“Achieving an economy with a high and sustainable rate of growth is possible only through high-value-added production, driven by science and innovation. This will also help achieve our country’s goals of high incomes for citizens, a high standard of living, the eradication of poverty and inequality, and high-quality infrastructure, education, and healthcare.”
With these words, Bulgarian President Rumen Radev opened a roundtable discussion themed “Toward a Competitive and Prosperous Bulgarian Economy,” organized by the Association of Industrial Capital in Bulgaria (AICB), the Bulgarian Industrial Association (BIA), and the Bulgarian Chamber of Commerce and Industry (BCCI).
The forum took place today, March 14, 2019, at the Balkan Hotel in Sofia, with the participation of Deputy Prime Ministers Tomislav Donchev and Mariana Nikolova, the Minister of Economy, Emil Karanikolov; the Minister of Finance, Vladislav Goranov; and the Minister of Education and Science, Krasimir Valchev; the chairs of the parliamentary committees on economic policy and tourism, Petar Kanev, and on labor, Social and Demographic Policy—Hasan Ademov, as well as heads of industry associations, owners, and managers of companies from various sectors of the economy, namely: Krasimir Dachev, Chairman of the Board of Directors of the “Angel Balevski Metal Technology” AD Group and “Svilosa” AD, Stamen Yanev, Executive Director, Bulgarian Investment Association; Vladimir Danailov, Chief Executive Officer, SOAPI; Dr. Ruslan Papazyan, Member of the Board of the Swedish-Bulgarian Chamber of Commerce; Prof. Ognyan Gerzhikov, Chairman of the Arbitration Court at the BIA; Attorney Valentin Savov, Chairman for Bulgaria of the International Tax Association; Nikolay Minkov, Executive Director of the Srednogorie Industrial Cluster and Member of the BIA Executive Board; Desislava Nikolova, Chief Economist at the Institute for Market Economics; Kancho Stoychev, Vice Chair of the Executive Board of the Association of Industrial Capital in Bulgaria (AICB) and Chair of the “Made in Bulgaria” Union.
In his remarks, President Rumen Radev noted that our economy faces a number of serious challenges—both domestically and, especially, globally—which is why structural changes and decisions with a strategic outlook are necessary. According to the head of state, the most important factor in building a strong, competitive, and resilient Bulgarian economy is open and timely dialogue among all participants in this process—the government, business, education, and science. In the words of Rumen Radev, low taxes and a low-wage workforce—advantages that were significant until a few years ago—are no longer sufficient to attract investors to Bulgaria, especially strategic ones.
Deputy Prime Minister Tomislav Donchev expressed a similar view. According to him, a more effective way of collaboration between the government, business, and academia must be sought to ensure an efficient and genuine transition to a knowledge-based, high-tech economy that generates high added value and attracts a new quality of investment.
Finance Minister Vladislav Goranov emphasized the government’s efforts to maintain financial stability in order to achieve competitiveness, including the decision not to change tax rates. Among the government’s priorities in the area of fiscal measures to promote growth, Minister Goranov also highlighted the steps being taken for Bulgaria’s accession to ERM II and, subsequently, to the eurozone.
Economy Minister Emil Karanikolov focused the audience’s attention on measures to promote investment and called on Bulgarian investors to make more active use of the opportunities provided by the Investment Promotion Act, including state financial support for infrastructure development, reimbursement of social security contributions for employees, training for newly hired staff, and more.
According to Minister of Education and Science Krasimir Valchev, the entire education system must refocus on building key competencies in children, rather than simply on learning specific subject matter. He thanked the representatives of employer organizations for their cooperation over the past two years, during which the ministry has implemented one of its most important policies: launching pilot projects to introduce dual education and involving the business sector in the admissions process for vocational schools.
“The government is making efforts to foster the connection between business and education, as well as to liberalize the rules governing the participation of workers and highly qualified specialists from third countries. However, we must continue this work because, despite falling unemployment, demographic replacement has deteriorated dramatically over the past 15 years. Currently, for every 100 people leaving the labor market, 62 enter it, whereas in 2001 that figure was 124,” said Deputy Prime Minister Mariana Nikolova.
“A good business climate requires: effective administration, low levels of corruption, a stable system of taxation and fees, legislative stability and a clear regulatory environment, a high level of security, and an effective justice system,” said Radosvet Radev, Chairman of the Bulgarian Industrial Association (BIA), addressing the forum participants. He cited data from a BIA study, according to which 72% of legislative changes are made through transitional and final provisions of other laws. Furthermore, it is a common practice to circumvent the mandatory requirement to coordinate draft laws with the National Council for Tripartite Cooperation by having members of parliament, rather than the Council of Ministers, submit draft amendments. “This ‘fast track’ is the preferred method for quickly pushing through changes that are most often of a lobbyist or populist nature. In this way, the opinions of the social partners are ignored in a manner that is entirely legal, but not particularly ethical,” the BIA chairman added. According to him, there is legislative instability, with frequent and sometimes contradictory regulatory changes that create uncertainty regarding the conduct of business and all other activities—including conditions that lead to an outflow of investment, the creation and maintenance of jobs, and so on. There are numerous examples of European requirements being literally copied and even exceeded, without taking into account national specificities and/or the state of the economy, and this renders the legislation unenforceable and fosters corrupt practices. Complex and incomprehensible legislation is often adopted, subject to additional “interpretation,” which hinders its effective implementation and creates conditions for corrupt practices among regulatory authorities.
According to Vasil Velev, chairman of the Association of Industrial Capital in Bulgaria (AICB), accelerating labor immigration and developing the workforce needed by the economy are essential for its growth. “Currently, 9 out of 10 entrepreneurs in our country are having trouble finding qualified personnel. And for half of them, this is the main obstacle to increasing productivity and boosting their companies’ revenues. In the medium term, Bulgaria will face a shortage of 500,000 people in the labor market. Our country has a certain reserve of human resources that should be utilized. These include people with disabilities, the long-term unemployed, as well as the bloated workforce in state and municipal administration,” stated Vasil Velev. However, these reserves are not an alternative to easing labor immigration. He proposed introducing the so-called “Bulgarian Card,” which would grant third-country nationals the right to work and reside in Bulgaria for a period of five years. During the forum, he called for broad public support for the ongoing educational reform. In his view, public resources should be directed toward funding natural sciences, mathematics, and technical fields of study, with incentives and commitments for young graduates to pursue careers in the country for a certain period of time. Proposals for a mandatory high school graduation exam in mathematics and the elimination of the 12th grade are currently under discussion.
Additional information can be found here: https://srednogorie.eu/
