies, or investments made pursuant to the 
Privatization Law.  Under the latest draft amendments to the law, 
real estate and tourism sectors are also excluded from 
government's investment promotion policies. 
 
In 2003, the GOB introduced tax incentives for investments in 
regions with high unemployment.  VAT exemption on imports for 
investment projects over 10 million BGN (about USD 6.65 million), 
which was introduced in 2004, is still in effect for non-EU 
companies. 
 
--------------------------------------------- --- 
¶6.  Right to Private Ownership and Establishment 
--------------------------------------------- --- 
 
The Constitution (Article 19) states that the Bulgarian economy 
"shall be based on free economic initiative."  Private entities 
can establish and own business enterprises engaging in any 
profit-making activities, unless expressly prohibited by law. 
Bulgaria's Commercial Code guarantees and regulates the free 
establishment, acquisition, and disposition of private business 
enterprises.  Competitive equality is the standard applied to 
private enterprises in competition with public enterprises with 
respect to access to markets, credit, and other business 
operations, such as licenses and supplies. 
 
--------------------------------- 
¶7.  Protection of Property Rights 
---------------------------------- 
 
Bulgarian law protects the acquisition and disposition of 
property rights.  In practice, the protection of property rights 
is subject to difficulties of varying degrees.  Although 
Bulgarian Intellectual Property Rights (IPR) legislation is 
generally adequate - and in some cases stronger than in other EU 
countries - with modern patent and copyright laws and criminal 
penalties for copyright infringement, industry representatives 
believe effective IPR protection requires stronger enforcement, 
including stricter penalties for offenders.  In 2006, a major 
revision of the IPR-related legal framework was made.  The Law on 
Copyright and Related Rights, the Law on Patents and Registration 
of Utility Models, the Law on Marks and Geographical Indications, 
the Law on Industrial Design and the Penal Code were all amended 
or supplemented to harmonize with international standards.  As a 
major step toward improving the work of the judiciary, a 
completely new Penal Procedure Code was adopted by Parliament in 
2006, while amendments to the Constitution are still being 
considered.  The strongly criticized GOB Decree on the Measures 
for Protection of IPRs was replaced by EU Regulation 1383/2003 
(customs regulation) and is now being directly applied. 
 
Additionally, the government still lacks sufficient institutional 
capacity, coordination, and in some cases, the will to address 
effectively major enforcement problems, especially in combating 
and prosecuting organized crime groups.  To improve the 
coordination among institutions and push for a more proactive 
dialogue with the private sector, in January 2006 an inter- 
ministerial Council for Protection of IPRs was set up.  The 
Council has since initiated and supported most of the amendments 
to the IPR-related legislation, and promoted better inter- 
governmental coordination and outreach to industry.  A few 
industrial groups currently have intellectual property disputes 
before the government. 
 
In May 2004, Bulgaria was placed on the Special 301 Watch List 
for the first time in five years and remains on that list. 
Although the sale of pirated optical disc media (ODM) is still an 
issue, Internet cyber crimes are turning out to be the greatest 
challenge for the GOB and creative industry now.  At a rate of 71 
percent for a third consecutive year, software piracy is 
pervasive both among the end users and system builders.  The 
government took good steps in 2006 to address IP problems, but 
must continue its efforts to reign in piracy. 
 
Bulgaria is a member of the World Intellectual Property 
Organization (WIPO) and a signatory to key international 
agreements. 
 
Copyrights 
 
The 1993 Law on Copyright and Related Rights protects literary, 
artistic, and scientific works.  Article 3 provides a full 
listing of protected works including computer programs (which are 
protected as literary works).  The Law distinguishes between 
moral and economic rights.  The use of protected works is 
prohibited without the author's permission, except in certain 
instances. 
 
In 2000, the Bulgarian Parliament adopted amendments to the law 
extending the copyright term of protection from 50 to 70 years 
after the author's death.  The new term of protection is 
retroactive, i.e., a term of protection that expired at the 
moment of approval of the amendments is revived within the 
framework of the 70-year term of protection.  For films and other 
audio-visual works, copyrights are protected during the lives of 
director, screenplay-writer, cameraman, or the author of dialogue 
or music, plus 70 years.  Other amendments to the law enable 
copyright owners to file civil claims to suspend the activities 
of pirates; provide for confiscation of equipment and pirated 
materials; enhance border control over pirated material; 
introduce a new neighboring right for film producers; and, 
harmonize Bulgarian legislation with the EU Association 
Agreement. 
 
The Copyright Office of the Ministry of Culture is responsible 
for copyright matters in Bulgaria.  The National Film Center is 
responsible for enforcing intellectual property rights with 
regard to films and videos.  Bulgarian legislation provides for 
criminal, civil and administrative remedies against copyright 
violation, but because of the small number of court judgments and 
sentences, law enforcement is still inadequate. 
 
Patents 
 
The Bulgarian patent law has been harmonized with EU law in the 
areas of application for European patents and utility models. 
Bulgaria joined the Convention on the Grant of European Patents 
(European Patent Convention) in 2002. 
 
Bulgaria grants the right to exclusive use of inventions and 
utility models for 20 years from the date of patent application. 
The term of validity of a utility model registration is 4 years 
as of the filing date with the Patent Office. It may be extended 
by two consecutive three-year periods, but the total term of 
validity may not exceed 10 years. 
 
Inventions eligible for patent protection must be new, involve an 
inventive step and be applicable for industrial applications. 
Article 6 lists items not considered inventions and utility 
models are specifically defined. 
 
The independent Patent Office is the competent authority with 
respect to patent matters.  The patent law describes the 
application procedures and the examination process.  Applications 
are submitted directly to the Patent Office and recorded in the 
state register.  Compulsory licensing may be ordered under 
certain conditions: the patent has not been used within four 
years of filing the patent application or three years from the 
date of issue; the patent holder is unable to offer justification 
for not adequately supplying the national market; or, declaration 
of a national emergency. 
 
Patent infringement is punishable by imprisonment of up to 2 
years or fines from BGN 100 to BGN 300.  Disputes arising from 
the creation, protection or use of inventions and utility models 
can be considered and settled under administrative, court or 
arbitration procedures.  Disputes are reviewed by specialized 
panels convened by the President of the Patent Office and may be 
appealed to the Sofia City Court within three months of the 
panel's decision. 
 
In 1996, Parliament approved the Protection of New Types of 
Plants and Animal Breeds Act.  This Certificate allows for a term 
of protection of 25 years for annual plants and 30 years for 
perennial plants and animal breeds, which starts from its date of 
issuance by the Patent Office.  In 1998, Parliament ratified the 
1991 International Convention for the Protection of New Varieties 
of Plants (UPOV). 
 
Data Exclusivity 
 
Responding to long-standing industry concerns, the GOB included a 
provision to provide data exclusivity (protection of confidential 
data submitted to the government to obtain approval to market 
pharmaceutical products) in its new Drug Law, which took effect 
in 2003. 
 
Trademarks 
 
In 1999, Parliament passed a series of laws on trademarks and 
geographical indications, industrial designs and integrated 
circuits in accordance with TRIPs requirements and the 
government's EU Association Agreement.  The Trademarks and 
Geographical Indications Act, which was amended in 2006 to comply 
with EU standards, regulates the establishment, use, suspension, 
renewal and protection of rights of trademarks, collective and 
certificate marks, and geographic indications. 
 
Registration is refused, or an existing registered trademark is 
cancelled, if a trademark constitutes a reproduction or an 
imitation or if it creates confusion with a well-known trademark, 
as stipulated by the Paris Convention and the Trademarks and 
Geographical Indications Act.  Applications for registration must 
be submitted to the Patent Office under specified procedures. 
 
Right of priority, with respect to trademarks that do not differ 
substantially, is given to the application that was filed in 
compliance with Article 32 first.  Right of priority is also 
established on the basis of a request made in one of the member 
countries of the Paris Convention or of the World Trade 
Organization.  To exercise the right of priority, the applicant 
must file a request within six months of the date of original 
filing. 
 
A trademark is normally granted within three months of filing a 
complete application.  Refusals can be appealed before the 
Disputes Department at the Patent Office.  The decisions of this 
department can be appealed before the Sofia Administrative Court 
within three months following notification.  The right of 
exclusive use of a trademark is granted for ten years from the 
date of submitting the application.  Requests for extension of 
protection must be filed during the final year of validity, but 
not less than six months prior to expiration.  Protection is 
terminated if a mark is not used for a five-year period. 
 
Trademark infringement is a problem in Bulgaria for many U.S. 
manufacturers.  Its categorization as a misdemeanor, subject to a 
nominal fine, is not a sufficient deterrent to illegal 
activities.  While more draconian measures are available, such as 
imprisonment of up to 5 years, confiscation or fines of up to 
5,000 BGN, their enforcement must be significantly stepped up. 
 
In Bulgaria, trademark and service-mark rights and rights to 
geographic indications are only protected pursuant to 
registration with the Bulgarian Patent Office or an international 
registration mentioning Bulgaria; they do not arise simply with 
Quse in commerce" of the mark or indication.  Under Bulgarian 
law, legal entities cannot be held criminally liable.  Similarly, 
criminal penalties for copyright infringement and willful 
trademark infringement are limited, compared to enforcement 
mechanisms available under U.S. law. 
 
------------------------------------- 
¶8.  Transparency of Regulatory System 
-------------------------------------- 
 
Major Taxation Issues Affecting U.S. Businesses 
 
Bulgaria and the U.S. negotiated a bilateral Treaty to Avoid 
Double Taxation in December 2006, which is expected to be signed 
early in 2007.  This treaty will help spur bilateral economic 
relations and increase investor confidence. 
 
Personal income tax rates increase progressively from 22 to 24 
percent.  There are three income brackets, with a non-taxable 
personal monthly income of 200 BGN.  The corporate and profit tax 
rate is 10 percent, the lowest in the EU.  Certain tax 
incentives, such as an exemption from corporate tax, apply in 
regions of high unemployment.  Physical persons, but not legal 
ones, in certain trades pay a "patent" tax (presumptive tax), 
according to a schedule established by Parliament.  Dividends 
(and liquidation quotas) distributed by a Bulgarian resident 
company to U.S. investors are subject to a withholding tax of 15 
percent.  While Bulgarian residents face a withholding tax of 7 
percent, a tax resident in an EU member state is not subject to a 
withholding tax.  A 50 percent depreciation rate is applied on 
investment in new machinery and other equipment, computers and 
computer software. 
 
Employers pay 65 percent of the monthly contributions for social 
security insurance and health insurance to an unemployment fund, 
but their share of contributions is slated to decline, in phases, 
to 50 percent 2010.  Employers must contribute for social 
security insurance and health insurance: 19.4 percent and 3.9 
percent of employees' gross salaries, respectively.  Companies 
also contribute 1.95 percent of the total wage cost to an 
unemployment fund.  Foreign persons are required to have the same 
insurance and unemployment compensation packages as Bulgarians. 
 
There is a 20 percent single-rate value-added tax (VAT), except 
for some tourist services where VAT is levied at 7 percent rate. 
VAT registration is mandatory for persons with turnover exceeding 
BGN 50,000 over a calendar year, while all others can register 
voluntarily.  A new VAT regime has been introduced for trade in 
goods between Bulgaria and the other EU member countries. 
 
All goods and services are subject to VAT except exports, 
international transport, and precious metals supplied to the 
central bank.  VAT payments are generally rebated when goods are 
resold.  Exporters may claim VAT refunding within a 30-day 
period.  Excise taxes are levied on tobacco, alcoholic beverages, 
fuels, certain types of automobiles, gambling equipment, coffee, 
and tea. 
 
Foreign investors have asserted that widespread tax evasion, 
combined with the failure of the authorities to enforce 
collection from large state-owned companies, places them at a 
disadvantage.  However, in conjunction with its IMF agreement, 
the government has strengthened tax collection and limited tax 
arrears of state-owned enterprises.  Another problem underscored 
by investors is the frequent revision of tax laws, sometimes 
without sufficient notice.  After full harmonization of domestic 
tax legislation with the EU law, the business environment is 
expected to become more transparent and predictable. 
 
Regulatory Environment 
 
An abundance of licensing and regulatory regimes, combined with 
arbitrary interpretation and enforcement by the bureaucracy, and 
the incentives thus created for corruption, have long been seen 
as an impediment to investment. 
 
In 2003, Parliament passed the Restriction of Administrative 
Regulation and Control of Economic Activity Act, which 
establishes a general and systematized set of rules for 
simplifying and implementing administrative regulations.  The law 
defines 39 operations that must be licensed and introduces two 
other simplified regimes, i.e., registration and permit regimes. 
 
From the perspective of regulatory relief, this law is a 
milestone.  It sets forth firm market principles of regulation, 
such as that regulation at all levels of government must be 
justified by defined need (in terms of national security, 
environmental protection, or personal and material rights of 
citizens) and cannot impose restrictions unnecessary to the 
stated purposes of the regulation.  The law also requires that 
the regulating authority take account of the compliance costs to 
be borne by business and that no national-level law can be passed 
without an impact analysis on the law's economic effect 
on the regulated activity.  In addition, the law eliminates 
bureaucratic discretion in granting applications for routine 
economic activities and provides for "silent consent" when the 
government has not acted upon an application in the allotted 
time.  All of these reforms considerably lighten the potential of 
regulatory abuse at all levels of government and, when 
implemented, should improve the overall business environment. 
While the law creates a ground-breaking normative framework, its 
practical enforcement is dependent upon movement towards a more 
flexible bureaucratic environment. 
 
Energy Regulator 
 
The new Energy Law enacted in 2003 established a transparent and 
predictable regulatory environment in the energy sector where the 
key regulatory responsibilities are vested with the State Energy 
Regulatory Commission - a separate body with regulatory 
authorities, with a high degree of autonomy and accountability. 
 
Competition Policy 
 
The 1998 Law on the Protection of Competition (the "Competition 
Law") is intended to establish and maintain a competitive 
market.  The Competition Law forbids monopolies, restraining 
agreements, trade restrictive practices, abuse of a dominant 
market position, and unfair competition, and seeks to promote 
consumer protection.  A company is deemed to have a dominant 
position if it controls 35 percent or more of the relevant 
market.  A company with a dominant market position is prohibited 
from: certain pricing practices; limiting manufacturing 
development to the detriment of consumers; discriminatory 
treatment of competing customers; tying contracts to additional 
and unrelated obligations; and, the use of economic coercion to 
E 
cause mergers.  The Law prohibits five specific forms of unfair 
competition: damaging competitors' goodwill; misrepresentation 
with respect to goods or services; misrepresentation with respect 
to the origin, manufacturer, or other features of goods or 
services; the use or disclosure of someone else's trade secrets 
in violation of good faith commercial practices; and, "unfair 
solicitation of customers" (promotion through gifts and 
lotteries), which may create difficulties for some foreign 
enterprises. 
 
The Competition Law was overhauled in 2003, introducing important 
provisions that expand the competency of the Commission for 
Protection of Competition (CPC), define the prohibition on misuse 
of an oligopoly, and impose a single criterion for assessing the 
significance of planned concentration: the aggregate turnover of 
the enterprises affected by the concentration. 
 
--------------------------------------------- ---- 
¶9.  Efficient Capital Markets and Portfolio Investment 
--------------------------------------------- ---- 
 
Since 1997, the Bulgarian Stock Exchange (BSE) has operated under 
a license from the Securities and Stock Exchange Commission 
(SSEC).  The 1999 Law on Public Offering of Securities regulates 
issuance of securities, securities transactions, stock exchanges, 
and investment intermediaries.  Comprehensive amendments to this 
Law (99 in number), which were promulgated in June 2002, 
establish significant rights for minority shareholders of 
publicly-owned companies in Bulgaria.  In addition, they create 
an important foundation for the adoption of international best 
practices corporate governance principles in public companies. 
 
The infrastructure of the stock exchange has been substantially 
improved, including the establishment of an official index 
(SOFIX).  New trading instruments (government bonds, corporate 
bonds, Bulgarian Depositary Receipts, and privatization through 
the stock exchange, municipal and mortgage-backed bonds, and 
Bulgarian Depository Receipts) have been introduced.  As a result 
of appreciation of nearly all of the most actively traded issues 
on the Bulgarian Stock Exchange, its capitalization more than 
doubled reaching 8.4 billion BGN (about USD 5.5 billion) in 2005. 
In the first six months of 2006 BSE's market capitalization 
increased further reaching 9.9 billion BGN (about USD 6.7 
billion).  While the stock exchange has become more attractive to 
investors Q fed by prospects of EU membership - it is still 
facing low liquidity.  To boost its liquidity, the GOB has 
announced plans to sell BSE to a world-renown capital and stock 
market. 
 
The Banking System 
 
The Bulgarian banking system has undergone considerable 
transformation since its virtual collapse in 1996 and now 
demonstrates both high predictability and client and investor 
confidence.  There are 33 commercial banks, with total assets of 
39.9 billion BGN (about USD 26.6 billion) and an annual growth of 
31.3 percent in November 2006 or 87 percent of the projected 2006 
GDP.  Approximately 34 percent of bank assets are concentrated in 
three banks: Bulbank, State Saving Bank (DSK), and United 
Bulgarian Bank (UBB). 
 
Bulgaria has completed the privatization of its state-owned banks, 
attracting some strong foreign banks as strategic investors. 
Foreign investors drawn to the Bulgarian banking industry, include 
UniCredito Italiano SpA (UCI), BNP PARIBAS, National Bank of 
Greece, Societe Generale, Bank Austria Creditanstalt, American 
Life Insurance Company - Consolidated Eurofinance Holdings, 
Regent Pacific Group, and Citibank. 
 
Bulgaria's banking system is highly capitalized.  Reflecting 
expanded lending in recent years, the average capital adequacy 
ratio (capital base to risk-weighted credit exposures) for the 
banking system has steadily declined from 43 percent at end-1998 
to 15.21 percent in September 2006, but still remains above the 
Bulgarian National Bank's  requirement of 12 percent. 
 
Government Securities 
 
The government finances government expenditures by accessing 
capital markets.  In 2006, the Ministry of Finance held only 
three auctions of Treasury bills - in January, March and 
September.  The bills are typically short-term (3-month, 6-month 
and 1-year maturities).  Commercial banks are the primary 
purchasers of these instruments, while pension funds and 
insurance companies participate mainly in the secondary market. 
Foreign banks can participate in the treasury market only through 
a Bulgarian bank or the branch of a foreign bank, which is 
licensed in Bulgaria.  The foreign bank transfers the money, 
which is then converted into Leva to make the purchase, which 
must be registered with the Ministry of Finance.  The foreign 
bank must open a Lev account (a "custody account") for 
transactions.  This Lev account cannot be used as a standard 
deposit bank account.  A foreign currency account can be opened, 
but it is not obligatory. 
 
The Investment Promotion Act defines securities, including 
treasury bills, with maturities over 6 months as investments. 
Repatriation of profits is possible after presenting 
documentation that taxes have been paid. 
 
Political Violence 
------------------ 
 
There have been no incidents in recent years involving 
politically motivated damage to projects or installations. 
Rather, violence in Bulgaria is primarily criminally motivated. 
 
Corruption 
----------- 
 
Corruption is still perceived to be one of the gravest problems 
in Bulgaria's investment climate, despite the Bulgarian 
government's numerous advances in laws and legal instruments. 
Bulgaria ranks 57th among 159 countries included in Transparency 
International's (TI) Corruption Perception Index for 2006, down 
two places from 2005. 
 
In reality, the established human trafficking, narcotics, and 
contraband smuggling channels that contribute to corruption in 
Bulgaria have yet to be broken, and serious efforts and political 
will are still needed to carry out much-needed reforms to address 
inefficiencies in the judicial system.  The Bulgarian public 
generally holds the police, the judiciary, customs officials, and 
political parties in low regard, due to their perceived 
corruption. 
 
Bribery is a criminal act under Bulgarian law for both the giver 
and the receiver.  Penalties range from one to fifteen years' 
imprisonment, depending on the circumstances of the case, with 
confiscation of property added in more serious cases.  In very 
grave cases, the Penal Code specifies prison terms of 10 to 30 
years.  The 1996 Money Laundering Law also applies to bribes. 
Bribing a foreign official is a criminal act.  There have been 
trials and convictions of enterprise managers, prosecutors, and 
law enforcement officials for corruption.  While Bulgarian tax 
legislation does not explicitly prohibit the deduction of bribes 
in the computation of domestic taxes, deductions connected with 
bribery and other illegal activities are not allowed under the 
tax code. 
 
Bulgaria has a 1998 Law on Measures against Money Laundering and 
in 1998 was one of the first non-OECD nations to ratify the OECD 
Anti-Bribery Convention.  Bulgaria has also ratified the Council 
of Europe Convention on Laundering, Search, Seizure, and 
Confiscation of Proceeds of Crime (1994) and the Civil Convention 
on Corruption (1999). 
 
The GOB's recent anti-corruption agenda included the adoption of 
key international anti-corruption instruments, including: 
-- signing the UN Convention against Corruption (2003); 
-- withdrawing the reservations made in 2001 at the ratification 
of the Criminal Law Convention on Corruption; 
-- signing and ratifying the Additional Protocol to the Council 
of Europe's Criminal Law Convention on Corruption; Bulgaria was 
the second state to ratify this Additional Protocol. 
 
Although the Bulgarian government has achieved some successes in 
the fight against organized crime and corruption, many observers 
believe that corruption and political influence in business 
decision-making continue to be significant problems in Bulgaria's 
investment climate. 
 
Bilateral Investment Agreements 
-------------------------------- 
 
As of December 2006, Bulgaria has foreign investment promotion 
and protection treaties or agreements with Albania, Algeria, 
Argentina, Armenia, Austria, Belarus, Belgium-Luxembourg, China, 
Croatia, Cuba, Cyprus, Czech Republic, Denmark, Egypt, Finland, 
France, Georgia, Germany, Greece, Great Britain and Northern 
Ireland, Hungary, India, Iran, Israel, Italy, Jordan, Kazakhstan, 
Kuwait, Lebanon, Macedonia, Malta, Moldova, Mongolia, Morocco, 
Netherlands, Poland, Portugal, Romania, Russia, Slovakia, 
Slovenia, Spain, Sweden, Switzerland, Syria, Tunisia, Turkey, 
Ukraine, the United States, Uzbekistan, Vietnam, Yemen, and 
Yugoslavia. 
 
Bulgaria signed a Bilateral Investment Treaty (BIT) with the 
United States, which guarantees national treatment for U.S. 
investments and creates a dispute settlement process.  The BIT 
also includes a side letter on protections for intellectual 
property rights.  The Governments of Bulgaria and the United 
States exchanged notes in 2003 to make Bulgaria's obligations 
under the BIT compatible with its EU obligations, and finalized 
the process in January, 2007. 
 
OPIC and Other Investment Insurance Programs 
-------------------------------------------- 
 
In 1991, the Overseas Private Investment Corporation (OPIC) 
(www.opic.gov) and the GOB signed an Investment Incentive 
Agreement, which governs OPIC's operations in Bulgaria.  OPIC 
provides project financing to U.S. investors making long-term 
investments in emerging markets.  OPIC also supports a number of 
privately owned and managed equity funds, including a regional 
fund for Southeast Europe created in 2005 for investments in 
companies in Bulgaria and other Balkan countries. 
 
OPIC provides project financing through direct loans and loan 
guaranties that provide medium- to long-term financing to 
ventures involving equity and/or management participation by U.S. 
businesses.  OPIC offers American investors insurance against 
currency inconvertibility, expropriation, and political 
violence.  Political risk insurance is also available from the 
Multilateral Investment Guarantee Agency (MIGA), which is a World 
Bank affiliate, as well as from a number of private U.S. 
companies. 
 
Labor 
------ 
 
Bulgaria's workforce officially consists of 3,281,600 highly 
educated and skilled men (53 percent) and women (47 percent). 
Adult literacy rate in Bulgaria is 98 percent.  A high percentage 
of the workforce has completed some form of secondary, technical, 
or vocational education.  Many Bulgarians have strong backgrounds 
in engineering, medicine, economics, and the sciences, but there 
is a shortage of professionals with Western management skills. 
The demand for skilled managers will increase with the advent of 
high technology, innovative and knowledge-based companies from 
EU.  The aptitude of workers and the relative low cost of labor 
are considerable incentives for foreign companies, especially 
those that are labor intensive, to invest in Bulgaria.  Employer 
tax obligations and benefits (clothing allowance, bonuses, etc.) 
can add more than 50 percent to the nominal wage. 
 
Bulgaria's Constitution recognizes workers' right to join trade 
unions and organize. The National Tripartite Cooperation Council 
(NTCC) provides a forum for dialogue among government, 
management, and trade unions, such as cost-of-living 
adjustments.  The current government has substantially 
revitalized the Council.  A tri-partite pact for social and 
economic development until 2009 was signed in 2006. 
 
Bulgaria has two large legitimate representative trade union 
confederations, the Confederation of Independent Trade Unions of 
Bulgaria (CITUB) and Podkrepa ("Support").  The 2004 trade union 
membership census indicates that CITUB has over 350,000 members 
and Podkrepa has about 110,000 members.  CITUB, the successor to 
the trade union integrated with the Communist Party, has long 
since severed its ties to the socialists, whereas Podkrepa is an 
independent confederation.  There are few restrictions on trade 
union activity and the confederations operate freely, but the 
workforce in smaller firms and elsewhere in the emerging private 
sector is often not represented by trade unions. 
 
Under the Labor Code, employer and employee relations are 
regulated by employment contracts, which may be agreed upon 
through collective bargaining.  The Code addresses worker 
occupational safety and health issues, establishes a minimum wage 
(determined by the Council of Ministers), and prevents 
exploitation of workers, including child labor.  The Code clearly 
delineates employer rights, strengthening management's hand in 
disciplining the workforce.  Disputes between labor and 
management can be referred to the courts, but resolution is often 
subject to delays. 
 
Over the last three years, the Labor Code has been amended to 
address labor market rigidities and bring labor legislation into 
compliance with the EU social policy and employment 
requirements.  The amendments to the Labor Code simplify 
additional work procedures, restrict mandatory leaves, and relax 
procedures for implementing collective redundancies.  However, 
collective labor contracts at the sectoral or branch level remain 
binding for all enterprises of the sector or branch.  The minimum 
annual paid leave is 20 days. 
Neither foreign companies, nor Bulgarian companies having 
majority foreign-control are exempt from the requirements of the 
Labor Code.  During 2002-2003, the Ministry of Labor formed the 
new QNational Institute for Conciliation and Arbitration" (NICA), 
which developed a framework for collective labor dispute 
mediation and arbitration.  NICA includes representatives from 
labor, employers, and the Government, as does the roster of 
mediators and arbitrators.  Although NICA-sponsored collective 
labor dispute resolutions are still few, a number of the 
appointed mediators received basic mediation skills training from 
the U.S. Federal Mediation and Conciliation Service. 
 
Foreign-Trade Zones/Free Ports 
------------------------------- 
 
The 1999 Customs Act renamed the six duty-free zones Qfree 
zones."  Foreign, including U.S., individuals and corporations, 
and Bulgarian companies with 1.0 percent or more foreign 
ownership may set up operations in a free zone.  Thus, foreign- 
owned firms have equal or better investment opportunities in the 
zones compared to Bulgarian firms. 
 
There are at present six operational Qfree zones" in Bulgaria: 
Ruse and Vidin ports on the Danube; Plovdiv; Svilengrad (near the 
Turkish border); Dragoman (near the Yugoslav border); and, Burgas 
port on the Black Sea.  They are all managed by joint stock or 
state-owned companies.  The government provided land and 
infrastructure for each zone. 
-- Plovdiv, the only inland free zone, is the most profitable, 
with 24 investment projects. 
-- The Burgas FTZ has the largest warehousing and automotive 
distribution facilities in Bulgaria and is used by more than 100 
foreign and joint venture companies including Samsung. 
-- Limited manufacturing is conducted in both the Plovdiv and 
Ruse FTZs. 
 
All forms of production and trade activities and services may 
take place in the free zones.  Foreign, non-EU goods delivered to 
the free zones for production, storage, processing, or re-export 
are VAT and duty exempt.  Bulgarian goods may also be stored in 
free zones with permission from the customs authorities.  Exports 
will become less attractive for EU exporter companies as the new 
VAT regime requires full price payment, VAT inclusive, before 
selling it into another EU Member State.  Convertible foreign 
currency may be used and revenues can be transferred abroad 
freely without any restrictions.  Administrative procedures 
relieve the investor from needing to contact local authorities 
directly.  Production and labor costs are low, with well-trained 
and highly qualified labor available.  All the zones are located 
on strategic trade rail, road, and/or water trade routes. 
 
Free trade zones in Bulgaria have attracted a number of foreign 
investors, including Hyundai, KIA Motors, Schwartskopf, Henkel, 
Landmark Chemicals Ltd., Group Schneider, and BINDL Energic 
Systeme GmbH. 
 
EU integration has encouraged regional authorities to attract 
outside investors and spur local economic development.  In 
partnership with the private sector, they provide resources 
(ground, infrastructure, etc.) for the development of industrial 
zones and parks, which are different from FTZs as they do not 
provide for any form of preferential tax treatment. 
International and local investors can use the favorable factors, 
such as low-cost and educated labor and easy access to the local 
market, to relocate their business.  Currently, the most advanced 
projects are the industrial zones in Sofia, Rakovski, 
Panagyurishte, Stara Zagora, Silistra, Pazardzhik and Ruse. 
 
Foreign Direct Investment Statistics 
------------------------------------ 
 
Between 1992 and Sept. 2006, total cumulative FDI into Bulgaria 
amounted to USD 17.602 billion (about 55 percent of estimated 
2006 GDP).  FDI in Bulgaria already exceeded $3.5 billion in Sept 
¶2006.  Bulgaria's direct investment abroad was a total of USD 258 
million at end-September 2006.  In the period of January through 
September Bulgaria's direct investment abroad increased by USD 58 
million. 
 
FDI by Year (millions of U.S. dollars) 
 
1992Q       34.4 
1993Q      102.4 
1994Q      210.9 
1995Q      162.6 
1996        256.4 
1997Q      636.2 
1998Q      620.0 
1999Q      818.8 
2000Q    1,001.5 
2001        812.9 
2002        969.7 
2003       2096.9 
2004       3443.4 
2005Q     2,883.7 
2006 Q     3,552.2 (Jan-Sep) 
 
Total     17,602.0 
(Source:  Invest Bulgaria Agency) 
 
FDI by Country of Origin 1992-2006 (Jan-Sep) (millions of USD) 
 
Austria              QQ3,018.1 
Netherlands  Q    QQ1,845.4 
Greece         QQ  Q1,598.2 
U.K.                  Q1,350.3 
Germany           QQ1,206.3 
Belgium and Luxemburg Q  898.1 
Italy QQ     QQ  892.3 
USA *                   Q  782.9 
Hungary               Q  778.7 
Cyprus                  Q  704.0 
Czech Republic    QQ  576.1 
Switzerland           Q  527.9 
Ireland                  Q  355.2 
France                  Q  310.1 
Spain                    Q  277.1 
Russia                  Q  232.1 
Turkey                  Q  225.8 
Denmark              QQ  176.4 
Sweden                Q  104.7 
Israel                        95.7 
Japan                      Q   61.5 
Liechtenstein          Q   60.1 
Malta                      Q   59.1 
Canada                  Q   56.1 
PanamaQ       QQ   45.9 
SloveniaQ       QQ   43.9 
RomaniaQ       QQ   38.7 
(Source: Invest Bulgaria Agency) 
 
* Official GOB investment statistics currently rank the U.S. as 
8th in terms of overall investment in Bulgaria for the period 
1992-2006 (Jan-Sep).  While the Central Bank credits the U.S. 
with investments at the rate of $40-$50 million per year in the 
last eight years, this data is incomplete as many US investors 
establish European subsidiaries to manage their investments in 
Bulgaria. 
 
FDI by Sector 1998-2005 (millions of USD) 
 
Financial activitiesQQQQ 2,287.2 
Trade and repairsQQQQ 1,695.7 
Telecommunications QQQQ 1,621.1 
Electricity, gas and waterQQQ 1,033.4 
Real estate and business activitiesQ   832.8 
Petroleum, chemical, Rubber PlasticQ   612.4 
Mineral products (cement, glass)QQ   536.8 
Construction QQQQQ   373.6 
Food productsQQQQQ   282.9 
Textile and clothingQQQQ   253.7 
Wood products, paperQQQ        191.8 
Hotels and restaurantsQQQ   191.8 
Machine-buildingQQQQQ   191.8 
Metallurgy and metal productsQQ   166.3 
TransportQQQQQQ   131.8 
Electrical eng., electronics, computers  135.4 
MiningQQQQQQ    84.3 
Agriculture, forestry and fishingQ    23.6 
Leather and leather productsQQ    22.4 
PublishingQQQQQQ    16.5 
Vehicles and other transport equipment     9.8 
 
(Source: Invest Bulgaria Agency) 
 
Selected 2005 Foreign Direct Investments 
 
(Investor, Country, Sector, Bulgarian Firm, USD millions) 
-- CEZ, Czech Republic, energy, West electricity distribution, 
366 
-- OTP, Hungary, finance, DSK Bank, 363.7 
-- EVN, Austria, energy, Southeast electricity distribution, 352 
-- E.ON, Germany, energy, Northeast electricity distribution, 183 
--OTE, Greece, telecommunications, Cosmo Bulgaria Mobile, 173.9 
-- Sisecam, Turkey, glass industry, Greenfield glass plant, 160-- 
Pireusbank, Greece, banking, Evrobank AD, 62.6 
-- Miroglio, Italy, textile, Miroglio Bulgaria, 50.2 
-- Umicore, Belgium, metals, Umicore Med, 48.1 
(Source:  Invest Bulgaria Agency) 
 
------------------ 
¶10.  Web Resources 
------------------ 
 
www.usembassy.bg 
www.investbg.government.bg (Invest Bulgaria Agency) 
www.opic.gov 
www.exim.gov 
www.ustda.gov