Interview with Mr. Kenneth Lefkowitz, President of the American Chamber of Commerce in Bulgaria for See-News.com 17.10.2005
Bulgaria stands a fair chance to develop as an outsourcing zone for high value-added businesses and see a boom of foreign investments after its European Union accession, as it offers investment opportunities in sectors ranging from IT to real estate. "I think that Bulgaria will improve as an outsourcing zone after joining the EU, because a whole group of headaches related to VAT and customs are going to drop off," Kenneth Lefkowitz, President of the American Chamber of Commerce in Bulgaria, told See-News in a recent interview. Lefkowitz, who is also a co-founder of Sofia-based financial advisory and investment management firms, said that although labour costs in Bulgaria are already higher compared to China, the market could lure foreign investors with opportunities for bigger value added.
Bulgaria was the main receiver of foreign direct investment in Southeast Europe last year, attracting USD 2.5 bln and registering a 5.6% growth, but it needs more FDI to maintain growth after joining the EU. Lefkowitz said that foreign investors would put more cash in greenfield projects instead of buying already existing businesses after the country's entry to the EU, expected in 2007. Many EU investors are waiting for the official entry to come and set up their operations in Bulgaria, he said.
INVESTMENT OPPORTUNITIES
"There are software companies that develop interesting products that merit investment," said Lefkowitz. After a major brain drain in the past decade, when hundreds of thousands of Bulgarians left the country in search for better living standards, many people were now coming back, the businessman said. "The problem with the tech sector in the long-term is that the educational system is going through a crisis and it needs urgently to be fixed."
The textile sector, which relies very much on time to market, could also be attractive for EU investors in the short-term, Lefkowitz said. "Certain textile products in Bulgaria have the advantage that it is lower cost than Italy or even Hungary, but it takes only a couple a days for shipment, compared to two weeks from China," stated the President of AmCham in Bulgaria. He added that fashion changes sometimes month by month, so if a company was shipping two or three weeks late from China, it could not react to the market.
"There is quite a bit of interest in the real estate market as well," Lefkowitz said. Institutional investors are interested in commercial property, warehouses and retail stores, individual investors are getting into the residential market, he added. Lefkowitz said that the real estate would be attractive in the long term, but forecast a slowdown in the market in the short term. "Real estate prices have bid up faster than Bulgaria's development justifies. Bulgaria will continue to develop and will justify even higher prices for the future, but in the short term I think we will see something of a slowdown," he said.
Lefkowitz highlighted the energy and the telecommunications sector as the most attractive for high profile overseas investors. U.S. investors are currently involved in works on two of the three units of the Maritsa East coal-fired power complex, which generates some 30% of Bulgaria's electricity. Earlier this year, Bulgaria launched a tender to pick a contractor to build a nuclear power plant at Belene with an installed capacity of 2,000 megawatts, which Lefkowitz said was an opportunity for big investors.
The Bulgarian telecommunications market, which features a dominant fixed-line operators, several smaller rivals and three mobile phone service providers, offers opportunities for European suppliers, because the infrastructure is still underdeveloped, Lefkowitz said.
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Bulgaria will strengthen its position of a value added outsourcing zone after EU entry
17.10.2005 << news : events : articles
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