1. Bulgaria – investment climate and business opportunities

2. Bulgaria – geographic location EU and EFTA Russia and CIS Turkey and Middle East  Strategic geographic location in South-East Europe  Offers direct access to markets like: EU, Russia, Turkey and The Middle East  5 Pan-European transport corridors pass through Bulgaria

3. Why invest in Bulgaria?  Political and business stability −EU member −Currency board −Low budget deficit and government debt  Low cost of doing business −10% corporate tax rate (0% in high unemployment areas) −10% personal income tax −Lowest cost of labor within EU −Favorable office rents and low cost of utilities  Access to markets −European Union / EFTA −Russia −Turkey / Middle East  Educated and skilled workforce  Government incentives

4. Macroeconomic indicators Real GDP GrowthInflation (HICP) Unemployment FDI Inflow Source: Bulgarian National Bank, Eurostat, NSI 2014*201320122011 2% 2010200920082007 2014*2013 0.4% 201220112010200920082007 20142013201220112010 10.3% 20092008 5.6% 2007 EU-28BulgarianEU-28Bulgarian 2014* 1,275 2013 1,141 2012 1,330 2011 1,151 2010 2,437 2009 6,728 2008 9,052 2007 1,181 € mln. EU-28Bulgarian *December *Preliminary data

5. FDI in Bulgaria comes mostly from EU countries and is concentrated in four main sectors Source: Bulgarian National Bank FDI by host country, 1996-2014 (€ mln.)FDI flows by industry, 1996-2014 (€ mln.) 4396.6 Telecom2062.5 Construction2995.4 Energy3897.23897.2 Trade6875.5 Manufacturing7584.7 Finance7686.37686.3 Real Estate7923.5 Other (10) Italy1410.3 (9) USA1468.2 (8) Switzerland1555.2 (7) Russia2019.7 (6) Cyprus2107.4 (5) Germany2497.8 (4) UK2549.0 (3) Greece3504.5 (2) Austria 5941.9 (1) Netherlands7147.6

6. Government financial indicators Source: Eurostat Greece Ireland Estonia Germany Denmark Czech Republic Bulgaria Belgium Average budget deficit/surplus (2008-2013) Poland -6%-5%-4%-3%-2%-13%-12%-11%-1% Latvia Cyprus Italy Romania Hungary Malta Netherlands Austria Portugal Lithuania Luxembourg Spain France Iceland United Kingdom Sweden -7% Finland Slovakia Slovenia 15%1%0% Turkey Croatia Norway Average government debt (2008-2013)

7. Bulgaria’s credit rating 2014 *The TE credit rating is driven by a model created at Trading Economics. Source: Trading Economics Rating Country credit ratings comparison 2014 Country S&P RatingMoody's ratingFitch Rating TE Rating* Czech RepublicAA-StableA1StableA+Stable80Stable PolandA-StableA2StableA-Stable69Stable ItalyBBB-StableBaa2StableBBB+Stable60Negative BulgariaBB+StableBaa2StableBBB-Stable53Stable SpainBBBStableBaa2PositiveBBB+Stable60Negative CroatiaBBStableBa1NegativeBBStable48.85Stable MacedoniaBB-Stable BB+Stable45Stable RomaniaBBB-StableBaa3StableBBB-Stable51Stable TurkeyBB+StableBaa3PositiveBBB-Stable45Negative HungaryBBStableBa1NegativeBB+Stable45Stable SerbiaBB-Negative B+Stable36Negative UkraineCCC-NegativeCaa3NegativeCCCStable16Stable

8. The lowest taxes in EU Country comparison Country Income Tax (%)Social Security (%) VAT (%) CorporateIndividualEmployerEmployee Bulgaria(*)10 17,9-18,512,920 Serbia1510-2016,9 20 Romania16 28,4516,524 Hungary10/191628,518,527 Czech Rep.1922341121 Poland1918/3222,1413,723 Turkey2015-35271518 Slovakia2319-2534,813,420 UK230-4513.81220 Italy27,523-43301021 Spain3024,75-5229,96,3521 Germany 30-33 (effective) 14-4519,720,619 France33,335,5-41502019,60 Source: Worldwide-tax

9. Bulgaria has one of the lowest business costs in Europe Gas prices for industrial users in Europe Source: Eurostat Hungary Romania Turkey Germany Estonia Bulgaria Czech Rep EU average Slovakia €/kWh, 2014€/Gigajoule, 2014 Electricity prices for industrial users in Europe EU average Austria Poland Bulgaria Czech Republic Italy Germany France Spain

10. Salaries in Bulgaria Source: IBA Analysis, National Statistics Institute Average salary by position, EUR per month Labour cost / Salary % of the Gross Salary Top Management Management R&D Engineers TechniciansSkilled labor Unskilled labor In EUR, per month LowHighLowHighLowHighLowHighLowHighLowHigh Net Salary Employee 77,1%9241925576770539693347462285385216270 Gross Salary Employee 100%120025007501000700900450600370500280350 Total Cost for Company 117,9%1415294888411798251061531707436590330413 Average gross salary by region, EUR per month Statistical regionNorth-WestNorth CentralNorth-EastSouth-EastSouth-WestSouth Central September 2014347350383378501356

11. Physical and chemical sciences Manufacturing and processing Agriculture, forestry and aquacultures Computing Mathematics and statistics Architecture and building Personal services Law Humanities Teacher training and education science Health Social and behavioural science Engineering and engineering trades Business and administration 67113 TOTAL: 277 239 (‘Bachelor’, ‘Master’, ‘Doctor’) Students in Bulgaria by narrow field of education in universities and colleges in 2013/14 academic year Source: National Statistics Institute A big number of students study in universities in Europe and USA

12. Bulgaria has highly-qualified, well-motivated, flexible and multilingual labour force  53 Universities, colleges and higher schools  494 Vocational gymnasiums and colleges  80000 Bulgarian students in foreign countries  24,6% Population hold university degree  7% Workforce has engineering degrees  45,5% Population speak at least one foreign language  85% Students studied English Total number of higher schools*53 Universities and equivalent higher schools45 Colleges29 Independent colleges8 Colleges, at the universities and equivalent higher schools 21 *Incl. universities and equivalent higher schools and independent colleges Sofia63 Plovdiv12 Varna12 Burgas Veliko Tarnovo Blagoevgrad Number of universities in some of the biggest cities Business field Technical sciencesOther Source: National Statistics Institute

13. The government supports specific industries under the Investment Promotion Act (IPA)  Investments must be related to the following sectors: −Manufacturing −Research & development −Education −Healthcare −High-tech services −Warehousing and logistics  Minimum investment amounts must exceed €2.5m −€1m in regions with high unemployment and €0.5m for investment projects in high-tech services  Benefits for certified investors include: −Shortened administrative procedures −Preferential acquisition of state or municipal land −Financial support for professional training / education −Infrastructure subsidies −Labor cost subsidies −Individual administrative services

14. Biggest investors are supported through a priority investment scheme  Priority projects can be related to all sectors of the economy, which do not contradict regulation 800/2008 of the European Commission −Subsidies not allowed in mining, primary agriculture production, and shipbuilding  Priority projects should exceed €50m and create at least 200 new working places for a 3-year period −€25m + 100 working places for certain manufacturing projects −€10m + 50 working places for high-tech services and R&D  Priority projects receive all benefits for certified investors, as well as the following: −Lowest possible costs for the acquisition of government and municipal land + waived taxes for land status changes −Working group for project support is assigned by the Council of Ministers −Financial grant scheme for up to 10% of the investment project cost (50% for R&D)

15. Attractive FDI sectors  Services: −Transport and Logistics −Information technologies −Outsourcing of business processes −Health and tourism related to healthy lifestyle  Industry: −Transport equipment and machine building −Electronics and Electrical engineering −Chemical industry −Food and Agriculture  Resources: −Mineral water −Tourism −Balneology −Alternative energy

16. Page 16 Varna Sofia Stara Zagora Plovdiv Italian companies have chosen Bulgaria Ruse

17. Page 17 Italian FDI in Bulgaria, mln. euro

18. Page 18 Export and import with Italy, mln. euro Export Import

19. Leading global investors have chosen Bulgaria IT developmentBack office operations Chemical and metal Industry EngineeringFood

20. Invest Bulgaria Agency IBA services:  Macroeconomic data on Bulgaria  Legal advice  Data on operational costs  Regional information: industrial zones and infrastructure, data on unemployment, skilled labour force and level of education  Recommendation of investment project sites  Identification of potential suppliers, contract manufacturers and joint-venture partners  Personalized administrative servicing  Liaison with central and local governments  Liaison with branch chambers and NGOs InvestBulgaria Agency is a Government investment promotion arm, part of the Ministry of Economy and Energy

21. InvestBulgaria Agency Sofia 1000, 31 Aksakov Str. Phone: (+359 2) 985 5500 Fax: (+359 2) 980 1320 E-mail: iba@investbg.government.bg Web: www.investbg.government.bg