With low labour costs and one of the lowest corporate tax rates in the EU, Bulgaria has long been a favourite outsourcing destination. There is also no foreign direct investment (FDI) screening, nor foreign ownership rules, in place by the Bulgarian government. Now, the country is targeting particular areas, such as the automotive and life sciences sectors, where it can move up the value chain.
Bogdan Bogdanov, executive director of Invest Bulgaria Agency (IBA), tells fDi how Bulgaria plans to become more “proactive” in its approach to investment attraction and why the new natural gas pipeline, the Interconnector Greece–Bulgaria, and its ambitious green recovery plan mean it can build out renewable infrastructure in the confidence that its short-term supply of power is secure.
Q: To what extent is geopolitical instability a challenge for IBA?
A: Of course, with the challenge of regional geopolitical instability, investors are becoming more and more cautious, and they are looking into investments that are really going to bring value in the long term. At the same time, however, we see a challenge of local instability because in this turbulent environment, governments are changing; our agency should become the bridge between the investors and the local environment.
Another challenge I would outline is talent. We have a very ambitious plan, especially in the automotive industry, health and life science, mechatronics and robotics sectors. These are just a few of the areas which we are targeting and the question is how fast we can back up these industries with the right talent.
Q: Renewable energy is a high priority for all investment promotion agencies (IPAs) right now. How are you navigating the balance between sustainability and the renewable energy build out?
A: Unfortunately, Bulgaria has been highly dependent on Russian gas for the past 10 to 12 years, but this is not the case anymore. We have completed the construction of the gas interconnector between Bulgaria and Greece, so we can have a third of our annual natural gas demand secured from Azerbaijan, and we have also secured supplies of liquified natural gas. So at the moment, we don't expect any issues in terms of energy supply.
We don’t expect there to be a trade off, as energy supply is strong and we have submitted one of the greenest recovery and resilience plans in the EU. We are targeting 1.4 gigawatts of new renewables and 600 megawatts (MW) of battery storage by June 2026. For renewables, there will be five slots, each slot of 285MW, and it will be a mix of wind and solar.
Q: The tagline of WAIPA’s World Investment Conference 2022 is ‘IPAs shaping the future of FDI’. Is the future more FDI or better FDI?
A: We are looking at more, better FDI. Of course, one of the main priorities is to have FDI that adds value to our economy. But at the same time, we have a very solid ecosystem, working in several key industries in Bulgaria. We’re not only looking at the investment, but the investors becoming part of a sustainable ecosystem. We’re looking into long-term partnerships. So when we’re talking to investors, one of the most important aspects is what is value we could add to that investment.
But what of the future? Definitely, for us, the future is to be more proactive in terms of building the right business model together with the investor; proactive in remaining with the investor through the whole investment cycle, creating the necessary connections to the local ecosystem; proactive in bringing onboard the other institutions which are adding value to the investor. As a government agency, we are just one piece of the puzzle, but we also have a very important contribution that comes from the support of the municipality, so we are looking into developing and extending the scope of activities on the local investment level.
Bogdan Bogdanov is executive director of Invest Bulgaria Agency (IBA).
Mr Bogdanov was one of several IPA directors interviewed for a fDi podcast episode recorded at the WAIPA World Investment Conference 2022. Listen to the full episode here.