The ECO Issue - AmCham Bulgaria€¦ · AmCham Bulgaria Magazine August - September 2006 editorial...

A m e r i c a n C h a m b e r o f C o m m e r c e i n B u l g a r i a

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The ECO Issue:Packaging and PricesMining Industr y Troubles

The ECO Issue:Packaging and PricesMining Industr y Troubles

Member News:HVB Bank Biochim-Hebros Bank,APICS, Pfizer, Avon, Balkan Star,Cefin, Colliers, Intel

Analysis:Bulgaria Mends Its Constitutionin Hope to Improve Judiciar y

Balkans Rivalries: Old Jokes and New Characters on The EU Threshold

Bulgarian TaxesAcquire European Flavor

Analysis:Bulgaria Mends Its Constitutionin Hope to Improve Judiciar y

Balkans Rivalries: Old Jokes and New Characters on The EU Threshold

Bulgarian TaxesAcquire European Flavor

You are holding an issue of the AmCham Bulgaria Magazine that was harder than usual to wrap up. Some of the

articles you will read were written during a 35-degrees-Celsius heat wave in Sofia, amid the construction noise

coming from five major boulevards at once.

Our reporters worked all August, at the time when many businesses and most government institutions are taking

a break from work. Obtaining officials' opinions often required some serious effort. Many cell phone calls were

prefaced by, "Minister, I understand you are on a vacation, but I would like to ask you about this and this..."

Not the least, our challenges were compound-

ed by the fact that issue 72 comes out right

between two major events. Because of its

monthly schedule, it is not close enough to

either one, which made it impossible to offer

timely coverage. The first event was the tripar-

tite coalition's report on its one-year rule. The

second is the coming presidential election.

You have already read enough about what

Sergey Stanishev, Simeon Saxe-Coburg-Gotha

and Ahmed Dogan said on their first year of col-

lective governance. The presidential elections

are a bit too far for accurate forecasts, although

some say its outcome seems all but decided.

Despite these summer predicaments, we did

our best to review the events that the business

community will likely find most pertinent. Our

financial editor Marina Tsvetkova summarizes

the most recent changes and trends in tax pol-

icy on Page 18. Our political reporters assess

the constitutional amendments adopted or

expected on the threshold of the European

Union. Boyko Vassilev takes a look at the atti-

tudes toward Bulgaria's prospective EU mem-

bership in Romania, Turkey, Macedonia and

Greece (4).

Dzhevdet Chakarov, the environmental minister,

picked this vacation month to announce his

plan to impose government shareholding rules

in privately-owned mining companies in

Bulgaria. We are addressing this disturbing

development on Page 10.

All important events in the AmCham family of companies are noted between Page 36 and Page 45.

I believe that in-between key developments, prolonged vacations and lingering heat waves in Bulgaria, we have

managed to put together yet another appealing issue for you. Happy reading during the cooler month of

September!

Sincerely,

Milen Marchev

Editor-in-Chief

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e d i t o r i a l

Dear Reader,

Sofia, 21.08.2006. Outside temperature 320C. „Yavorov“ Boulevard - the way to AmCham

Bulgaria Magazine editorial office is under construction as well as 4 other main streets in

the capital.

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Publisher

American Chamber of Commerce in Bulgaria

Business Park Sofia, Mladost 4 Area

Building 2, Floor 6, Sofia 1715, Bulgaria

e-mail: [email protected]

www.amcham.bg

Editor-in-Chief

Milen Marchev

Deputy Editor-in-Chief:

Christopher Karadjov

Senior Editor:

Irina Bacheva

Layout, Design & Printing:

Milen Marchev

Writers:

Boyko Vassilev, Marina Tzvetkova,

Mina Georgieva, Panayot Angarev,

Yuliana Boncheva

Advertising

AmCham Bulgaria:

Nadejda Vakareeva, [email protected]

AmCham Bulgaria Magazine:

Milen Marchev, [email protected]

The AmCham Bulgaria Magazine reaches a broad audience

of AmCham members, leading US, Bulgarian and internation-

al companies, US and Bulgarian decision-makers, all

AmChams around the world.

Subscription is free of charge. If you would like to subscribe

to AmCham Bulgaria publications, please contact the

AmCham Bulgaria office.

i s s u e 7 2a u g u s t - s e p t e m b e r 2 0 0 6

AmCham Bulgaria Magazine is a primary forum for political and economic analyses, news, viewpoints as well as for the presentation of new business oppor-

tunities. The articles in the AmCham Bulgaria Magazine express the opinions of the authors and do not necessarily reflect the position of the American

Chamber of Commerce in Bulgaria.

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a m c h a m b u l g a r i a

3M (East) AG . AA KRES EOOD . ABB Bulgaria Ltd. . AbCRO - Bulgaria . Accor ServicesBulgaria . ACSIOR . ADIS Ltd. . Advance International Transport (Balkan) EAD . AESCorporation . AFA OOD . AGS Bulgaria Ltd. . AIG Bulgaria Insurance & ReinsuranceCompany EAD . AIG Life Bulgaria . AIMS Human Capital . ALEXANDROV GROUP COR-PORATION . Allan Collautt Associates, Inc. . Allied Pickfords Bulgaria . Alter Ego CompanyOOD . American College of Sofia . American Construction Products JSC . American EnglishAcademy . American University in Bulgaria (AUBG) . Anglo-American School of Sofia .Anton Preslavski, Liebert Hiross . APIS - BULGARIA Ltd. . APOLO Ltd. . Argento HumanResource Solutions . Aries Commerce . Ashtrom International AD . Association of BulgarianBroadcasters - ABBRO . AT Engineering 2000 Ltd. . Auditing Company Versi and PartnersLtd. . Avendi Ltd. . AVON Cosmetics Bulgaria Ltd. . Balkan News Corporation Plc. .Balkan Star . Baxter AG . Bayer Bulgaria EOOD . BearingPoint, Inc. . BG Radio .BMG Ltd. . Bodyguard-Fire-K Ltd. . Borislav Boyanov & Co. . Braykov's Legal Office .Bristol-Myers Squibb . Brown Forman Beverages Worldwide Sofia Branch LLC . BULBANK .Bulgarian American Enterprise Fund . Bulgarian Charities Aid Foundation (BCAF) . BulgarianPost Bank . Bulgarian Telecommunications Company EAD . Business Media Group .Business Park Sofia EOOD . CA IB Bulinvest . CableTel . Car Rental Bulgaria Ltd. .Carlsberg . Cefin Bulgaria EOOD (IVECO dealer) . Center for the Study of Democracy .Century21® . Chelopech Mining EAD . Cisco Systems Bulgaria . Citibank N.A.- Sofia Branch. City University . Clockwork Ltd. . CMS Cameron McKenna EOOD . Coca-Cola BulgariaEOOD . Coca-Cola HBC Bulgaria SA . COLLIERS International . ConsulTeam Recruitmentand Selection Ltd. . Cook Communications . Corstjens Worlwide Movers Group . CPMInternational Ltd. . Curtis / Balkan Ltd. . DeConi M&A . Deloitte Bulgaria EOOD . DHLExpress Bulgaria Ltd. . Diageo Bulgaria Ltd . Diamed Ltd. . Dimitrov, Petrov & Kalaidjiev .DIMON Bulgaria . Djingov, Gouginski, Kyutchukov, & Velichkov . Dobrev, Kinkin & LyutskanovLaw Firm . Domaine Boyar AD . Dr. Emil Benatov & Partners . Dr. I.S. Greenberg MedicalCenter, Ellen Ruth Greenberg, Ph.D. . DynCorp International LLC . Effekten Und Finanz - SofiaAD . Electron Progress AD . Eli Lilly and Company . Elido (Lamel Ltd.) . Elmek SportBulgaria EOOD . Elta consult AD associated partner of CB Richard Ellis for Bulgaria . EmersonProcess Management AG . Encouragement Bank AD . Engineeringservice Sofia Ltd. .Epsilon Interactive . Equest EAD . ERATO HOLDING PLC . Ernst & Young Bulgaria . ExpoTeam Ltd. . Flying Cargo Bulgaria Ltd. - Licensee of FedEx . Force Delta Ltd. . ForemConsulting Bulgaria . Forton International JSCo . General Electric International . GenmarkAutomation Bulgaria . GiTy Bulgaria ltd. . GlaxoSmithKline . Goodyear Dunlop Tires Bulgaria. Grand Hotel Sofia . Grenville . Grey Worldwide Bulgaria EOOD . Group 4 Securitas(Bulgaria) OOD . Hewlett-Packard Bulgaria Ltd. . Hilton Sofia . Honeywell EOOD . Horizon. HVB Bank Biochim AD and HEBROS Bank AD . IBM Bulgaria . Ideal Standard Bulgaria. Industrial Holding Bulgaria . In Time Ltd. . Infoguard - Stefan Nedkov . ING Bank SofiaBranch . Intel Czech Tradings, Inc. . Interbrands Marketing & Distribution Inc. OOD .Interdean . Investbank Plc. . IP Consulting Ltd. . ISI Emerging Markets (Internet Securities,Inc.) . Johnson & Johnson Doo. . Junior Achievement Bulgaria . Kaliakra AD . KamenitzaAD . Kamor Auto Ltd. . Kempinski Hotel Grand Arena Bansko . Kolbis International TransferCorporation . KPMG Bulgaria . Kraft Foods Bulgaria . LANDMARK Properties Bulgaria .Lexim Sofia Ltd. . Lindner Bulgaria OOD . Lirex BG Ltd. . Lowe Swing Communications. M & M Air Cargo Service BG OOD . M3 Communications Group, Inc. A Hil & KnowltonAssociate . Maersk Bulgaria Ltd. . Magnetic Head Technologies . Maritza East III PowerCompany AD . Marsh EOOD . MARTERN EOOD . McDonald's Bulgaria Ltd. . MerckSharp & Dohme IDEA Inc. . Meridian Hotels Bulgaria OOD . Microsoft Bulgaria . MiltechLtd. . Mmd, Corporate, Public Affairs & Public Relations Consultants . Mobiltel EAD . MonbatPlc. . Moten Sport . Moto Pfohe Ltd. . Motorola Bulgaria EAD . National DISTRIBUTORS. NATO Defense College Anciens' Association . NDT Equipment Supplies LTD . Net Is Ltd.. Neterra Communications . Neumann International AG . New Europe Corporate AdvisoryLtd. . Nexcom Bulgaria EAD . Nu Image Bulgaria EOOD . Opet Aygaz Bulgaria EAD .Oracle East Central Europe Limited - Branch Bulgaria . Orbit Ltd. . Orkikem Ltd. . OSGRecords Management . Parsons E&C Bulgaria Limited . Pfizer H.C.P. Corporation,Representation Office Bulgaria . Philip Morris International Inc. . Pioneer Semena BulgariaEOOD . Popov Legal Office . PostPath Inc. . Pratt & Whitney . PricewaterhouseCoopers. Prima Soft Ltd. . Procter & Gamble Bulgaria . ProSoft . PSG Payroll Services Ltd. .Radisson SAS Grand Hotel . Reader's Digest EOOD . Rising Force Co., Ltd. .Rockwell/Intelpack . S&T Bulgaria . Sante International OOD . Schering - Plough CentralEast - Bulgaria . SEAF Management Bulgaria EOOD . Seplex Law Offices . Sheraton SofiaHotel Balkan . Sherita M Ltd. . Sienit Ltd. . SigmaBleyzer Investment Group LLC -Representative Office . Soravia Bulgaria Ltd. . Stefan Dimitrov, Norman Management Co. Ltd.. Symix Bulgaria . TechnoLogica EOOD . TeleLink AD . Tero Halmari, European Bankfor Reconstruction and Development (EBRD) . The American Research Center in Sofia . TheAtlantic Club of Bulgaria . The Executive Centre . Tishman Management Company Ltd. .Tissue Bank Osteocenter Bulgaria EAD . TM Auto Ltd. . TMF . Tumbleweed CommunicationsEOOD . Unimasters Logistics Group AD . Unisys Bulgaria Branch . United Consulting Ltd.. Urban 2000 Ltd. . Vaptsarov Joint Stock Company . Vector Management Bulgaria EOOD. Videolux Holding / Technopolis . VIP Security Ltd. . VISA International Service Association. VSK Kentavar Ltd. . Westinghouse Energy Systems Bulgaria Branch . World Courier .Wrigley Bulgaria EOOD . Xerox Bulgaria Ltd. . Yavlena Ltd. . Zlati Dinev Studio in partner-ship with Outerbridge/Morgan .

Board of Directors of the American Chamber of Commerce in Bulgaria

President Mr. Borislav Boyanov Borislav Boyanov & Co.

Vice President Mr. Stefan Dimitrov Allied Pickfords Bulgaria

Second Vice President Mr. David Hampson Grenville Financial

Treasurer Mr. Anthony Hassiotis Bulgarian Postbank

Members Mr. Kenneth M. Lefkowitz New Europe Corporate Advisory

Mrs. Olga Borissova AUBG, Director European Programs

Mrs. Tanya Kosseva Landmark

Mr. George Randelov IBM Bulgaria

Mrs. Elitsa Tsaneva Ideal Standard Bulgaria

Mrs. Maria Vranovska Eli Lilly and Company

Ms. Evgenia Stoichkova Coca-Cola Bulgaria

Mr. Christopher Thompson Bearing Point, CLRP

Ex-Officio Member Mr. James Rigassio US Senior Commercial Officer

Executive Director: Valentin Georgiev

Contentse u a c c e s s i o n

Bulgaria Mends Its Constitution in Hope to ImproveJudiciary . . . . . . . . . . . . . . . . . . . . . . . . . . . .4By Marina Tsvetkova

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Bulgaria May Lose $350 Million in Foreign Investment . . . . . . . . . . . . . . . . . . . . .10By Milen Marchev

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Packaging Matters . . . . . . . . . . . . . . . . . . . . .14

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Bulgarian Taxes Acquire European Flavor . . . . . . .18

Green Light for Second Round of Negotiations onU.S.-Bulgaria DTT . . . . . . . . . . . . . . . . . . . . . .21

a n a l y s i s

Europeans Split, ill-informed on EU Enlargement . . . . . . . . . . . . . .22

a n a l y s i s

Balkans Rivalries: Old Jokes and New Characters on EU Threshold . .24By Boyko Vassilev

b a l k a n s

Meet Montenegro, please . . . . . . . . . . . . . . . . .28

v i s i t s

The Connection between Economic Growth and National Security . . . . . . . . . . . . . . . . . . . . . .31

a n a l y s i s

External Balance Narrows Risk Exposure . . . . . . .32

s o c i a l r e s p o n s i b i l i t y

Focusing to Lead . . . . . . . . . . . . . . . . . . . . . .34

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American Research Center in Sofia Holds First Summer Session . . . . . . . . . . . . . . .36

HVB Bank Biochim, Hebros Bank Increase InterestRates on Deposits . . . . . . . . . . . . . . . . . . . . .36

APICS Launches New Certified Program . . . . . . . .37

Certificate Program In Supply Chain ManagementFundamentals . . . . . . . . . . . . . . . . . . . . . . . .38

Pfizer Appoints New General Manager for Bulgaria . . . . . . . . . . .39

Avon Celebrates 120 Years . . . . . . . . . . . . . . . .40

Balkan Star Opens New Service Center in Plovdiv . .41

Cefin Service Center Celebrates First Anniversary . .42

Colliers: Office Leasing in Sofia, Suburbs Grows . .42

Intel Teams with Top Universities for Software-relatedResearch . . . . . . . . . . . . . . . . . . . . . . . . . . .43

New English-language Property Magazine in Bulgaria . . . . . . . . . . . . . .43

NATO Conference Addresses Regional Security,Technologies . . . . . . . . . . . . . . . . . . . . . . . . .44

a m c h a m e v e n t s

Seminar on the EU Environmental Liability Directive . . . . . . . . . . . . . . . . . . . . . .44

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From Project to Real Construction . . . . . . . . . . . .45

n e w m e m b e r s . . . . . . . . . . . . . . . . . . . .46Century21®, Epsilon Interactive, Reader's Digest EOOD, World Courier

m u s i c

Pink Floyd Guitar Fetches £33,000 For Charity . . . . . . . . . . . . . . . . . . . . . . . . . .47

Sting - Another Fender Hero . . . . . . . . . . . . . . .48

"The fourth amendment to Bulgaria'sconstitution must be moved to theNational Assembly by mid-September," said imperativelyFranco Frattini, European commis-sioner on justice, freedom and secu-rity, during his August 2006 visit toBulgaria. "The amendments to theconstitution must guarantee theindependence of the judiciary sys-tem, which does not mean impunity,but a higher level of responsibility ofthe judiciary system to the commu-nity," Frattini added.

The repair of the fundamental law is

progressing more than

sluggishly.

It became apparent during the peaksummer season months that proceed-ings related to the fourth amendmentto the constitution have been stopped.The proposed revision was aimed atstrengthening the prerogatives of theSupreme Judicial Council and atdecentralization of municipalities. Afterthe latest amendments were initiated,legal experts marked down somebasic ideas, but there is still no clari-ty regarding the wording of the specif-ic texts.

In March 2006, the parliamentapproved the third amendment to thefundamental law, albeit with question-able results. That is why it becameimperative, barely three months later, toinitiate the fourth amendment.

The "error" that was made was con-tained in a couple of paragraphs thatwere added to the fundamental law,which shattered the 16-year-old myth ofthe exceptional independence of thejudiciary and of the untouchables atsome of the key positions who consid-ered themselves responsible "to Godalone."


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Bulgaria Mends ItsConstitution in Hope toImprove Judiciar y

By Marina Tsvetkova

Bulgarian Minister of Interior Rumen Petkov and European

Commissioner Franco Frattini on a visit to the centre for

video surveillance at the Sofia police directorate.

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The European Commission reacted byaccusing Bulgaria of having placed theindependence of its judicial system injeopardy. The balance was disrupted infavor of the executive, that is why theremust be guarantees in place that wouldfavor the magistrates, European expertssaid. Hence, Brussels proposed toestablish an independent supervisory

body within the judiciary.

The parliamentary majority - consistingof the Bulgarian Socialist Party (BSP),the National Movement Simeon II (NMS),and the Movement for Rights andFreedoms (MRF) - was not enthusiasticabout the European proposal. The parlia-mentarians may well disregard this rec-ommendation, even though BrigitteCharnota, manager of the team forBulgaria in the General DirectorateExpansion, is adamant about the creationof the supervisory body. Bulgarian parlia-mentarians may be not capable ofexplaining to the European experts thatwe already have not one but two super-visory bodies - the Supreme JudicialCouncil (SJC) and the Inspectorate atthe Ministry of Justice.

Currently, legal experts are trying tofind a way to convince their Europeancolleagues that their proposal is notfeasible for Bulgaria. One of their mainarguments is that no such body existsanywhere else in Europe. KameliaKassabova of the NMS, who is amongthe members of the working group incharge of the reshaping of the funda-mental law, said that the concept of anindependent judicial supervisory bodyrepresents a strange interference inconstitutional affairs and could emergeand an exotic appendix to the funda-mental law. Her colleagues from theBSP and the MRF share a similar view.

"It is important to us that

Bulgaria's judiciary system

is independent,

and accountable, that there would be atransparent selection when appointingmagistrates and that cases would bedistributed according to a random prin-ciple." EU Enlargement CommissionerOlli Rehn said when he presented themonitoring report last May.

The report expressed Eurocommission'sconcerns that constitutional reformsprovide the minister of justice with con-siderably larger prerogatives in draftingthe budget of the judiciary, in training,promotion and relief of duties of magis-trates, the managing the infrastructureand the records of the courts of justice.

The commissioners raised also theissue of restructuring the SupremeJudicial Council:

"We do not think that a larger numberof investigations and formal charges, orenhancing the role of the executiveabove the role of the judiciary alonewould result in a substantive reform ofthe judiciary system. We would rathersay that the judicial reform may beimplemented by a fundamental restruc-turing of the authority managing thejudiciary - namely the Supreme JudicialCouncil."

Legal experts from the parliamentarymajority admitted that they have failedto understand what the EC actuallywants. Some of them think that Europehas failed to present its ideas in fulland that is why it is not quite clear nowwhat exactly should be done. It is anabsurd situation, but the incumbents aredrafting various options without having aclear idea whether the amendments


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would not emerge as an obstacle toBulgaria's accession.

Necessary amendments

Deleting provisions that list the preroga-tives of the minister of justice, as wellas those that require the heads of thesupreme courts to be accountable tothe parliament will take the edge off thethird constitutional amendment, anddampen the crisis. This, however, wouldnot be sufficient as the EuropeanCommission was quick to grasp theidea that the key lies with the SupremeJudicial Council.

The management of the AmericanChamber of Commerce expressed asimilar opinion in an open letter toPrime Minister Stanishev, which pro-posed that the personnel manage-ment authority of the third powershould be restructured. The problemwas described accurately - the mech-anism of proceedings of the SJCdoes not work properly. The resultsare obvious - a judiciary system,which is not sufficiently accountableand transparent. That is why it wouldbe better to eliminate the opportunityto allow prosecutors play the leadingrole on magistrates, and vice versa.

The idea is as follows - the personnelmanagement authority of the judiciaryshould have only judges as members.For more than 16 year the council hasbeen staffed by prosecutors, investi-gating magistrates and lawyers, whoobviously have no place there. Thisarrangement has resulted in a para-dox - parties to court cases areempowered to decide the careers ofarbitrators. Solving this problem hasfailed to crystallize into a regulation,and the fourth amendment seems tobe its last possible chance. There arequite a few jurists outside the parlia-ment, who think that these constitu-tional amendments will actuallylaunch the

genuine reforms of the

judiciary system.

The fiscal autonomy of municipalitiescould also be listed on the agenda ofthe fourth amendment to the constitu-tion. For this purpose, Article 60 andArticle 84 of the fundamental lawshould be changed. Amending these

f e e d b a c k

Only one out of every five Bulgarians believes that they would get a fair judg-

ment in case they have to go to court. A similar number of people are convinced

that exactly the opposite would happen. These are the conclusions from a sur-

vey conducted by Alpha Research sociological agency and commissioned by the

U.S. Agency for International Development.

According to researchers, the trust in Bulgaria's courts of justice will depend, in

the short term, on the change of opinion of the undecided - some 60 percent

of all respondents. Freelancers and private-sector employees seem to have more

trust in the legal process, while people with lower incomes (40 percent), the

Roma (37 percent) and the poorly educated (30 percent) seem to be much

more suspicious.

Most of the respondents consider courts of justice to be independent, but less

than 10 percent of the respondents believe that it is nearly unthinkable for a

Bulgarian judge to levy an unfair judgment motivated by economic or other inter-

ests. According to 37 percent of the respondents, this is fairly possible, and

about one in two consider this as a "relatively probable" phenomenon.

The influence of political parties on the judiciary is most visible in Sofia. The

smaller the place, the higher the perception of economic pressures. Again, peo-

ple with less education and minorities representatives see the court of justice as

subject to a very high extend of political influence. At the same time, people with

university education, employees and the representatives of free-lance profes-

sions find the system as being the most resistant to partisan practices but nev-

ertheless vulnerable to economic and criminal pressure.

When asked what they expect from the reform, 80 percent of the respondents

said they want faster court of justice proceedings and better administrative ser-

vices. The smallest percentage of answers contained the recommendation to

suppress corruption. According to sociologists, this means people see the com-

bat against corruption as the most difficult task.

European Commissioner on Justice, Freedom and Security Franco Frattini on a meeting with Bulgarian Prime

Minister Sergey Stanishev in Sofia.


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two texts will allow municipalities toindependently set the rates of localtaxes - something for which mayorshave been fighting for a decade already.

Currently, the NMS is pressing for thelong-awaited decentralization, and thefaction has moved its own draft of theconstitutional amendments in question.The idea of the 'tsarists' is to set anupper and a lower limit on the taxesrates, thus creating a margin for themunicipalities to operate in. The para-meters would be much clearer that way,and in practical terms, taxation in thedifferent regions of this country wouldnot suffer from any drastic deviations.Besides, central authorities will continueto execute control over financial disci-pline on a local level.

Fiscal decentralization

looks nice, but it would also meantremendous expenditure of budgetfunds, Finance Minister PlamenOresharski said recently. For 2005alone, transfers from the central budget

to local treasuries exceeded 200 millionLeva.

Oresharski launched last January theidea that simultaneously with theamendments to the constitution, onemore option should be introduced inprovide the framework for bankruptingsmall and financially weak municipali-ties.

According to government financialexperts, the state must be allowed toimpose a "financial board arrangement"and declare municipalities with largeoutstanding debts insolvent. Smallmunicipalities could merge with largerand more economically viable neigh-bors. Some municipalities currently actas subscribers to government subsi-dies.

"It would be an illusion to expect that allmunicipalities will be able to performfinancially and avoid indebtedness,"Oresharski said.

According to the current financial status

quo, only 35 out of the 264 municipali-ties in Bulgaria could claim they have nofiscal problems, while another 70 suffera chronic deficit of funds, according todata released by the NationalAssociation of the Municipalities in theRepublic of Bulgaria (NAMRB). It is con-sidered that a municipality could neverclaim insolvency, as those that have themost serious financial problems are atthe same time recipients of the bulk ofsupplementary budget financing. Hence,the poorer the financial performance ofa municipality, the higher amount offinancing it is allocated by the centralbudget.

Fiscal decentralization is intended tobalance the distribution among "rich"and "poor" municipalities, NAMRB pres-ident Ginka Chavdarova said. The prin-ciple would be that the state wouldinterfere only in case the revenues fromlocal taxes and fees are insufficient. Itis clear that regardless of its vaguenessfrom a financial point of view, localauthorities' fiscal autonomy sooner orlater will become a fact. ■

a r c h i v e s

In July 1991, during the tenure of thecoalition government of Dimitar Popov,appointed with the mandate of theMovement for Rights and Freedoms,the 7th Great National Assemblyadopted the new Constitution of theRepublic of Bulgaria. The historicevent was celebrated with champagnein the parliamentary canteen. Outside- the square was alive with cries,posters and placards - 39 membersof the parliament were stoicallyenduring their hunger strike, surround-ed by angry supporters of the thenUnion of Democratic Forces (UDF)National Movement.

Actually, the main issue that triggeredthe hunger strike was the refusal ofthe majority to conduct a referendumbefore the constitution was adopted.The anger, however, was aimed notexactly against the "red" members ofthe parliamentary majority, but againstthose representatives of the UDF whosigned then fundamental law. Thus,the constitution was born almostsimultaneously with the first splinterfactions of the right-wing coalition.

Archive photo of pro-

testers against the new

bulgarian Constitution

in front of the

Parliament building

15 years ago.

The Chairman of the

7th Great National

Assembly Joseph

Petrov celebrates the

adoption of the

Constitution in 1991.

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Bulgarian and foreign mining companiesare facing a serious threat caused bygovernment intentions - again. Ministerof Environment and Water ResourcesDzhevdet Chakarov announced in earlyAugust that he would initiate takingsteps to allow the state to become ashareholder in private mining companiesin Bulgaria. Although the governmenthas not expressed its position on theissue formally Minister Chakarov hasalready shared his intentions publicly onseveral occasions.

"The state, together with investors, will

participate in gold and silver miningoperations," Minister Chakarov said dur-ing a news conference on August 2. Headded that the specific scheme foracquiring shares by the state is stillunder discussion. In all cases, theinvestors will retain shares proportionalto their substantial assets, the ministerpromised. At the same time, he went asfar as to propose that some of theeffective concession contracts shouldbe revised. According to MinisterChakarov, the money obtained as aresult of the revised concessions shouldbe used to establish a special fund

under the direct management of thefinance minister.

Two foreign companies operating inBulgaria - Dundee Precious Metals andMartern - have alone invested more than$100 million so far. They have plannedto raise the total amount to around $450million, provided they are granted theconditions required for normal business.These investments, in view of the recentstatements made by Minister Chakarov,may now skip Bulgaria.

It might be a good idea to place the

Bulgaria May Lose $350 Million in Foreign InvestmentState administration has again created problems for mining businesses. The

American Chamber of Commerce in Bulgaria and Confederation of the

Employers and Industrialists in Bulgaria voice their concernsBy Milen Marchev

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state as a shareholder in foreign-ownedmining companies, if the idea waslaunched at the time the stateembarked on signing concession agree-ments. Now, three or four years after theWestern companies made seriousinvestments, it is really strange to startimposing new conditions and searchingfor ways to bring the state as a partnerinto the ventures.

Mining investments

Canadian Dundee Precious Metals, forinstance, started operations in Bulgaria inearly 2003. The company is developingthe Chelopech mine and the Ada Tepemining project near Krumovgrad. TheChelopech project involves the investmentof $175 million, with $45 million alreadyprovided at the end of 2005. Another $18million have already been invested inKrumovgrad, and a total of $75 millionhave been budgeted for the next twoyears - unless the company decides topull the plug because of unfavorable busi-ness climate. Currently, 740 workers areemployed full-time at Chelopech, andanother 120 have entered into contractualrelations with the company. TheKrumovgrad mine employs 70 workers.

In view of these investment projects,Dundee Precious Metals was awardedFirst-Class Investor Certificate in 2004.And today, barely two years later,Bulgaria's environmental minister ispressing the investors to accept the stateas a shareholder both in Chelopech andKrumovgrad, regardless of the majorinvestments made by the private entre-preneurs.

Another key foreign investor in Bulgaria'smining business is the Canadian compa-ny EurOmax, which operates here asMartern. It discontinued this summer itsgold prospecting operations in the regionof Popintsi (Central Bulgaria).

The company was granted in 2003 per-mission by the Ministry of Environmentand Water Resources to engage inprospecting in the region. Now, becauseof protests by the local population andenvironmental organizations, and due tothe complete lack of interest demon-strated by the state, Canadians areforced to suspend operations at Popintsi.

Martern has already spent 700,000 Levaon its permit. The company planned toinvest another $10 million in Popintsi,and the total investments may reach asmuch as $150 million, if the deposit isactively mined. With the protests of thepeople in Popintsi and in view of thestatements made by Minister Chakarovimplying the existence of plans for thestate to become involved in this busi-ness, Martern has started to questionseriously the feasibility of their futureoperations in Bulgaria.

Business community

responds

The most influential business associa-tions in Bulgaria responded immediatelyto the statements by Minister Chakarov.

The American Chamber of Commercein Bulgaria and the Confederation of theEmployers and Industrialists in Bulgaria(CEIBG) * expressed at a shared newsconference their concerns about theideas to revise the concession contractson mining mineral deposits. In a jointstatement, the two organizationsdescribed the environmental minister'sintentions as a negative signal to the for-eign investors.

AmCham and CEIBG note in their state-ment that mineral resources mining is ahigh-risk venture as the prices of natur-al resources are set by the internation-al commodity exchanges and are sub-ject to frequent and sometimes dramat-ic fluctuations. The business associa-tions reminded that the concession to

A greener point of viewBulgaria's environmental organizations celebrated a victory when gold prospect-

ing near Popintsi was terminated this summer by Canadian company Martern.

Activists from Za Zemyata, Federation Green Balkans and Petlovo Initiative

Committee broke into folk

dances and drank rakya to the

village's good health. All hailed

eco-minister's statement that

the state may review mining

concessions. Foreign mining

companies indeed have

stopped or almost stopped their

work in Bulgaria in view of the

uncertainty these pronounce-

ments have created. The area

around Popintsi has a rich his-

tory of mining, and people

there know all too well the pros and cons of this business. Plenty of miner wid-

ows live there, and many former workers have poor health after the years spent

in the extraction industry. Locals also remember that in the 40-s when the state

was the sole owner and operator of all mines, nobody cared about the environ-

ment, and accidents were a matter of fact. Since foreign mining companies have

been allowed to work in Bulgaria, every project must be approved by the Ministry

of Environment and Waters. Experts scrutinize all plans in depth, and the fact that

the companies have received the green light at all, signifies that certain environ-

mental and safety standards have been satisfied. It is very doubtful that if the

state becomes a shareholder in these operations, the scrutiny will continue to be

so thorough. In essence, state officials will be evaluating other state officials - and

not likely to be too harsh on their peers. With this in mind, the celebration of

environmental activists seems a bit rushed. Also, Minister Chakarov said that if

the concessions are revised, the generated income will go into a fund controlled

by the finance minister. This fund would be used for infrastructure projects and

co-financing of various Euro-projects. Translated, that means any fiscal gains

from the state's participation in mining ventures are not likely to help directly the

rehabilitation of mining sites, but will flow into various budget holes instead. Now,

that is not a reason for a celebration, is it?

People from Popinci village celebrate the stopping of explo-

ration work in their region.

* BIBA (The Bulgarian International Business Association) and EABG (the Employers' Association of Bulgaria) merged on May 16, 2006, thus finalizing a long processof consolidation efforts. The new organization was named Confederation of the Employers and Industrialists in Bulgaria (CEIBG) - The Voice of Bulgarian Business.The merger decision was taken by parallel general-assembly meetings of the two organizations.

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prospect, explore and mine mineralresources are among the schemes forpublic-private partnership applied world-wide. Market trends have demonstrated,however, that private companies aregenerally flexible, capable of offsettingthe inherent risks and responsive tocompetition.

According to AmCham and CEIBG, therole of the state is to persist in a target-ed policy to develop the mining industryand to create a competitive environmentfor the enterprises engaged in this busi-ness. The representatives of the busi-nesses insist that relevant legislation mustbe promulgated with the aim to makestate policies more transparent, providenormal conditions for the operations ofthe sector, and guarantee the compliancewith environmental standards.

Other precedents

The August surprise served by theMinistry of Environment and Waters wasnot a precedent for the private miningcompanies this year. In January and

February 2006, the same ministrydelayed to the critical point its final deci-sion regarding the assessment of theimpact on the environment and watersrelated to the Chelopech mine.

Kenneth Lefkowitz, then AmCham pres-ident, and Sasha Bezuhanova of theBulgarian International BusinessAssociation (BIBA) expressed their con-cerns in an open letter to Bulgaria'sPrime Minister Sergei Stanishev.

The January attempt to delay bybureaucratic means projects launchedby private business is a traditional toolemployed by the state administrationwhenever it aims to derail a specificdevelopment. Western investors havealready grown accustomed to suchcapriciousness displayed by the state.But the environmental ministry's intent torevise effective agreements in order toplace the state as a shareholder in pri-vate mining operations may be acceptedas indicative of the existence of a sys-temic problem, which must be solvedpromptly. ■

Copy of the opened letter to Prime Minister Sergey

Stanishev written by the American Chamber of

Commerce in Bulgaria and the Bulgarian

International Business Association (BIBA) and the

Employers Association of Bulgaria in February

2006.

Photos from Chelopech mines.

Pre

ssph

oto

BTA

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Chamber of Mining and Geology In Support of the ProjectsThe investment projects of the

Canadian Company Dundee Precious

and Martern are supported by the

Bulgarian Chamber of Mining and

Geology. In several statements before

media Petar Petrov from the Chamber

said that both companies are

obstructed in their efforts to extend

investment projects in Chelopech and

Popintsi. According to Petrov, the pol-

icy of the Ministry of Environment and

Waters is not beneficial for foreign

companies which are exploring natur-

al resources, which in effect would

harm to great extent the mining indus-

try. In August the Chamber pressed

for urgent changes in the industry

regulations, particularly in the Natural

Resources Act. According to

Lachezar Tsotsorkov, Chair of the

Chamber, approximately 30 000 work-

ers are involved in the industry sector

with a production of 2 billion BGN

annually. In addition, some of the eco

organizations are also taking steps to

voice concerns over the policies of

the Ministry of Environment and

Waters. Some of these organizations

are still examining the possibilities for

future activities in order to help the

investments of foreign companies.

One of them, Alliance of united non-

governmental eco organizations

"Vitoshka Konferencia 2002", is start-

ing protest campaigns all over the

country against the policies of the

Ministry, and will alarm the interna-

tional community, in particular the

European Green Party and the

European Commission.

Exterior view from Chelopech.


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The term "packaging" in its current meaning emerged in the1930s, but its use became widespread as late as the 1950s.Before that, the currently implied meaning had not existed atall. Cases, bags, barrels, jars for pickles, bottles were used todescribe tools of the trade - practical inventions, manufac-tured with pride, purchased with attention to details and care-fully stored. Before the aluminum cans, the only discardedproducts were made of cheap and widely used biomass thatvanished back into nature after use.

The Ministry of Environment and Waters (MEV) and the orga-nizations engaged in packaging waste recycling signed in May2006 a memorandum on the three-year national objectives inre-using and recycling packaging waste. The document con-tains the technical criteria, which the system for separate col-lection of packaging waste has to comply with, as well as theinvestments and operational costs required for the establish-ment of such a system. The organizations assumed the com-mitment to develop the system by 2008 to a level that wouldcover six million people, disposing of some 400,000 packag-ing units annually.

Actually, that was the end

of the dispute between businesses and the environmentalministry, which agreed to approve the annual report of therecycling company and allowed its clients to avoid raising theprices of general commodities.

In 2005, each company had to pay a packaging fee to recy-cling organizations, with which the businesses had signed therelevant agreements, which was about 20 times lower than thestate fees.

Business representatives claimed that if they were to agree topay the state fees, prices of bread would rise by 3-4 percent,meat and dairy products - by 5-6 percent, and of non-alco-holic drinks and mineral water - by 13 to 14 percent.

Bulgaria's businesses are experiencing a growing concerncaused by the environmental standards, entrepreneurs said.The European Union (EU) is setting steep requirements relat-ed to the preservation of the environment that have to be

Packaging MattersNew EU regulations on wrappings and casings disposal will affect Bulgarian

businesses. Waste separation is the way to go

Ecobulpack teams are distributing containers for recycable disposals around Sofia.

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observed as production standards, and require environment-friendly technologies and waste management. A new WasteManagement Act, which imposed a number of restrictions thatproducers have to comply with was promulgated in 2003. Inorder to avoid excessive difficulties, Bulgaria negotiated tran-sitional periods in several sectors - for instance, the utilizationof packaging waste by 2007, recycling of plastic packaging by2009, and will have initially easier times with respect to airquality, water management and monitoring and control ofindustrial pollution.

Until the end of 2006 Bulgaria will receive around 100 millionLeva annually as grants for projects and investments in envi-ronment-friendly productions and environment preservation,whereas the most expensive projects will be financed by theEU ISPA program.

The Waste Management Act and the Regulation on Waste andPackaging Waste were promulgated in line with Bulgaria'scommitments to harmonize its legislation with the legislationeffective in the EU. The "waste act" requires all producers andimporters to pay a product fee for imported products or forproducts marketed in marketing packaged products. Thepackaging fee is accrued per kilogram of packaging accord-ing to the specific type of material.

Producers and importers could be relieved of paying this fee,provided they could prove to MEV they have observed theirobligations related to the recycling of the packaging theyhave marketed. Compliance with this obligation could be indi-vidual (companies collect and recycle packaging by them-selves), or collective - through a collective organization. Acollective organization is engaged in re-using and recycling

the packaging used by its clients. Besides, such an organi-zation has to create a system for the separate collection ofwaste packaging, which would include the placement of suit-able waste containers and the construction of waste separa-tion installations.

The EU environment legislation contains around 300 instru-ments - directives, regulations, decisions and recommenda-tions, together with all the relevant amendments and supple-ments. The basis of environmental legislation consists ofabout 70 directives (some of which have undergone multipleamendments and have been supplemented by 'daughterdirectives'), and about 20 other regulations. More than 95 per-cent of these instruments have been already transposed intothe effective Bulgarian legislation and are being applied. Theproblem is that the application of the fundamental directivesrequires investments of about 7 billion Euro. Businesses willhave to cover some 30 percent of this amount over the next10 years.

Clean nature is really expensive,

but the benefits of attaining the European

environmental standards for the communi-

ty as a whole will be much greater.

"Let us keep Bulgaria clean for the sake of our children!"urges the main slogan of ECOBULPACK, which has emergedas Bulgaria's largest national organization engaged in the uti-lization of packaging waste. The organization was establishedin 2004, and currently has some 2,300 companies as clientsforming an annual target of 120,000 tones of packaging wasteper year. By the end of 2006, a total of 42,000 tons of pack-

The prices of household appliances might rise because

of the fees accrued for the processing of waste from

electrical and electronic equipment. The new prices were

delayed, as there isn’t a company licensed to recycle

such waste, importers of "white" and "black" technology

claim.

The accrual of such a fee is provided for by the provi-

sions of a regulation, which was published several weeks

ago in government's Official Gazete. Various amounts will

have to be paid, according to this regulation, for the pro-

cessing of each kilogram of the materials used in an

electrical appliance, and branch sources expect that

prices will rise by an average of 3 percent. The price of

a 60-kilogram washing machine will rise by 12 Leva, and

of a refrigerator - by up to 36 Leva.

"White" technology sellers claim that the prices of this

group of appliances have reached their maximum level,

and the clients are already selecting items by their make

rather than by their price. With the expected hikes, buyer

might revert to their previous habits of choosing an item

by its price.

Household AppliancesWith New Prices

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aging waste will be collected and recycled.

ECOBULPACK has contracted around 30 companies dealingwith waste collection in Bulgaria. It has placed about 4,500containers for the separate collection of waste in 20 munici-palities. A total of 29,103 tons of packaging waste were col-lected and submitted for recycling in 2005 through the ECOB-ULPACK system. By force of an executive order signed by theenvironment minister, the annual report of ECOBULPACK for2005 was approved, and the member companies wererelieved of the due product fees.

Currently, the ECOBULPACK system for separate collection ofpackaging waste covers the following municipalities: theSerdika and Vazrazhdane regions in Sofia, Sliven, Gabrovo,Yambol, Lovech and Nevestino. ECOBULPACK has placedcolor-coded containers for the different types of waste in allthese municipalities. The containers have been designed to beas strong and as tamper-proof as possible.

In early July 2006, ECOBULPACK launched its system of sep-arate collection of packaging waste also in the region ofBankya, a spa suburb located nearly 5 kilometers west ofSofia.

Some 2,500 households were each provided with a yellowBeaver-type household container for the separate collectionof waste paper, plastics and metals. Another 170 large yellowcontainers were placed at administrative premises, commer-cial outlets, sanatoria, hotels and schools. The initiative waslaunched with the recruitment and training of eco-ambas-sadors, who - on behalf of ECOBULPACK - have visited eachof the households in the spa township and explained the ben-efits of the separate collection of waste, the structure of theECOBULPACK system and the manner of separating waste.

The collection of waste from Bankya started on August 15,according to a pre-announced schedule. Within a separatescheme, 50 green Iogo-type containers for the collection ofglass waste will be placed at major street crossings. The pro-ject implemented by ECOBULPACK in Bankya is consideredto be unique for Bulgaria. It was designed by using the expe-rience gained in Paris and a number of other European cap-ital cities.

The investment program of the company includes the con-struction of

waste separation installations.

This will reduce the quantity of waste that will have to bedeposed at waste dumps by 30 percent. The installations will beused for additional sorting of the separately collected waste aswell as for a preliminary treatment of mixed hard waste beforeits final deposition. The first installation of this kind in Bulgariawas commissioned by ECOBULPACK in the town of Sliven.

The organization is cooperating closely with municipalities,which have launched their own projects for the separate col-lection of waste by organizing charity events. Earlier this year,ECOBULPACK participated in the cleaning of Berkovitsa riverbed, the Irakly natural reserve, and of various sites in the Rila

mountain, and the collected separate waste was submittedfor recycling. A project for the separate collection of wastewas launched also at the Sofia University and at severalschools in Bulgaria. A parallel awareness program is beingimplemented with the aim to inform citizens and provoke theirinterest. Instructions dealing with the proper separate collec-tion of waste, with the markings on packaging and on thebenefits of the separate collection of waste are being dis-tributed. ■

After Bulgaria's accession to the EU, the packaging of all

drugs on sale will have to be changed. The name of the

drug will have to be written in Bulgarian, according to the

provisions of a new draft act on drugs, approved by the

Council of Ministers. Currently, the leaflet with instructions

for use of all drugs must be written in Bulgarian, while the

names of most of the imported drugs are spelled in the

Latin alphabet.

In the future, the name of the drug will have to be spelled

also in the Braille alphabet. Drug packaging will also bear

marks concerning separate collection and recycling. The

drugs containing narcotic substances will bear an addition-

al mark - two parallel red strips will highlight the presence

of substances like morphine, lydol, and codeine, while two

blue strips will indicate that the packaging contains seda-

tives like diazepam.

Drugs Packaging - inBulgarian and in Braille

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The news from the tax-reform front inBulgaria is that there is no breakingnews. As it stands now, next year VATwill remain at 20 percent, excise dutieswill continue rising, and the profit taxwill drop from 15 percent to 12 percentnext year. One level will be removedfrom the natural persons' taxationscale: incomes from 250 Leva to 600Leva. There will only be two rates: 20percent for incomes up to 600 Levaand 24 percent for incomes exceeding600 Leva.

Such are the government's taxationplans for the first three years ofBulgaria's EU membership. They arelaid out in a special document, BudgetForecast for 2007-2009. The tax-exempt income minimum from 2007 willbe 200 Leva. Tax rates will continue tofall and there will be new incentives for

businesses, coupled with a more activesocial policy, the government said.

The abatement of some taxes will bemost probably insignificant because ofthe payments due to the EuropeanUnion. Bulgaria's contribution to theEuropean budget will exceed 650 mil-lion Leva, which will burden the coun-try's finances.

"There are resources for a more sensi-ble and targeted income policy, espe-cially as concern the low-incomegroups," Prime Minister SergeyStanishev said. Low pensions will beraised this very year. The exact figureswill depend on the budget performanceand unbudgeted revenues. One of theoptions considered is increasing thelowest pension up to around 80 Levafrom this fall.

The Finance Ministry is also discussingkeeping

only two tax rates in 2007

concerning natural persons' incomes:20 percent and 24 percent, that is,eliminating the intermediate 22-percentrate. Most probably two annual incometaxation scales will be introduced: indi-vidual and household. The latter willtake into consideration the aggregateincome of a family. Besides, people willbe free to opt between the two taxationscales.

The tax-exempt minimum will "jump"from 180 Leva in 2006 to 200 Leva nextyear, and incomes above that amountwill be levied at 20 percent. Experts saythat the net monthly income of peoplereceiving a taxable income of above 200

Bulgarian Taxes AcquireEuropean FlavorThe so-called tax revolution in Bulgaria will not take place in 2007, as the gov-

ernment hurries to harmonize the tax system with EU'sBy Mina Georgieva

Bulgarian Prime Minister Sergey Stanishev made a joint statement with his political partners Simeon II and Ahmed Dogan last month.

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Leva will increase by 4 Leva. The grossincome tax relieves will cost the treasury150 million Leva. The minimum wagenext year will be most probably 170Leva, i.e. a 10-percent rise.

Together with the new income taxation lawin line with the European requirements, theincumbents are also considering

reforms in corporate

taxation

The finance minister said the govern-ment is still discussing whether to cutthe corporate tax rate from 15 percentto 12 percent from 2007. According tothe draft amendments to the CorporateIncome Taxation Act, all types of gamesof chance will be taxed with 10 percentof the profits. Currently, the tax on win-nings from lottery, lotto, bingo, and tele-phone games ranges between 8 per-cent and 12 percent. The quarterlycharge for a slot machine will be 300Leva, roulette operators will pay 18,000Leva.

Another change concerns the enterpris-es that submit their annual tax declara-tions and financial statements beforeMarch 31 of the following year.According to the regulations they will

enjoy a tax relief of 1 percent of theannual corporate tax due, but not morethan 1,000 Leva.

Donations for medical treatment, dis-aster victims, support for the sociallydisadvantaged and such will beseverely limited. The aim is to termi-nate the attempts at fraud by means offictitious charity made by companiesand individuals, which is a commonpractice in Bulgaria today. The reliefsfor companies donating directly to indi-viduals are revoked in the corporateincome taxation bill. The restriction isenvisaged to be included in the newlaw on natural persons' income taxa-tion.

If the amendments are adopted, compa-nies and individuals will only enjoy taxreliefs when donating to specializedenterprises and funds supporting peoplewho need expensive medical operations,the socially disadvantaged, the victimsof disasters etc.

A relieved procedure for profit tax refundis also envisaged for manufacturersoperating in municipalities with highunemployment. More investors areexpected to take advantage of this taxincentive.

Companies in the agricultural sector willpay less taxes, since the state willrefund 60 percent of the amount due.The relief will be offered for reinvest-ment of profit by farmers, bee keepers,fish farmers etc. Exempt from the taxare collective investment schemes,closed-end investment companies, andspecial purpose vehicles.

The preferences remain for enterpriseshiring physically challenged people whohave stayed jobless for more than a yearor who are at a pre-retirement age. Theinstalments for pension, health and lifeinsurance worth up to 60 Leva will alsobe free from tax.

The corporate income taxation bill pro-vides for an increase in the tax rate onmanagement staff's automobile expens-es from 10 to 15 percent. A single 12-percent tax will replace the two rates(12 and 15 percent) currently imposedon social expenses: food vouchers, vol-untary insurance etc.

The most serious changes are made tothe

new VAT law.

The bill revokes the terms "import" and"export" and introduces a regime ofintracommunity supply or acquisition ofgoods. Calculations show that when thecurrent member states switched to thatregime, they lost between 15 and 30percent of their VAT revenues. As is wellknown, Bulgaria strictly observes theregulations of the EU Directive 6, whichexempts from VAT only 17 goods andservices.

Therefore after the accession, the listof taxable goods in Bulgaria willexpand: VAT will be levied on all legalservices, including on the fees oflawyers defending clients in court orduring the pre-trial procedure. The taxwill also be imposed on the services ofprivate bailiffs and notaries, which willput them at a disadvantage with stateones. VAT will also be paid on books,periodicals, privatization deals, land forconstruction, trade in scrap, tourismpackages for foreigners, supports forthe disabled, children's clothes, medi-cines etc. The only exception to therule concerns hotel overnights includedin tourism packages: they will be taxedat 7 percent.

Bulgarian Finance minister Plamen Oresharski said the government was still discussing whether to cut the

corporate tax rate for 2007 from 15 percent to 12 percent.

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The main change is the

revocation of VAT

accounts,

which were severely criticized by busi-nesses. Calculations show that the bal-ance of all VAT accounts amounts to560 million Leva. At the same time 70percent of the companies which VATaccounts retain considerable amountsare small firms. Over 1.3 million Leva ispaid a month in fees to commercialbanks for maintenance and use of VATaccounts. After this mechanism isscrapped the resources can be used asturnover money. However, the term fortax credit refund will remain 90 days forall companies. Currently companies withVAT accounts get a refund in 45 days.

Nevertheless, the budget will collectadditional 200 million Leva due to EU'srequirement that in 2007 excise dutiesshould be raised again, mainly as con-cerns the duties on fuels. The excise onunleaded petrol will rise from 530 Levato 585 Leva per 1,000 liters, and on gasoil and kerosene, from 430 Leva to 485Leva. The rates on liquid fuels will jumpby another 50 Leva per 1,000 litersstarting in 2008.

From 2007, excise duty will also be leviedon electricity and coal. In the first yearthe rate on electricity for the industry willbe 0.001 Leva/kWh. Coal for householdneeds will be charged 0.15 Leva/GJ andfor industrial purposes, 0.30 Leva/GJ.

The government is also consideringintroducing a tax on arable land. Therate will be at minimum, the aim is toencourage owners to register their plots.According to tentative calculations, thetax will secure around 60 million Leva tomunicipalities.

Opportunities

The World Bank has advised Bulgaria tofurther reduce the social security bur-den for individuals and companies. In2006, social security contributionsdropped by 6 percent, which secured a630 million Leva free resource toemployers. The Finance Ministryexpected that the amount would bespent on new jobs, investments in pro-duction and increasing wages. But forthe time being no such effect isobserved. At the same time the deficitof the National Social Security Institute'sPension Fund grew to 1.3 billion Leva. Itis fully covered by the budget, i.e. pen-sion costs are covered with tax rev-enues. In other words, that is just stick-ing money from one pocket into theother. To a certain extent that distortsthe social security model in Bulgaria,since the idea is to pay pensions for agewith the receipts from contributions.

Budget 2007

Next year's budget is based on the pre-sumption that from 2007 Bulgaria will bea EU member. The government has pro-jected gross domestic product of 51 bil-

lion Leva, which represents a 5.8-per-cent growth compared with 5.5 percentfor 2006. Fiscal discipline is preserved:the government plans a 0.8-percentbudget surplus, despite Bulgaria's instal-ment in the European budget, whichstands at 1.2 percent of GDP, or some624 million Leva. An 11.8-percent ceilingis planned on the current accountdeficit. Twice lower inflation is envisagedfor next year, compared with an averageannual rate of 4.4 percent in 2006, infla-tion at the end of 2007 is projected tofall to 3.1 percent. Foreign direct invest-ment next year is expected to reach 2.7billion Euro and receipts from the EUfunds are forecast at 2.1 percent ofGDP.

Pre-owned cars exempt

from VAT from 2007

Only new automobiles will be chargedVAT after Bulgaria joins the EuropeanUnion; the tax currently due on import-ed second-hand vehicles will berescinded.

The VAT rate on new cars will be verylow, the Finance Ministry said. Morethan 80 percent of the vehicles inBulgaria have been bought used.

The delivery of new means of trans-portation will be treated as an intra-community supply, which is zero-ratedand the tax is due by the buyer, no mat-ter whether registered by VAT legislationor not. That means that when a personin Bulgaria buys a new car from anoth-er member state, that person will beobliged to pay the tax at the rate inBulgaria. For the purpose, the bill pro-vides for such persons to submit decla-rations of acquisition to the respectivedirectorate of the National RevenueAgency within 14 days of expiration ofthe month in which the acquisition tookplace. The tax has to be paid within thesame term.

If a person makes a delivery of a newautomobile from Bulgaria to anothermember state, that person will have todeclare the delivery before the compe-tent directorate within 14 days of expira-tion of the month in which the delivertook place. The delivery is zero-ratedand the person will have right to arefund of the tax paid upon the pur-chase, acquisition or import of the auto-mobile up to a certain amount. ■

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On July 21 the Bulgarian Parliament passed the new

Law on Credit Institutions, where Article 62 stipulates

that the Court can order disclosure of data under

paragraph 2 at the request of the Minister of Finance

or person authorized by him.

This article relates to article 143 in the Tax Procedure

Code, published in issue 63 of the State Gazette. It

reads that if a foreign country requests data under the

paragraph 1 and under the conditions of reciprocity,

the Minister of Finance can provide data under the

provisions of Law on Banks, Law on Public Offering

of Securities or under another regulation of the

Bulgarian legislation on confidential capital funds,

financial assets or other kind of property.

A key requirement of the US side in regard with the

US-Bulgaria Treaty for Avoidance of Double Taxation

was that Bulgaria adopted legislative amendments

allowing the Bulgarian tax authorities to collect cer-

tain information from Bulgarian banks and other

financial institutions pursuant to a formal request from

the U.S. under the treaty.

With this regard, the Bulgarian Finance Ministry draft-

ed the necessary legislative amendments concerning

information requests under the treaty that were

adopted recently by the Parliament. The amendments

affected the Law on Banks, the Law on Public

Offering of Securities, and the Tax and Social

Security Code.

The second round of negotiations is due to take

place in Sofia in October.

AmCham has lobbied actively and successfully for

the re-launch of negotiations on a US Bulgaria DTT.

In Europe, only former Yugoslavia, Albania, and

Bulgaria still do not have DTTs with the US. In view

of the outstanding political and military cooperation

between Bulgaria and the US, and the rapidly grow-

ing volume of US investment in Bulgaria, such a

treaty is now a necessity and the two sides have

launched negotiations.

The first round of treaty negotiations took place in

February 2006 in Washington.

Both sides viewed this round as a success. The level

of withholding rates discussed is generally favorable -

5% on interest, and 5% on dividends on stakes of

greater than 10% in a company, otherwise 15% on

dividends, but with many zero-rate exceptions. The

withholding rate for royalties is still under discussion.

The list of issues for further discussion in the second

round is quite small. ■

Green Light for SecondRound of Negotiationson U.S.-Bulgaria DTT

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Europeans are split on the question whether it is a good ideato enlarge the Union further, the most recent Eurobarometersurvey shows. It finds that 42 percent of Europeans areopposed and 45 percent in favor of accepting new members.At the same time, the majority of EU citizens say they are notwell informed by their governments and media on the pros andcons of future accessions.

Two years after the biggest enlargement in the history ofEuropean integration and before the accession of Bulgaria andRomania planned for Jan. 1, 2007 or 2008, enlargement is acrucial issue on the European agenda. Enlargement is one ofthe most powerful policy tools that the European Union has toextend peace, stability and prosperity. The pull of the EU hashelped to transform Central and Eastern Europe into modern,well-functioning democracies with market economies. Morerecently, it has inspired far-reaching reforms in Turkey andCroatia.

The European Commission's Directorate General -Enlargement regularly reviews attitudes and experiences of EUpopulations relating to the enlargement of the European Unionusing the standard Eurobarometer surveys. This time, theEurocommission wanted a poll specifically on the EU citizens'knowledge and their perception of the advantages and disad-vantages of the enlargement. Interviews were conducted face-to-face in the respective national languages between March27 and May 1, 2006.

The countries surveyed

included the 25 member states of the European Union, the twoacceding countries (Bulgaria and Romania), the two negotiat-ing candidate countries (Croatia and Turkey), as well as theTurkish Cypriot Community (TCC).

The underlying objective of this analysis was to assess citi-zens' level and type of information, as well as their attitudestowards principal objectives, and their perception of advan-tages and disadvantages of EU enlargement.

The results show that a plurality of EU population (45 percent)is basically in favor of EU enlargement. Nevertheless, they arequite divided on this issue, as a significant number of respon-dents (42 percent) oppose it. In all the 10 new member statesat least one out of two citizens support further enlargement ofthe Union. In Poland (72 percent) and in Slovenia (73 percent)this ratio of support represents almost three quarters of theirpopulation.

People in the two acceding states - Bulgaria (62 percent) and

Romania (69 percent) - along with the candidate country,Croatia (64 percent), are also vigorous about the enlargement.However, only a plurality of Turks (45 percent) backs thisprocess in general. The opponents represent 29 percent of the

Turkish population; in addition, there is a high rate (25 percent)of interviewees who had no opinion on this matter. Of theEU15, the majority of Greek (56 percent), Spanish (55 per-cent) and Danish (51 percent) respondents claimed to be infavor of enlargement.

In Sweden (49 percent), Italy (48 percent), Portugal (47 per-cent), Ireland (45 percent) and the United Kingdom (44 per-cent), pluralities support enlargement. The majority of respon-dents in Germany (66 percent), Luxembourg (65 percent),France (62 percent), Austria (61 percent) and Finland (60 per-cent) disapprove of EU enlargement in particular.

Croatia's prospective membership enjoys widespread supportamong the EU population, unlike Albania and Turkey's, whichis least favored. In fact, 48 percent of Europeans opposeTurkey's accession.

Socio-demographic variables tell us that men (47 percent) areslightly more in favor of enlargement than women (43 percent).Age and education seem to markedly affect the attitude ofEuropeans surveyed towards enlargement. The younger cohort(56 percent among those aged 15-24) and the better educat-ed respondents (51 percent among those who left full-timeeducation at the age of 20 or later) seem to prefer the

Europeans Split , i l l-informed on EUEnlargement

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enlargement more than the older (35 percent of persons 55years or older) and less educated (35 percent of those wholeft at age 15) respondents. Political views also influence thisissue a little; i.e., people on the left (50 percent) tend toendorse the accession of future member states more thanpeople with right-wing views (42 percent). Most Europeanssurveyed recognize that EU enlargement will have

positive consequences

on mobility in Europe, enrichment of cultural diversity, peaceand stability, democracy, as well as the reinforcement of EU'srole on the international scene.

In contrast, with regard to the economic and social conse-quences of the process, EU citizens worry most about employ-ment. They fear an increase in labor transfer to countrieswhere labor is cheaper, as well as influx of workers from othercountries who will compete for the existing jobs. EuropeanUnion citizens do not perceive enlargement as a win-win situ-ation; respondents seem to consider future accessions as pri-marily in the interest of the candidates and fear the conse-quences for the economic situation of their own country.

To ensure the success of future enlargement, EU citizens firstand foremost emphasize the need for a clear political project

for Europe. They underline the importance of information andknowledge about enlargement, obtained both through personalexperience (a better knowledge and understanding betweenpeople in the EU and in the potential candidate and candidatecountries), as well as through promoting public awareness ofthe benefits and challenges of EU enlargement. It is quiteclear that information and communication play a crucial rolehere on the EU25 citizens' perceptions of enlargement.

The survey reveals a self-admitted lack of information onenlargement among EU citizens. More than two-thirds (68percent) of the EU population feel they are not well informedabout the issue. Europeans seem to have insufficient infor-mation about, and are less aware of, the benefits for the oldmember states and the collective good thereof. This also holdstrue for future enlargement processes; apart from the low levelof knowledge about the topic in general, benefits for the EUare less known compared to benefits for potential future mem-ber states.

To sum up, EU citizens call for more information and commu-nication about EU enlargement in order to better assess thebenefits and challenges of this process, in the context of aclear political project for Europe. It falls to national govern-ments and the media to provide them with leadership andinformation. ■

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"The sun is shining and Bulgarian communist leader TodorZhivkov is carrying an umbrella. Asked why, Zhivkov replies:'Because it is raining in Moscow.'"

It was in Pale, Bosnia, during the 1990s, when I last heardthis joke followed by an uproar of laughter - one of thescores of Yugoslav jokes about Bulgaria and Bulgarians. Buttoday the tellers of these stories, who have gone throughwars, an embargo and international ostracism, are lookingwith eyes wide open at Bulgaria: the country they used tovisit for the cheap cheese is on the threshold of theEuropean Union.

In July 1999, a Kosovar Serb pointed at a NATO tank on theleft, then at a triumphant Albanian mob on the right, and toldme, the Bulgarian journalist, "Even with all that, we are still bet-ter off than you, Bulgarian!"

I did not want to argue with him - it would be pointless. Iremembered how I had argued and got angry the first time Iheard a joke about Bulgarian men (and women) in Skopje,Macedonia, in 1995. That joke was much more ingenious andoffensive than the one in Bosnia. Today, however, thousands ofMacedonians line up to get Bulgarian passports, and formerPrime Minister Ljubcho Georgievski has become a Bulgariancitizen.

Do not get me wrong: this article is not intended to putBulgarian readers in a gloating frame of mind. It is my attemptat an analysis. Comparisons to your neighbors are alwaysprone to stir emotions on the Balkans; and, yes, Bulgaria isjoining the European Union, while Serbia, Croatia, Macedoniaare well behind on that task.

The question is, what is the reason for such touchiness?

"Freud calls it the narcissism of minor differences," explainsBelgrade-based psychologist Zarko Trebjesanin. "Neighborlyproximity breeds rivalry, even hatred. You do not have to hateso much those far away."

Balkan history proves him right. Just look at the relationsbetween Bulgarians and Serbs: we can label them an

eternal competition.

For the past 50 years Bulgarians and Serbs have been com-peting to show which nation is more Eastern European (1944-1948); which is better, East or West (under Tito, Serbs werecloser to the West, and under Milosevic, they switched theirallegiances); which country is more Westernized (after 2000).

Recently, Bulgaria has been winning the competition, which is

Balkans Rivalries: Old Jokes and NewCharacters on The EU Threshold By Boyko Vassilev

Romanian President Traian Basescu Turkish Prime Minister Recep Tayyip Erdogan

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confusing its neighbors to the west: "Until yesterday we trav-eled without visas and they watched our television. And nowwhat? How have things changed…"

The situation with Macedonia is even more delicate: the bor-der here separates brothers, sisters, cousins. Before 1989"Macedonian" relatives used to come to Sofia, proud of theirall-access Yugoslav passports, Deutsche marks and originalU.S. jeans; their confidence was sky-high, and restaurants inSofia were shaking with their royal feasts on the cheap. After2001, the "poor relatives from Sofia" started traveling in theopposite direction; this time it was them who had the money,no-visa passports, jeans and high self-confidence ("It's ourplace here!"), and some restaurants in Ohrid were forced to

accept payment in Bulgarian Leva.

"They say we have a secret strategy: to wait for Bulgaria tojoin the EU and then say that

we are Bulgarians

and become a member, too," says Skopje-based analyst SashoOrdanoski, whose humor sounds bitter-sweet.

Lining up for Bulgarian citizenship was already old news whenit emerged that ex-premier Georgievski and his wife hadreceived Bulgarian passports with a registration address inBlagoevgrad. The reaction on both sides of the border quick-ly stirred the emotional memories I mentioned above. The for-mer premier's fellow party members started to distance them-selves in apparent embarrassment; the old anti-Bulgarian elitein Skopje blew the whistle about the 'Bulgarian threat'; and inSofia, comments ranged from "Well done, Ljubcho!" to "Didn'the do it out of self-interest?"

Issues of nationality cannot be analyzed in cold blood. It is anintimate feature of a person's identity anywhere in the world,and in the Balkans it is downright hot. To the citizens of theRepublic of Macedonia, Bulgaria's entry in the European Unionwill be a complex mixture of problematic identities and old sto-

ries, love and hatred, state system and the opposite of statesystem, benefit and lack of benefit. In Europe's mirror,Macedonia will be looking for its image, and Bulgaria will beupping its pride.

How about the other neighbors?

Serbs, or at least Belgrade's pro-Western elite, expected in2000 that they would quickly catch up with Bulgaria andRomania on the road to the European Union.

"Accelerated entry into the EU; Serbia: leader in the Balkans"were some of the election slogans raised by Serbian democrats.But after Zoran Djindjic's murder and Kosovo's independencelooming on the horizon, democratic Serbia lost its momentum,and President Bush promptly labeled Bulgaria as the

"leader in the Balkans."

"Because of the successes of Bulgaria, Hungary, and Romaniawe see

how much we have lost," says Zarko Trebjesanin. "But still, weare happy with Bulgaria's success."

This happiness, even if earnest, comes with a bitter pill toswallow. The common European policy requires that Bulgariaintroduce a visa regime for Serbs in 2007. No matter how seri-ously Bulgarian officials promise relieved procedures, manySerbs visiting the Black Sea coast on holidays will have onemore hindrance to overcome. A reciprocal decision is expect-ed from Serbia, too. If that happens, Bulgaria will get into theparadoxical position of being open to the whole of Europe andclosed on its very border.

Bulgaria's European experience, however, offers a uniquechance for cooperation between the two neighboring countries,which have a history of competition and rivalry. The first fruitscan already be seen: there has never been so much businessgoing on between Serb and Bulgarian counterparts. Unlike inthe past, most of it is not related to criminal money launder-ing or embargo violations, but common representative officesof Western companies or joint participation in international pro-grams.

Let us have a look at Greeks. They are bound to lose theirmonopoly as the only EU and NATO member on the Balkansvery soon. Historically speaking, Bulgarians and Greeks havenot always been on the same side: the generally warm feel-ings between the two have been marred by a series of wars,refugee waves, and propaganda aggressions. But Bulgaria'spending European integration is not viewed as "a threat fromthe North." Besides, Greeks have always been a little skepticalof the West, so there is

no overt frustration or competition

with Bulgaria's progress. The businesses in both countries aretrying to derive as many benefits for themselves as possible,and that seems to be the most important task at hand.

An interesting example is the development of the southwestern

Macedonian President Branko Crvenkovski

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Bulgarian town of Sandanski. In 1997, unemployment therereached 80 percent. After 2002, in connection with the adop-tion of the Euro and the impending Olympic Games, Greecebecame a very expensive country and people from its north-ern parts quickly discovered how much cheaper it was to shopin Bulgaria. Sandanski was furnished with Greek signs, waiterslearned the language fluently, and small businesses from NorthGreece started relocating across the border, too.

Bulgaria's pending EU membership has started to reverse thetrend: prices are going up, Bulgarian businesses are acquiringself-confidence, and the Greek tide is slowly ebbing inSandanski. The end of miracles and beginning of equal part-nership: that will be the Greek motto concerning Bulgaria's EUintegration.

Bulgaria and Romania are going to the EU together. Followingthe rules of Balkan competition, one accuses the other indelaying its progress, then the roles change and so on - until2007 or, at worst, until 2008. Each of the two countries has

a sense of superiority over the other -

Romanians, because they are more numerous; Bulgarians,because they lived better before 1989. In other words,Bulgarians were to Romanians what Serbs were to Bulgarians:in the 1980s Sofia watched Belgrade television, andBucharest's residents tried to pick up the television signal fromSofia. As far as Turkey is concerned, it expects that Bulgariawill do for its EU candidacy what Turkey did for Bulgaria'sNATO candidacy: provide vigorous support.

But so far there has not been much debate about the issue.Despite the good neighborly relations in recent years,Bulgarians and Turks have too much common history to avoidstirring passions here and there. What these mutual feelingswill be, and where they will be directed, is yet to be seen.

As I am finishing my overview of the neighborly emotions inthe Balkans, I discern some general rules surrounding the

issue. When the EU membership was just appearing on thehorizon, there was nothing but elitist discussions, endless fore-casting and general sense of boredom. When the EU becamecloser, passions suddenly erupted. And when the EU becomesa fact for Bulgaria and Romania, there will mainly be busi-ness. Such dynamics were apparent in the recent wave of EUaccessions, and even before, every time the Union wasexpanding.

I wonder if those who believe that all nations react alike to thesame stimuli are, in fact, correct. Or probably neighborly pas-sions feed on the lack of information about the EU and theneighbors? Or

new Balkan jokes are yet to be invented,

where Bulgarians and Romanians will be paying formerYugoslavia back in kind?

"Why not compete for EU integration? That is not actually bad!"Goran Svilanovic, the former foreign minister of Serbia andMontenegro, told me years ago. No, that is not bad at all. Wefinally have a worthwhile competition for the entire neighbor-hood. ■

Greek Foreign Minister Dora Bakoyanni (L) and her Bosnian counterpart Mladen Ivanic

Serbia's Prime Minister Vojislav Kostunica

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There is a new state on the Balkans.Following the logic of Balkan geopolitics(which is, you are always nice to thosewith whom you have no common bor-ders), this new state should have perfectrelations with Bulgaria. Yes, Montenegrohas always been a friend to Bulgarians.

There is still a Bulgarian embassy inCetinje, dated back to the early 19thcentury, when Montenegro was indepen-dent for the last time. The Bulgarian andMontenegrin dynasties are related. TheBalkan War caught three Montenegrinsin Sofia, and that is what they wrote totheir General Staff: "Shall we comehome, or should we strike from here inthe back?" Even when Bulgarians andMontenegrins are at war, they do it in anunforgettable manner: there is a story,dated back to the War Between theAllies, which is still being told, about theShops (hard-headed inhabitants of theregions around Sofia and Pernik) andthe Montenegrin platoons, both prone tobayonet attacks, slaughter each othersilently and viciously with knives…

What will this new state with around600,000 citizens be like? If the jokes

and the stereotypes are true, then itstands no chance economy-wise.

Montenegrins were often

ridiculed

within former Yugoslavia as being lazy.According to one of the most benevolentanecdotes, the local mountain dwelleralways keeps a stool handy - to restawhile after a heavy sleep… One couldoften encounter, in the villages, in thetowns and along the Adriatic sea coast,six-feet-six men carrying coffee, guard-ing their coffee or simply doing nothingout with coffee.

Well, stereotypes are usually misleading.Tourism along the magnificent Adriaticsea coast may well feed the whole ofMontenegro - its coastline is curvy andthat is why it is longer than the BulgarianBlack Sea coast. The small republic hasintroduced the Euro. Unemployment islower than in Serbia, The grey sector isalso flourishing - nowhere else Balkanpeople call each other "Mafioso" intend-ed as a an insult. And finally, it shouldnot be that difficult to find jobs for600,000 people… That is less than half

of Sofia, after all…

Montenegro has a long tradition ofheroes and braves - its prince-bishopsnever let the Turks into their mountains.That is why independence was so dearto many. For the sake of the indepen-dence people forgave the incumbentstheir luxury, the accusations in corrup-tion, and the fact that Milo Djukanovic,the current prime minister and a formerpresident, has never worked anythingelse but ruling a state. But what will bethe benefit of independence?

The optimists claim: We get rid ofSerbian guardianship - and on toEurope. The pessimists nod their heads:That split will also

obliterate the million

consumers on the

Serbian market,

and that could turn into a bad omen forMontenegro. One of the greatest con-cerns is whether the Serbian interest inbuilding the uncompleted and badlydelayed highway project to the city ofBar will persist. For the time being, one

Montenegro's Prime Minister Milo Djukanovic (L), President Filip Vujanovic (C) and Parliament Speaker Ranko Krivokapic stand in front of the Parliament build-

ing after parliament deputies voted to proclaim independence in Podgorica June 3, 2006.

Meet Montenegro, pleaseThe newly independent country awaits first election

By Boyko Vassilev

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could drive to the Montenegrin seasideat no more than 60 km/h. Will, however,Serbia be keen on investing inPodgorica's tourist business, or will itredirect its subsidies to the Nis-Sofiahighway instead? Since Serbia's touristswill still travel abroad, they could well optfor Bulgaria.

There is one more problem - Montenegrois not homogenous. Almost half of its cit-izens are with pro-Serbian orientation;some of them even consider themselvesSerbs. These people will hardly swallowthe independence of Podgorica. Besides,they are not evenly spread over the ter-ritory but are concentrated in enclaveslocated in the North and even here andthere along the sea coast - Herzeg-Novi.No doubt that September will be a hotmonth in Montenegro -

the first parliamentary

elections

after the proclamation of independenceare pending. No one will be surprised ifthe winners in the independence refer-endum - the factions around MiloDjukanovic - consolidate their victory -that is what political logic dictates.

However, it will become very interestingif pro-Serbian opposition headed byPredrag Bulatovic takes the upperhand: those who resisted independencewill govern an independentMontenegro.

The most important issue, however, iswhether the elections will be conduciveto the appointment of an efficient leg-islative majority and a government capa-ble of cashing in on the Montenegrinindependence. To get Montenegro in as

many international organizations as pos-sible… To establish fair relations withSerbia… To build their country from theinside… To preserve and raise the livingstandards of Montenegrins… This isquite a lot of work for people who likejokes, naps and rest.

For the time being, all we have heard isthat there is a new state on the Balkans.We shared a joke or two, and looked atit from afar. After September, we shallhave to get to know each other. ■

Thousands of supporters of Montenegrin independence attend a pro-independence rally in centre of Podgorica,

May 18, 2006.

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The Tennessee National Guard highlighted the strong con-nection between economic growth and national security.

The close U.S.-Bulgaria bilateral security relationship is begin-ning to evolve into something broader and deeper, oftenbecause of personal contacts and experiences betweenAmericans and Bulgarians.

For fourteen years, the National Guard of the State ofTennessee has conducted joint military exercises with theBulgarian military.

When the Tennessee military people went home, they talkedabout opportunities in Bulgaria. In June, a trade delegationcame from Tennessee to look into some of these opportunities,and to explore possibilities for partnerships and investments.

Tennessee National Guard military staff escorted selectedState of Tennessee commissioners and civic and businessleaders including the:

● Tennessee Commissioner of Agriculture

● Tennessee Commissioner of Tourism

● Tennessee Deputy Commissioner of Economic andCommunity Development

● Civic and Business Leaders ■

The Connection betweenEconomic Growth and National SecurityTennessee-Bulgaria SPP Civic Leader Visit 28-30 June 2006

Mr. Larry Kenneth Givens TN Commissioner of Agriculture COL Terry M. Haston Deputy Chief of Staff, Operations/J-3

Gus Hargett, the adjutant general, Tennessee National Guard, during visit in Plovdiv.

Annualised CA improves

for first time in 21 months

The monthly CA deficit dropped nearlytwo times in a year in June cutting theannualised gap to 14% of GDP against14.2% a month earlier. The preliminarydata of the central bank also show thatthe CA deficit narrowing in June is thefirst one since Sept 2004. Despite themonthly improvement, the CA deficitincreased by 63% y/y to EUR 1.8bn inH1 due to significant worsening in thefirst 5 months of the year. The goodperformance in June was triggered bythe gap narrowing in the merchandisetrade balance and a higher service sur-plus paced by a sound increase of 7.7%y/y in tourism receipts. The latter dis-pels concerns on possible downwardcorrections in the tourism industry,which has stayed flat in Jan-May beforescoring a new rebound in June uponthe opening of the peak season in thesea resorts. The CA deficit in H1 almostfully matched the surplus in the finan-cial and capital account. However, theoverall balance of payments andrespectively the change in the foreignreserves ended on a positive territorydue a EUR 711mn inflow in net errorsand omissions. Most of the identifiedinflow will be assigned to labour remit-tances from abroad in the expecteddata revisions that will narrow the CAgap though the income balanceaccount.

Foreign direct investments

soar 86% y/y to

EUR 1.4bn in H1

The net inflow of foreign direct invest-ments surged 86% y/y to EUR 1.4bn in

H1 or 6.1% of the projected full-yearGDP, according to preliminary data ofthe central bank. The sound improve-ment came on the back of significantfunds poured into real estates andconstruction projects and contained

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This article is based on extracts from ISI Emerging MarketsIntelliNews publications: Bulgaria This Week and BulgariaCountry Report. For more detailed information please contactISI Emerging Markets office in Sofia at +359 2 8160404 or [email protected]

Balance of Payments, EUR mn, Analytical Report

2005 2006

Jun Jan-Jun Jun Jan-Jun

CURRENT ACCOUNT -106 -1,116 -63 -1,816

Trade Balance -394 -1,819 -351 -2,171-Exports of Goods 821 4,386 1,057 5,699

-Imports of Goods -1,214 -6,205 -1,409 -7,870Service Balance 189 143 229 -21-Tourism revenues 270 721 290 747Income Balance 11 150 12 56Net Current Transfers 88 411 48 321FINANCIAL & CAPITAL ACCOUNT 108 1,743 149 1,794

Net FDI 53 742 196 1,382- FDI inflows 99 810 198 1,412- FDI abroad -2 -25 -2 -30- M&A net 0 -43 0 0

ERRORS AND OMISSIONS 233 -37 56 711

OVERALL BALANCE 235 590 142 690

Source: Central bank, preliminary data

External BalanceNarrows Risk Exposure

Merchandise foreign trade

Imports (FOB, EUR mn) Exports (FOB, EUR mn)

H1/2004 H1/2005 H1/2006 H1/2004 H1/2005 H1/2006

Consumer goods 794 924 1,125 1,250 1,290 1,398

Raw materials 2,032 2,308 2,781 1,543 1,955 2,472

- non-ferrous metals 48 81 183 323 409 759 - ferrous metals 177 247 306 375 415 413

Investment goods 1,247 1,679 1,980 506 691 891

- machines 424 560 666 174 198 239 - transport vehicles 331 516 559 38 118 190

Energy 794 1,092 1,767 316 450 939

TOTAL, EUR mn 4,905 6,064 7,692 3,615 4,386 5,699

Source: Central bank, IntelliNews

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almost no receipts from privatisation deals. The net FDI hikesent the share of the 12-month non-debt coverage of theCA gap to 77% in June from 72% in May. The ratio remainsmuch worse in comparison with previous years but is stableable to keep the foreign reserves on the rise amid a mod-erate external debt accumulation.

Exports outperform imports for third

consecutive month in June

The merchandise trade deficit dropped by 11% y/y to EUR351mn (fob/fob) in June as exports outperformed importsfor a third month in a row, shows preliminary data of thecentral bank and the national statistical institute. In line withour expectations based on the earlier released industrialreports, non-ferrous metal production and price hikes con-tributed to a strong export growth of 28.8% y/y in June and29.9% y/y in H1 against 16% y/y and 26.8% y/y for imports,respectively. The H1 trade gap widened by 19.3% y/y toEUR 2.2bn. Exports of non-ferrous metals grew by 86% y/yto EUR 759mn in H1 or 13.3% of the country's overall mer-chandise exports. The foreign balance of non-ferrous metaltrade ended on surplus of EUR 576mn (fob/fob) in H1,marking an annual hike of 76% that had largely offset thenegatives from the expensive oil import.

External debt and liquidity

In addition to the improved trade and investment inflows, themid-year statistics on the country's next external liquidityalso looks largely positive. The gross external debt moni-tored by the central bank went up 2% y/y and 18.6% y/y toEUR 15.9bn at the end of May or 66.4% of the projectedfull-year GDP. However, the absolute increase of EUR312mn in May is still some 32% lower than the foreignreserve accumulation for the same month that still bodeswell for the country's external liquidity. In line with the pat-tern from the past several years, the foreign debt accumu-lation in May is fully driven by private entities while the gov-ernment sector continues to reduce its indebtedness. Thecorporate capacity to service debts looks quite good in ourview, as the real economic growth in the private sector isfluctuating around 10% annually for a long period and theservice of bank loans runs quite smoothly. Moreover, aquarter of the total external debt is received from parentcompanies at very favourable interest terms and low defaultrisks.

Reserve accumulation accelerates in July

The foreign reserve managed by the central bank booked asolid growth of EUR 448mn in July to EUR 8.3bn at the endof the month. The net accumulation of reserves is not sur-prising in the summer months in view of the seasonal peakin tourism inflows combined with reduced oil demand, butthe scope if improvement is much better in comparison withthe summer months of last year. The net increase ofreserves also gives hopes that the relative improvement inthe CA flows in June would be sustained for several monthsand possibly on a long-term basis as lagged effects fromforeign investments should finally end up in favour of thecountry's foreign trade balance. ■

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The levels of US individual, corporate and foundations givinghave been rising constantly and in 2004 its total was nearlyUS$ 250 billion with estimates that in 2017 it will reach $316billion. Substantial role for the growth should be attributed toindividual giving - making about 75% of the total. It is notthat between 70 and 80% of Americans contribute annuallyto at least one charity. It certainly has become fashionableamong the rich and famous to give more. Examples can onlystart with the names of Bill Gates and his unprecedented giftof 31 billion to his foundation; Sergey Brin and Larry Page,and of course Bono.

Internationally, billionaires of Europe but also the new richof Indian, Russian and Chinese origin are giving millions totheir regions and national charitable causes. The list willcertainly be continued as a consequence of the rapidwealth creation in the world, the increase in billionaires'numbers, and with their intention to follow Carnegie's state-ment that "the man who dies thus rich dies disgraced".Among the famous followers we can distinguish world's sec-ond richest man Warren Buffet, who declares almost all hismoney will go to charity because his children should not beconsidered "members of the lucky sperm club" and be given"enough to do anything they want but not so much to donothing at all".

Now coming back to our country and our organization wemust start by saying that although every capacity in philan-thropy talks about increase in Bulgarian giving, these state-ments are still difficult to back with statistics. Partly, becausemost of giving is still non-tax effective and does not show inthe books, partly because just recently companies started toreveal such information. If we are to mention some figures,the Deputy Finance minister Kadiev said that for 2004 com-panies have donated 9 million leva; according to the data ofthe Bulgarian Donors Forum, the annual domestic giving isbetween 15 - 18 million BGN for the year 2005. The floodsrelief campaigns last year collected 4 million leva. For com-parison over $ 740 million were dedicated to support reliefwork after the Katrina hurricane.

The change in quantity does not mean the change in qual-ity. As Economist article stated this February, many people"continue to give in unimaginative ways" and there should benew approach in order to transform philanthropy over thenext 20 years.

And what is this new approach?

It is generally about accepting the understanding that tradi-tional philanthropy or charity looks into relief of the conse-quences; while new philanthropy should focus on finding thesolutions to problems and causes. This is so muchAmerican, related to the basic values like freedom, entre-preneurship and individualism cherished by the Americans. It

is ultimately about integrating of philanthropy into socialdevelopment, into collective vision about the future and real-ly making a difference to the world.

US philanthropists, steadily followed by Europeans, adoptedfor philanthropy a new language, used only by the for-profitworld before that. Believing that in order to be more efficient,philanthropical efforts should become a strong and modernindustry. Thus, now the talk is about "social investment',"social entrepreneurship", and "venture philanthropy", while inplanning our activities we need to be "strategic", "market-conscious" and "knowledge-based". In Europe, it all becamea strong movement for corporate social responsibility - wrap-ping into one the concepts for equal attention to social, envi-ronmental and governance matters in doing business. Thisand the American Chamber in Bulgaria decided to have aCSR Committee - reflecting the complexity of the relation-ships between business and communities and declaringmodern approach and forward thinking.

AmCham CSR Committee believes that we can certainly addvalue to what we already do as an organization positionedbest to introduce US good traditions and innovations in phil-anthropy.

Reflecting a strategic thinking, AmCham will have a morefocused and planned approach to current work. Withoutinterrupting or replacing individual members' CSR activities,AmCham as an organization will have its own plan and willmake steps to improve it constantly. How we are to do that:

● Select one or two themes annually that would be sup-ported jointly by members

● Raise money for these themes and also plan for emer-gencies

● Raise money from current events like Thanksgiving auc-tion and Christmas party as well as by asking voluntarycontributions once in the year

● Stick to voluntary participation of members in all fundrais-ing activities

● Manage spending well so that money makes a differenceto people's lives

● Monitor and assess what was supported in order to learnand improve

Many steps and efforts are needed to make the Chamber'sCSR activities strong and systematic in a way it becomes anexample for others to follow. Your input is highly appreciat-ed and we will be communicating next steps more con-cretely very soon in a special leaflet. ■

Focusing to LeadAmCham can certainly help accelerate the change of Bulgarian philanthropy by

introducing US concepts

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The American Research Center in Sofia (www.einaudi.cor-nell.edu/arcs) held a three-week summer session onBulgarian history and culture, with an emphasis on the ancientand Mediaeval periods, in collaboration with the Varna FreeUniversity (www.vfu.bg) and the Bulgarian Heritage NationalAssociation (under the patronage of the President ofBulgaria).

The session consisted of a day of introductory lectures inSofia (15 July), a week of lectures at the Varna Free Universitywith visit to sites in and near Varna (19-23 June 2006), and14 days of historical and cultural excursions in Bulgaria (16-18June and 24 June-4 July 2006).

Lectures and site reports were given by leading experts fromBulgarian universities (Sofia University St. Kliment Ohridski,Varna Free University, American University in Blagoevgrad), theBulgarian Academy of Sciences (Archaeological Institute andMuseum, Institute of Balkan Studies) and museums throughoutthe country, as well as by guest lecturers from CornellUniversity. On the last day of the session, which symbolicallycoincided with Independence Day, the participants and orga-nizers attended a cordial meeting with Bulgaria's First LadyZorka Parvanova.

The summer session was attended full time by 10 studentsand non-students from U.S., Canadian, and European univer-sities, coming from diverse ethnic and educational back-grounds. ■

American Research Center in Sofia Holds First Summer Session

HVB Bank Biochim and Hebros Bank

now offer higher interest rates on term

deposits in U.S. dollars starting in

August. The increase is applicable to

individual clients as well as to corpo-

rate clients. The higher interest rates

are valid automatically for new

deposits as well as for current dollar

deposits.

The annual interest rate for individuals

with one-year term deposits with

amounts of $2,000 to $25,000 has

been increased by 8 percent. The new

interest rate is now 1.95 percent. For

legal entities or corporate clients, the

interest rate for one-year term deposits

between $50,000 and $200,000 has

also been increased by 8 percent to

1.95 percent.

HVB Bank Biochim offers a specialized

long-term deposit "Biochim INVEST."

The interest rates offered vary from

2.95 percent for a three-year term

deposit up to $50,000, and up to 4.50

percent for a five-year term deposit in

the same amount. ■

HVB Bank Biochim, Hebros BankIncrease Interest Rates on Deposits

The Ethnographical complex in Brashlian village, 15 km from Malko Tarnovo.

Thracian archaeological site of Debelt village, near Bourgas lake.

Visiting Rila Monastery

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The Certified Supply Chain Professional (CSCP) program is anew industry educational and certification program created tomeet the rapidly changing needs of the supply chain man-agement field. From the manufacturing to the service industry,regardless of whether a company is serving business or con-sumer markets or is for profit or not-for-profit, the increasing-ly important role of supply chain management is affecting allorganizations. Customers already expect good quality at lowprices, and speed of delivery is becoming more important. Asa result, effective supply chain management has becomeessential to successfully compete in today's global market-place.

The CSCP program takes a broad view of the field, extendingbeyond internal operations to encompass all the steps through-out the supply chain-from the supplier, through the company,to the end consumer - and provides you with the knowledgeto effectively manage the integration of these activities to max-imize a company's value chain.

Benefits of the CSCP Program

● Learn to boost productivity, collaboration, and innovation

● Discover how to positively affect lead times, inventory, pro-ductivity, and bottom-line profitability

● Understand how to manage the integration and coordinationof activities to achieve reduced costs and increase efficien-cies and customer service

● Gain the knowledge to effectively and efficiently manageworldwide supply chain activities

● Achieve greater confidence and peer and industry recogni-tion

Who should pursue the CSCP education

and designation?

The CSCP program is for professionals in operations and sup-ply chain management. This designation is ideal for you if youare interested in more depth of knowledge and understandingin the areas of supplier and customer relations, internationaltrade, the use of information technology to enable the supplychain, and physical logistics.

CSCP Domains

The CSCP body of knowledge is made up of the following fourdomains

● Supply Chain Management Fundamentals

● Building Competitive Operations, Planning, and Logistics

● Managing Customer and Supplier Relationships

● Using Information Technology to Enable Supply ChainManagement

Earning Your CSCP

To earn the CSCP designation, candidates must pass onecomprehensive four-hour exam. The CSCP exam will beadministered in paper-and-pencil format on December 2, 2006.

For more information contact: 359 2 931 58 51

Eligibility Application: Completed applications are due toAPICS by September 29, 2006.

Exam Registration: October 16, 2006Exam Administration: December 2, 2006 ■

APICS Launches New Certified Program

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INTRODUCTION

Supply Chain Management Fundamentals is an innovative pro-gram of education leading to professional certification, orga-nized by the Centre for European Programmes of the AmericanUniversity in Bulgaria in cooperation with the USAID LabourMarket Project and Direct Remark Inc. Introduced for the firsttime in Bulgaria in 2006, the program is uniquely designed forbusiness executives seeking to improve their organization'scompetitiveness by adopting cross-organizational approachesto reducing cost while increasing sales, efficiency and cus-tomer service.

Following the success of its first edition, the CertificateProgram in Supply Chain Management Fundamentals will beoffered again in autumn of 2006. The program has beendesigned to allow participants to quickly identify opportunitiesto improve the performance of their companies and applyproven techniques to achieve business results. The new edi-tion of the program is further improved to reflect identifiedcountry-specific business needs of additional content. Theinstructional approach is innovative and dynamic with a clearfocus on building systematic knowledge, sharing real-worldexperiences, business transformation and competitiveness.

PROGRAM LEADER

Mr Nimish Jhaveri, who has a 20-year consultant experiencein supply chain management activities, organizational develop-ment, business technologies and reconstruction of businessprocesses, will deliver the executive program in Supply ChainManagement Fundamentals.

MAIN OBJECTIVES

The program aims at achieving the following impact:

● Provide a clear understanding of how business performance

can be dramatically improved by effectively managing oper-ational interdependencies across business partners, individ-ual departments, and customers

● Study the challenges other companies have faced in howthey acquire, produce, and deliver goods and services world-wide, and how they have taken advantage of supply chainmanagement principles to gain leadership positions in theirindustries

● Gain appreciation for internal factors that facilitate the suc-cessful implementation of supply chain improvement initia-

tives, such as product design, business process manage-ment, performance measurement and supply chain tech-nologies

WHO CAN BENEFIT?

This program is designed for senior business executives,decision-makers responsible for financial performance, cus-tomer service or operating efficiency, cross-company teamsresponsible for managing partnerships with customers orsuppliers, senior executives in charge of delivering supplychain services to their customers, sales executives incharge of customers with a demanding supply chain strate-gy.

The program is also suitable for individuals, who want to gainquick access to highly scalable solutions and proven tech-niques for reducing cost while increasing sales, efficiency andcustomer service, which otherwise require years of practice.

WHEN?

The modules are organized every other weekend, starting 29September and finishing 25 November 2006 with the followingschedule and content:

Certificate Program InSupply Chain ManagementFundamentals

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Dr Antony Totev is appointed General

Manager for Bulgaria of the world

No 1 pharmaceutical company

Pfizer. As of July 17, 2006 he is in

charge of the operations of the lead-

ing health care provider in the coun-

try. He will drive all Pfizer activities

in Bulgaria to become the most val-

ued company to patients, customers,

colleagues, partners and the com-

munity. Pfizer Inc, founded in 1849,

is dedicated to better health and

greater access to healthcare for

people. The purpose of the company

is to help people live longer, healthi-

er, happier lives. In 2005 the rev-

enues amount to $51.3 Billion with

actual R&D spending of $7.4 Billion.

The key Pfizer pharmaceutical prod-

ucts include: Aromasin, Campto,

Celebrex, Genotropin, Lipitor/Sortis,

Lyrica, Norvasc, Relpax, Viagra,

Xalatan/Xalacom, Zeldox, Zmax. ■

Pfizer Appoints New General Managerfor Bulgaria

● Module 1: September 29-30Introduction to Supply Chain Management

● Module 2: October 13-14Building Blocks of Supply Chain Competitiveness

● Module 3: October 27-28Game-changing Supply Chain Tactics

● Module 4: November 10-11Supply Chain Enablement

● Module 5: November 24-25Defining a Supply Chain Improvement Program

WHERE?

All the modules will take place in Sofia, at the Elieff Center

for Education and Culture, American University in Bulgaria.

PROMOTIONAL MATERIALS

A DVD with video presentation of the program, delivered by theprogram leader Nimish Jhaveri in both languages: Bulgarianand English as well as references from participants in the firstedition of the program are available upon request, free ofcharge.

APPLICATION

For additional information about the program and the applica-tion process, as well as to take advantage of the special dis-count for EARLY BIRD REGISTRATION- deadline 8 September,please visit our web site www.aubg.bg/cep/new or contact theCentre for European Programmes at tel. 960 79 22 or e-mail:[email protected]. ■

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Avon, the company for women, is aleading global beauty company, withover $8 billion in annual revenue. As theworld's largest direct seller, Avon mar-kets to women in well over 100 coun-tries through over five million indepen-dent Avon Sales Representatives. Avon'sproduct line includes beauty products,fashion jewelry and apparel, and fea-tures such well-recognized brand namesas Avon Color, Anew, Skin-So-Soft, AvonSolutions, Advance Techniques, AvonNaturals, Mark, and Avon Wellness.This year The Company for Women,celebrates 120 years from the time it'sfirst products reached the market.

Here is a short history of Avon year byyear:

1886

…the story begins with the founderDavid H. McConnel and The Little DotParfume Set with five different fra-grances: Heliotrope, Violet, White Rose,Lily of the Valley and Hyacinth.

1890

We printed our first Avon Brochure. Ittold the story about our products withoutany single illustration.

1897

Mr. McConnell decided to build our ownlaboratory in Suffern, New York State .Today, research and development forevery single makeup and skin careproduct we sell around the world takesplace there.

1905

This was the year when we introducedour first decorative cosmetic products tothe customers: rouge in liquid and pow-der form.

1906

We published our first color brochure.

1920

First time our sales reached $1 million.

1927

In this year we introduced our first skincare line - The Gertrude RecordonFacial Treatment Set.

1929

The first products were offered under

the brand name Avon.

1953

First television advertising launched fol-lowing the big expansion of TV sets inthe world in 50s.

1955

Our vision to improve lives of womenglobally got the name - The AvonFoundation. Now marking its half centu-ry, the Avon Foundation brings this mis-sion to life through two key areas: breastcancer and women's empowerment.Through 2005 Avon programs in 50countries worldwide have raised andawarded more than $450 million forhumanitarian causes. The Avon BreastCancer Crusade supports access tocare and finding a cure, funding fiveareas of the breast cancer cause:awareness and education; screeningand diagnosis; access to treatment;support services; and scientificresearch.

1972

First time sales reached $1 billion.

1975

The year Avon becomes the biggestjewelry manufacturer in the world - afterfour year in business.

1986

Avon celebrates 100 years. First major beauty company to stabilizethe anti-aging ingredient retinol, thepurest form of vitamin A, for use in ananti-aging treatment in 1986.

1987

Avon made breakthrough in skin care -we were first to the market companywhich stabilized vitamin A (retinol) andvitamin C for usage in anti-aging, mois-turizing and skin lightening products.

1989

Avon became the first major cosmeticcompany to end all animal testing for itsproducts and ingredients, worldwide.

1991

We brought alpha hydroxy (AHA) technol-ogy to the mass market with the launchof a breakthrough perfecting cream, AnewPerfecting Complex for Face.

1999

Avon names its first-ever female CEOwith the appointment of Andrea Jung inNovember.

Avon announces its first ever global adver-tising campaign. The campaign themed"Let's Talk", focuses on Avon's unique rela-tionships with women around the world.

2000

We launched first ever global advertisingcampaign themed "Let's Talk" focusedon Avon's unique relationships withwomen around the world. The big tennis stars Venus and SerenaWilliams were chosen as spokespersonsfor the campaign.

2004

Oscar-nominated actress Salma Hayeksigned as the global celebrityspokesperson for the company and facefor the first prestigious collection of fra-grances from Avon Today TomorrowAlways and Avon Color.

2005

The Fragrance Foundation honored Avon'sToday Tomorrow. Always with theFragrance of the Year Award in theWomen's Private Label/Direct Sell Categoryat the 33rd annual "FiFi®" Awards.We opened new Global Research andDevelopment Center in Suffern, N.Y. ,New Suffer Laboratory, $100 millionstate-of-the art facility, was built on thefoundations of our first laboratory andcontinues the mission of our founder -to be the first to the market company inresearch and innovations. ■

Avon Celebrates 120 Years

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Balkan Star, the authorised local distributor of DaimlerChrysler,Mitsubishi, Jeep and Dodge, has inaugurated a 4 milion eurosales and service center in Plovdiv. The 44,000 sq m centeris the company's third so far and will cater to clients fromCentral and Southern Bulgaria. The center will sell cars,trucks, bus and spare parts thereof and will provide after-salemaintenance services.

The center is situated in the Industrial zone near Plovdiv, closeto the Radinovo village. The main building consists of 4 depart-ments and includes commercial and service spots for theautomobile models. The service center is a European styleone, built according to standards of DaimlerChrysler AG andMitsubishi Motors Corp. ■

Balkan Star Opens New Service Center inPlovdiv

For this particular occasion Willi Betz , the owner of Willi Betz Group, attended

the event.

The new center near Plovdiv.Testing new Mercedes model.

Total multi-tenant/speculativeand owner-occupied officestock in Sofia has seenimpressive growth in the firsthalf of 2006. This was justone of the findings in the lat-est installment of Colliers'Office Market Overview, pub-lished every six months.

Office stock in the suburban area increased by 20 percent in thefirst six months of 2006, with 10 new buildings completed. Thestrong absorption is evidenced by a modest vacancy rate of 8percent by the end of June. Total inventory of speculative andowner-occupied office space has increased by approximately50,000 square meters in the first half of 2006. Some 75 percentof this space was immediately occupied.

The overall vacancy on Sofia office market is a healthy 6.1 per-cent, with both broad centre and CBD vacancies well below thisfigure. Office rents continue to be very stable and remain amongthe lowest in Southeast Europe, thus contributing to the compet-itiveness of Bulgaria as an outsourcing destination.

Larger retail formats such as shopping malls and big-box retailoutlets are increasingly preferred by Bulgarian consumers. Twoshopping malls opened in Sofia in the first half of 2006, addinga combined 42,000 square meters of leasable area to the retailstock.

Demand for prime retail space is very high. Well developed shop-ping malls enjoy significant interest from both new market

entrants and established brands looking to expand. The supplyof high-street retail space is still limited relative to demand. High-street retail space in Sofia commands monthly rents of 50 Euroto 120 Euro per sq. m., while retail warehousing achieves 7 Euroto 12 Euro a month. ■

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Cefin Bulgaria, authorized dealer ofIveco, celebrated July 7th with a rockconcert one year from the officialopening of Cefin Service Center, Sofia.Cefin customers, partners, employees,and media representatives enjoyed thecelebration and the special perfor-mance Signal of the legendary rockband.

Mr. Daniel Marin, Managing Director ofthe company, thanked the guests fortheir trust, and reassured them thatCefin will spare no effort in providingservices of highest quality.

On the 7th of July last year Cefin openedthe doors of the biggest commercial vehi-cles center in Bulgaria. The center is

located on 425, Slivnitsa Blvd., on themain road Sofia-Belgrade. It occupies anarea of over 23,000 sq m, distributed inthree main areas: the commercial and

administrative offices, the after salesoffices and warehouses and the serviceworkshop. More than 4.5 million euro wasinvested in the facilities and technology. ■

Cefin Service Center Celebrates FirstAnniversary

Colliers: Office Leasing in Sofia, SuburbsGrows

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Intel Corporation announced in August a global effort to prepareuniversity students for a new paradigm of software developmentas Intel transitions its processors from single-processor enginesto ones that will have multiple cores and threads. This evolutionwill transform software design and require entirely new thinkingand innovation in order to leverage this kind of processing power.As part of its higher education program, Intel is providing 45 ofthe world's top universities with expertise, funding, developmenttools, educational materials, on-site training and sustained col-laboration with Intel to incorporate multi-core and multi-threadingconcepts into their computer science curricula.

By the end of this year, Intel expects more than 75 percent ofits mainstream server, desktop and laptop PC processors to shipas dual-core processors; with four-, eight- and many-cores on thehorizon.

"To usher in a new generation of computing technology and bringcreative new products to market, it's crucial to educate tomor-row's software developers to architect, develop and debug thenext generation of software for modern, multi-core platforms,"said Renee James, corporate vice president and general man-ager of Intel's Software and Solutions Group. "The full potentialof multi-core based systems to deliver great performance andexpanded usages is unleashed when software is designed totake advantage of the full capabilities of the machine. Workingwith the world's best universities, Intel is creating the future forperformance computing."

Universities participating in the worldwide effort include CarnegieMellon University, Cornell University, Georgia Institute ofTechnology, University of Michigan and University of Washington,as well as leading academic institutions across Brazil, China,India, Mexico, Russia, Taiwan and several European countries,among which is Hungary. The first courses will be offered during

the fall term this year and Intel expects hundreds more universi-ties to participate in 2007 and beyond.

"Intel's support in multi-core education is critical for two reasons,"said Karsten Schwan, professor of College of Computing,Georgia Institute of Technology. "First, getting early access toadvanced technology and new equipment is something thatalways excites students. Second, companies like Intel have a per-spective that looks beyond research to see the broader potentialfor technology."

The curriculum provides an introduction to Intel multi-core archi-tecture and teaches computer science students how to achievemaximum performance of their programs on threaded, multi-coreand multi-processor systems using Intel compilers and threadingtools. It also covers the importance of parallelism, threading con-cepts, threading methodology and programming with threads(Windows, OpenMP, PThreads). ■

Intel Teams with Top Universities forSoftware-related Research

Budapest Polytechnic Institute is on the list of universities providing expertise for

the Intel initiative.

The publishers of The Sofia Echo weekly

newspaper are to launch PropertyWise on

September 21 this year. PropertyWise will

be a bi-monthly publication offering analy-

sis and in-depth coverage of the trends

and opportunities on the Bulgarian prop-

erty market. The publication targets for-

eigners living, working and investing in

Bulgaria but will also be an indispensable

source of information for those working in

the spheres of property, finance and

investment consultancy abroad.

PropertyWise will contain just the right mix

of industry info, people profiles and

regional reviews all written in a tight, crisp

style to give the serious property investor

what he or she is looking for. PropertyWise

will be distributed throughout the country

at newsstands, hotels, shops and petrol

stations as well as on a subscription basis.

In addition to this, the first edition will be

distributed free to all the readers of The

Sofia Echo, bumping up the planned cir-

culation by an extra 3000 copies.

Subscriptions abroad (including the UK,

US, Russia and Western Europe) can

already be made online at www.property-

wisebulgaria.com, with moves ahead to

start selling the magazine in the UK from

the beginning of next year. ■

New English-language Property Magazinein Bulgaria

NATO Defense College Anciens' Association - Bulgaria host-ed an international conference on June 21, 2006, titledTransformations in Regional Security Policy and DefenseTechnologies in 21st century. The event was organized underthe patronage of Bulgaria's defense minister and in cooper-ation with AmCham - Bulgaria and General Dynamics.

Among major presenters were Lord George Robertson, NATOsecretary general, 1999-2003; General Paul Kern, command-ing general, Army Materiel Commandof the U.S. Army

Forces, 2001-2004; Yanus Bugajski, director of project NewEuropean Democracies; William Smidder, vice-president ofGeneral Dynamics; and Christian Fuchs, president of Steyr.

During the second part of the conference, General Dynamicsdemonstrated its latest achievements in the development oftactical communication-information systems for the armedforces. A specialized program of the company for demilita-rization of obsolete weapons and ammunitions was present-ed as well. ■

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NATO Conference Addresses RegionalSecurity, Technologies

a m c h a m e v e n t s

On September 19 the American Chamber of Commerce in

Bulgaria in cooperation with CEC Government Relations will

be hosting a seminar on the EU Environmental Liability

Directive (ELD). The ELD is mandatory for member states by

April 30, 2007 and will need national legislation for its trans-

position. Bulgaria got no extra "derogation period" for the

ELD.

While the ELD is limited to new contamination sites, created

after April 30, 2007, it does have provisions and implications

for existing contamination. Existing contamination is general-

ly viewed to be far more environmentally and economically

significant than new sites. The ELD has "financial assurance"

provisions that some member states have applied by requir-

ing mandatory insurance for environmental risks and other

cash requirements if insurance is not available. This will

cover a broad range of businesses - everyone with an inte-

grated permit, water discharge permit, waste management

operations, hazardous material transportation, etc.

The ELD also applies to sites where the actions causing the

contamination have not stopped as of April 30, 2007. Thus

old contamination may get swept in with new requirements,

including notification of the contamination to the government.

Finally, the ELD uses risk assessment techniques and defines

a broad class of liable parties. It is advisable to make the

existing Bulgarian law consistent with these rules to provide

a coherent system of liability for contaminated land and

ground water. ■

Seminar on the EU EnvironmentalLiability Directive

Bulgarian business leaders, politicians and military attended the event. Lord George Robertson appriciated the achivements of Bulgaria in reforming the

army, conferring with Minister of Defence Vesselin Bliznakov.

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Residential Park Sofia is the first resi-dential project of its kind in Bulgaria.Employing the best practices in suchdevelopments from the US and Europe,the park blends an excellent location atthe foot of Vitosha Mountain with care-fully planned architecture and infra-structure to create the best possibleenvironment for living.

In August, the regulation procedure forthe plot of Residential Park Sofia wasfinalised by the Municipality of Sofiaand is already included in the regula-tion plan of the district. Constructionworks start in September. There is asample multifamily house that willdemonstrate the customers the differ-ent styles of finishing works and willfacilitate the choice for their ownhouses and apartments. The samplehouse will be completed by mid ofSeptember.

The building of new roads and twobridges over the Ring Road, as well asrehabilitation of existing infrastructure,are also under way. This will makeResidential Park Sofia easily reachablewhich is nowadays an important prereq-uisite to success - the well-known"Location, location, location" is alreadybeing replaced by "Accessibility, acces-sibility, accessibility".

20 million BGN have been invested inthe development of Residential ParkSofia to date. By the time of projectcompletion in 2009, the total ivestmentis expected to rise to BGN 110 million.

Residential Park Sofia is created by aninternational team of professionals with aconcept design from a leading Germanarchitectural company that also devel-oped the Olympic Village in Torino, 2006.The complex consists of different typesof buildings - single and double houses,row houses and multifamily apartmentbuildings, planned to satisfy a vast arrayof customer preferences. It addition, aCommunity Center with various serviceswill be at residents' disposal. The largeindoor swimming pool and modernsports and leisure facilities, the kinder-garten and spacious party room are just

a few of the amenities planned. A pro-fessional facility management servicewill care for the flawless operation of thepark. The immediate vicinity of BusinessPark Sofia and Commercial Park Sofiamake the concept of a "City within theCity" a reality. ■

From Project to Real ConstructionResidential Park Sofia building starts in September

Residential Park Sofia In figures260 000 sq. m plot area194 000 sq. m total built-up area205 buildings1 000 living units3 000 residentsYear of completion 2009

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Established in 1971, Century21® is theworld's most recognizable real estate brand.Century21® is further expanding its globalmarket share, and currently owns theworld's largest real estate agency system,

providing better global branding presence than any other com-petitive brand. Century21® is dedicated to continually provid-ing buyers and sellers of real estate with the highest quality ofservice. In more than 48 countries in the world there are over8 000 independently owned and operated offices, where morethan 144 000 real estate professionals at any given time areable to provide their clients and customers with quality helpand first-class service. The launch of CENTURY21® Bulgariais a result of the natural development of the World's real estatecommerce. CENTURY21® Bulgaria enters the local marketaiming to impose the virtues of honesty, fair dealing, andresponsibility to every single client. CENTURY21® Bulgaria isthe high quality real estate professional that everyone has wait-ed for, up until now. With a grand opening on September 142006 the company presented its activities in the DiplomaticClub of Gorna Banya in Sofia.

Contacts:Onik Latifian

Executive DirectorTel: ++359 2 945 3890Fax: ++359 2 945 3891

E-mail: [email protected]: www.century21bg.com

Address: 10-12 Kremikovsko ShosseSofia

Epsilon Interactive is a leadingprovider of strategic, ROI-focusedemail communications solutions andmarketing automation technologies.

Through its combination of innovative technologies, profes-sional services and vertical market expertise, EpsilonInteractive helps marketers acquire, grow and retain profitablecustomer relationships through highly relevant and personal-ized email communications. The company's end-to-end suiteof industry-specific products and services includes scalableemail campaign technology, delivery optimization, marketingautomation tools, turnkey integration solutions, strategic con-sulting, and creative expertise to produce email programs thatgenerate measurable results throughout the customer lifecycle.

Epsilon Interactive (formerly Bigfoot Interactive), is an operat-ing unit of Epsilon (http://www.epsilon.com), a leading providerof multi-channel marketing services.

Epsilon Interactive International is a trading name of AllianceData FHC, Inc.

Contacts:Jeffrey Green

Country ManagerE-mail: [email protected]

Web: www.epsiloninteractive.comAddress: 116, James Baucher Blvd., Apt. 4

1407 Sofia

Reader's Digest EOOD is a sub-sidiary of the top global publisherReader's Digest Association, head-

quartered in the USA, distributing more than 50 editions in 21languages and over 70 countries. We are Bulgaria's leadingdirect marketer in the publishing field, a fruit of the 85-yearlong RDA history. Our Mission is to create products that inform,enrich, entertain and inspire people of all ages. We are com-mitted to open the eyes of the reader to the uniqueness, vari-ety, beauty and wisdom of the world, digging beyond trivialconceptions of things. The RD products portfolio includesBooks, Music, Magazines, Periodicals, Video, HomeEntertainment and Children's products. The RDA flagship pub-lication, Reader's Digest magazine, the largest-selling maga-zine in the world, reaches 100 million people a month. Theglobal bestseller "Discover the Wonders of the World" is thefirst RDA book published in Bulgarian.

Contacts:Nelly Dimitrova

Country ManagerTel.: 8108414; Fax 810849953A, Nikola Vaptzarov Blvd.

East ParkTrade center, 1

1407 Sofia

Since 1969, World

Courier has set thestandard for speed,reliability and personal-

ized service within the transportation industry.

Thirty years of advances in technology have changed the waythe world does business. Today speed of delivery is no longerthe only consideration. Temperature control. Specialized pack-aging. Multi-centre coordination. Just-in-time logistical supplychain solutions.

World Courier is the only express company in the world spe-cializing in nationwide and worldwide "same-day" and "next-flight-out" service for time-critical shipments.

No weight, size or value restrictions, we ensure the fastestdelivery possible throughout the world, often measuring inhours what other companies measure in days. No shipment isever held for consolidation.

Our entire global network of over 130 company owned officesoperates on a 24-hours, 7 days a week, 365 days each yearincluding week-ends and holidays. At World Courier, we offeryou total service without boundaries.

Contacts:World Courier Bulgaria EOOD

Atanas TrendafilovGeneral Manager

Tel: ++359 2 976 9481Fax: ++359 2 976 9259

E-mail: [email protected]: Business Park Sofia, Bldg. 4, Fl. 1

1766 Sofia

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This year, the annual Silver Clef Awards,sponsored by O2 were held in the grandsurroundings of the London Hilton ball-room in Park Lane. The event raised animpressive 480,000 Pounds for Nordoff-Robbins Music Therapy, and was attend-ed by Foo Fighters, The Eagles, KaiserChiefs, Ozzy & Sharon Osbourne andBrian May, amongst others

Proceedings began with an awards cer-emony. Among the highlights were BrianMay presenting an Award to FooFighters, Peter Hook from New Orderpresenting a gong to Kaiser Chiefs, andEditors bagging an award for 'Best NewMusic'. The main award of the eveningwent to The Eagles, who were presentedwith the honorary Nordoff-Robbins MusicTherapy Lifetime Achievement Award byvocalist Paul Carrack. The Hard RockSilver Clef Award was presented to Ozzy& Sharon Osbourne, who had visited theNordoff-Robbins centre in Kentish Town,London that week to witness the excel-lent work of the charity.

The second part of the event was acharity auction, which saw a number ofgreat lots going up for sale, including alimited edition, signed Sir Peter Blakeprint featuring The Beatles plus anotherof Elvis Presley. The single highest bid ofthe auction however, was £33,000($48,226.57), which ensured that onelucky bidder won a Stratocaster® guitarsigned by David Gilmour, Roger Waters,Nick Mason and Rick Wright. As well asbeing signed, the body of the guitar wascustom painted using the iconic 'prism'logo from Pink Floyd's classic 1972album, Dark Side Of The Moon, which isstill the best-selling rock album of alltime.

Fender Europe's Jamie Crompton, whoarranged for the guitar to be created inconjunction with UK custom paint artistMartin Sims (and who also got the musi-cians to sign it), said "I have beeninvolved with Nordoff-Robbins Music

Therapy for a few years now since beingintroduced to the charity in 2003. It is areal pleasure to work with such commit-ted people - from the fundraisers to thetherapists themselves. It's great to seehow the effects of music, when used intherapy, can enable communication forchildren and adults with a wide range ofneeds."

A spokesman for Nordoff-Robbins said"Emotional, cognitive and developmentalneeds can be addressed through inter-active music-making within a securerelationship offered by the music thera-pist. Intimate connections with musiccan remain despite disability or illness,and are not dependent on a musicaltraining or background. As well as fund-ing important research money raisedfrom these events helps to cover costs

of 30,000 music therapy sessions in theUK each year. The charity & organizersof the Silver Clef Lunch very muchappreciate Fender Europe's contribu-tions".

The auction contributed £210,000 tothe evening's total. The Silver ClefAwards are always always one of thehighlights of the U.K. music industry,and this year's get-together wasattended by many of the main players

in the business.

Fender Europe is a supporter of Nordoff-Robbins, and previously raised over£200,000 for the charity by staging2004's Strat Pack Concert in London.Each year we have donated guitarssigned by legendary artists, and this yearwas no exception! We would like tothank David Gilmour and everyone elseinvolved in making this event so suc-cessful. ■

Pink Floyd GuitarFetches £33,000 For Charit y

Iconic 'prism' logo from Pink Floyd's classic 1972 album, Dark Side Of The Moon

David Gilmour

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Composer, singer, actor, activist-Stinghas won universal acclaim in all theseroles, but let's not forget that he's oneof the finest bass players in popularmusic. From his chart-topping tenurewith the Police to his amazingly var-ied solo career, Sting's cleverly con-structed bass lines have always com-bined tremendous muscle andfinesse.

Born Gordon Mathew Sumner inNewcastle, England, he was ateacher, soccer coach and ditch dig-ger before his love for jazz and popmoved him to music. Sumner - nick-named "Sting" for an oft-worn yellowand black jersey - met U.S. drummerStewart Copeland while he was stillthe bassist for popular Newcastlejazz/rock outfit Last Exit; the pairenlisted guitarist Andy Summers toform The Police in 1977.

The Police, of course, quickly rose tointernational stardom on the strengthof sheer personality, ferocious musicalability and Sting's apparently endlessability to write hit after hit-"Roxanne,""Message In a Bottle," "Don't Stand SoClose To Me," "Every Little Thing SheDoes Is Magic," "Every Breath YouTake," and more. By the time thePolice disbanded in the mid-80s, theywere considered by many as thebiggest band in the world.

Sting released The Dream of the BlueTurtles, the first of his many top-sell-ing solo albums, in 1985. It was fol-lowed by Bring On The Night (1986),Nothing Like The Sun (1987), TheSoul Cages (1991), Ten Summoner'sTales (1993), Mercury Falling (1996),Brand New Day (1999), All This Time(2001) and Sacred Love (2003).

He remains one of the world's mostdistinctive and highly respected per-formers, collecting (as a solo artist)12 Grammys, 2 Brits, a Golden Globe,an Emmy, three Oscar nominations,Billboard Magazine's Century Award,and MusiCares 2004 Person of theYear. He has appeared in more than

10 films and has written and record-ed music for many more. Fenderintroduced its Artist Series StingPrecision Bass® guitar in 2001.

Sting's support for human rights orga-nization like the RainforestFoundation, Amnesty Internationaland Live Aid mirrors his art in its uni-versal outreach. With his wife, TrudieStyler, he founded the Rainforest

Foundation in 1989 to protect theworld's rain forests and the indige-nous peoples who live in them; theyhave raised more than $19 millionwith 13 benefit concerts to raisefunds for and awareness of the plan-et's threatened resources. TheRainforest Foundation has nowexpanded to a network of intercon-nected organizations working in 18countries worldwide. ■

Sting - Another Fender HeroThe star, who recently made a concert in Bulgaria congratulates the guitar com-

pany for its birthday

The ECO Issue - AmCham Bulgaria€¦ · AmCham Bulgaria Magazine August - September 2006 editorial...

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