Points for Discussion Daniela Bobeva, Foreign
Total Investment Inflow
From 1990 until the end of September 1994,
sixty-nine investments of declared American origin were registered
at the Ministry of Finance. Forty-three of them were made in
Bulgarian Leva. The total volume of American investment is
18,662,000 USD, or 6.5% of the total foreign investment inflow to
Bulgaria (in comparison, Germany invested 177,305,000 USD). The
United States place fifth in terms of invested capital in
Thirty-eight of the declared American investments
consisted of 50,000 Leva, or less, each. American investors bought
two Bulgarian enterprises. One of the transactions (Magnetic Heads)
was a complete failure. It had a negative effect on the confidence
of the Bulgarian privatization authorities in American investors.
The case was broadly discussed in the mass media.
American investment in Bulgaria is insignificant in
size and strange in its sectoral structure.
There are no American investments in key branches of
the Bulgarian economy. Coca-Cola, American Standard Inc., Kraft
General Foods, and Bulgarian-American Foods (Struma Food Co.) are
the biggest investments in industry.
AMERICAN INVESTMENT COMPANIES BY SECTORS
SECTOR NUMBER OF COMPANIES
Computer Servicing 4
Tour Operators 2
Medical Services 1
Note: The investments made by the BAEF are
not registered as investments because, according to the Bulgarian
Foreign Investment Law, only long-term investment is considered as
As seen from the table above, the service sector
rather than industry is the most important area of activity for
American investors in Bulgaria.
Is Bulgarian Less Attractive to American
Companies Than the Other Central and East European
The data for the recent EUROSTAT conference on
foreign investment shows that American investments are widely
present only in few countries in the region. Unfortunately,
Bulgaria does not appear to be a priority country for American
investment. One of the reasons might be the limited size of the
Bulgarian market. American investors prefer larger markets.
In Romania American companies have invested
107 million USD. The three largest investors are Coca-Cola with 32
million USD, Amoco with 17 million USD, and Colgate Palmolive with
17.4 million USD.
In the Czech Republic American investments
comprise 25 percent of the total amount of foreign investment,
ranking second after Germany with 627.9 million USD.
In Hungary the biggest American investor is
general Electric - Tungsram.
In Poland American companies make up the
largest part of foreign investment. Coca-Cola invested 235 million
USD, IPC - 193 million USD, the Polish-American Enterprise Fund -
180 million USD, and Curtis - 100 million USD.
In the other Central and East European countries
American investments are insignificant.
The data provided indicate that Coca-Cola is the
biggest American investor in Central Europe. The other big
investors also tend to be the kind of companies that operate only
on the domestic consumption market.
_ Many American investors have not registered their
investments, thus violating the Foreign Investment Law. Article 16
Paragraph 2 provides for a fine of 10% of the amount of
unregistered investment. Bulgarian authorities have not yet
undertaken steps to apply the Foreign Investment Law in this
_ There are very few real investments from the
United States to Bulgaria. Institutional investors rather than real
investors prevail. Higher interest is expressed by multi-national
companies, for which Bulgaria is simply a 'link in the chain'.
_ American investors are connected primarily with
the domestic Bulgarian market and only few of them contribute to
_ The experience of the Foreign Investment
Commission has proven an explicit interest amongst American
companies visiting Bulgaria to invest here. They come mostly
through the prominent consultancy companies.
The Main Obstacles and Reasons for the Current
_ The lack of interest on the part of American
investors, rather than domestic obstacles;
_ The lack of promotional activities that could
generate such interest;
_ The lack of special guarantees and mutual funds
for foreign investment coming from the USA;
_ Too many American institutions and consultancies;
improper investment strategy; a lot of mistakes come from poor
_ Insufficient efforts of the Bulgarian side to deal
with the 'bad cases'.