As the results from the Brexit referendum gloomed over the British economy, other EU member states realized that they could actually benefit from Britain's decision to leave the EU. While Frankfurt, Dublin and Paris were said to be competitors for the role of Europe's new financial capital, the Hungarian Minister of Economy said that Hungary would love to become home to any other businesses leaving Britain.
Meanwhile, Bulgaria is still struggling to create a coherent post-Brexit policy and to point out how it can benefit from Brexit in economic terms. Bulgaria may not be the perfect destination for London's enormous financial sector, but it has its plus sides. Low corporate tax and cheap labor in comparison to other European countries are some of the country's attractive features. In municipalities with unemployment 25% above the country's average, companies may be granted up to 100% exemption from corporate tax. DHR International, a recruitment company, claims that skilled labor is 40% cheaper in Eastern Europe than in Britain, The Guardian reports.
Invest Bulgaria Agency, the country's investment promotion body, has drafted a strategy which comprises 14 sectors estimated as investment-friendly. Some of them are defined as 'traditionally strong for Bulgaria, including manufacturing of computers and communication technology, electronic and optical products, machinery, textiles and clothing, chemical products and food. Car manufacturers are looking to move their R&D teams to Eastern Europe, according to a recent article in The Guardian. IBA also says that the car industry is a potential target for investments.
Among the strategic industries newly added to IBA's list are the IT sector, nanotechnology, pharmacy, biotechnology and outsourcing. Several countries are targeted for a more intensive search of investments in these areas and the United Kingdom is among them.
However, it is clear that no thorough analysis has been made and there is a lot more to learn about what Bulgaria can offer and whom to offer it to. According to Borislav Stefanov, an ex-chief of IBA and a businessman, the strategy needs to be more specific and based on real analysis. "The help from people with local knowledge is important as well", he adds.
A better plan is needed
On the other hand, low corporate tax and low salary expenses may not be enough to counter the impact of corruption and the flawed judicial system. Compared to other Eastern European countries, however, Bulgaria can be competitive after all. "We are friendlier than Hungary and Poland", Mr Stefanov says. The political situation in Hungary and Poland creates a somewhat unpredictable climate for potential investors. Bulgaria still needs to improve its infrastructure, though important steps have been made in this direction with large investments in highways.
Besides, it is still unknown what kind of Brexit will be negotiated. Meanwhile, the Bulgarian institutions have to start working on identifying investors, to go beyond the most famous household names, and to establish networks that might help the country's economy benefit from the United Kingdom's decision to leave the EU.
Mila Cherneva is reporter with Capital