The state will start encouraging new investments in the processing industry, electricity production from renewable energy sources, the IT sector and research and development.

The Cabinet decided this on September 5, approving regulations to implement the Investment Encouragement Act (IEA). The move is linked to previous IEA amendments and appendixes, which came into effect on August 30 2007.

The act sets out areas of the economy in which investments will be encouraged. In the industrial sector, there will be encouragement of capital investments in the reprocessing industry and the production of electricity from renewable energy sources – water, wind, geothermal energy and sun.

In the service sector, investments in high-tech endeavours in computer technology will be fostered, as well as activities connected to research and development, education and humanitarian health care.

The IEA amendments foresee a new classification of investments to two classes – A and B. The minimum threshold for class A investments is now 70 million leva, while for class B investment it is 40 million leva. In addition, class A investments will receive “individual administrative service”. Up to now there was also a third class, to stimulate small projects investments amounting to between 10 and 40 million leva.

The regulations set out how to implement the provisions to encourage investment, which include financial support for education towards professional qualifications. The IEA amendments further provide for state support for investors who give jobs to young specialists up to 29 years old or Bulgarian university trainees, in the field of new high-tech production, or when capital investments are devoted solely to regions that lag behind in economic terms. Financial support will be granted for training and professional qualifications.

The Cabinet said that the measures were being taken because the business sector had shown that there was a great need for new knowledge and practical skills to implement new technology.

The aim is to boost the competitiveness of Bulgaria’s economy by increasing investments in the development of technology and in other fields that have high added value.

The Cabinet hopes to make Bulgaria more competitive by recruiting new capital, as has been done through similar plans in other Eastern and Central European countries such as the Czech Republic and Slovakia.

A new procedure is also to be implemented to assess and decide on investment projects that will get help from the state budget. These will be assessed and chosen through a competition procedure. The appraisal will be done at two stages through the calendar year.

The criteria and the priorities for classification are also defined, and will be the basis for the methodology and assessment procedure, which will be decided by the minister of Economy and Energy, and will be published on the ministry’s website.