No changes happened after Bulgaria recognized Kosovo to the business conducted by 90 Bulgarian companies in Pirot free-trade zone (PFZ), PFZ managing board member Nesko Madic told Bulgarian journalists on March 27.

Bulgarian companies form the majority of the 130 firms that operate in the zone, although they only combined for a turnover of 50 million euro in 2007, with the PFZ as a whole recording a turnover of 324 million euro.

Among the Bulgarian companies using PFZ's tax breaks are Apix, Balkanpharma, MM Pharma and Actavis, while others operate in the raw materials, motocar parts and textiles commerce.

PFZ is now in talks with Bulgarian companies to start also production activities in the zone, Madic said. It would be convenient for the firms, as those goods that have more than 51 per cent of their components produced in Serbia, pay only one per cent custom tax for export to Russia, while goods produced in Bulgaria would pay 25 to 45 per cent custom tax for export to Russia.

However, the Bulgarian companies in PFZ are currently only selling goods to other companies operating there, which on their turn export it to the rest of Europe and the world.

According to Madic, PFZ was one of the best places for Bulgarian investments, as they should pay only transportation expencses when bringing their business to the Serbian town that has a population of about 45 000.

PFZ is one of the three free-trade zones in Serbia, which offer investor important tax incentives. Besides Bulgarian firms, is is also a base of operations for Greek, Argentinian, French (Michelin), Italian and Serbian. Serbian tire producer Tiger, operating together with Michelin, is one of the biggest investors in PFZ.

PFZ is developing a common project for creating a Pirot-Pernik free-trade zone. The European Union backed the effort with a 300 000 euro grant for investments in the future Bulgarian-Serbian link-up, while Pernik will also receive finance for a free zone from EU. The financing is extended as part of the Phare pre-accession aid programme.

PFZ was established on April 1 1998, and now spreads over 17 ha, but it plans to expand on another 28 ha starting from this year.