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The Netherlands In Bulgaria: The Dutch Are? Coming Even Closer - Sophia Echo

The Netherlands has never departed from its role as a close partner of Bulgaria, at least not since the latter entered onto its pro-European path in the early 1990s. Unlike a host of other countries whose businesses flooded Bulgaria only on European Union and Nato accession, the Netherlands did it the difficult way by, instead, co-treading aspirant member states’ path to accession.

Institutionalising the building of bilateral business ties – and in a steady, perennial and concerted manner – is a policy of the Dutch government. It persists in implementing it irrespective of the partner country’s level of development and is instrumentalised with technical and financial support programmes.

These programmes – PSO and Matra – have been ongoing for so long that they ring familiar to many Bulgarian entrepreneurs.

The PSO programme, since Bulgaria’s accession to the EU renamed to G2G.NL, allocates funds for projects spearheading Dutch trade, investments and other forms of business co-operation with Central and Eastern European countries. Matra, for its part, seeks to transform the public sector through transfer of knowledge and experience and through R&D development, production, delivery and maintenance of production lines and sites.

This governmental strategy runs alongside networking initiatives of businesses. One such initiative is the Bulgarian-Dutch Business Club. In existence since 2003, it has been brokering information and contacts for companies interested in or running businesses in Bulgaria and the Netherlands.

Dutch public and business figures have also been active in eliciting the drawbacks of Bulgaria’s business environment. Both Dutch business people and public officials have pointed at red tape, corruption, sluggish public administration and high taxes and social security contributions as the main deterrents to an even more energetic inflow of Dutch investments to the country.

The governmental approach, aided with business calls, has paid off, the end result being ever-growing volumes of investments and trade turnover.

Many interim rankings since 1991 to date put the Netherlands as the largest investor in Bulgaria and as the country’s fourth-largest trading partner.

Suffice to say, the Netherlands placed second in overall investments in Bulgaria in a 15-year ranking of InvestBulgaria Agency. The Dutch investment backlog in the 1993/2006 period totalled $1.937 billion, the annual commitments being irregular and fluctuating in a broad $0.5 million to $842.5 million corridor, according to combined data of Bulgaria’s Ministry of Finance and Bulgarian National Bank.

However, just as broad is the Dutch exposure by sectors. The Netherlands has tapped into Bulgaria’s financial and agricultural, metal processing and IT, energy and infrastructure, consultancy and home and personal care sectors.

So is the size of Dutch businesses present in Bulgaria. The palette of investors includes both small and large enterprises, some of which Dutch-only and others part-owned by Bulgarian or other non-Dutch companies.

There are more than 100 Dutch-owned businesses present in Bulgaria, the most recent list compiled by the Dutch embassy in Bulgaria reads. InvestBulgaria puts Belgian-Dutch copper smelter Cumerio, Eaststarch-owned food producer Amylum, Russia-Dutch-owned oil processing and fuel retailer LUKoil in its updated roster of Bulgaria’s largest investors.

Other Dutch players of note are ING Bank, home and personal care giant Unilever, and bathroom and kitchen fixtures’ makers American Standard, in Dutch-US ownership.

It is worth noting that the Dutch business is not concentrated in Sofia alone. Many businesses focus their attention on the countryside, which has made Bulgarian officials praise the even spread of Dutch presence in Bulgaria.

In addition, an analysis of Dutch investment activity in Bulgaria reveals that the Dutch businesses are focusing on building their long-term presence in Bulgaria. For this reason, their investments are either greenfield or venture capital by nature. The Netherlands has generally curbed the latest real estate craze, which, last year, accounted for 60 per cent of foreign direct investment in Bulgaria, and is seeking to capitalise on speculative re-sale of Bulgarian property.

At the same time, trade dynamics is continually intensifying. In 2007 alone, trade turnover totalled 1407.5 million leva, data of the National Statistics Institute reads. Yet the import-export coverage ratio is still much in favour of the Netherlands and the skewed picture is persisting over the years.

Last year, the Netherlands imported goods worth 1093.1 million leva (in FOB prices), an increase from 758.2 million leva in 2006. The increase re-affirms a trend of steady import growth. In 2007, the Netherlands was the fourth largest EU importer, losing out only to Italy, Germany and Greece.

On the other hand, Bulgaria’s exports decreased year-on-year from 325.5 million leva in 2006 to 314.4 million leva in 2007, the decrease being attributable to the decrease in shipments of organic chemical products and processed tobacco goods.

Experts believe that the decline is temporary and set to rebound this year round.