What are the main concerns raised by potential investors and how do you respond to them? How confident are you that these concerns can be resolved within a reasonable time frame?
The major concerns are in three broad categories - administrative barriers to starting and running a business, the infrastructure of the country, which is the communications, transport, and so on, and number three is really everything else. I'd really like to emphasise the administrative and the infrastructure. 'Everything else' includes financial and tax concerns which are rather towards the end of the table.
Administrative concerns also include concerns about corruption, about inefficiency and delay and sometimes about things not getting done to start with. It also concerns the volume of red tape, paperwork, and the attitude of the administration which provides service to investors. The infrastructure issue is very, very serious because it is the first thing you need to have in order to run an operation. Solving administrative issues is really a small step to starting a business - pipes and wires and things like that, and very often they're not there. You need to get something from point A to point B and the means to do that are not there, and there are other complications.
How do we address these things? Well, at the moment, the agency can do very little to address the administrative issues. What are we planning to do about it? The agency has put a proposal to become a one-stop shop institution which would collect all the paperwork that one needs to turn in to start a business, and then work with the administration on behalf of the business, and do all the paperwork and all the knocking on the doors on behalf of the business. We also assess and make proposals on individual instances of red tape and bureaucracy and so on. We also sometimes try to tackle specific cases where we are able to identify a problem before it has become too deep, and the business has decided to pull out altogether. We do have a substantial number this year and we have been successful in a couple of cases.
Overall I can say we have been successful because we have found an inventive or original way to solve the situation, not because we have the legislative mechanisms to do so at this point. So what we are trying to do with the new one-stop shop concept is acquire such capability. This should happen in the framework of a new law called the Investment Encouragement Law, under which the agency will also be renamed to the Bulgarian Investment Agency as opposed to the BFIA, which would address the issue of both domestic and foreign investors.
How good or otherwise is the level of co-operation between your agency and other Government departments? Is there any rivalry and how do you resolve this?
I wouldn't say there is rivalry. I would say that the role of the agency so far has been very limited and it is a bit of a ground-breaking effort to position the role of the agency as a partner to other institutions. This has already occurred with a number of institutions that recognise people who change things, but again the effort is limited in its scope until we have more capability based on this law and other laws. At the moment it's a lot of personal effort and less legal capability.
Will the new agency have a much bigger staff complement, and how will you ensure that it does not become unwieldy and overly bureaucratic?
If we are successful in becoming a true one-stop shop, not another shop, then of course we will need to grow. I think the way to avoid becoming a bureaucratic institution or just another institution which increases the overall administration is to have a very defined task, both on an individual and on an institutional level. To have a very short trial and error period, to have an idea whether this idea works in a very short span of time. If it doesn't work, to adjust the structure to a more workable form and then if that doesn't work, change the concept. I definitely do not want to create yet another institution. If I see that this does not work, or that we have created just another institution, then I will be as active in dismissing it as I am now in putting it together.
Does the possibility exist that the agency will eventually transform into a ministry in its own right?
I don't know. I doubt it. I don't want to be a minister.
At your first news conference after your appointment, you said that large-scale public contracts would be used as an incentive to attract investments. Have you made any progress on this since then?
Yes we have. We are in negotiations with two companies at the moment for very large contracts for which we are trying to find an offset model. This means that the contractor will have the economic benefit of the contract, but some of the economics will have to go back into the economy of the country, in a way beneficial to both parties. It is about to be institutionalised in a proper form, which doesn't contradict EU legislation.
Do you agree that more could be done to reform Bulgaria's tax laws to create investment incentives?
I think the tax system is among the most successful attempts of the country so far. I think the concept of the tax system is very, very good. I think the implementation is not so good yet. So the answer to your question is 'yes'. But not so much to the extent of decreasing taxes or changing structures but more on how you administer the tax system. I am also a big believer in a flat tax rate.
Options for investment in Bulgaria could mainly be categorised as joint ventures, participation in privatisations, Greenfield investment, and portfolio. Which of these is proving most popular at the moment and which do you think has the biggest potential for expansion?
Greenfield investment has in the past three years grown as an overall proportion of investment because of the decrease of privatisations. I would say joint ventures and Greenfield investment have become the forms that are probably accounting for two-thirds of investment.
What is being done to expand investment from Bulgaria's non-traditional partners, that is, those outside Europe and the US?
This Government has been very active in reaching out beyond Europe - and when I say beyond Europe, I mean the US, Japan, the Middle East, and China as well. The agency is becoming very active with China. We are very active with the American institutions in Bulgaria, both public and private. I am very pleased, for instance, that the US embassy and commercial service are among our most active partners. We talk to them five times a week. Currently they are helping us set up a big marketing trip to the US. Abroad, Bulgaria has no image, or not such a good image. I want that to change. We need to get the message out. Bulgaria needs to leverage its partners, as in the case of the war in Iraq. Bulgarian representatives abroad need to be more active. There needs to be a focused message about what is Bulgaria. I will be very happy if the readers of your newspaper make some suggestions - to sum up how they sell Bulgaria, or describe Bulgaria when they go back home, that would be very helpful. We need to have something which combines where we are, who we are, and what we are. I think something of the effect of 'East meets West' - that kind of idea, short, punchy as well, and loaded with content. We are very actively looking for this, we would appreciate any ideas.
What is your assessment of the likely impact of the Iraq war on the investment climate, both in Bulgaria and in the region?
It's very dependent on the timing and the outcome of the war. Two weeks ago I was very worried as to whether the war would start and how quickly it would end. Today I am very worried about how quickly it will end. Uncertainty and lack of visibility creates a lot of volatility in the financial markets and in corporate development plans. If things go well and there is a quick end, I think we stand a chance to actually benefit from the war. Both because of the reconstruction effort, which we expect to be part of, and also because we aim to be associated with a just cause for the war, and hope to gain more visibility out of the allies. We could see more British and more American and other people and companies passing through, and staying, and recognising Bulgaria as a place where East meets West, geographically a place that could could definitely serve as a launch pad to these new markets.
Have the drawn-out sagas involving Bulgartabac and the Bulgarian Telecommunication Company damaged Bulgaria's image among foreign investors?
Yes. It is difficult. The focus of this agency is Greenfield investment, not privatisation. But if you have Europe's most prominent financial institution and one of Europe's and the US's most prominent private equity fund trying to close deals which combined have now lasted more than seven years, it creates problems for me to convince people to come and build new businesses. It raises questions about how things are working and what are the guarantees that it couldn't happen to anyone. I don't want it to cast a shadow on all investment opportunities in Bulgaria. These are two politically-charged situations, because of the scope of the companies, their importance to national security, employment and the services they provide. One would have expected for these to become the most difficult privatisations, and they have. At the moment when sale and purchase agreements get out of the sales team and into Parliament, you begin to wonder who has what role. I say that from the perspective of someone who has been part of sales deals for more than $3 billion in my career.
What role is Bulgaria's expatriate community in other countries playing in investment in Bulgaria?
A very, very important role. I consider myself to be part of this community. We have very strong ties to communities in London and New York where there are formal expat organisations. They bring a lot of business and potential investors to Bulgaria and speak to them in their language. What I would expect to see more and more is second-generation Bulgarians who were born and live abroad to come back with their capital. Probably one-third of the references we get are from people who live abroad and know us and try to bring business opportunities to Bulgaria. I would like to see this happen more outside London and New York.
After your appointment, you spoke of creating a "qualitatively new" image for Bulgaria abroad. In short, please outline the key aspects of this image.
The key aspects of the image are, number one, the location. I see it as the East-West bridge, and I see it as the Europe to Asia bridge. I see it as the launch pad for companies from the East, including China, to the European market, and to companies in Europe to the Middle East, Caucasian, Asian markets, and the Mediterranean rim. Number two is the product - a green unspoilt country, with very diverse nature and I guess the third aspect would be the people, who are highly educated, speak foreign languages and have good technical capabilities. If you ask me how I like to chart the pie chart of the economy of Bulgaria in 10 years time it would be the green economy - which is both the leisure industry and the ecological industry, environmental technologies, accounting for more than half the economy. And then the rest would be energy and some niche sectors, light manufacturing for example, that are capital intensive and not people-intensive.
What do you expect to come out of the visit to the US in May by the Bulgarian business delegation which you will be leading?
I want to put Bulgaria on the map of 30 to 40 leading US companies from three or four sectors - technology, life science companies, and industrial manufacturing. I would like to have Bulgaria appear as a prominent consideration on their corporate development plans.
I would like to tell them about Bulgaria and impress them with some facts about the country, and to propose some very specific projects to each company. I hope to generate a level of interest which would materialise if these companies come here to take a look at the specific things I have proposed, and plan their capital expenditure and investment, that when they think Eastern Europe, or Europe for that matter, that they consider this place.
What are the criteria for success you have set for yourself in this job?
I have three objectives for this year. Number one is that at the end of December this year I want to have the confidence that about half a billion dollars of Greenfield investment has either come or is coming our way, from ideas generated or executed this year. Number two I want to see the new law and the role of the agency as a one-stop shop either in practice or almost in practice. Number three I want to see the recognition of the people we work with, the people we serve, who are the investors, our partners from Government, and last but not least the people from the agency, that they have a successful and productive year and that it has been a different year for them.
You are still relatively young. What are your career ambitions?
I want to go back to the private sector and be an investor in Bulgaria. I want to be able to create jobs and help create the new business ethics. And operate fairly. Because I think this is ultimately what will make Bulgaria a better place.
The major concerns are in three broad categories - administrative barriers to starting and running a business, the infrastructure of the country, which is the communications, transport, and so on, and number three is really everything else. I'd really like to emphasise the administrative and the infrastructure. 'Everything else' includes financial and tax concerns which are rather towards the end of the table.
Administrative concerns also include concerns about corruption, about inefficiency and delay and sometimes about things not getting done to start with. It also concerns the volume of red tape, paperwork, and the attitude of the administration which provides service to investors. The infrastructure issue is very, very serious because it is the first thing you need to have in order to run an operation. Solving administrative issues is really a small step to starting a business - pipes and wires and things like that, and very often they're not there. You need to get something from point A to point B and the means to do that are not there, and there are other complications.
How do we address these things? Well, at the moment, the agency can do very little to address the administrative issues. What are we planning to do about it? The agency has put a proposal to become a one-stop shop institution which would collect all the paperwork that one needs to turn in to start a business, and then work with the administration on behalf of the business, and do all the paperwork and all the knocking on the doors on behalf of the business. We also assess and make proposals on individual instances of red tape and bureaucracy and so on. We also sometimes try to tackle specific cases where we are able to identify a problem before it has become too deep, and the business has decided to pull out altogether. We do have a substantial number this year and we have been successful in a couple of cases.
Overall I can say we have been successful because we have found an inventive or original way to solve the situation, not because we have the legislative mechanisms to do so at this point. So what we are trying to do with the new one-stop shop concept is acquire such capability. This should happen in the framework of a new law called the Investment Encouragement Law, under which the agency will also be renamed to the Bulgarian Investment Agency as opposed to the BFIA, which would address the issue of both domestic and foreign investors.
How good or otherwise is the level of co-operation between your agency and other Government departments? Is there any rivalry and how do you resolve this?
I wouldn't say there is rivalry. I would say that the role of the agency so far has been very limited and it is a bit of a ground-breaking effort to position the role of the agency as a partner to other institutions. This has already occurred with a number of institutions that recognise people who change things, but again the effort is limited in its scope until we have more capability based on this law and other laws. At the moment it's a lot of personal effort and less legal capability.
Will the new agency have a much bigger staff complement, and how will you ensure that it does not become unwieldy and overly bureaucratic?
If we are successful in becoming a true one-stop shop, not another shop, then of course we will need to grow. I think the way to avoid becoming a bureaucratic institution or just another institution which increases the overall administration is to have a very defined task, both on an individual and on an institutional level. To have a very short trial and error period, to have an idea whether this idea works in a very short span of time. If it doesn't work, to adjust the structure to a more workable form and then if that doesn't work, change the concept. I definitely do not want to create yet another institution. If I see that this does not work, or that we have created just another institution, then I will be as active in dismissing it as I am now in putting it together.
Does the possibility exist that the agency will eventually transform into a ministry in its own right?
I don't know. I doubt it. I don't want to be a minister.
At your first news conference after your appointment, you said that large-scale public contracts would be used as an incentive to attract investments. Have you made any progress on this since then?
Yes we have. We are in negotiations with two companies at the moment for very large contracts for which we are trying to find an offset model. This means that the contractor will have the economic benefit of the contract, but some of the economics will have to go back into the economy of the country, in a way beneficial to both parties. It is about to be institutionalised in a proper form, which doesn't contradict EU legislation.
Do you agree that more could be done to reform Bulgaria's tax laws to create investment incentives?
I think the tax system is among the most successful attempts of the country so far. I think the concept of the tax system is very, very good. I think the implementation is not so good yet. So the answer to your question is 'yes'. But not so much to the extent of decreasing taxes or changing structures but more on how you administer the tax system. I am also a big believer in a flat tax rate.
Options for investment in Bulgaria could mainly be categorised as joint ventures, participation in privatisations, Greenfield investment, and portfolio. Which of these is proving most popular at the moment and which do you think has the biggest potential for expansion?
Greenfield investment has in the past three years grown as an overall proportion of investment because of the decrease of privatisations. I would say joint ventures and Greenfield investment have become the forms that are probably accounting for two-thirds of investment.
What is being done to expand investment from Bulgaria's non-traditional partners, that is, those outside Europe and the US?
This Government has been very active in reaching out beyond Europe - and when I say beyond Europe, I mean the US, Japan, the Middle East, and China as well. The agency is becoming very active with China. We are very active with the American institutions in Bulgaria, both public and private. I am very pleased, for instance, that the US embassy and commercial service are among our most active partners. We talk to them five times a week. Currently they are helping us set up a big marketing trip to the US. Abroad, Bulgaria has no image, or not such a good image. I want that to change. We need to get the message out. Bulgaria needs to leverage its partners, as in the case of the war in Iraq. Bulgarian representatives abroad need to be more active. There needs to be a focused message about what is Bulgaria. I will be very happy if the readers of your newspaper make some suggestions - to sum up how they sell Bulgaria, or describe Bulgaria when they go back home, that would be very helpful. We need to have something which combines where we are, who we are, and what we are. I think something of the effect of 'East meets West' - that kind of idea, short, punchy as well, and loaded with content. We are very actively looking for this, we would appreciate any ideas.
What is your assessment of the likely impact of the Iraq war on the investment climate, both in Bulgaria and in the region?
It's very dependent on the timing and the outcome of the war. Two weeks ago I was very worried as to whether the war would start and how quickly it would end. Today I am very worried about how quickly it will end. Uncertainty and lack of visibility creates a lot of volatility in the financial markets and in corporate development plans. If things go well and there is a quick end, I think we stand a chance to actually benefit from the war. Both because of the reconstruction effort, which we expect to be part of, and also because we aim to be associated with a just cause for the war, and hope to gain more visibility out of the allies. We could see more British and more American and other people and companies passing through, and staying, and recognising Bulgaria as a place where East meets West, geographically a place that could could definitely serve as a launch pad to these new markets.
Have the drawn-out sagas involving Bulgartabac and the Bulgarian Telecommunication Company damaged Bulgaria's image among foreign investors?
Yes. It is difficult. The focus of this agency is Greenfield investment, not privatisation. But if you have Europe's most prominent financial institution and one of Europe's and the US's most prominent private equity fund trying to close deals which combined have now lasted more than seven years, it creates problems for me to convince people to come and build new businesses. It raises questions about how things are working and what are the guarantees that it couldn't happen to anyone. I don't want it to cast a shadow on all investment opportunities in Bulgaria. These are two politically-charged situations, because of the scope of the companies, their importance to national security, employment and the services they provide. One would have expected for these to become the most difficult privatisations, and they have. At the moment when sale and purchase agreements get out of the sales team and into Parliament, you begin to wonder who has what role. I say that from the perspective of someone who has been part of sales deals for more than $3 billion in my career.
What role is Bulgaria's expatriate community in other countries playing in investment in Bulgaria?
A very, very important role. I consider myself to be part of this community. We have very strong ties to communities in London and New York where there are formal expat organisations. They bring a lot of business and potential investors to Bulgaria and speak to them in their language. What I would expect to see more and more is second-generation Bulgarians who were born and live abroad to come back with their capital. Probably one-third of the references we get are from people who live abroad and know us and try to bring business opportunities to Bulgaria. I would like to see this happen more outside London and New York.
After your appointment, you spoke of creating a "qualitatively new" image for Bulgaria abroad. In short, please outline the key aspects of this image.
The key aspects of the image are, number one, the location. I see it as the East-West bridge, and I see it as the Europe to Asia bridge. I see it as the launch pad for companies from the East, including China, to the European market, and to companies in Europe to the Middle East, Caucasian, Asian markets, and the Mediterranean rim. Number two is the product - a green unspoilt country, with very diverse nature and I guess the third aspect would be the people, who are highly educated, speak foreign languages and have good technical capabilities. If you ask me how I like to chart the pie chart of the economy of Bulgaria in 10 years time it would be the green economy - which is both the leisure industry and the ecological industry, environmental technologies, accounting for more than half the economy. And then the rest would be energy and some niche sectors, light manufacturing for example, that are capital intensive and not people-intensive.
What do you expect to come out of the visit to the US in May by the Bulgarian business delegation which you will be leading?
I want to put Bulgaria on the map of 30 to 40 leading US companies from three or four sectors - technology, life science companies, and industrial manufacturing. I would like to have Bulgaria appear as a prominent consideration on their corporate development plans.
I would like to tell them about Bulgaria and impress them with some facts about the country, and to propose some very specific projects to each company. I hope to generate a level of interest which would materialise if these companies come here to take a look at the specific things I have proposed, and plan their capital expenditure and investment, that when they think Eastern Europe, or Europe for that matter, that they consider this place.
What are the criteria for success you have set for yourself in this job?
I have three objectives for this year. Number one is that at the end of December this year I want to have the confidence that about half a billion dollars of Greenfield investment has either come or is coming our way, from ideas generated or executed this year. Number two I want to see the new law and the role of the agency as a one-stop shop either in practice or almost in practice. Number three I want to see the recognition of the people we work with, the people we serve, who are the investors, our partners from Government, and last but not least the people from the agency, that they have a successful and productive year and that it has been a different year for them.
You are still relatively young. What are your career ambitions?
I want to go back to the private sector and be an investor in Bulgaria. I want to be able to create jobs and help create the new business ethics. And operate fairly. Because I think this is ultimately what will make Bulgaria a better place.
