Russian Business in Bulgaria – Start with 1 Euro

18.05.2010 — Analysis

- Many foreign business people complain about the Russian administrative barriers that complicate business, require a lot of time and, as a result, discourage investors. What is being done to ensure sustainable investment climate in Bulgaria?

- In Bulgaria, it takes from 7 to 10 days to put a company on track, starting from scratch to reach the full-fledged status. People come to Bulgaria, and 10 days later they have an operating company. Of course, I do not mean that they have streamlined production - it is just a registered company that gives an opportunity to work in the legal sense of the word.

In addition, the authorized capital of a startup in Bulgaria can be equal only to 2 leva (1 euro) - it is the minimum amount. This is true not only for Bulgarian residents, but also for foreign business people. This policy is aimed to make business more accessible: any person, even the poorest one, should have an opportunity to start their business. We have the lowest income tax rate and profits tax rate (10%), relaxed requirements for trading transaction with European Union countries as well as unsophisticated accounting and bookkeeping systems and many other advantages that are attractive to investors from Russia.

- What industries attract Russian investors?

- Construction, by all means, ranks first. Initially, many Russian companies were in sales, dealing with the Bulgarian real estate; later, however, they realized that construction could be more profitable. Even if a Bulgarian entity is owned by a Russian business person, it still has the right to buy the land required for development. 

Russian investors are also interested in the service sector - we have quite a few Russian hotels, translation agencies and so on. The retail sector is another area of their interest - shops, cafes and bars. Small business goes hand-in-hand with big business. Russian citizens and companies are owners and shareholders of large Bulgarian enterprises. Large-scale joint projects are being planned in the power industry.

- How is information about Bulgaria's tourist destinations promoted to the Russian market?

- All advertising and promotion efforts taken by Bulgaria in other countries are centralized. Before 2009, these activities had been in responsibility of a public travel agency; however, today it does not exist. Now tourism pertains to the competence of the Ministry of Economy and Energy of Bulgaria. As a result, we have a mega-ministry.

Tourism for us is, first of all, economy. The situation that exists, for example, in the Sverdlovsk Oblast does not fit in the Bulgarian approach. This situation is not able to facilitate full-scale development of tourism. Before everything else, the tourist sector is an industry.

Russia ranks seventh in the number of tourists who visited our country in 2009. Residents of the Ural Region account for 8% of the total arrivals from Russia. Moscow hosts the Economy, Energy and Tourism Ministry representative office of the Republic of Bulgaria in Russia - the Bulgarian Industrial Center. 

- Is it equivalent to a trade representative office?

- Yes, the Center is similar to a trade representative office. However, note that the Bulgarian Embassy in Moscow has its own trade representation. In part, their activities overlap; they do a lot together. However, the Embassy representatives are more focused on building a framework for economic relations. Experts of the Industrial Center deal mostly with practical matters, being in close touch with business people, organizing different business-forums, presentations and exhibitions. This is their core objective. 

Early in April 2010, we, together with the Industrial Center, arranged an exhibition within the Days of Bulgaria program, where more than 20 Bulgarian firms took part. The experts of the Center participated in this event, making presentations. 

- How do you work with tour operators? 

- Tour operators play a critical part in promotion of tourist destinations in Bulgaria. The tour operators accredited at the Embassy are very dynamic, and we appreciate their efforts. Unfortunately, many travel agencies still apt to a conventional approach. To attract customers, they emphasize what is well known. As a result, Bulgaria has fallen into a trap of the summer resort image that was established years back during the socialist period. However, Bulgaria cannot be limited to the sea; our ski resorts are very popular among European travelers as well as our spa and recreation centers or golf complexes. I hope that in future tour operators will boost their efforts in promoting other types of recreation in Bulgaria.

In technical and organizational terms, we do not have any particular problems with tour operators.

- Mister Petkov, to attract tourists, Turkey is intended to grant a visa-free access; Croatia is granting a visa-free entry for a vacation period. What is the attitude of Bulgaria to this method as a tool to attract tourists?

- The concept of a visa-free entry tends to focus on psychological, rather than on economic effect. It is aimed at those who make a trip on impulse - making their decision today and hitting the road tomorrow. Planning a trip to Bulgaria requires some time to prepare documents. I do not think that the existing visa arrangements have any adverse impact on the tourist flow out of the Ural Region and Russia, in whole. The annual increase in the number of tourists willing to visit Bulgaria is convincing evidence.

I want to point out that this year the traditional air-bridge will connect Ekaterinburg and Bulgaria for the summer time. By today, all the flights have been bought out by tour operators.

- Did your diplomatic mission notice any drop in visa demand due to the financial crisis? 

- In 2009, the Bulgarian Embassy in Ekaterinburg issued about 9 thousand visas. However, the actual number of trips made by Ural residents to Bulgaria was larger due to the multi-entry visas issued previously. Essentially, there was not any decline.

In 2011, Bulgaria will join the Schengen zone. At the moment, we are getting ready to that, both technically and organizationally.

- On April 5 in 2010, the new EU Visa Code came into effect, and starting from the next year you will work within its framework. The Code includes the clause, under which a consulate must explain the reasons for a visa denial. Will it make the process easier for the Russians who apply for a visa?

- I do not think that it will affect the process of visa issuance. In most cases, the reason for denials relates to improperly prepared documents or insufficient grounds, or, in fact, lack of proof of such grounds. In any case, the denial is substantiated, no matter whether the reasons have or don't have to be explained to the applicant.

On our part, we try to restrain the submission of documents when we see that a legitimate denial can be expected. In our visa center, any applicant can be advised on the required documents and their proper execution.

It should be noted that Ural citizens have very rarely made any attempts to submit forged documents to receive a visa. The Bulgarian Ministry of Interior and migration services also have very few complaints about Russian visitors. Ural residents demonstrate a high level of discipline in relation to visa and migration issues.

The interview was prepared by Valentina Mazharova