Bulgaria: Investing in Bulgaria
FDI inflows to Bulgaria maintained a steady course in the early 2000s and reached an all-time high in 2007, at USD 13.88 billion (UNCTAD). According to UNCTAD's World Investment Report 2023, FDI inflows decreased in 2022, reaching USD 2.5 billion, up from USD 1.9 billion one year earlier. The total stock of FDI stood at USD 57.3 billion at the end of 2022, around 64.4% of the country’s GDP. Data from the Central Bank of Bulgaria show that FDI into the country grew by 28.1% on the year to EUR 3.37 billion (US 3.62 billion) in 2023. The largest net FDI inflow into Bulgaria in 2023, of USD 862 million, came from Switzerland, followed by Austria with USD 396 million and Belgium with USD 354 million. The most active sector for inbound foreign investment in Bulgaria remains technology, media, and telecommunications, followed by construction, real estate, and financial services (Investment Monitor).
With one of the lowest corporate tax rates in the area (10%) and its low labor costs, the country is relatively well-placed for foreign investments, which are not subject to screening by the government. There are no legal limits on foreign ownership or control of firms, and foreign entities are formally granted the same treatment as national companies. However, according to the Offshore Company Act, firms with foreign participation of more than 10% cannot do business in 28 specific sectors (including government procurement, exploitation of natural resources, banking, and insurance services, though there are certain exemptions). The Invest Bulgaria Agency (IBA) is the government’s FDIs coordinating body which provides information, administrative services, and incentive assessments to potential foreign investors. Among the challenges investors have to face, there is a shortage of skilled labor, corruption, the unpredictability of the regulatory and legislative framework which is often amended, and concerns about the rule of law. Furthermore, the judicial system is slow and intellectual property rights are not always enforced. Bulgaria ranks 38th among the 132 economies on the Global Innovation Index 2023 and 31st out of 184 countries on the latest Index of Economic Freedom.
Foreign Direct Investment | 2020 | 2021 | 2022 |
FDI Inward Flow (million USD) | 3,397 | 1,892 | 2,505 |
FDI Stock (million USD) | 59,730 | 57,989 | 57,378 |
Number of Greenfield Investments* | 37 | 50 | 76 |
Value of Greenfield Investments (million USD) | 810 | 1,046 | 2,161 |
Source: UNCTAD, Latest available data
Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.
Country Comparison For the Protection of Investors | Bulgaria | Eastern Europe & Central Asia | United States | Germany |
Index of Transaction Transparency* | 10.0 | 7.5 | 7.0 | 5.0 |
Index of Manager’s Responsibility** | 2.0 | 5.0 | 9.0 | 5.0 |
Index of Shareholders’ Power*** | 8.0 | 6.8 | 9.0 | 5.0 |
Source: Doing Business, Latest available data
Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action.
Bulgaria's strong points are:
Even though the country has become attractive to investors and especially since its membership in the European Union, Bulgaria still has to tackle a number of challenges:
Finally, the Invest Bulgaria Agency (IBA), is at the disposal of investors for their prospection as well as their implantation, and the 2004 law for the Promotion of Investment guarantees the equal treatment of domestic and foreign investments. The industrial production and high-tech sectors have been identified as a priority by the government, which has established a series of incentives for FDI in these sectors: for example, many public-private partnership opportunities exist for land acquisition, infrastructure construction and human resource training.
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Latest Update: October 2024