Bulgaria is its own worst enemy in many ways. Not least the superfluous, archaic bureaucracy and the decrepit infrastructure which are the main dampeners when it comes to direct foreign investment.

Massive projects and foreign capital have decreased significantly in the second half of 2008, and investment in real estate has also slumped in light of the global financial crisis but also because the Bulgarian system is very good at stopping them coming in the first place, according to official data released by the Bulgarian National Bank, BNB, as reported by Stroitelstvo Gradut.

The problem is integral for the economy which, until this point, was mainly fuelled by direct foreign investment and financing from overseas with credit. The global crunch will suppress both those sources of revenue in 2009, which will, in turn, hit Bulgarian exports to the European Union hard as well.

The difference between direct foreign investment until November 2008, as opposed to November 2007, was 689 million euro, or a decrease of 11.6 per cent. Real estate purchased by foreigners in 2008 has also decreased by 23 per cent, down to 1.28 billion euros.

The construction sector is further burdened with problems emanating from unresolved issues regarding local municipalities who owe vast amounts of money to businesses and the reluctance of the Bulgarian government to intervene positively. Their resolution could be one positive step ahead in securing a healthy business environment for the construction sector which will have a positive impact on the economy as whole - to an extent.

The losses from the state of the Bulgarian infrastructure and quality of service are paramount obstacles, not only for entrepreneurs, but for every manufacturer who contemplates opening a factory in the country. Set that against the background of the global economic crisis and the outlook for Bulgaria in 2009 is grimmer still.

Rossen Plevneliev, manager of Lindner Immobile Management, daughter firm of the German company, for management of its investments in real estate in Bulgaria, has told of the firm's unsuccessful attempt to erect a factory for double tiered floors in Sofia.

"With the capabilities that we possess, I wasn't able to find a parcel in Sofia for under 60 euro per sq m. We needed a place near Sofia that was supported by adequate infrastructure. Eventually, the Germans came and said they had found a solution to the problem. The 'solution' was eight 8km from the outskirts of Prague, in the industrial zone where they had made a contract with the municipality where land in the Czech capital was sold for 12 euro per sq m," he told Stroitelstvo Gradut.

The problem in Bulgaria is two-fold - companies are forced to pay for inadequate infrastructure from which they have no subsequent benefits whatsoever. Thus, the end clients are left to pay for the aforementioned, as demand increasingly shrinks. Leaders of international companies are reluctant to invest in Bulgaria simply because no assurances can be made that even marginal profits will be made to offset their initial investment in public infrastructure. The other major problem is monstrous bureaucracy to which they are subjected. This seems to be designed with the sole purpose of deterring business and economic growth and foreign investment.