Bulgaria – investment climate and business opportunities

1. Bulgaria – investment climate and business opportunities February 2013

2. % Macroeconomic indicators show consistent pre-crisis economic growth and quick post-crisis recovery Real GDP Growth Inflation (HICP) Bulgaria EU-27 Bulgaria EU-27 0.4% 2004 2005 2006 2007 2008 2009 2010 2011 2004 2005 2006 2007 2008 2009 2010 2011 FDI Inflow Unemployment € mln. 9,052 Bulgaria EU-27 9.2% 6,728 6,222 6.9% 6.3% 3,152 2,736 2,437 1,341 1,209 2004 2005 2006 2007 2008 2009 2010 2011 2004 2005 2006 2007 2008 2009 2010 2011 Source: Bulgarian National Bank, Eurostat

3. y FDI in Bulgaria comes mostly from EU countries and is concentrated in four main sectors FDI by host country, 1996-2011 (€ mln.) FDI flows by industry, 1996-2011 (€ mln.) (1) Netherlands 6,018 Real Estate 8,204 (2) Austria 5,809 Finance 7,652 (3) Greece 3,664 Trade 6,522 (4) UK 2,733 Manufacturing 6,479 (5) Germany 2,523 (6) Cyprus 2,257 Construction 2,705 (7) Russia 1,486 Energy 2,699 (8) USA 1,283 Telecom 2,260 (9) Italy 1,279 Other 2,664 (10) Hungary 1,272 Source: Bulgarian National Bank

4. Why invest in Bulgaria? • Political and business stability • EU and NATO member • Currency board • Low budget deficit and government debt • Low cost of doing business • 10% corporate tax rate • Lowest cost of labor within EU • Access to markets • European Union / EFTA • Russia • Turkey / Middle East • Educated and skilled workforce • Government incentives

5. 0 Government financial indicators are remarkable not only in the region, but on a pan-European scale Average government debt (2006-2011) Greece Italy Belgium Portugal Hungary France Germany United Kingdom Malta Austria Iceland Ireland Cyprus Netherlands Finland Poland Spain Sweden Turkey Norway Croatia Slovakia Denmark Lithuania Czech Republic Slovenia Latvia Romania Bulgaria Luxembourg Estonia -11% -10% -6% -5% -4% -3% -2% -1% 0% 1% 15% 16% Average budget deficit/surplus (2006-2011) Source: Eurostat

6. Bulgarian economy maintains its excellent performance despite global challenges Bulgaria is the only country in Europe with a credit rating upgrade by Moody’s in 2010 and 2011 Budget deficit for 2011, % of GDP BG Egypt Aaa Greece United States Japan United Kingdom Estonia Spain A1 Poland France India Baa1 Netherlands Bulgaria Euro Area Spain Italy Hungary Czech Republic Ba1 Denmark Austria Brazil B1 China Iceland Lithuania Turkey Caa1 Latvia Portugal Germany Sweden Greece Switzerland Ca Hungary 01/10 04/10 07/10 10/10 01/11 04/11 07/11 10/11 01/12 04/12 07/12 10/12 Source: Eurostat, Moody’s

7. Bulgaria has one of the lowest business costs in Europe Lowest corporate income tax rate in Central / Eastern Europe Most competitive cost of labor in Central / Eastern Europe Office rents in Bulgaria are among the lowest in Europe Monthly wage, nominal, € / month December 2011 € / sq.m /m, 2012 Bulgaria (*) 10% Sofia Bulgaria 350 Romania 16% Belgrade Romania 363 Hungary 19% Zagreb Serbia 518 Czech Rep 19% Bratislava Hungary 758 Poland 19% Bucharest Slovakia 792 Croatia 20% Budapest Poland 876 Turkey 20% Prague Czech Republic 995 Slovenia 20% Warsaw Croatia 1,048 Slovakia(*) 23% Moscow 100 Slovenia 1,520 *0% tax rate for manufacturing companies in regions with low employment * From January 2013 Source: Eurostat; Bank Austria, CBRE

8. Bulgaria is only 3 hours flight from all major destinations in Europe, Russia and the Mediterranean region Russia and CIS EU and EFTA Turkey and Middle East Strategic geographic location Major transport corridors passing through Bulgaria

9. 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: • Mining • Oil

10. Balneology and SPA

11. Hundreds of historical, cultural and natural landmarks are located all over the country Fortress Tsarevets Veliki Preslav Fortress Kaliakra Baba Vida Fortress Fortress Pliska Magura cave Troyan monastery SOFIA Belogradchik Rocks Etar Nessebar Vitosha mountain Kazanluk's Thracian Tomb Ancient Plovdiv Rila monastery Sozopol Pyramids of Melnik Rupite Perperikon

12. Bulgaria is an attractive destination for treatment, prophylaxis and recreation Excellent geographical, climatic and environmental conditions Bulgaria ranks second in Europe after Iceland in the number the mineral springs, providing all types of mineral water existing in nature. The unique combination of seaside, mountains and mineral water makes Bulgaria a suitable place for health promotion throughout the year Long-standing tradition in balneology and spa tourism Refurbished world-class medical and rehabilitation centres and hotels Highly qualified and experienced healthcare staff Relatively low cost of medical services Well-developed network of private cosmetic surgery and dental clinics

13. Mineral water is among the greatest treasures of Bulgaria Bulgaria has about 600 mineral water deposits with over 1600 springs of varying physic-chemical composition, temperature (10°C - 103°C) and indisputable curative properties

14. Bulgaria has been famous for its climate and mineral springs since Antiquity Empress Helena was a frequent visitor to Odessos (now Varna) Prehistoric village established near Hissarya Spa centers were established such as: Augustra (Hisarya), Dezudava (Sandanski), Pautalia (Kyustendil) and Serdika (Sofia) Ottoman times Thracian & Roman period Byzantine period 5-6 Millenium BC 1-2 century AD 3-7 century AD 1400 AD 1878 AD Roman Emperor Constantine the Great: “Serdica spring is my Rome!” Baths and water fountains built near many mineral springs

15. Bulgaria ranks first in Europe according to the availability and diversity of mineral water and spa resorts Velingrad the SPA capital of the Balkans with 80 mineral springs Hissar a resort with a millennial history, used by the Thracians and in Roman times Sofia about 50 hydrothermal deposits in the vicinity of Sofia Pomorie the most popular and modern mud therapy centre in the country Sandanski the town recognized as the best natural “hospital” in Europe for bronchial asthma

16. SPA resorts in Bulgaria Velingrad 40 km from Sofia, located in one of the most picturesque part of The Rhodope Mountains “Kleptuza” is the largest Karst spring in Bulgaria (1200L ice-cold water / second) Indications for treatment: diseases of the central and the peripheral nervous system orthopedic and traumatic diseases cardio-vascular diseases endocrinal and metabolic diseases gastro-intestinal diseases Sapareva Banya located 75 km southwest of Sofia at the foot of the Rila mountain the only one in Bulgaria and continental Europe geyser-fountain Indications for treatment: diseases of locomotive and nervous system gynecological skin diseases prophylaxis of osteoporosis tooth caries

17. SPA resorts in Bulgaria Sandanski located halfway between Sofia and Thessaloniki, in the foot of the Pirin mountain suitable climate (with the highest average annual temperature, +14.1°C) Over 80 mineral water springs Indications for treatment: diseases of the respiratory system chronic diseases treatment after pneumonia, bronchiectasitis chronic diseases of the joints diseases of peripheral nervous system, neuralgia, neuritis, plexitis rehabilitation after strokes Hissarya situated on the south slopes of Sredna gora mountain, at an altitude of 528 m, 140 km from Sofia. Contains one of the best preserved Roman public baths (thermae) in Europe Indications for treatment: urinary-secretory system alimentary system: chronic gastritis and gastroduodenitis, functional diseases of the stomach, dyspeptic syndrome gallbladder-liver diseases metabolism diseases: хhyperamnesimia, obesity, diabetes, podagra; loco-motory system arthro-rheumatic diseases

18. SPA resorts in Bulgaria Pavel Banya situated on 185 km from Sofia, in the unique Valley of Roses, between Stara planina and Sredna gora nine mineral springs, 7 useful for balneology transitional continental climate, with average annual temperature +10.8ºC Indications for treatment: diseases of the peripheral nervous system degenerative neurological diseases orthopedic diseases: articulations, posttraumatic and degenerative diseases and disease of the joints gynecologicaldiseases Pomorie about 400 km of Sofia and 20 km of Burgas continental climate with Mediterranean influence the lagoon lake, from which extracted the curative firth mud Indications for treatment: diseases of the locomotory system women's and men’s gynecological diseases skin diseases: psoriatic arthritis, neurodermitis, chronic eczemas, skin ulcers diseases of the respiratory system metabolic diseases

19. InvestBulgaria Agency Thank you for your attention and have a nice and enjoyable stay in Bulgaria!