The opportunities for EU-wide expansion now that Bulgaria is a fully-fledged EU member remain a potential that Bulgarian entrepreneurs are yet to tap into. Only 12.2 per cent of Bulgarian companies were involved in export activities in 2007.
However, the reverse flow of goods remained high, with more than 70.1 per cent of Bulgarian entrepreneurs relying on imported commodities as input materials or necessary wares for their operations.
These are the main findings of the Bulgaria-focused enterprise survey of the World Bank. The survey draws on the answers of 663 Bulgarian entrepreneurs to a questionnaire covering several major areas, including regulations and tax, permits and licences, corruption, crime, finance and trade.
The report has pointed out the grey economy and its mirror phenomenon corruption, political instability and the inadequately trained workforce as main obstacles to doing business in Bulgaria. The least problematic areas, according to Bulgarian entrepreneurs, are access to financing, tax rates and regulations.
More than 60 per cent of Bulgaria-focused business people identified grey economy as a major constraint. The same phenomenon troubled 46 per cent of business people in the Eastern Europe and Central Asia region.
Corruption, on the other hand, has been identified as a major challenge by 20.36 per cent of respondents, versus 18.93 per cent in the region.
Yet few Bulgarian businesses say that they give gifts when meeting tax officials (6.15 per cent) or when going for a public contract (19.8 per cent), or admit that they pay bribes to public officials (16.1 per cent). The ratio of positive answers to the same questions in the region is 42.3 per cent, 21.86 per cent and 33.9 per cent, respectively.
Bulgaria is still slow in terms of issuing licences, when compared with the rest of the East Europe and Central Asia region. While in Bulgaria an operating licence takes 48 days to issue, the average figure for the region is 30 days. Those in need of a building permit in Bulgaria must prepare to wait for at least 134 days, as opposed to 64 days in the region. A company waits 85 days on average to plug to the power grid, as opposed to 17 days in the region. Getting a fixed-line phone connection usually takes 30 days, versus 16.7 days in the region.
On the upside, Bulgarian companies find it increasingly easy to access financing and feel less anxious in this regard compared to the region. Four in 10 companies said they used bank loans to finance investments, versus 17.31 per cent in the region. About 46.65 per cent of Bulgarian entrepreneurs use banks to finance operational expenses, the regions average being 25.3 per cent.
Bulgarian lenders, World Bank figures show, have a more relaxed approach to extending loans, requesting a smaller collateral for a loan than their peers in the region. The value of a collateral generally hovers around 127.78 per cent of the loan in Bulgaria, compared with 154.49 per cent in the region.
While only 13.7 per cent of Bulgarian businesses perceive relations with tax administration as problematic, against 22 per cent in the region, about 17.7 per cent of senior managers spend time on dealing with tax officials. The regions average on this parameter is 5.6 per cent.
Bulgarian companies are of a smaller size compared to their regional peers. While the average number of full-time staff in Bulgaria hovers around 38 people, the number in Eastern Europe and Central Asia is 84 people.
