Invest in here

Eastern Europe remains attractive to foreign investments , Bulgaria is now on the edge

The business world map is being redrawn . Europe is still active at attracting foreign investments, but it’s for the first time now that it loses its historical leadership attractiveness position. That is indicated in an investment attractiveness survey by Ernst & Young: Ernst & Young European Attractiveness Survey 2008. The survey is conducted on the basis of the results of a telephone interview of 834 international executives - from all origins, industries and business types . Nevertheless the perceptions of the interviewed have not been supported by real cash flows yet, note the analyzers of Ernst & Young.

China has moved into first position as the most attractive business location in 2008 with 47% of votes. Central and Eastern Europe climb to second place by 42% of votes, while Western Europe falls back from first to third place in 2008 as compared to last year. USA and Canada also fall back in their position by receiving an approval of only 21%. Russia is now seen as more attractive than ever, baring in mind that in past years she was not listed in the survey at all, while now her votes equal 21%.

Four are the main set of factors used by international companies to determine the attractiveness of a location when it comes to doing business. They are:

- market accessibility: infrastructure, proximity to markets and the quality of telecommunications are important

- labor force and productivity: skills, labor availability and costs are measured against productivity

- taxes and laws : tax burden, legal and regulatory mechanisms influence the profitability of an investment

- environment and region: the opportunity of a development from the point of view of access to capital and financial markets, innovations and quality of life

Despite the constantly growing attractiveness of the developing markets, Europe marks a record influx of direct foreign investments, by attracting 42% of global FDI inflows - US$651b of FDI inflows. The main forces remain capital transfers between European countries and at this mainly to Western and Eastern Europe. What is to be changed is the investments structure. 18% less are the generated in 2007 jobs as compared to 2006. In Western Europe reinforcement of investments in services is clearly pronounced, as opposed to industry investments that have fallen sharply. 87% of the new-found jobs created in Central and Eastern Europe have moved into the industry sector. Central and Eastern Europe countries, however, miss out on their positions as preferred business outsourcing destinations. Poland retains her first regional position and second after Germany in Europe as concerns opening business support centers.

Europe’s long established inward investments champion is United Kingdom in both number of projects and newly-found job . UK dominates in software , business services and financial services . However, the UK’s performance is highly dependent on American capitals and can be weakened by US economy’s slowdown. Poland and the Czech Republic take second and third place respectively in newly-found jobs.

Bulgaria gives in when it comes to attracting foreign investments, indicates the data of Ernst & Young ’s survey . Our country lags behind in respect to both of the evaluated indicators as compared to 2006. Bulgaria ranks 17 in Europe (13^th in EU) in number of investment projects with a market share of 1.7% and a decline of 7%. As regards number of newly-found jobs (3096) our country takes 16^th place in Europe (14^th in EU) and reports a decline of 25%. That data however, might prove to be misleading, since it does not give an account neither on the real increase in direct foreign investments (€6.1b in 2007 as compared to 5.96b in 2006) , nor on their ratio to GDP, it is on this indicator than Bulgaria ranks 4^th in EU according to the last data of Eurostat in 2006.
Europe remains in the future business development plans of the companies - 47% of the respondents intend to develop their business in Europe. Poland, Germany and Russia seem most attractive. On the other pole remain 16% of the interviewed who respond that they intend to relocate their activities outside the region.
According to the majority of companies the most important reforms that have to be implemented for attracting investments is increasing the flexibility of the labor market and simplification of the national regulation regimens.

Source: http :// www . capital . bg / show . php ? storyid =506787