Q: Could you briefly tell us what are the main achievements of the Bulgarian Government for the year and forward in the favour of structural reforms and privatisation?
A: I think that others before me have told you about the financial stabilisation we have achieved and this was our basic target this year because whatever reform we need to make , whatever new way of running the country and new democratic and market economy society we need to create, first of all it was important to get out of the abyss, to get away from the hyperinflation, the lack of law and order, the collapse of the institutions. The first year was more or less dedicated to the reforms that would bring stability and the important thing is to have a stability that will last for long. On that base we built our structural reform and privatisation program. We started immediately after coming to power with two big targets of privatisation: number one is the privatisation of the big state owned enterprises, both to have them restructured and streamlined towards modern way of production and creating new markets mostly by introducing foreign investments and management. The second direction of our privatisation is equally important: this is the privatisation of a huge number of small and medium enterprises in order to be able first to get the state out of the economy but on the other hand to create what is expected to be the backbone of the democratic market society, the middle class. We have put our efforts in both fields and we have achieved a serious success. We expect by the end of this year to have about 50% of the economic and industrial assets in private hands and on the other hand to have about 85% other enterprises under private control with more than 50% private participation share holding. This way we will be having accumulated effect of both targets
: a small and medium enterprises group that will employ a lot of people and divert quite a number of people from the bigger enterprises where through downsizing and modernisation a lot of people were laid off . We also expect on the other hand to have sizeable revenue in order to support the balance payments in the budget.
Q: What kind of techniques are you going to use to increase the speed of the privatisation?
A: We have opened wholly new series of procedures and methods of privatisation. We have simplified and streamlined the rules for tenders and auctions. We have made very effective the negotiation procedure where we have additional requirements for companies: like investments ,keeping work force and etc. We have made all these standard methods very effective . For instance using them in the Ministry of Industry we are able to sell 5-10 enterprises per day. On the other hand for the big state enterprises which are privatised by the Privatisation Agency and usually take a lot of efforts from big teams ( for example to sell a steel, copper-melting factory a team of 10 people working for moths until they can get to the final contract ). Then we have transferred the 100 biggest companies into the hands of international advisors and aid privatisation agents who on a successfully basis are performing the marketing , the preparation of the privatisation and are taking an active part in the negotiation process itself. We have started using our newly established stock exchange for the sale of shares of state-owned enterprises and we just finalised the first sale of a big sale of a big size company through the stock exchange which has given us some good and bad examples of what is good in our legal structure there and what are our mistakes. And we are now making some serious amendments to our bonds and securities and exchange to all. We are structuring the function of the Exchange Security Committee. We are now launching centralised auctions for a numbers of enterprises that will start in the early autumn and for this reason but also with the possibilities for other uses by the end of June we will start providing people with vouchers amounting to
230 000 levs per person, which will be used directly in the privatisation process . In this way not only we are providing additional resources for privatisation but also we are providing a new incentive for the people to use the vouchers in privatisation deals. We have given quite a strong push to MEBO especially for small and medium enterprises where management in employee teams have a lot of regulations that make privatisation much easier for them. They pay only 10% Dubfront and the rest is paid in 10 years period by deterred payments at a low interest rate. So the combination of all these methods and recently we have additionally involved Bulgarian consultants as agents for groups of small companies which take too much time otherwise for the teams in the ministries and the Agency. So we are doing what we call :privatisation of the privatisation in order to have a much bigger scope of possibilities to sell as many companies as possible.
Q: You are responsible for the privatisation process. Which privatisation deal would you consider to be your priority?
A: I don’t have any special preferences. Last year there were numbers of very important and good deals. I would put probably as the most complicated but also the most rewarding deal - the privatisation of the Copper’s Melter which was done with " Union Minya "- Belgium. It was an extremely complicated deal because there was a huge problem of pollution. So we got the World Bank involved with a special lawn extended for past environmental damages. There is a very big investment program for the Copper’s Melter and this whole deal took few months to conclude but I think that it could be used as an example of a successful deal. It is a win-win situation where every body is happy. I would say that one of the most interesting deals which has debt to a series of additional consequences is the one with American Standard where they started with a joint-venture , then went through a privatisation and now they are finalising a green-field investment. And this is a typical case when an investor is happy with the country. So they found a good location, they found good partners, they have excellent relations with the municipality, they have created a lot of jobs, they have built a whole gas-pipe plant, that will serve nit only their plant but also the town its self. So this is a complex approach, which we hope that more investors are going to adopt- a successful story. There are other stories like this one but the above mentioned two give a good picture of how foreign investors should enter.
Q: In your opinion, which are the most attractive sectors of the Bulgarian economy and why?
A: Definitely a lot interest is being shown in the
Tourism sector. That’s without any doubt a
place where money will have a big return and it
is an attractive sector. A very attractive sector
is the pharmaceutical sector where Bulgaria has
long history both in drugs but also in cosmetics
and perfumery with the huge export we used to have
for the Soviet Union. So the production capacities
are there , the skilled labour is there and we are
in the process of privatising these companies ,
who have established products , trade marks, even
now their markets. Another important sector that
definitely has already attracted foreign investments
and will continue to attract is the Fertiliser Industry
. We have got already " Solvey " in the
Soda-ash plant but we are now in the process of
selling the other fertilisers plants. We have very
big capacities for fertiliser production mostly
for export. Of course ,there are few crown jewels
and probably these are the most important: one is
the Telecoms, the Bulgarian Telecommunication Company
is going to be privatised by the end of the year.
The Deutch of Morgan Granfal is our adviser there
and we are at quite advanced stage of preparing
the company for privatisation. The Information Memorandum
will be out soon and then active marketing will
begin . The Oil Refinery is attracting very serious
interests because it is the biggest in the Balkans.
And the crown jewel is the Tobacco Industry. We
have seven of the biggest world investment banks
now figthing over the contract of being our advisers
for the privatisation of this sector. It is really
a good piece of cake . And ,of course , in the Banking
sector our biggest bank - Bulbank, which is very
well run bank and probably one of the most important
banks in Central and Eastern Europe is for privatisation
and possibly it is going to be by the end of this
year. All our banks are going to be privatised but
Bulbank is attracting quite serious international
attention. |
Q: US investments are not very present in Bulgaria. It seems that they are suspicious and come step by step. What do you think can be done to improve US investments in Bulgaria?
A: I don’t think that is to be expected to ever have big industrial investments from the USA. Well, a few companies might come like American Standart and there will be a few others. We have been in the USA for the last two months for a number of times and the Government’s attention is focused more on portfolio investors , on asset management funds, on venture capital funds, on investment funds which seem to be much more flexible and who are not interested in running companies but rather in investing in small packages of shares. So by speeding up the stock exchange its self so that we can provide the environment for this type of investors but also by providing more opportunities for a bigger number of companies to put their shares for sale and by changing the bigger frame in order to protect minority share holders. We are attracting and we have attracted a big number of American investors which , as you now , understand who is the investor at the annual share holders meeting. It is very difficult to calculate how much has been invested
. Just yesterday I understood that an American company has acquired 25% of one of our companies but they don’t want to make it public. It is a typical case where you can count the sheep in the end of the year.
Q: Do you have some concrete results during your last visit to the United States?
A: Yes, my last visit to the USA was connected with a very particular subject . This is the High-tech Industry in Bulgaria. Bulgaria is a country with a very interesting history in High-tech Industry. In the late 70’s and in the 80’s Bulgaria was supposed to be the back door through which high level industrial and technological products could get into the Communist market (COMECON?) especially to go to the Soviet Union for its military industry . For this reason we developed a very serious university educational system: for computer engineers, for bio-technology, for software, for micro-electronics and we also have the "grey cells ". We have also a very serious asset base, most of it ,of course, outdated already but the companies are there, the clean rooms are there, the potential and the capacity of the people to work in the high-tech field is there. The software private companies are having already a lot of contracts coming from both the USA and Europe. So we are trying now to institutionalise this and to support this type of development. We visited two locations which are quite famous: The Drum Visitor Triangle Research Park and the Silicon Valley in California where we had talks not only with potential partners but also with the management of this park, with the non-profit companies that are running them, with the venture capital funds, with the people who run the show in order to be able to understand how the whole scheme works and I think we got a pretty good picture . We discussed a lot of our organisational measures in order to understand how to get these things running and we are going very soon to open the first Bulgarian-American joint venture in software where George Soros is going to invest 4 million $ . Everything that he has done for Bulgaria till now has been in charity this is his first investment as an investor , not through his foundation. So after he has been so popular in Bulgaria for years and his foundation has been doing a very good job, he has decided for the first time to act as an investor in Bulgaria and he selected the high-tech industry and I think that this is something that is quite obvious because he is a person who knows how to make money.
Q: You are one of the most powerful men in this country. As a more personal issue , what has been your personal most satisfying achievement since you have been the Deputy Prime Minister and the Minister of Industry?
A: My best achievement has been that every evening when I go home I can tell my wife that I have accomplished something for the day. I think that this is the most rewarding thing for everybody that every day he has something done and finalised: I have sold 5 companies
, I have passed a new law or I have opened the stock exchange , or I have brought a new investor in, or we have made a joint venture, or we have signed an agreement with the IMF
, or with the World Bank we have got a new lawn, we have successfully finalised this... This in the time when things are moving so quickly ; this is the best thing every day you have something fully accomplished. You have not time to leave things for the next day.
Q: What will be your final message to our readers?
A: The most understandable and simple thing to say is that Bulgaria has come out of the shadow. Bulgaria exists and is a success story. After 8 years moving forward, backward, sideways , we have made a huge step forward and this is an irreversible step. So Bulgaria is a nice place to visit , to invest and to live.
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BULGARIA, 
