連鎖Business News

In addition to the global challenges of rising costs, local problems of corruption and political unpredictability remain

Due to high costs and problems with supply chains, Austrian companies in Bulgaria are preparing for a more difficult year and expect a contraction in economic activity. This is shown by the results of a survey by Advantage Austria, the trade department at the Embassy of Vienna in our country, conducted at the end of 2022, in which 101 businesses took part.

Almost half of them are pessimistic about this year, although this share is smaller compared to the average levels in Europe and the region. At the local level, corruption and unpredictable economic policy remain the biggest problems for companies for another year.

With more than 5 billion euros invested here, Austria is the second largest source of foreign investment in Bulgaria, which creates more than 300,000 jobs, pointed out Philip Kupfer, commercial counselor at the Austrian Embassy, during the presentation of the survey results. In 2022, for the months up to October, Austrian exports to Bulgaria grew by 37%, and trade in the opposite direction - by 34%. This deepening partnership is mutually beneficial for both countries, and its importance will grow in these economically challenging times, Kupfer said.

Expectations - shrinking turnover and fewer orders

High energy and transport costs, inflation and problems with supply chains are having a negative impact on the attitudes of Austrian companies operating in Bulgaria - nearly half of them are preparing for a worsening of the economic situation in the next 12 months. For comparison, a year ago this share was around 30%. Still, these numbers sit well against the big picture. 58% of Austrian companies in Europe are pessimistic, and in Eastern Europe the share is 54%.

This year, companies are set to be more cautious. In general, they expect a contraction in turnover and fewer orders, as well as underutilization of production capacity. "Because of higher energy and transportation costs and raw materials, it takes more capital to produce the same amount as before," Kupfer pointed out. Firms will be less inclined to make investments. In terms of hiring employees, however, there is no significant change in the plans for now.

The problems - corruption, bureaucracy, unpredictability

The biggest problem for Austrian businesses in our country, indicated by 92% of respondents, for another year, are the gaps in the fight against organized crime and corruption. 45% of the companies gave an extremely negative assessment on this topic.

Second among the difficulties is the unpredictable economic policy, and the political instability of the last 2 years and the lack of regular governance with a clear direction probably contribute to this. Big companies usually plan for the long term, business representatives said, and "trust is one of the most important currencies." Therefore, unexpected turns in the country's economic and financial policy make it difficult to work and potentially make the country a less desirable destination for investment.

"We are often faced with sudden regulatory changes that have not been discussed or about which the business is not informed, and this makes it difficult to implement them," said the manager of "EVN Bulgaria Group" Alexander Sipek.

The lack of qualified personnel to meet business needs is also "one of the most serious obstacles to growth," according to Sipek. A possible solution is to apply the Austrian model of dual education in the country. Although attempts have been made for it for 9 years, the state is still not actively involved. A key problem is that the law does not allow students to work, which goes against the idea of dual education. In comparison, in Austria, students in such schools spend about 70-80% of their time in production, where they simultaneously gain skills through practice. Education here largely does not meet the needs of business and this leads to additional costs for companies that have to invest in the training of personnel. 

The pluses

Despite the environment's shortcomings, many of which have been unresolved for years, there are companies that continue to expand. This is the case of "Amer Sports Bulgaria" - part of the Amer Sports group, which produces skis in Chepelare and is currently building a second factory in Asenovgrad.

According to Sipek, Bulgaria also has advantages as an investment destination. Such are lower taxes and the country's membership in the EU, which gives security to investors. The geographical location provides access to key markets for companies in the country. Low labor costs also remain among the top benefits, although wages grew at double-digit rates last year.

Source: https://www.capital.bg/politika_i_ikonomika/ikonomika/2023/01/17/4439347_avstriiskite_kompanii_v_bulgariia_ochakvat_po-trudna/