NINETY-ONE percent of foreigners are satisfied with their life in Bulgaria, according to a new survey by KPMG.

There has been a shift in leading concerns among foreign business people, from macroeconomic and taxation issues, to socio-economic ones, the survey found.

The findings were revealed last Wednesday after the third KPMG nation-wide survey of foreign investors was completed in August. Previous surveys were done in 1998 and 2000.

"The expected accession of Bulgaria to the EU is a matter of growing importance to foreign investors," according to the survey.

About 47 per cent believe that the prospect of EU membership will be a driver for future foreign investment. For about 20 per cent of the respondent companies, EU membership prospects were a factor in their initial investment decision.

The survey presented the present picture of the business environment in Bulgaria the way it is perceived by the top management companies investing in the country. In its survey, KPMG Bulgaria quizzed 200 of the largest companies with foreign ownership or participation, which operate in Bulgaria and shape its economy. The respondent companies represent cumulative foreign investments in Bulgaria of more than $1000 million and staff of more than 17 000.

Limited purchasing power of local customers is currently perceived as the most crucial barrier to foreign investment in Bulgaria (77 per cent, up from 68 per cent in 2000). Corruption ranks second (74 per cent) followed by a conflicting and unpredictable legal system. Red tape was in fourth place.

The most important factor that influenced foreign companies to invest in Bulgaria was the recognised emerging market followed by skilled labour and lower labour costs with respectively percentages of 46, 45 and 39. The survey conveys that lower labour costs are an important driver for the decision to invest in Bulgaria while lower non-labour costs are comparatively insignificant. Concerning the level of satisfaction of respondent's expectation towards labour costs, satisfaction is felt among all companies. Almost one fourth of the respondents replied that it was cheaper than they expected. Many of the respondents expressed satisfaction of the work out of their projects. 91 per cent indicated that the primary expectations of their parent company were fulfilled (72 per cent in 2000 and 58 in the first nation wide survey from 1998) and also 91 of them consider future investment in Bulgaria compared to only 83 per cent in 2000 and 88 in 1998.

Currency instability is no longer a factor, and inflation is just of slight concern. All respondents answered they enjoy working and living in Bulgaria (100 per cent to 91 in 2000 and 88 in 1998).

Tourism is seen as the most promising business as an opportunity for foreign investors. Trade (18 per cent) has experienced the strongest decline of all given sectors, down from 31 per cent in 2000 and 38 per cent in 1998. This seems to reflect the increased competition through the entry of several foreign investors into the sector.