Interview Stefan Sofroniev,
Head of Trade and economy Mission,
Embassy of Bulgaria in Ukraine
- Mr Sofroniev, how would you describe the current state of the bilateral economic relations
between Bulgaria and Ukraine?
- Currently Ukraine ranks among the important foreign economic partners of Bulgaria, and this
is the result of long lasting, even centuries old relations between our two countries.
Without going too far back in the past, I’ll just remind that Bulgaria is the first country to support Independent Ukraine, and in 2018 we celebrated 100 years of diplomatic relations. Our country is as well among the first EU member states to have ratified the Association Agreement between EU and Ukraine.
The high level of bilateral economic relations between Ukraine and Bulgaria currently is hence based on active and continuous historical and cultural ties, traditionally friendly relations between our people, our geographical, cultural, language and religious proximity, as well as the biggest historical Bulgarian diaspora outside our country (about 225 000 people, upon the Ukrainian data). From here derives the multilayered character of our bilateral economic relations at the moment.
- What do you mean by “multilayered character” of our bilateral relations?
- I mean that Ukraine is a strategic foreign economic partner of Bulgaria, with the full meaning
of such statement. In practice, there is basically no main sector of the economy, which is not involved in our partnership. These are foreign trade, infrastructure and transport, energy, tourism, agriculture, finances and insurance, industry and investments etc.
During the last couple of years we are witnessing a rising activity in the exchange and training of employees and trainees in the tourism and the software and telecommunication sectors. Yearly more than 4000 Ukrainians are working in the tourism branch in Bulgaria, as per the Ukrainian IT specialists – they are highly recognized and demanded from our very fast developing High technology sector.
- Concerning the foreign trade, what is the trade exchange between our countries and what
does Ukraine buy from Bulgaria?
In 2008, our foreign trade exchange surpasses 3 bln. USD and until 2013 it ranges between 1 and 2 bln. USD. Starting 2014 up to 2016 there is a considerable decline. Since then, for the last few years we are witnessing a steady and continuous increase. During last year the bilateral trade exchange had surpassed 785 ml. USD., and for the first half of 2019 the increase reaches almost 20%, comparing to the same period of the previous year.
The range of Bulgarian goods imported in Ukraine is quit various: motor and industrial oils; pharmaceutics and cosmetics; fertilizers; electrical equipment (boilers, heaters etc.), confectionery; household chemical products; industrial glass and mirrors; auto and industrial batteries etc.
There is an increasing interest towards the Bulgarian wines in Ukraine. The local wine culture is developing during the last couple of years and most of the respectful and specialized wine stores and restaurants are working on expanding their product diversity. At the same time, the considerable number of Ukrainians visiting our country are quick to consume the Bulgarian wines brought with them in their luggage, hence are looking to find them on the local market. Here I think is the moment to emphasize that Bulgaria was among the tree biggest exporters of wine in the world, during the 70s and 80s. Nowadays our wines continue to be very popular worldwide and are wining various awards.
- And what does Bulgaria buy from Ukraine?
The Ukrainian export to Bulgaria is not that diverse. It consists mainly of metallurgical and
wood processing products, parts of railway machinery etc. For the last years there is an increase of the export of Ukrainian Food processing products, mainly confectioneries, including my favorite ice cream “Plombir”, which has the unique feature to help you travel back in time (in the childhood) J
The foreign exchange balance is traditionally in favor of Ukraine.
- What about the investments? Bulgaria is known as one of the EU countries with very
attractive investment climate.
Bulgaria offers a good combination of political and macroeconomic stability, as well as wide range of stimulus for investors. Our national currency (Lev) is pegged to the Euro, within the principals of monetary board, already for more than 20 years. Our country has the lowest tax rates in the EU (10% flat corporate and private tax and 0% corporate tax within zones of high unemployment), as well as the lowest labour force costs inside the EU. All these are combined together with special encouraging measures for investors from the state. The access to financing from the EU – amounting to more than 8 bln.EURO from various EU funds for the next couple of years is also an additional attracting factor for investors. Currently in our country there 14 fully operating industrial zones, more than 20 are operating yet not at full capacity and almost 30 are under establishment.
Among the main fast growing sectors of our economy, attracting traditionally internal and foreign investments are electronics, machine building, food processing, transport and logistics, pharmaceutics, chemical industry etc. For the past decade a huge boom is happening in the sphere of High Tech, Business operations outsourcing (BOP), telecommunications, automotive industry etc. Currently in the last one are operating more than 100 companies, and around 80% of all cars in Europe has parts, manufactured in Bulgaria.
Actually, the real estate sector is also attracting foreign investments, and has a considerable share among the Ukrainian investments in our country. More and more Ukrainian citizen are purchasing estates in Bulgaria, mainly to spend their holidays, but often with business goals also.
Are there Bulgarian investments in Ukraine and what kind of? How is Ukraine perceived as an investment destination among the Bulgarian business?
In Ukraine are operating around 200 companies with Bulgarian capital, from which around 35% are representatives of Bulgarian firms. Among those is “Prista oil” – from the oil refining sector, “Sopharma”- a leading Bulgarian company in the pharmaceutical sector, “Euroins”- insurance company, “Reprisa”- a local chain of boutique cafeterias etc. In October 2010, the Bulgarian company “Kaolin” established a factory in Ukraine for enrichment and processing of quartz sand, an investment project for more than 15 mln.USD.
Unfortunately the investment environment in Ukraine is still perceived as one with high risk from the Bulgarian business, hence this limits considerably the use of the existing potential and often demotivates our businessmen, considering developing various projects and investing in the country. But I believe that this is about to change, as we are witnessing some positive indications towards the improvement of the business and investment climate in Ukraine.
Bulgaria has always been among the popular travel destinations for Ukrainians. What tendencies are you witnessing in that field lately?
- Indeed Bulgaria ranks among the preferred foreign travel destinations among the Ukrainian
Tourists, and we are very happy to see that interest constantly growing for the last couple of years. In practice, for the past 10 years the number of Ukrainian tourists, visiting Bulgaria per year has increased with almost 400%, reaching approximately 380 000 during 2018. For the current year the positive trend continues, and for the first 8 months the increase is above 24%, comparing to the same period for 2018.
I would like to underline that a proof of the importance of Ukraine as a strategic partner to us in the tourism sector is our permanent participation on a national level at the annual 2 Travel fairs in Kyiv (UITT and UITM) since their very first editions…so to say – 26 years already.
In Ukraine our country is usually a reference for summer and sea tourism, and those continue attracting the biggest share of Ukrainian tourists. During the last several years there is an increasing interest towards other types of tourism, mostly Spa & Wellness, and Winter/Ski, underestimated and unknown among most of the Ukrainians for a long time.
Here is the right place to mention that Bulgaria ranks 2nd in Europe for the high number of mineral springs, from where - our numerous and well developed Spa complexes, offering all types of therapies. Concerning the Winter/Ski tourism, it is worth knowing that 30% of our territory is mountainous, and the average duration of the Ski season is 130 days per year. Only less than within 2 hours drive from our capital Sofia, there are more than 5 ski resorts.
The popularity of the Cultural, Religious and Eco tourism is also increasing. There is a growing demand also for organized trips/camps for children, mainly during the summer and on the coastline.
The rise is not only for the tourism visits but as well as for the business trips, education, trainings etc. There is a daily direct flight Kyiv-Sofia, and since this spring, twice a week is also operating a low cost direct flight from “Ryan air”, as with this the less than 2 hours flight between our capitals becomes even more affordable.
Olexander Kondratenko, photographs of Olexander Avramenko and provided by the Embassy of Bulgaria in Ukraine