Transport Infrastructure in Romania and Bulgaria

1. Growth of the GDP:

The annual growth of the Bulgarians’ GDP was around +2.1% in 2006 (Source: Eurostat) and the Romanian’s GDP’s growth is +4.1% (Source: Eurostat). The trend is an increase of the GDPs’ growth in this country since 2000 until 2006.

After a devastating crisis in 1997, Bulgarians’ governments did a lot of reforms (trade liberalization, social reform, divestiture of state-owned companies,…) in order to improve the productivity, the foreign and local investors confidence.

Moreover, the minimum wage increased this year from 65 to 90 € in Bulgaria. In Romania, the minimum wage is around 110 €. So, the employees costs increased, but these wages are the lower of the EU. We can differentiate 3 group in Europe for the minimal wage : Bulgaria and Romania are in the lower group, which included Latvia(172 €), Lithuania (173€), Slovakia (217€), Estonia(230€), Hungary(257€), Poland (245€) and Czech Republik (288€) (Source: Eurostat).

So, from a labour costs approach, it’s a good opportunity for our company to invest now in Bulgaria and Romania, because they are just starting their development.

2. Inflation

The average inflation rate for the whole EU is 2% in 2006. ( Source: Eurostat). Exclude 4 countries, all the new member states have an inflation rate above 2%. Among these countries, we found Romania (+0.5%) and Bulgaria (+0.4%) who are of last rank. So we can say that it’s better to invest now, and we will have few years before the development of a high inflation in Romania and Bulgaria on account of the European integration.

3. FDI inflows

The amount of the net FDI inflow in Bulgaria is 2 600 billion $ (US), whereas in Romania this amount grows up until 6 600 billion $ (US) (Source: Worldbank).

Even if there is a gap between the FDI levels in these 2 countries, they have approximately the same trade partners: principal export partners for Bulgarian’s export are Turkey (10.8%), Italy (10.1%), Germany (9.9%) and Greece (8.1%), whereas main export Romanian’s partners are Italy (17.9%), Germany (15.7%), Turkey (7.7%).

Moreover, we can see that import main partners of these countries are similar than for export: Germany (17.4%), Russia (12.5%), Italy (8.8%) and Turkey (6.1%) for Bulgarian’s import.

Then, Germany (15.2%), Italy (14.6%), Russia (7.9%) are important partners of the Romanian’s import.

One quarter of Romanian’s import is the trade of Machinery and transport equipment. The second main assignment of import in Romania is the purchasing of Minerals, fuels and lubricants (14.9%), then we find textile products and chemicals/ plastic. The structure of import is very similar between these 2 countries. As they have the partially same development level, they have similar need, that’s why they buy the same kind of materials which are essential to sustain the economic and business development.

They export the same kind of goods that they import, as we can see they export iron steel and base metal products that means they produce it.

4. Time required to start a business

11 days for Romania

32 days for Bulgaria

5. Transport infrastructure

Railway Network:

Bulgaria owns 4136 km of railroads. It provides a good coverage of the national territory.

Romania owns 10.800 km of railroads

The modernization of Bulgarians’ transport infrastructures is an essential condition to develop business (According to Radio Bulgaria’s website).

The importance of the railway network in Bulgaria is less than for the other transports mode. The rolling stock is obsolete and its maintenance is bad.

However, the state continues to subsidize the company which manage the railway network.

Moreover, they want to support the multiplication of goods trains, because this business insures to them the biggest share of their profits.

According to Radio Bulgaria, the duration of the trip in train between Sofia and the sea is 10 hours, and in car the duration is between 6-7 hours for 400 km.

Since September 2007, BDZ had started to import recycled carriages from Germany, and most populars tracks will be modernized to increase the speed