Bulgaria,Old Friend Eyes New Trade Cooperation with China

Bulgaria,one of the earliest countries to establish diplomatic relationswith China in 1949,joined the Europe an Union(EU)on January 1,2007.This event has greatsignificance in boosting bilateral relations between Bulgaria and China.In March,China'sForeign Trad interviewed H.E.Mr.Angel Orbetsov,Ambassador of Bulgaria,"Let me emphasizethat the Republic of Bulgaria and the People's Republic of China enjoy traditional relations,which have been thriving long before our accession to the European Union."Angel Orbetsov said.The follows are his comments. By Editor

Comprehensive partnership to expediate the bilateral trade cooperation

First of all,let me emphasize that the Republic of Bulgariaand the People's Republic of China enjoy traditional relations,which have been thriving long before our accession to the Euro-pean Union.those relations have been defined as comprehensivepartnership and cooperation in a Joint Declaration signed betweenPrime Ministers H.E.Mr.Wen Jiabao and H.E.Mr.Sergey Stan-ishev during the latter's oficial vistit to China last November.Thedeclaration also stipulates that Bulgaria,after its accession to theEuropean Union on January 1,2007,will contribute to enhancingChina-EU comprehensive strategic partnership.

Since the beginning of this year the bilateral cooperation isfollowing its usual upward trend.The initial data on the com-mercial turnover are quite encouraging:according to the Chinesestatistics in January it has expanded by 86% year-on-year to reachthe figure of US$104 million.A positive development pertainingto our EU membership is the forthcoming accession of Bulgariato the EU-China Agreement on Approved Destination Status,which will lay the grounds for Chinese organized tourists to travelto Bulgaria.The legal procedure has been started by the Euro-pean Commission upon our request and we hope that the Chineseside will respond positively.

Impressive trade exchanges help build mutual respectful tradecooperation

Last year we saw an impressive exchange of delegations be-tween the Bulgarian Ministry of Economy and Energy and theChinese Ministry of Commerce.Five delegations at vice-minis-terial level visited the other country on different occasions,usingtacts.The 12thsession of the Joint Economic Committee was heldin Bulgarian capital Sofia in the month of Apirl,co-chaired byvice-ministers Mrs.Anna Yaneva and Mr.Yu Guangzhou.Bul-garian Minister of Economy and Energy Mr.Roumen Ovcharovwas included in the official delegation led by the Prime Ministerin November and help talks with Vice Minister of the NationalDevelopment and Reform Commission Mr.Zhang Xiaoqiang.Among the documents signed the most important one was thenew Agreement on Economic Co-operation.Contacts betweenlocal authorities added yet another dimension to the expansion of economic ties．Awhole lot of chinese cities and provinces,including．Shanghai,zhejiang,zhengzhou,

Chongqing,Yunfu(Guangdong Province),etc．were involved in active exchange withtheir Bulgarian counterparts．

China ascertained its position as Bulgaria's biggest economic partner in the Asia-Pacific region．In 2006 bilateral trade enjoyed a particularly steep increase of morethan 3 times and has amoumed to US$1.87 billion,according to Chinese data．Thisunprecedented flgure renects the intensified economic ties but,also,the rising interestof Chinese business to the Bulgarian market on the verge of our accession to the Eu-ropean Union．The even bigger deficit on Bulgaria's part,however,remains a problem,which has to be tackled with the concerted efforts of both sides．

We are working on a number Of high-ranking visits in both directions throughoutthe year 2007,which are supposed to strengthen mutual confidence and explore newideas for boosting ties in particular areas．To be more cOncrete,Chinese AssistantMinister of Commerce Mr．Fu Ziving is ahoutto travel to Bulgaria and two other countriesof the region shortly in order to explore op-portunities for promoting Chinese imports ofdifferent products．This coming spring we areexpecting the Joint Economic Committee toconvene in Beijing for its 13thsession．NDRCChairman Mr．Ma Kai has iust extended aninvitation to Minister Ovcharoy to attend theASEM Small and Medium-size EnterprisesMinisterial Meeting to be held in Beijing inOctOber．We are also looking forward to mu-tual participation in international fairs andexhibitions organized in the two countries．Itshould be noted in this aspect that Bulgariawas among the first countries to confirm itsparticipation in Expo-2010 to beheld in Shanghai and to appointa General Commissioner forsupervising the related ac-tivities．We may,therefore．contacts at official andspecify the details of our

In the coming days wetivities organized by the Eu-Beijing for commemoratingof the Treaties of Rome．whichboosting the presence of Eumpeanalso keen．as a new EU member state．envisage furtherexecutive level toparticlpatlon．intend to join the ac-ropean Embassies inthe 50thanniversaryinclude a campaign forOpanies in China．We areto establish closer interactionwith the EU Chamber of Commerce in China．Bilaterally,the Embassy will be verymuch focused on fixing the dates and carefully preparing the 13thsession of the JointCommittee．

In a wider scope we will be watching closely the implementation of the new poli-cies announced at the NPC session and directed toward facilitating imports fromforeign countries．On that basis we will be looking into more effective measures toboost Bulgarian exports to China while continuing our routine practice of preparingmutual business fora,enhancing contacts between small and medium-size enterprises.arranging presentations of Bulgarian products in China,etc．Bulgaria is a worldfamous producer of wines,rose perfume and yoghurt,to which therle is growing

interest in China．Other export items include metals and metal ware,metal-lurgical machinery and equipment,chemicals,pharmaceuticals,etc．We are also well aware that mutual co-Operation should not beconfined to sales and purchases．It may and should rather be ex-tended to a whole lot of other fields such as telecommunications,power generation anddistribution,transportation,agriculture and animal husbandry,tourism and many more.We can also think about some more sophisticated areas like nanotechnologies and spaceindustry where both countries have acquired valuable experience．

Perfect investment environment ready for Chinese investors

Bulgaria has become a leading investment hotspot in South-Eastern Europe．TheWorld Bank ranked Bulgaria the country with the world's largest ratio of investment toGDP in the last two years．It now attracts more than 30% of all foreign capital flow in theregion．On the basis of foreign direct investments(FDI)per ccapita estimates,Bulgaria．which has a population of less than 8 million people,is well ahead of all countries inCentral and Eastern Europe．Those comparisons are all the more impressive,having inmind that our part of Europe is one of the most dynamic regions in terms of attractingforeign investments．FDI for the 1998-2005 period exceeded 10 billion Euros and in 2006amounted to nearly 2.3 billion Euros．

According to MoOdy's credit rating agency,top reasons to invest in Bulgaria are"stra-tegic location,skilled labour,excellent technical qualiflcations,competitive cost,robust le-gal framework and EU membership"．Above all,Bulgrdria is considered a politically stablecountry．Ethnic and rellglous tolerance has remained a constant feature of internal devel-opments.The transltion period to market-oriented economy has been completed withoutany major political．The country's private sector already generates about 80% ofthe gross value added．Another favourable factor is the positive trend of development ofthe Bulgarian economy,which is increasing by 6%annually．It is coupled with financialstability,resulting from interaction with the IMF and the European Uhion over the last 9years．Bulgaria's knowledge-and-skill base ranks with the world's best for its technology,math,engineering and specialized science strengths．Bulgaria enlploys more than 20,000professionals in the IT sector and ranks the third in the world for certified IT professionalsper capita．Meanwhile,labour costs are currently among the lowest in the region．

Bulgaria has provided a favourable business climate for foreign investment.Corporatetax,standing at 15％in 2005-2006,was further cut to 10%since the beginning of 2007 torank Bulgaria,along with Cyprus,the country with the lowest tax rate in Europe．Also,inheritance and motor-vehicle taxes have been repealed．The basic features of the Invest-ment Encouragement Law in place since 2004 are as follows:

Guarantees all investors the same rights and protections

Substantial asset discount prior to EU membership

Period for VAT reclaims for exporters shortened from 45 to 30 days

10-day VAT refund for major investor companies

VAT exemption for imports of investment projects over $5 million

50% annual depreciation rate:accelerated depreciation for production equipment

Investors in the top investment bracket(over 50 mln Euros)receive help with

information and administrative services．infrastructure and busihess assistance

Zero percent capital gains tax

Zero percent interest gains tax

Removal of 20 percent of licensing,permit and registration regimes

33 percent of licenses simplified

Investments represent a new dimension of Bulgarian-Chinese economic co-operation．Both countries are becoming increasingly aware of mutual benefits from creating jointventures and penetrating third markets．Chinese companies in the fields of audio-visualequipment(SVA group,Shanghai),climatic installations(Chongqing Lifan Weili appli-ances),telecommunications(Huawei and ZTE)have been expanding their presence inBulgaria.Two more ventures are on the way in the automotive and chemical fields corre-spondingly．HoweVer,Chinese investments in the Bulgarian economy still remain lessthan 10 mln．Euros,which is、well below China's capacity．We hope that Chinesebusinesses will fully assess the benefits of investing in Bulgarian economy andwill be encouraged to step up their activities in the country．