Bulgaria is a relatively cheap place to invest, and the government offers incentives to new investment. Despite its fast development, the country enjoys some of the cheapest labour in the European Union (EU) and low and flat corporate and income taxes. In recent years, however, labour shortages and pressures on inflation have pushed up wages and domestic prices. The rate of labour productivity in Bulgaria is the lowest in the EU, and the growth of wages is higher than the growth of labour productivity. Productivity is threatened in the medium term by a declining population and somewhat low investment in innovation, although the government is moving very strongly to counter the effects of these challenges.
The advantages of investing in Bulgaria
They consist of:
Business facilitation
Bulgaria generally helps to create and develop small- and medium-sized businesses along with the EU-financed innovation and competitiveness programs, and with a particular focus on the export potential. Both commercial and state-owned.
Competition and Antitrust Laws
The Commission for Protection of Competition monitors the competition on the market and keeps the Law on the Protection of Competition. According to the Competition Law that was adopted in 2008, it is aimed at bringing into effect the EU rules on competition. The act prohibits monopolies, restrictive trade practices, misuse of market power and unfair competition in some forms. The monopoly may be legally created only within listed groups of strategic industries. The Competition Law has been enforced unevenly in practice, and some of the decisions taken by the Commission are doubtful and seem to be politically instigated.
Investment Incentives
According to the Investment Promotion Act of 2004 (last revised in 2018), foreign and domestic investors are to be treated equally. The law promotes investment in manufacturing, services and high technology, education and development of human resources through a set of incentives, which comprise assistance to investors to buy municipal or state land. State funding of basic infrastructure and of training new employees, and refunding to the employer of the social security contributions. The law, through tax incentives and administrative procedures, also gives a fast track to public-private partnerships.
Disadvantages
They include:
Performance and data localisation requirements
Bulgaria does not condition the establishment, maintenance or expansion of an investment by requiring export performance or local content. Most expatriate workers who are non-EU nationals need employment visas and work permits. Most of the U.S. firms have faced challenges in securing work permits for their non-Bulgarian, non-EU members of staff. Recent amendments to the Law on Labour Migration and Labour Mobility do not require that Bulgarian employers should canvas the local labour market before employing non-EU labour.
Intellectual property rights
Bulgaria does not sustain very well in terms of Intellectual Property Rights (IPR) protection and enforcement. In the Online Piracy category, Bulgaria has been placed on the U.S. Trade Representative Watch List because it has not adequately addressed the deficiencies in its investigation and prosecution of cases involving online piracy, including by permitting criminal investigations, expert examination and prosecutions to be based on only a portion of the infringing works that have been seized.
Although Bulgaria modified its enforcement law against digital piracy in July 2023, the country must present an adequate case record of how it successfully investigates computer crimes under its new evidence sampling approach.
Trademark infringement
U.S. cigarette and apparel companies, cosmetics makers and drug firms have a serious issue in Bulgaria. On a smaller scale, other U.S. products, including Hewlett-Packard (HP) and Apple accessories, are also infringed. The Bulgarian law offers criminal, civil, and administrative redress for infringement of trademarks. Bulgaria has adopted a streamlined border control process for destroying confined counterfeit goods without the need for a civil or criminal court proceeding.
Climate issues
Bulgaria is still very susceptible to climatic variability and change, especially as regards to water resources in the country, agriculture, human health, energy and forestry. The quality of air in most cities and other hot spots remains poor and therefore poses a great risk to human health. In general, the emissions nationally are tall as to of Western European nations and other Central and Eastern European nations. Especially, the emissions of large industrial plants continue to be a principal health/environmental risk, as well as emissions due to the residential/commercial sector usage of poor-quality solid fuels.
Corruption
Corruption is an old problem in Bulgaria, and it consistently ranks first in opinion polls among the problems that the citizens consider most important to be solved. Some laws require conflict of interest statements and asset declarations by public officials. However, some family members are exempted, and in any case, enforcement has been patchy. In October 2023, parliament passed a law to overhaul the Anti-corruption Commission, a specialised administrative authority, charged, among other things, with enforcing conflict-of-interest provisions.
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