Sofia - The Largest Economy in the Country

  • 13 юни 2017, 09:27
  • Default profile Автор Kmeta.bg
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Sofia is the largest regional economy in the country. It manufactures 40% of the gross domestic product of Bulgaria, and this share has been increasing steadily in recent years. Sofia provides the highest standard of living for its citizens compared to other parts of the country. The Gross Domestic Product per capita is traditionally the highest in Sofia, since 2008 it is more than 2 times higher than the average for the country and more than 4 times higher than the lowest country values.

Sectors which are developing at a rapid pace include the IT services (mostly software development) and the professional activities. The later include outsourcing of the whole spectrum of business services - advertising, marketing, human resources, accounting, etc. Information and communication technologies and the professional activities sector are developing because of the combination of educated workforce, knowledge of foreign languages and low labor costs.

The manufacturing industry has also increased its share in the local economy after a number of investments were made in the field of pharmaceutics,car parts, cosmetics, optics, etc.

The City Attracts More Than Half

of the Investments in the Country

Sofia also attracts more than half of the investments in the country. By the end of 2015,it has attracted over12 billion euros of foreign investment or over 9,000 euros per capita of the population, which is about three times more than the average for the country. Most of the investments are allocated to the service sector. This is due both to the high incomes, and the consumption in the capital, and also to the fact that the city is a developed transport and logistic center. The other most attractive sectors for foreign investments are the industry and the public utilities, real estate, IT and outsourcing industries.

Sofia is also distinguished by its good absorption of European funds, which is a major source of public investments. By the end of 2015,the city has absorbed 2.8 billion bulgarian leva. The largest beneficiary is Metropoliten Municipal Company, which manages the metro of the capital, with 1 billion bulgarian leva absorbed.

Highly Qualified Personnel at the Labor Market

Sofia is characterized by a relatively young and highly qualified workforce, as well as the best demographic trends in the country. The capital is one of the six districts where the settlers are more than the emigrants. As a result, it not only continues to concentrate an increasing share of the economic activity, but also an increasing number of the country population. The natural population increase in Sofia is the most favorable in the country-1.7 per mil for 2015, and the coefficients of age dependence are also among the best in the country.

The population of Sofia is highly qualified. While the average share of the population with higher education in Bulgaria is 28%, here it is almost twice as high.

The capital is the center of the educational system. As the district with the largest population and the greatest number of children, Sofia city has the most of the various educational institutions at all educational levels operating on its territory. Students perform best at the matriculation exams, traditionally reaching the highest average result and the lowest share of poor grades.

Nearly 70% of the students in the specialized schools study in English, German, Spanish, French and other language schools,and 23 of all 51 accredited higher education institutions in the country are located in Sofia. The number of the students is over 100 000. The three universities (Medical University, University of National and World Economy and Sofia University) having the highest accreditation grade in the country are also located in Sofia. Many of the students coming from other districts stay in the capital after completing their education, which is another factor for the good demographic situation.

Taking into account the concentration of highly educated population at working age, the fact that the employment in Sofia is the highest (71.7% in 2015) and the unemployment - the lowest (3.1%),compared to all other regions, is not a surprise.There has been a significant increase in the number of working places in the IT industry and the professional activities, which is a result of the boom of these sectors over the last few years.

The salaries in Sofia are higher than the average in the country. In recent years, salary growth has been the highest in two of the fastest developing sectors - IT services and professional activities where the salaries have grown respectively by 9,000 bulgarian leva (+53%) and by7,000 bulgarian leva (+61%) for the period of2009-2014.

At the same time, the unemployment is mostly frictional or voluntary. Meaning that it is a result of the natural movement of people from one work to another.

Predictable Tax System

The tax environment in the capital is stable and predictable. The rates of the most local taxes and fees are similar to the average levels of other district cities. Only the waste collection fee and the patent tax for retail trade are different with relatively high rates.

Transport Corridors, Highways, Metro, and Internet Infrastructure

In addition to the educated workforce, Sofia also provides relatively good infrastructure connectivity. The city is the main railway center in the country. It is part of three European transport corridors, and several highways and main roads, connecting the capital with the Black Sea coast and the country borders with Turkey, Greece and Serbia start from here. The largest airport in Bulgaria is also found in Sofia. It has two passenger and two cargo terminals. The total capacity of the cargo terminals is 20,000 tons per year and of the passenger terminals -4.6 million passengers each year. Sofia is the only city in the county with a metro, which is currently used by about 350,000 people daily and continues to expand. Last but not least, Sofia Municipality offers good Internet infrastructure, and the Internet speed is one of the fastest in Europe. More than - of the population at the age of 16-74 years have access to and regularly use the Internet.

Competitive Advantages over Other Cities in the Area

Compared to its main competitive destinations in the area, Sofia has a number of advantages. Firstly, the low and proportional direct taxes - 10% flat tax on corporate profits and personal income. Only in Skopje these rates are at the same level, while in other countries in Southeastern Europe they are higher. Another key advantage is the low costs for rent and utilities - the lowest for the whole area. Salary and labor costs as a whole are comparable to those in other major cities in the area,with the exception of Thessaloniki. The Internet speed and accessibility are another advantage of Sofia Municipality.

Positive development perspectives

The development perspectives of Sofia are positive. The city will continue to concentrate an increasing share of the economic activity of the country due to the positive demographic processes and its leadership in the development of the fastest growing sectors. The highly qualified workforce will continue to attract future investments in the highly growing sectors of the IT industry, business services and some industrial activities with relatively high added value. Proof for their development is the data for increasing investments in these sectors over the last few years. Sofia is very well positioned for the development of some new forms of economic relations, such as the services of digital and shared economy. It is because of the appropriate IT infrastructure - highly qualified people, high average Internet speed and numerous IT companies, and because of the large number of the local population.The concentration of people and businesses in Sofia and the continuing increase of the local population imply a good basis for the development of trade, transport, warehousing,postal services and tourism. The construction industry also has all the preconditions for growth in the next years, although at a moderate rate. The factors for this are the natural expansion of the capital as a result from the incoming flow of people from other parts of the country and the concentration of business activities.

Sofia Municipal Investment and Privatization Agency

In 2015, Sofia Municipality established a department for promotion of investments in Sofia - part of the Sofia Municipal Investment and Privatization Agency.

Sofia Municipal Investment and Privatization Agency (SMIPA) is part of the general administration of Sofia Municipality.

The Agency was established in 1992 as an official institution engaged in the privatization processes of municipal properties in Sofia city.

The mission of the Agency is to support the city development as a modern, progressive, innovative, intelligent and green city, an attractive and preferred place for starting and developing business, development activities, start-up and entrepreneur projects of Bulgarian and foreign entities.

The Agency works for the turning of Sofia into a regional competences center that attracts, retains and inspires professionals, entrepreneurs, and scientists,who help the city to differentiate itself as a destination for highly efficient knowledge-based industries.

The institution provides “one desk” support for foreign and Bulgarian companies, entrepreneurs and start-up companies, which want to initiate or establish their business in Sofia, and also supports local businesses in their progress in foreign markets.

The team provides information, analyses, contacts and guidelines for starting a business in the capital of Bulgaria. The Agency cooperates closely with all structures of Sofia Municipality, and thus supports the entrepreneurs at every step of the implementation of their investment intention.

Sofia Municipality through the Sofia Municipal Investment and Privatization Agency stimulates foreign and local investors through the Class C Investorprogram.

It supports public-private partnerships between the Municipality, foreign and local companies in building socially beneficial infrastructure and improving the quality of life.

The Agency encourages the interaction between the business and the Bulgarian universities, academies, schools and scientific institutes for a better development and planning of human capital.

You can contact the Sofia Municipal Investment and Privatization Agency (SMIPA) at contact@investsofia.com.



 

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