For investors to invest and for businesses to grow and prosper, a predictable and transparent regulatory environment is also important, United States ambassador in Sofia Marcie Ries told an American Chamber of Commerce in Bulgaria (AmCham) business lunch meeting on October 30 2012.
Bulgaria’s transition to a market economy over the past 20 years had seen the achievement of many regulatory and legislative milestones such as the Bilateral Investment Treaty and the US-Bulgaria Treaty on the Avoidance of Double Taxation, she said.
“I know that the AmCham played a leading role in the negotiation of the taxation treaty to the benefit of many of the companies in this room and to many American and Bulgarian citizens residing abroad,” Ries said.
The US trade relationship with Bulgaria grew by 37 per cent last year, she said.
“The US remains one of the largest investors in Bulgaria and more importantly, American companies are committed to Bulgaria and to this country’s economic success. American companies, including those represented in this room, create thousands of high-quality jobs, supply the country’s cleanest energy, and contribute in terms of business ethics and corporate social responsibility to improving the overall business environment in the country. You are important stakeholders in Bulgaria’s future,” Ries said.
Along with American companies and with the AmCham, the embassy would like to work in partnership with the Bulgarian government to help to create the conditions for more business and more US investment in Bulgaria, she said.
“Although much progress has been made, there is more work to be done to ensure a predictable business environment that will inspire continuous confidence from the international investment community.”
Bulgaria has a lot to offer to foreign investors, Ries said.
The cost of doing business as well as the cost of labour is relatively low and many Bulgarians, thanks to a culture that reveres education, have very strong technical, foreign language and customer service skills, she said.
“For investors to invest and for businesses to grow and prosper, a predictable and transparent regulatory environment is also important.
“I know you will agree with me that investors need to be confident that when they start to build something, the rules of the game will stay the same when they reach the end of the project,” the US ambassador said.
“Investors need a legal system they can trust, so they can be sure that their intellectual property and other rights will always be protected and that if there is a dispute they can rely on a judicial system that will act with impartiality.”
The emphasis placed on advancing the rule of law by government, by Parliament and by civil society in Bulgaria suggests that there is an awareness of the linkage between strong legal and judicial systems and advancement in many other areas, including growing the economy,” Ries said.
The introduction of e-government, which is underway, should also be encouraged for its potential contribution to transparency and predictability for both new and experienced investors, she said.
An open dialogue between the business community and government can help move things along. This can happen in many ways, from formal meetings with officials and parliamentarians, to conferences organized by civil society and groups such as yourselves to discuss policy areas with an impact on the business community.
“A dialogue can be a source of creative ideas and can build a sense of common purpose. Together we should look for opportunities in the coming months.”
Bulgaria has great potential for expanded trade and investment in innovative industries and can do even more with the technology sector, especially if additional steps are taken to address the protection of intellectual property,” Ries said.
The Interior Ministry’s General Directorate for Combating Organized Crime deserves credit for closing down some of the pirate sites on the internet and arresting the operators, she said. “But much more needs to be done. Both government and the private sector have a role in figuring out what are the best tools to bring to the fight.”
Ries added: “I cannot talk about the technology sector without speaking for a moment about a theme of growing importance for both our countries – innovation.
“I know even after a short time here that Bulgariahas some great, young small businesses that are world class. My staff at the embassy has been involved with StartUP, Junior Achievement, and other initiatives to promote innovation in Bulgaria and we have seen some terrific small but significant successes from these programs. For example, at the StartUP Weekend last month the winners included a group who invented a device to control lights and appliances remotely and monitor energy use and another group with a novel application that would allow real-time sales of private parking spots on an on-demand basis.”
She told her audience that, as leaders of the American business community, they should get to know the young Bulgarian entrepreneurs involved in these activities.
“They need mentors, contacts and help finding sources of venture capital. And, I am certain that they can offer you and your businesses important synergies for your work here.”
Innovation needs islands on which to thrive, Ries said that she was pleased to see that the Bulgarian government was making progress on the business plan for the Sofia Tech Park. “Attracting marquee tenants to the park will not be automatic. There’s more to this than just, ‘if you build it, they will come’,” Ries said.
On the theme of energy, Ries said that diversity of types, sources and routes for energy is important to all countries.
“As (secretary of state Hillary) Clinton said in a recent speech at Georgetown University, energy is central to geopolitics, it is how we power our economy and manage our environment and it is the key to economic development and political stability.”
Bulgaria faces several energy policy questions that are crucial to developing the country’s economy, creating jobs and protecting Bulgarian consumers, Ries said.
“Most are well know to this audience, for example, Bulgarians are continuing to discuss future steps in the area of nuclear power. By the end of this year Bulgaria must renew its natural gas contracts with its main supplier. Decisions must be taken with respect to building regional gas interconnectors with neighbors, which in turn will be important for energy diversity.”
Bulgaria also has its own energy resources. Exploration for gas in the Black Sea and in central Bulgaria holds promise, Ries said.
“Right now, I am told, about 10 percent of the natural gas that Bulgariaconsumes comes from Bulgaria. The easiest path to energy independence is for Bulgaria to increase the percentage of its supplies that come from its own fields.”
Developments in the energy sector contribute importantly to the investment climate as a whole. In addition to predictability of supply, predictability of operating conditions is extremely important for investors and operators,” Ries said.