VZCZCXYZ0000
RR RUEHWEB

DE RUEHSF #0044/01 0170947
ZNR UUUUU ZZH
R 170947Z JAN 08
FM AMEMBASSY SOFIA
TO RUEHC/SECSTATE WASHDC 4688
INFO RUCPDOC/USDOC WASHDC
RUCPCIM/CIMS NTDB WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC

UNCLAS SOFIA 000044 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR EB/IFD/OIA AND USTR 
TREASURY FOR OASIA 
USDOC FOR 4232/ITA/MAC/EUR/OEERIS/SSAVICH 
 
E.O. 12958:  N/A 
TAGS: EINV EFIN ELAB ETRD KTDB OPIC USTR BU
SUBJECT: BULGARIA 2008 INVESTMENT CLIMATE STATEMENT 
 
Ref:  07 STATE 158802 
 
SUBJECT: Bulgaria - 2008 Investment Climate Statement. 
 
¶A. OPENNESS TO FOREIGN INVESTMENT 
 
Bulgaria has a liberal foreign investment regime with a top 
government priority to attract foreign investment.  Promising 
sectors of the economy for foreign investment include: 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 and relatively low labor costs.  Its 
geographic position places it at the crossroads of Europe, the 
Middle East, and the CIS.  Bulgaria joined WTO in December 1996, 
NATO in April 2004, and the EU on January 1, 2007. 
 
Investment Trends and Policies 
------------------------------ 
 
Sound economic performance and political stability have enhanced 
Bulgaria's ability to attract respected international investors. 
Gradual convergence with the EU common market and a national 
currency pegged to the Euro provide incentives for increased trade 
and investment opportunities.  While Bulgaria's international credit 
rating is stable, Bulgaria's reliance on capital account inflows is 
seen as a potential macroeconomic weakness that could undermine the 
peg and boost inflation. 
 
The Investment Promotion Act, last amended in May 2007, 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 joint stock 
companies, joint enterprises, business associations, general and 
limited partnerships, and sole proprietorships. 
 
The main controlling bodies of law are: the 1991 Commercial Code, 
which regulates commercial and company law, including the creation 
and rights of legal entities, and the 1951 Law on Obligations and 
Contracts, which regulates civil transactions.  These laws are 
deemed generally adequate and neither limits foreign participation 
in legal entities. 
 
The 2003 Law on Special Purpose Investment Companies allows for 
public investment companies (SPIC) in real estate and receivables. 
Since a SPIC is considered a pass-through structure, at least 90 
percent of its net income must be distributed to shareholders, who 
are taxed 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; 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, beginning in 2014, 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 United States. 
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.  Bulgaria sold some of its district heating plants (Plovdiv, 
Russe, Varna) in 2007 as part of a major privatization package. 
Some of the most attractive companies slated for privatization in 
2008 are the district heating plants in the capital city Sofia and 
in two other cities (Pernik and Shumen), the Bulgarian Navigation 
Fleet, and the military machine building plant in Sopot 
(South-Central Bulgaria) which is awaiting a new privatization 
strategy.  The government's privatization program will close out in 
2008, as most 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 ensures 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. 
 
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 on central and/or local 
government property, 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.  There are three main categories of public interest for 
concession: 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. 
 
¶B. 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. 
 
¶C. EXPROPRIATION AND COMPENSATION 
 
According to Article 17 of the Bulgarian Constitution, private real 
property is protected by law.  Depending upon the purpose, and only 
in the case that public needs cannot be met by other means, 
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 
United States, Bulgaria committed itself to international 
arbitration in the event of expropriation and other investment 
disputes. 
 
¶D. 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.  Corruption remains a serious problem with public 
opinion polls indicating that bribes are commonly paid in the 
justice sector.  In 2007, the Bulgarian Parliament passed 
Constitutional amendments followed by a new Judicial System Act 
aimed at strengthening disciplining of magistrates, increasing the 
efficacy of the court system, and preventing corruption in the 
justice system.  As a result, an Inspectorate was created under the 
judiciary's governing body, the Supreme Judicial Council (SJC), 
which shall monitor the conduct of magistrates and initiate 
disciplinary proceedings.  Members of the Inspectorate are elected 
with a supermajority by Parliament.  At the end of 2007, Parliament 
appointed nine of the 11 members of the Inspectorate in a highly 
politicized process that attracted wide-spread criticism.  It us 
unclear whether the Inspectorate will be effective in uncovering 
cases of improper magistrates' conduct. 
 
Bulgaria's judicial system includes judges, prosecutors and 
investigators.  The proposition that prosecutors and investigators 
would be more efficient as part of the executive branch has been 
widely debated but a Constitutional Court decision found that such 
reforms could only be passed through major constitutional amendments 
by a Grand National Assembly.  The governing body of the judiciary 
is a 25-member Supreme Judicial Council that has broad powers to 
appoint, discipline and dismiss magistrates. 
 
There are three levels of courts.  117 regional courts exercise 
jurisdiction over civil and criminal cases.  Above them, 29 district 
courts (including the Sofia City Court) have trial-level 
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 is the Supreme Court 
of Cassation.  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 new Administrative Procedure 
Code, adopted in April 2006, introduced the establishment of 28 
courts throughout the country specialized in reviewing appeals of 
administrative acts. 
 
As of March 2007 the administrative courts officially started 
receiving complaints.  The decisions issued by the administrative 
courts can be disputed before the Supreme Administrative Court as a 
final appeal.  The Supreme Administrative Court also 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. 
 
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, debtors 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 a judgment, 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.  The 
institutional framework for execution of judgments was improved with 
a 2005 law allowing private professionals to act as execution 
agents.  Since 2006 both private and state execution agents operate 
in Bulgaria.  Two years after the introduction of private execution 
agents, businesses report a dramatic increase in the efficiency of 
executive of judgments.   Still, Bulgarian and foreign observers 
caution that the proceedings for the execution of judgments and 
other enforceable claims under the Code of Civil Procedure remain 
cumbersome.  The new Civil Procedure Code, effective March 2008, 
should address some of these deficiencies.  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 United States does 
not currently have reciprocity with Bulgaria; 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, one of 
whom must be 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 estate 
situated in the country, alimony, 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. 
 
Regarding 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.  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 wishig to use mediation to solve their disputes in 
Bugaria may find it difficult to locate experienced ediators. 
Mediation as a practice has only recenly begun to develop in the 
country following the adoption of the Mediation Act at 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. 
 
¶E. PERFORMANCE REQUIREMENTS/INCENTIVES 
 
Bulgaria does not impose export performance or local content 
requirements as a condition for establishing, maintaining, or 
expanding 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 50 million) 
are deemed to be priority "Class A" 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 "Class B" (investments of USD 28 - 50 
million) before all central and territorial executive authorities 
and the local self-government authorities, and processes all 
administrative documents.  The government policy for promotion of 
investment is not applicable to investments made pursuant to the 
Privatization Law, coal and steel production, shipbuilding, 
synthetic production, and fish industry.  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 7.5 million) under certain conditions, was 
introduced in 2004. 
 
¶F.  RIGHT TO PRIVATE OWNERSHIP/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. 
 
¶G.  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 Border Measures for Protection of 
IPRs was replaced by EU Regulation 1383/2003 (customs regulation) 
and is now being directly applied. 
 
Additionally, the government still needs to strengthen 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 acknowledgement of the improvements made in IPR field, in April 
2006 Bulgaria was removed from the Special 301 Watch List.  Although 
the sale of pirated optical disc media (ODM) is diminishing, 
Internet cyber crimes are turning out to be the greatest challenge 
for the GOB and creative industry now.  At a rate of 69 percent in 
2006, software piracy is pervasive both among the end users and 
system builders.  The government took good steps in 2007 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.  Since 2000 
the Law has gone through major revision to comply with EU and 
international legislation. 
 
The term for protection of copyrighted works was extended 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 
------- 
 
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 Granting 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 four 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. 
 
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 Administrative Court 
within three months of the panel's decision.  Patent infringements 
are punishable by administrative fines from 300 up to 20,000 BGN. 
 
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 Drug Law, which took effect in April 
¶2007. 
 
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 2005 and 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 registered or 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.  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 eighteen 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.  Bulgarian legislation provides for criminal, civil 
and administrative remedies against trademark violation, but due to 
the low record of court resolutions and effective sentences, law 
enforcement is inadequate.  While more draconian measures are 
available, such as imprisonment of up to five years, confiscation or 
fines of up to 5,000 BGN, their application 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 "use 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. 
 
¶H.  TRANSPARENCY OF THE REGULATORY SYSTEM 
 
Major Taxation Issues Affecting U.S. Businesses 
--------------------------------------------- -- 
A Treaty for Avoidance of Double Taxation (TADT) between the United 
States and Bulgaria was signed in 2007.  The Treaty applies to 
direct taxes only and excludes indirect levies, such as value-added 
and excise taxes, as well as all social contributions.  It also 
applies to all sources of income that residents of either state have 
received "at source" in the other state.  Once it is ratified and 
enters into force, the TADT is expected to reduce the tax burden for 
residents of both states, which will stimulate cross-border trade 
and investment. 
A flat 10 percent tax rate on income is in place since January 2008, 
replacing the old progressive taxation.  The new flat income tax 
matches up with a corporate and profit tax rate of 10 percent making 
Bulgaria one of the EU member states with the lowest direct taxes. 
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.  Since January 1, 
2008 the size of the "patent tax" will be determined by and is 
payable to the municipal authorities.  Dividends (and liquidation 
quotas) distributed by a Bulgarian resident company to U.S. 
investors are subject to a withholding tax of 5 percent at the 
source.  A 50 percent depreciation rate is applied on investment in 
new machinery and other equipment, computers and computer software. 
 
 
The changes introduced in 2008 refer to a new monthly ceiling of BGN 
2,000 for social contributions.  Employers pay 60 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: 16.3 
percent and 3.6 percent of employees' gross salaries, respectively. 
Companies also contribute one percent of the total wage cost to an 
unemployment fund which also covers accidents at work.  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 upon which VAT is levied at seven 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 is in place 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, and gambling. 
 
Foreign investors have asserted that widespread tax evasion, 
combined with the failure of the authorities to enforce collection, 
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 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 Energy Law establishes a transparent and predictable regulatory 
environment in the energy sector where the key regulatory 
responsibilities are vested with the State Energy and Water 
Regulatory Commission - a separate, body with regulatory 
authorities, and a high degree of autonomy.   In mid-2007 the 
electricity market in Bulgaria was fully liberalized to comply with 
EU energy legislation.  The restructuring of electricity monopolies 
provided equal market access and fair competition in the sector. 
 
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 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 solicitatin of customers" (promotion 
through gifts and loteries), which may create difficulties for some 
freign enterprises.  Monopoly position can be estabished only by 
law and for certain categories of activities: railway and postal 
services; use of atmic energy; production of radioactive materials;and weapons 
production. 
 
The Competition Law wasoverhauled in 2003, introducing important 
provisons 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. 
 
¶I. EFFICIENCY OF CAPITAL MARKETS/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 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 for 
corporate governance principles in public companies. 
 
The infrastructure of the stock exchange has been substantially 
improved, including the establishment of an official index (SOFIX). 
In addition to floating company stock and privatization through the 
exchange, the Bulgarian stock exchange also trades in government 
bonds, corporate bonds, Bulgarian Depositary Receipts, municipal and 
mortgage-backed bonds, and Bulgarian Depository Receipts.  Raising 
capital has become increasingly attractive, and more competitive, 
with the advent of special purpose investment companies (REITs) 
which are aggressively investing in the economy.  In addition, the 
number of initial public offerings (IPOs) is growing, reaching 23 in 
¶2007.  Trading has been facilitated by the growing number of 
investment brokers and a joint database for secure access in place. 
In the first six months of 2007, the Bulgarian stock exchange 
recorded a turnover of BGN 2.72 Billion (about 1.9 Billion USD), a 
notable 86 percent increase on the year.  The market capitalization 
of Bulgarian stock exchange reached BGN 20.78 Billion (about 14.7 
Billion USD) at the end of June 2007, an increase by 110 percent on 
the year.  To boost its liquidity, the GOB has announced plans to 
sell its share in the Bulgarian stock exchange 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 30 commercial banks, with total assets of 
54.9 billion BGN (about USD 39 billion) and an annual growth of 37.6 
percent in November 2007 or 98 percent of the projected 2006 GDP. 
Approximately 38.7 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, KBC, 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 13.9 
percent in September 2007, but still remains above the Bulgarian 
National Bank's requirement of 12 percent. 
 
Government Securities 
--------------------- 
 
The government finances government expenditures by accessing capital 
markets.  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 a 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, and 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 six months as investments.  Repatriation 
of profits is possible after presenting documentation that taxes 
have been paid. 
 
¶J. 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. 
 
¶K. CORRUPTION 
 
Corruption is still one of the gravest problems in Bulgaria's 
investment climate, despite the Bulgarian government's numerous 
advances in laws and legal instruments.  Bulgaria ranks 64th among 
180 countries included in Transparency International's (TI) 
Corruption Perception Index for 2007, down seven places from 2006. 
 
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. 
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, which 
also covers bribery, 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 and ratifying 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; 
-- signing and ratifying the UN Convention Against Transnational 
Organized Crime. 
 
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. 
 
¶L.  BILATERAL INVESTMENT AGREEMENTS 
 
As of February 2007, 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, 
Indonesia, Iran, Israel, Italy, Jordan, Kazakhstan, Kuwait, Latvia, 
Lithuania, Lebanon, Macedonia, Malta, Moldova, Mongolia, Morocco, 
Netherlands, Poland, Portugal, Republic of Korea, Romania, Russia, 
Singapore, Slovakia, Slovenia, Spain, Sweden, Switzerland, Syria, 
Thailand, Tunisia, Turkey, Ukraine, the United States, Uzbekistan, 
Vietnam, Yemen, and Yugoslavia. 
 
Bulgaria has 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. 
 
¶M. 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 medium- 
to long-term funding through direct loans and loan guarantees to 
eligible investment projects in developing countries and 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's Small- and Medium-Size Financing is available for 
businesses with annual revenues under 250 Million USD.  OPIC's 
Structured Financing focuses on U.S. businesses with annual revenue 
over 250 Million USD and supports large-scale projects that require 
large amount of capital, such as infrastructure, telecommunications, 
power, water, housing, airports, hi-tech, financial services, etc. 
 
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. 
 
¶N. LABOR 
 
Bulgaria's workforce officially consists of 3,550,600 (third quarter 
of 2007) highly educated and skilled men (53 percent) and women (47 
percent).  The 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 is increasing 
with the advent of high technology, innovative and knowledge-based 
companies from the 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. 
 
Bulgaria's Constitution recognizes workers' right to join trade 
unions and organize. The National Council for Tripartite Cooperation 
(NCTC) provides a forum for dialogue among government, 
national-level employer organizations, and national-level trade 
unions, on issues such as cost-of-living adjustments.  The current 
government has substantially revitalized the Council improving 
relations between management and trade unions.  A tri-partite pact 
for social and economic development - the first of its kind - until 
2009 was signed in 2006. 
 
Bulgaria has two large trade union confederations represented at 
national level, the Confederation of Independent Trade Unions of 
Bulgaria (CITUB) and Confederation of Labour "Podkrepa" ("Support"). 
 At the end of 2007, the estimated trade union membership is about 
200 000 for CITUB and between 70 000-75 000 for CL "Podkrepa". 
CITUB, the successor to the trade union integrated with the 
Communist Party was reformed and has long since severed its ties to 
the socialists, whereas Podkrepa is an independent confederation. 
There are very few restrictions on trade union activity and the 
confederations operate freely, but the workforce in smaller firms in 
the private sector is often not represented by trade unions.  In 
addition, there are six nationally recognized employer organizations 
currently in Bulgaria which target different industry and company 
membership. 
 
Under the Labor Code, employer and employee relations are regulated 
by employment contracts.  The framework of the employment contracts 
can be shaped through collective bargaining.  Following the Labor 
Code, collective agreements (collective labor contracts) can be 
concluded at the sectoral level, enterprise level and municipal 
level (only for activities financed by the budget).   The Labor 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.  The idea for establishing so-called "labor 
courts" has so far been in deadlock.  Neither foreign companies, nor 
Bulgarian companies having majority foreign-control are exempt from 
the requirements of the Labor Code. 
 
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.   The minimum annual paid 
leave is 20 days.  Effective January 1, 2008, the minimum monthly 
salary is 220 BGN. 
 
During 2002-2003, the Ministry of Labor formed the new "National 
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 - and its work therefore ineffectual - a number of the 
appointed mediators received basic mediation skills training from 
the U.S. Federal Mediation and Conciliation Service. 
 
¶O. FOREIGN TRADE ZONES/ FREE TRADE ZONES 
 
The 1999 Customs Act renamed the six duty-free zones "free 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 "free 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. 
 
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.  With Bulgaria now in 
the EU, the export of goods of EU origin via the FTZs has lost its 
luster, as the new VAT regime requires full price payment, VAT 
inclusive, before selling it into another EU Member State. 
 
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, Kardzhali, Dobrich, Varna and Ruse. 
 
¶P.  FOREIGN DIRECT INVESTMENT 
 
Between 1992 and 2006, total cumulative FDI into Bulgaria amounted 
to USD 20,199.7 billion (about 64 percent of estimated 2006 GDP). 
FDI in Bulgaria totaled $5.1 billion in 2006.   Bulgaria's direct 
investment abroad was a total of USD 172 million in 2006.  In the 
period of January through September Bulgaria's direct investment 
abroad increased by USD 197 million. 
 
FDI by Year (millions of U.S. dollars) 
 
1992        34.4 
1993       102.4 
1994       210.9 
1995       162.6 
1996       256.4 
1997       636.2 
1998       620.0 
1999       818.8 
2000     1,001.5 
2001       812.9 
2002       969.7 
2003     2,096.9 
2004     3,443.4 
2005     3,861.9 
2006     5,171.7 
Total   20,199.7 
Source:  Invest Bulgaria Agency) 
 
FDI by Country of Origin 1992-2006 (millions of USD) 
 
Austria              3,454.1 
Netherlands          2,075.3 
Greece               1,819.5 
U.K.                 1,586.3 
Germany              1,207.2 
Italy           960.4 
Hungary                865.4 
Czech Republic         851.6 
Belgium and Luxemburg  823.1 
Switzerland            822.1 
USA *                  817.6 
Cyprus                 766.6 
Ireland                465.4 
France                 335.0 
Spain                  338.2 
Russia                 371.6 
Turkey                 273.3 
Denmark                193.5 
Israel                 117.5 
Japan                  102.0 
Sweden                  94.3 
Malta                   78.3 
Liechtenstein           57.0 
Canada                  56.2 
Panama               53.6 
Slovenia               47.4 
Latvia           45.8 
Romania               43.3 
(Source: Invest Bulgaria Agency) 
 
* Official GOB investment statistics currently rank the United 
States as 11th in terms of overall investment in Bulgaria for the 
period 1992-2006.   While the Central Bank credits the United States 
with investments at the rate of USD 40-50 million per year in the 
last eight years, this data is incomplete as many U.S. investors 
establish European subsidiaries to manage their investments in 
Bulgaria. 
 
FDI by Sector 1998-2006 (millions of USD) 
 
Real estate and business activities  3,784.6 
Financial activities     3,151.6 
Trade and repairs          3,028.5 
Electricity, gas and water     1,631.0 
Petroleum, chemical, Rubber Plastic   1,209.3 
Telecommunications           1,045.2 
Construction              888.1 
Metallurgy and metal products              859.5 
Mineral products (cement, glass)     635.4 
Food products             399.6 
Textile and clothing       304.1 
Hotels and restaurants          259.5 
Machine-building            231.7 
Wood products, paper               228.1 
Electrical eng., electronics, computers    178.3 
Transport             126.2 
Mining               50.4 
Agriculture, forestry and fishing      44.6 
Leather and leather products       22.1 
Vehicles and other transport equipment     12.6 
 
(Source: Invest Bulgaria Agency) 
 
 
Selected 2006/2007 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 
--Tishman Property Company, U.S., Sofia Airport, 344 
-- E.ON, Germany, energy, Northeast electricity distribution, 183 
--OTE, Greece, telecommunications, Cosmo Bulgaria Mobile, 173.9 
--Cumerio Med AD, Belgium, copper refinery and smelter Pirdop, 170 
--Sisecam, Turkey, glass industry, Greenfield glass plant, 160 
--Petromax, Austria, Crude oil refnery Silistra, 152.1 
--Carrefour, France, food rtail, Hypermarket Sofia, 103 
--Tokushukaial Corp, healthcare, Tokuda Hospital Sofia, 90 
--Pireusank, Greece, banking, Evrobank AD, 62.6 
-- Miroglio, Italy, textile, Miroglio Bulgaria, 50.2 
-- Umcore, Belgium, metals, Umicore Med, 48.1 
--Melexs, Belgium, automotive electronics, 38 
(Source: Invet Bulgaria Agency) 
 
KARAGIANNIS