From the Business Bulletin – Issue No 301 – 22nd June 2013

peterGayBulgaria2

Walking around Plovdiv, we were struck by the obvious investment in making the town centre and the old town really attractive. Gone were the pot holes, cracked pavements and crumbling buildings, to be replaced by new paving and spruced up buildings. It was obvious there was a lot more money about.

The reason became clear; Plovdiv has had an inward investment boom with plants set up by German, Scandinavian, Italian and Taiwanese investors. Leibherr, the refrigeration company, has centred all its refrigeration manufacturing there. Labour shortages are now common, particularly among engineers.

In the country the changes are palpable. In the Communist days agriculture was in the hands of large cooperatives. Inefficient perhaps but they mostly fed the people. After the changes the cooperatives were wound up and the land restored to the original owners. Instead of one large unit there would be anything up to 40+ small plots. Irrigation plants decayed, machinery rusted and production slumped. Now there is a process of large firms buying up land and recreating large farms with all of the economies of scale and application of sophisticated technology, resulting in substantially increased yields.

Also large orchards have been planted and new money has come in to create state of the art drip irrigated vineyards. It all adds up to a major economic development.

One key contributor to this has been the Currency Board, in existence for over 15 years. This is a mechanism that pegs the currency, the lev, to the euro at the rate of 2:1. This is enshrined in law and no political party would touch it because it is the bedrock of the economy. Citizens have confidence in the currency and investors have predictability about money.

Our friends in the Universities have been modernising and producing large numbers of graduates, however not all remain the country. It is estimated that 80% of medical graduates leave for other EU countries; this is a major subsidy from a poor country to richer ones. Engineers are another case in point. German firms are very active in building partnerships with technical Universities, offering work experience in Germany. It results in many migrating there rather that working at home where the going rate is €1,000 a month.

Sofia has become a centre of excellence in ITC and wages are on the up there.

A telling fact is that two of our EKIP team have children who are studying in the UK, whether they will return to Bulgaria is anybody’s guess.

So the country moves on but another sad fact is that the population has declined from 8 million in 1990 to 7 million today. Those who are worried about migration from Bulgaria to the UK should consider where these ‘migrants’ could come from. Of the 7 million about a quarter are over working age and another quarter below it. Much of the migration to the EU is of the well educated type that benefits the recipient country but probably not Bulgaria.

I wonder what the next 10 years will bring?

Peter Gay. Plovdiv May 2015.
You can email Peter here – petergballyholme@btinternet.com

Comments are closed.