Automotive Industry  Proximity to existing and new productions facilities of OEM and Tier 1 companies  Traditions and expertise in the industry, two major subsectors – electronics and metal casting  Attractive operational and start-up costs  Availability of inputs at competitive prices  Low risk

Automotiveparts Production Locations Cogged wheels, car seats Engines Car radiators, filters and batteries Driving axles, forgings, cogged wheels Pistons, piston rings Castings, wheel covers Steering mechanisms Wheel covers, non-ferrous metal castings Forgings Generators, starters, auto bulbs Batteries Fasteners, electronics Fasteners Section steel Castings Forgings, chassis Bearings Cast-iron castings Car tyres Batteries, car accessories Cogged wheels, castings Steel, tyres, rubber products, electronicscogged wheels

Credit Rating of Bulgaria Bulgaria has proven higher investment credibility June 2004 Standard&Poor’s gave an investment-grade foreign-currency rating BBВ- (stable outlook) by Standard&Poor’s; BBВ- (stable outlook) by Fitch IBCA; Bа1 (stable outlook) by Moody’s; BBВ- (positive outlook) by the Japan Credit Rating Agency

Tax Reform – Budget 2005  establishing new enterprise  Corporate tax: 15%  Income tax rate: min - 10%; max - 24%  Increasing the amortization norm for new plant and equipment: 50%  Expenditure on research and development of the companies are not subjects to taxation  Tax Preferences:  establishing new enterprise  expanding of an enterprise  increasing the average number of employees

Investment Categories Third category – universal measures (Euro 5 - 25 mln.)  Submission of information, prepared and processed in advance;  Certificate, specifying the investment category and the type of administrative services, provided by the central and local executive authorities;  Minimum deadlines. Second investment category (Euro 25 - 50 mln.)  Individual administrative services;  Individual information services;  Institutional support. First investment category (above Euro 50 mln.)  Universal measures;  Institutional support;  State aid for developing the necessary elements of technical infrastructure.

Requirements to investors  Establishing a new enterprise, expanding or modernizing an existing one  Term of project implementation – up to 3 years  Creating new jobs  Economic efficiency

Investment incentives in Bulgaria  15% corporate income tax in 2005  0% corporate tax in areas with above average unemployment  Depreciation rates – 2 years for computers and related equipment and 3 1/3 years for manufacturing equipment  2-year VAT exemption for imports of equipment, consumables and components related to investment projects valued over € 5 million  0% capital gains tax  The highest bracket for personal income tax is only 29% for monthly income over € 300  The Employment Agency’s Programmes and measures for employment of young people

Innovation Strategy measures for stimulating innovative and research potential Stimuls for research, related to industry and the co-operation among R&D units, universities and business;  Improvement of the innovations funding, evolving mechanisms for attracting private equity/capital;  encouraging implementation of new technologies;  support for the establishment of clusters in sectors, traditional for our country;  support for newly established companies and firms that develop successfully in view of enhancing their innovative potential;  creating mechanisms for attracting foreign investment in the spheres of science and technology.