the cost of business in Bulgaria

In its May issue MANAGER magazine in Bulgaria has published a comment what is the reason for which the cost for business in Bulgaria is one of the lowest. Here is part of it .

The cost of Business in Bulgaria is among the lowest in the world and this is one of the reasons for increasing foreign investments

It looks like EU membership has had quite a positive influence on Bulgaria's image as a stable macroeconomic economy. Proof of this is the record amounts of direct investment in the past year, as reported by the Bulgarian Agency for Investmens. According to preliminary calculations, they amount to 5,5 bln leva, which is about 10% of the BUlgarian GDP, and the growth relative to last year is 20%. The goverment earn part of the merit here for attracting more and more capitalto the economy, as it undertook reforms to reduce the tax burden, simlify regulations and business rules. However in order to hold the interest of investors,it is important taht Bulgaria remains competitive, because on a world scale we are competing with quickly growing economies like China and India, as well as with reforming countries from the New Europe like Estonia , Latvia and Slovakia.

How much does it cost to do business in Bulgaria compared with elsewhere?

In order to compare the cost of business in various countries we will use an example, company X, and compare how would it fare in each country . It is a private limited company, a start up businesshiring 50 workers. The office is located in the capital ofthe respective country. The company is oriented towards exports. We must stress-the items included in calculating the operating expenses of the company in all the countries include the resources necessary to start a business, worker salaries ,insurance for the eployer, corporate taxes, local taxes and fees, as well as the money forenting a 300 sq.m of office and all the expences related to exports. The data is from 2006 and is based on the World Bank Study Doing Business in 2008 andPaying taxes 2008 as well as on the international ratings and marketing research onthe costs of renting an office in large cities and average worker wages.

According to current prices, it is cheapest for Company X to have its offices in Bulgaria. When the expences are adjusted according to the purchasing power of respective economies, it turns out that it is cheaper to do business in Romania and China than in Bulgaria.

Starting a business

Registering company X is the easiest in the USA, Ireland and UK. In Bulgaria it would take 31 days, while in the US 6, in France and Portugal 7 and in the Netherlands 10 days.At the beggining of 2008 , after a delay of more than a year , the electronic register has been introduced into Bulgaria, which will lead to a significant simplification of registration procedures for firms and to an improvement in the business environment. The new procedure will not only allow registration to take place over the internet, but all the information regarding the firms to be publicly available free of charge. The minimal capital requirement for registering a firm in Bulgaria is an unnecessary burden however.In Ireland , France, the UK, the USA, Japan, India and Hong Kong , there is no such prequisite and in most of the countries included in the study the size of this capital as a percentage of gross national income per capital is much smaller than in BUlgaria.