Until very recently, before you became a minister, you were an investor. From that point of view, what do you believe is the reason big investors don't go to Bulgaria, but rather choose Greece, Serbia and Romania?
- I must admit that when I was an investor I was privileged to invest in that part of the economy, which is the least concerned with geography, corruption and the rule of law. The possibilities for corruption in the high-tech sector are very few, because there are no physical assets and everything is intellectual property. In that line of thought I can't say that I've seen first hand that side of our reality, but I know enough such cases. There are no secrets, we said it during the campaign - the main problem is the uncertainty: will you be asked to give a bribe? Who will demand the bribe? When?
The corruption itself is not even the main problem, but the kind of corruption we have. If we imagine a perfect dictatorship, where the only corrupt person is on the top of the pyramid, corruption can even be efficient to some extent. When corruption is decentralized, however, and you need 200 different permits from 200 different institutions to build an industrial park, then investors face a real problem. They don't know how much the bribe will be, and if they do give it, it is a risk for their corporate discipline. Will it have a positive effect or will the next one along the chain say "ah, you gave to the last person, now we want something too".
How can you fight such decentralized corruption?
- We have done an amazing job in the last 30 years to establish a judicial system which does not do justice, but gives rights to certain people. It is used to help "our guys" do their part of the deal. As they say in Russia: "We have contracts for our friends and laws for our enemies". If the system works this way, nothing is going to change. If your right of property is not guaranteed, nothing is going to happen, nobody is going to invest.
The recipe is fairly simple, but it takes a parliamentary majority, in some cases even a constitutional one. An anti-corruption commission, which shows the cases of vast corruption and a prosecutor's office which takes the case to court with enough evidence. It sounds simple, but it will take a while.
This is the main problem with Bulgaria, the reason why so many investors come here and like what they see - the nature, the people, the food, the weather, the mountains, the coastline, the IT engineers, the mechanical engineers - but still ask themselves what will happen if they invest their money here. Less attractive places like Greece, Serbia and Romania are easily winning the race, because they have predictability.
There is an argument that the level of corruption in Bulgaria is the same as in the Balkan region overall, but yet Serbia, for example, sees billion-dollar investments, while Bulgaria lags behind
- Just this week we spoke to the following potential investors: an electric cars manufacturer from Asia; a solar panels manufacturer; an industrial hydrogen manufacturer; a startup with 100 million dollars in funding; an academic center which wants to do a PhD program in AI with top universities in Europe.
What we heard was what I told you, plus one more thing that sounds funny, but is actually scary: they never had anyone to talk to. No ministers, no deputy-ministers, no prime-minister. For years there was nobody you could talk to. Even if you somehow do find someone, it means nothing, nothing happens, the administration does not help or care. And you tell yourself: I will have to pay a bribe and then, even if something happens, the administration does not care.
But there is also something else. The main reason Bulgaria lost the Volkswagen investment to Turkey, for example, was the direct help they received in terms of money from the state. Do you have plans to give more money as direct help for investments?
- The administration does and I do, but we have to defend our ideas before the Ministry of finance, the Council of Ministers and the National Assembly. It is important to us not only to have more investments, but smart investments. This means not only manufacturing, but R&D centers, financial centers, and intellectual property development.
We really do give small sums for stimulating investors. As fixed sums they are about 10-15 millions per year, which is nothing, but, even without changing the law, we can give additional money through memorandums, as is the case with Next.e.GO. When Bulgaria starts being more active, we have the mechanisms to give a lot more money to stimulate investments. This will be one of the new ministry's missions. We will be more active in looking for investments. So far we waited - if Volkswagen comes, if Skoda comes, if anybody comes, we will find some place and we will do something.
Given the new ministry, if Volkswagen or Skoda comes, are they going to meet with you?
- First of all, I want not for them to come, but for Bulgaria to find them. If we find them, this means that the Bulgarian Investment Agency (BIA) has proactively profiled the types of investors and businesses that we want to have here. Since BIA is part of our ministry, we will make the first step. After that we will see where they go. On the level of the Council of Ministers, we work as a tight team.
You already mentioned that you want to be proactive in looking for companies. This brings up the questions: how it will happen, what kind of companies, from which sectors and even where - are you going to tell them "come to Bulgaria", or "we know we don't have problems in Sofia, so come to Vidin"? What will be your offer to investors?
- We have some very interesting ideas. The first is what we see from the market. I told you what I saw and heard in our first week - simply put, green and digital. These are the main pillars of Europe for the next financial program and the ideology of the EU itself, so we will look for these two as the most obvious ones.
Another priority is companies that work with other companies that are already here. These companies contact us themselves, so we can simply help them. You have a car parts factory, so why not have your suppliers nearby?
The last aspect is the new investors, who will flock to the sectors that are already developed here. When you have one car manufacturer, another one comes. When you have one software company in "Mladost", another one comes. Investments follow investments.
You mentioned the IT - sector, which you know well. Do you plan to seek an investment from tech giants like Apple, Facebook, Google, Amazon and Microsoft? Apple might be a long shot, but the strictly software companies only seem to be present in those countries around us. They are in Romania, Poland, Greece, but not in Bulgaria
- Frankly, the former titans of the near past, like HP, have a serious presence here. Google also has a data center, although it's not very famous. We will talk to many of them, because a big investment from any such company is symbolic for every country. We are in competition with all the other countries in the region and we have to see in what ways we can prove ourselves better than them. I think that most of these companies want to work on a regional level, because each of our markets is comparatively small. Bulgaria is small for Bulgaria, Greece is small for Amazon, Serbia is small for Microsoft. Each of these markets is not very interesting by itself. The question is who will be able to win a regional center from among these players.
According to our unofficial conversations, representatives from the giants say that Bulgaria has an image problem as a corrupt country but that if Bulgaria has a chance for something, it is a data center. But, if you have a center in Romania, you don't need one in Bulgaria. How can we tell them: don't go to Romania or Greece, come to Bulgaria?
- We can't tell them not to go to Romania or Greece, but we can tell them this: first of all, there is the geography of Bulgaria. They have to take that into consideration, especially for data centers. Second, there is the tax system in Bulgaria. Third, there is our workforce. Fourth, Bulgaria today is not what it was last year. We will show this through results in our corruption indexes, but it will take time. Meanwhile, the whole administration will work in that direction. I am very happy to say that I see that the ambassadors and company representatives have someone to talk to and I suppose it is refreshing for them too.
But now the other point of view: do we want Google or Amazon to open an office here in Bulgaria, if this means for them to suck out the talent, mainly from smaller Bulgarian companies?
- Not only that. Do we want Google or Amazon to open a big data center, if it will cost the state budget money we cannot afford? A project of this scale should be calibrated in such a way that it helps Bulgaria grow, not suck people and money out of it. This is our mission here. We don't want a center for 1 billion dollars, which will just use electricity and people, we want added value - R&D, services, products. That is the package each of them has to offer.
You said that in just one week alone, since your appointment, there have been numerous companies showing interest. It sounds like they have been on the starting line. Did they tell you why are they hesitant?
- I wouldn't even say that they were on the starting grid, but rather revolving around us. We saw some of them in the summer. They revolve around Bulgaria, but these are not fast decisions, and they also center around other places, looking at what is happening. When Bulgaria started producing some interesting news, we had some requests - we hear that something is happening, that things are changing, can we see this minister (note: Kiril Petkov, former minister of economy and current prime-minister; Lorer was his advisor at the time)? We didn't have an answer then, because we didn't know what was going to happen. We do now. Things are happening in Bulgaria and if you stay, you will see them.