 "VIRTUAL OPPORTUNITIES FOR EXPANSION" |
There is a lot of opportunity for expansion in the Internet world. At the moment Internet penetration in Bulgaria is probably around 3-4% whereas in the UK more than one in three homes has a PC, which means that there is a substantial space for growth. Like in the mobile market, the main constraint to growth is personal disposable income. People still find it expensive to buy PCs. Nonetheless, as the economy expands and personal wealth is likely to increase, these opportunities are expected to grow along.
There will also be many opportunities in IP-based virtual private network services, which allow companies to connect together their sites around the country in a very cost-effective way. For example, many of the banks with branch networks still have no electronic means of communication - they rely on faxes or couriers. This might be a huge opening for the IT high-tech in the financial sector.
Value added applications like e-commerce will come as well. There are some barriers to growth in this sector - the level of use of credit cards is still low in Bulgaria while this is by far the most common means of payment on the Internet. However, as of today, opportunities for e-commerce are still quite limited albeit widely open for expansion.
In general Bulgarians are well educated and due to their high technical skills there is a high level of IT capability.
One of Bulgaria's biggest problems however is the emigration of skilled and educated people. For the past 10 years Bulgaria has probably lost 8-9% of its entire population and those who remain are either over-qualified people or very uneducated people.
Industry, which is dependent on a steady supply
of raw materials and semi-manufactured goods, has
much potential as well. Within the present macro-economic
conditions, Bulgaria is a good manufacturing place
- anything that is manufactured and exported would
thrive as a business. |
In 1990, Bulgaria awoke from the ecstasy of its soft revolution to face a collapsing system of guaranteed external markets and a USD 10 billion in foreign debt. Almost immediately Bulgaria had to default on its foreign debt payments, which drove the country off the financial map of the world.
In 1994 Bulgaria managed to reach an agreement on debt resettlement with the two main groups of international lenders - the London Club of commercial creditors and the Paris Club of official creditors.
As a result Bulgaria issued three different types of Brady bonds on its foreign debt to the London Club, and for some time Bulgarian Brady bonds were very popular among potential investors who were allowed to use them as an instrument of payment in the privatization process in Bulgaria.
It took three years to devise the necessary mechanism for venturing into the first major privatization deal - the sale in 1993 of a prestigious hotel in Sofia that fetched in nominal terms more than what a large sized enterprise would fetch now.
As a result of the efforts to restructure and enhance the deregulation of the economy through privatization, a substantial portion of the state-owned assets were acquired by private entities. By the end of October 2001, a total of 4,689 privatization deals were signed. About 52% of the assets of the state-owned enterprises are already in private hands. A total of 152 large foreign companies have established themselves firmly in Bulgaria, and they contributed the greatest portion of the financial revenue from privatization.
The sale of the large enterprises in the major branches (chemistry, metallurgy, food industry, the military-industrial complex, machine building, the cement mills) has nearly been completed. The enterprises, which are still not denationalized, had until recently - or still have - a monopoly status in infrastructure branches like energy, telecommunications, tobacco and railway transport.
The main task for the incumbent cabinet is to privatize
the telecommunications sector, the tobacco industry
and some less important assets. |
