FDI inflows to Bulgaria maintained a steady course in the early 2000s and reached an all-time high in 2007, at USD 12.4 billion (UNCTAD). According to UNCTAD's 2022 World Investment Report, FDI inflows decreased in 2021, reaching USD 1.5 billion, down from USD 3.4 billion one year earlier. The total stock of FDI stood at USD 57.6 billion at the end of 2021, around 71.8% of the country’s GDP. According to the Central Bank of Bulgaria, FDI inflows in 2022 stood at EUR 2.25 billion: investment in equity, including in the real estate sector, recorded an inflow of EUR 461.2 million (compared to an outflow of 52.8 million in 2021) and re-invested earnings totalled EUR 1.31 billion (down from 1.85 billion a year earlier), according to preliminary data. By country, the largest direct investments came from Switzerland (EUR 483.2 million), Cyprus (EUR 383.9 million) and Austria (EUR 380.2 million). Notable net outflows were recorded towards the Netherlands (EUR -177.9 million) and the UK (EUR -177.9 million). FDIs are directed chiefly to the real estate, manufacturing and financial and insurance activities sectors.
With one of the lowest corporate tax rates in the area (10%) and its low labour costs, the country is relatively well-placed for foreign investments, which are not subject to screening by the government. There are no legal limits on foreign ownership or control of firms, and foreign entities are formally granted the same treatment as national companies. However, according to the Offshore Company Act, firms with foreign participation of more than 10% cannot do business in 28 specific sectors (including government procurement, exploitation of natural resources, banking and insurance services, though there are certain exemptions). The Invest Bulgaria Agency (IBA) is the government’s FDIs coordinating body which provides information, administrative services and incentive assessments to potential foreign investors. Among the challenges investors have to face, there is a shortage of skilled labour, corruption, the unpredictability of the regulatory and legislative framework which is often amended, and concerns about the rule of law. Furthermore, the judicial system is slow and intellectual property rights are not always enforced. Bulgaria is expected to receive EUR 6.2 billion between 2021-2026 from the EU’s post-COVID recovery grant funds to improve its economy in areas such as green energy, digitalization, and private sector development; and is expected to adopt the Euro in early 2024. The country ranks 35th out of 132 in the 2022 Global Innovation Index and 72nd out of 180 in the Corruption Perception Index.
|Foreign Direct Investment||2020||2021||2022|
|FDI Inward Flow (million USD)||3,397||1,892||2,505|
|FDI Stock (million USD)||59,730||57,989||57,378|
|Number of Greenfield Investments*||37||50||76|
|Value of Greenfield Investments (million USD)||810||1,046||2,161|
Source: UNCTAD - Latest available data.
Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.
Bulgaria's strong points are:
Even though the country has become attractive to investors and especially since its membership in the European Union, Bulgaria still has to tackle a number of challenges:
Finally, the Agency for Investment in Bulgaria (IBA), is at the disposal of investors for their prospection as well as their implantation, and the 2004 law for the Promotion of Investment guarantees the equal treatment of domestic and foreign investments. The industrial production and high-tech sectors have been identified as a priority by the government, which has established a series of incentives for FDI in these sectors: for example, many public-private partnership opportunities exist for land acquisition, infrastructure construction and human resource training.
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Latest Update: September 2023