INCREASING Bulgaria's competitiveness, introducing new technologies and investing in human capital will be the main challenges for the country's economy in the next few years.
This was said on May 13 by former deputy prime minister and economy minister Lydia Shuleva at a discussion on the current state and further development of Bulgaria. The event was organised by Industry Watch, an independent analytical company.
Shuleva said that in the next few years, small- and medium-sized enterprises (SME) have to be promoted, education modernised, while improvements to the business environment must be continued.
She listed steps such as the removal of the management of the register of companies from the court system, the introduction of private bailiffs, and "one stop shop" government services as moves in this direction.
Transport and Communications Minister Nikolai Vassilev said that there was another challenge to Bulgaria's economy - the necessity to develop the country's infrastructure.
Infrastructure investments in the past 30 years had been insufficient and Bulgaria had lagged behind, Vassilev said. He said that there would be serious interest in investments in communications in the next five years, and they were expected to reach two billion euro.
Deputy Finance Minister Lyubomir Datsov and Kalin Hristov, adviser to Bulgarian National Bank governor Ivan Iskrov, said Bulgaria should be ready for the introduction of the euro by mid-2009.
Datsov said that the model of development of the economy should be based on investments, not on expansion of consumption, as some political parties had promised in their election programmes.
International Monetary Fund resident representative in Bulgaria, James Roaf, said that Bulgaria had shown very good economic growth even though it had the strictest fiscal policy in the region, as well as in Central and Eastern Europe. Strict fiscal policy should continue to be maintained by Bulgaria after its accession to the EU, he said.
Sasha Bezouhanova, deputy chairman of the Bulgarian International Business Association (BIBA), said that after Bulgaria becomes a full EU member, it should focus on developing tourism, organic farming, the IT sector and the energy industry.
According to BIBA, Bulgaria could become a regional centre for IT investments and for the production and transit of electricity and natural gas.
Economy Minister Milko Kovachev said the encouragement of innovation, completion of reform of commercial registration, and raising the quality of human resources were the factors for improving the business environment.
However, some - especially those with ties to the political oppostion - have recently put forward less optimistic views.
Former environment minister Evdokia Maneva, now a member of the opposition Democrats for a Strong Bulgaria (DSB), told a news conference on May 12 that more than 80 per cent of companies in Bulgaria could go bankrupt after the country joins the European Union.
DSB leader Ivan Kostov said this was because the Government had made impractical commitments in EU negotiations with regard to environmental protection.
Bulgaria will need nine billion euro investment to build purifying facilities and change manufacturing technologies. Some of this money would have to come from private businesses. If the money is not spent, local firms will not be able to enter the EU market and will become uncompetitive, dooming them to bankruptcy, according to the DSB.
About 700 million euro has to be secured every year, and even the planned 140 million for 2004 have not been used yet, Maneva said. Only nine per cent of the money for environmental projects had been used so far, Kostov said.
The need to make local companies, regardless of their size, more competitive, was highlighted by President Georgi Purvanov on May 13, in a speech he delivered to a forum held at the Bulgarian Academy of Sciences.
Purvanov saw the challenges to business as manifold, including in regard to competitiveness, new technology, and human capital.
Purvanov said that it was high time that Bulgaria stopped living on "the memory of good education and a high level of science", and to find new opportunities, to allow the country to be of equal worth to the other EU member countries in future.
He recommended several steps in this direction. Funds for science should increase significantly and reach one per cent of gross domestic product (GDP) within the next three to four years. Money should be spent on clearly defined scientific priorities and on the principle of building competitiveness. As a priority, the state budget should co-fund projects, which are financed under EU framework programmes.
The interest of business to innovations and funding of applied research should be stimulated.
Funding of scientific research is the biggest and most serious problem facing Bulgarian science, and the entire state and its economy. According to European Commission data, Bulgarian researchers are the least-resourced in Europe, with 8000 euro for 2001, about 20 times lower than the average in EU states.
Bulgaria should become a competent and active part of the European research community, and part of the European technology market, Purvanov said.