MUNICIPALITY OF SHUMEN
INVESTMENT OPPORTUNITIES AND
SUCCESSFUL BUSINESS

 

TEN INVESTMENT ADVANTAGES
OF THE TENTH BULGARIAN TOWN

• Important transportation crossroad
• Access to airports and Danube and Black sea harbours
• Developed infrastructure and communication systems
• Skilled labour market
• Light industry experience
• Optimum conditions for agriculture development
• Available investment locations
• Low cost of land and real property
• Clean environment
• Ambitious local authority – supporting your business

LOCAL AUTHORITY – A GUARANTEE FOR YOUR SUCCESS

Krasimir Kostov
Mayor of Municipality of Shumen

The local authority of Shumen will support and assist you with your investments.

A specialized team of municipal experts are available for fast and effective development of your business.

The local authority can provide:

• Information about the property market and production locations;
• Detailed information and history of existing locations;
• List of requirements for acquiring property, permissions and licenses;
• Information about delivery and construction companies with the capacity to realize your project;
• Recruitment and training of high skilled and motivated labour power;

The Municipality of Shumen is certificated ISO 9001:2000 and ISO 14001:1999 and includes an "Enterprise office"; the main activities include: detailed description of procedures, necessary documents, work time and addresses of most important institutions, also the dates for implementation of related procedures.

Index:

• About Shumen
• Human resources
• Labour market
• Infrastructure
• Economy

ABOUT SHUMEN

Location — The Municipality of Shumen is situated in the central part of Northeastern Bulgaria between the Balkans and the Danube plain. The municipality includes 26 villages.

Area — The entire area of the municipality is 652 km2. Populated territory - 36 027 decare, agriculture - 449 807 decare, workable land - 349 560 decare and woodlands - 114935 decare, roads and railways 15 860 decare.

Climate — Typical soft continental. Medial annual temperatures + 10.70. Mildest month - July /average temperature + 21.80 С/. Coldest month - January /average temperature - 1.20 С/.

Geography — Mountainous, hill and plain-valley.

Soil — carbonate, typical black, and grey mountain.

Rivers — Goliama Kamchia, Pakosha, Mutnishka, Poroina, Kamenica, Stara reka and others.

Roads — 23 km of highway Hemus (Sofia-Varna), international roads Е 70 (1,2) Ruse-Shumen-Varna; Е 772 Shumen–Sofia, as well as public road 1-7 Silistra-Shumen–Jambol.

HUMAN RESOURCES

Age Demographics

Educational Demographics:

Population Density:

LABOUR MARKET

LEVEL OF THE UNEMPLOYMENT IN MUNICIPALITY OF SHUMEN 2004 – 10.00 %

ACTUAL INFORMATION FOR LEVEL AND STRUCTURE OF THE UNEMPLOYMENT IN THE MUNICIPALITY IS AVAILABLE ON THE LABOUR MARKET WEBSITE – www.dbt-shumen.psit35.net

AVERAGE SALARY PER YEAR AND NUMBER OF EMPLOYEES BY SECTORS IN MUNICIPALITY OF SHUMEN

INFRASTRUCTURE

Transportation

The territory of Municipality of Shumen includs 23 km of the Hemus highway /Sofia-Varna/.

The total length of roads between the settlements in the municipality is 226.09 km. 68.4% are asphalt-paved roads (154.62 km). Of the 220 km road network with lasting pavement 90% is asphalt covered and 10% is paved.

Republican road network as per of the road in Shumen

Shumen is also on the north railway Sofia-Varna line and connects with Shumen-Komunari-South Bulgaria. The total length of the railways on the territory of the municipality is 30.16 km. with electricity - double railways are 12.31 km.

90 km from Shumen is the Varna Airport and 20 km from Shumen is the civil airport – Targovishte.

In November 2004, the Municipal council of Shumen approved a program for the rehabilitation of the road network in Shumen. The program coincides with existing guaranteed dates for basic repair and rehabilitation of the streets.

The main aims and targets of the approved program are:

• The creation of a road network with street pavement and pedestrian pavement conforming to European standards;
• Decrease future expenses for support of the street network;
• Increase the safety of automobile traffic, increase of the safety of movement of the pedestrians and creation of more comfortable, aesthetically pleasing conditions in the town;
• Attraction of tourists and investors with European modeled street infrastructure;

The Program for rehabilitation of the street network of Shumen (total cost: 5233 900 lv) includes the following project-programs for 2005 year:

• Basic repair and rehabilitations of all road ways to Shumen — 161 000 m2 (2 602 000 lv);
• Basic repair and rehabilitation of the street network in Shumen — 49 500 m2 (1 671 900 lv);
• Construction of new streets in Shumen (960 000 lv);

During 2005-2006 there will be reconstruction of part of the town water-supply and sewerage network by program ISPA. 47.05% of all street network will be reconstructed/rehabilitated.

Water Supply

Shumen’s water is supplied from an artificial lake "Ticha" and Marash system. The municipality does not contain any natural lakes; though there are 12 micro artificial lakes for irrigation and fishing – with 9 in good condition, 2 in sufficient condition and 1 out of order.

All settlements of the Municipality of Shumen have water service. The drinking water used for one year is between 11.5 – 12.3 million. m3. The useful drinking water is approximately 6.0 million. m3. 50% for use by the population, with the next largest consumers being the industry and services sector.

The internal network is build mainly from steel pipes; there are also cast iron, zinc and plastic pipes. The current water-supply system is outdated and the Municipality of Shumen is renovating it with resources of the World Bank.

The drainage system of Shumen is connected to the bed of the Poroina River. During 2002, the town complete the first stage of building the mechanic stage of the town’s cleaning station. Following that will be the building of the second biological stage. The cost of the project is 12 914 000 EUR, and funded by the program ISPA of the European Union.

Cost of the water in Municipality of Shumen

The sewerage system of town Shumen is connected with the bed of the Poroina river. During 2002 we finished the first stage – the construction of a mechanic stage of the Town’s water cleaning station.

During 2005-2008, by agreement ISPA grant by project "Improvement of the water cycle of town Shumen," we will be building:

• Reconstruction of part of the sewerage network in Shumen and construction of main water-conduits for sewerage waters from Divdiadivo quarter to Town’s cleaning station – 7 800 000 EUR;
• Build of second stage to Town’s cleaning station for waste-water for biological cleaning – 9 445 000 EUR;
• Reconstruction of highway water-conduit from the "Ticha" artificial lake tо Targovishte and reconstruction of 60 km from inside water-supply network of town Shumen – 11 160 000 EUR;
• Reconstruction of the main equipment and pump stations of the water-supply network of Shumen – 1 000 000 EUR;

The main aim of the project financed of ISPA is to protect the Poroina and Kamchia rivers (and the Black sea) of household and industrial waste water, and to diminish the influence over the environment and the risks for the health of citizens in this regions and areas near the Black sea.

The realization of the project will help Shumen comply with:

• The requirements for the standards of drinking water (Agreement for Drinking water of EC 98/83/EU);
• Implementation of Agreement 2000/60/EU with presentation of effeciant usage of water, through improved management of the water supply and quantities;
• Conformation with Agreement for the town’s waste waters 91/271/ЕЕС за заустване с нечувствителни води;
• Diminish of the health risks in town Shumen; Build of effective infrastructure for the environment;

Electricity Supply

The electrical system in the Municipality of Shumen is well developed. 41% of consumed energy is for production needs, 47% - for home use, 10% - for community sector and 2% for street lighting. Currently there is a project for the energy effective reconstruction of the street lighting in Shumen. The goals of the project are to improve the quality of the street lighting, increase energy efficiency, decrease the direct expenses, decrease harmful emissions and ensure of the return of the invested capitals.

Cost of electricity for economic and social activities

During 2002-2003, the Municipality of Shumen financed - with own funds - "Energy-effective reconstruction of the street lightening in town Shumen" (684 000 lv). Renovation of the lightening instruments with energy-saving lamps and double tariff of the electrical energy will decrease the expenses about 40%.

During 2004 the "Municipal program for energy efficiency" program was prepared. This program was approved by a session of the Municipal council – Shumen. Its main priorities are:

• Effective energy rehabilitation in the settlements of the Shumen Municipality during 2004 (611 000 lv.);
• Heating all municipal locations with natural gas in order to decrease the heating expenses by 35%;

Heat Supply

Shumen has a central heat system which uses natural gas and has 477 stations. As of the end of the heating season in 2003-2004 "Toplofikacia" – Shumen has 9 335 subscribers. Included in this number are 8 950 household and 385 industrial and social subscribers. The length of the supply network in the municipality is 100 km.

Cost of the heat energy in Shumen

Gas Supply

With license № Л-132-08/26.02.2004, "Black sea technology company" was chosen for the distribution of natural gas in the region of "Dobrudja" for the next 35 years.

In accordance with the conditions of the license, the company must build a 191,320 km gas-distributed network in the town Shumen over the period of 10 years, with investments totling 26 million lv.

100% of the gas-supply of industrial and commercial sector and 80% on life sector in Municipality of Shumen is supplied. During 2004 year started the building of highway gas-conductor. On the first stage the gas-conductor will envelop 10 administrative and 200 on life subscribers. The gas-supply system will complete after 10 years. The social and industrial sector will be completed to 2007 year.

The energy expenses and heating expenses will decrease round 35-40% with building of highway gas-supplying system. This will increase the returns of investments in the economic sector.

Communications

The most recent information shows that the phone density of the main phone lines in Municipality of Shumen is 35.26 numbers per 100 citizens. Number of active phone lines in the municipality is 36 159; with 30 590 private phones and 5569 office phones. All areas of the municipality have automatic phone connection with the municipal centre. 15.90% phone lines are with pulse dialling. Number of the alternative phone lines is 30 408 and dial lines 5 751.

Tax List

Phone line setup	– 70 leva
Cost of the tax for official subscribers	– 0.09 leva

Subscription taxes for official subscribers (leva)

Capacity of the settlement phone network	Direct   telephones	Subscriber   connected  lines
To 10 000 lines	13.50	18.00
Over 10 000 lines	16.50	20.50

* Costs without VAT

Six companies offer Internet connection in Municipality of Shumen - BTC, I-service, ICON, Variant 6, Globo, Ro&Ni.

ECONOMY

Macroeconomy

Bulgarian economy develops in conditions of macroeconomical stability. During of last six years the country realize economic increase. During the period from 2000 year to present permanent increase over level of 4%. The real development of GDP during 2003 year increase to 4.3%. Municipality of Shumen produce 1.5% of GDP of Bulgaria for 2002 year (597 038 leva) - 13,27% of GDP for Northeastern region. By size of the produced GDP Municipality of Shumen take 38th place among 262 Bulgarian municipalities.

Gross domestic product per person

Year	GDP per person  (leva)
2000	2412
2001	2758
2002	2946
2003	3447

In recent years, the municipal economy has intensified the processes of transforming government and the municipal property to private property. As a result of this, the largest portion of production and employees are in the private sector. The government sector completely privatized the main parts of the trade associations with the exception of the infrastructure sectors. From the trade associations, the municipal property was sold during 2000 and 2001 year, completing the privatization. In these years, 80% of economic activities were created by private firms. This is in contrast to 1999 when the municipal trade associations in the real sector make 1.26 % of the incomes from economic activities general for the municipality.

Newly created employment in the other economic sectors can not to cover the exist unemployment. The existing of big private companies and the fact, that almost all public companies in present are private take positive influence over the economic development of the municipality.

Foreign investment as the main capital of the partnership associations amounts to 695,800 USD, as additional capital – 339,100 USD. The Turkish company "Phaph metal" owns a majority of "Alkomet". Currently, the company invests 10 million lv. The Denmark Company Carlsberg Breweries A/S is the main holder of "Shumen beer" and invests 4 million EUR. The American corporation "Mebel" and the American firm "JENEX-3" are proprietors of "Mebel Jen". The municipality also includes investments from Shell – Bulgaria and OMV. During 2001, Shumen added a hypermarket from Austrian company "BILLA". During 2002, the company TECHNOMARKET built a store. In near future, another hypermarket will be built by the German company "HIT".

During 2003, the incomes of sold of the municipal properties and laws over this property amount over 1,300,000 lv. Included in this number:

• From sold municipal regulated and unregulated real estate, houses and other – about 345,000 lv.;
• From sold municipal objects by Law for the privatization and after privatization control – about 400,000 lv.;
• From sold permission of building and reconstruction over 580,000 lv.;

By competition was implemented two transactions, with acceptable costs of sold of the municipal property. The main condition for new investment is the guarantee of employment.

• "KAUFLAND BULGARIA" will build a Trade center-hypermarket in sector 345 with a cost of 20 USD/m2.– general 305,000 USD. The second payment - 91,000 USD was deposited during April 2004; with a minimum of eighty working places; minimum investment 10,000,000 (ten million) lv.
• "Brothers commerce" will build production facilities for the food-taste industry the town of Shumen with an area of 25,000 decars, cost – 25,000 lv.; minimum working places - 80 (eighty); minimum amount of investment 5,000,000 (five million) lv.

The priorities are fair conditions for investments and providing working places. The competition to build a facility for the production of biological products in area of terrain №076009, with area 100.001 decars, was won by "HRANCOMPLEKT", cost – 75 000 lv; minimum work places – 150; minimum investment 15 000 000 USD.

Gross Value Added Tax (VAT)
by economic sectors
for 2001 year

Sector	VAT [thousand leva]
Agrarian	124,622
Industry	104,999
Services	269,390
Total	499,011

Inflation in Bulgaria for 2003 year is 5.6%, and for three months of 2005 year - 1.9%.

Average salary
in Municipality of Shumen

Sectors	2000 year	2001 year	2002 year
Social sector	274	297	347
Private sector	199	184	221

Foreign direct investments
in Shumen region (Million USD)

Year	Foreign direct investments  Shumen	Foreign direct investments  Bulgaria
2000	17.948	1 001.5
2001	17.416	812.9
2002	29.646	904.7
2003	29.645	1 419.4

Duty and Tax

State Taxes

Tax	Tax Subject	Tax Base	Tax %	Distribution of the incomes
				Local	National
Value added tax (VAT)	Registered people by Act for VAT with value over with 50000 lv.	Added tax	20%	100%
Personal incomes tax	Employees by work/official attitude and people with disengaged professions	Received recompenses and incomes	От 15% до 29% по скала на дохода		100%
Benefit tax	Enterprises – finance, non finance, budget	Transform finance result	19.50%	100%
Expenses tax (representative, social, for automobiles, for donations)	Enterprises – finance, non finance, budget	Size of expenses	20%	100%

*RB – Republican budget; LB – Local budget

Local Taxes

Type	Tax Subject	Tax Base	%	Distribution
				SB	LB
Private property tax	Possessor of private property	Tax value	Fixed sum per tax value		100%
Transport taxes	Possessor of automobile	Tax (insurance) value	Fixed sum per type		100%
Hard trashes tax	All citizens	Tax valuation of private property	2.8/1000		100%
	Companies	Tax valuation of private property	8/1000		100%
License and administrative services tax	For services and licenses for companies		Fixed value with Municipal council agreement		100%

The following local taxes are applied in the Municipality of Shumen:

1. Waste removal;
2. Use of markets, fairs, borders, squares, streets;
3. Use of children’s places, hostels and other social services;
4. Production of stone materials;
5. Technical services;
6. Administrative services;
7. Tourist tax;
8. Other local tax, by law.

Economic Structure - Municipality of Shumen
(non finance sector) for 2002 year

2003	Sectors	Incomes of activities (%)	Employees (%)	Material long-term funds (%)
	Total	100.00	100.00	100.00
А	Rural, hunting and forest economy	6.420	6.66	7.597
D	Process industry	37.768	38.79	59.964
Е	Production and electricity and heat-energy distribution	2.235	2.25	5.973
F	Building	6.306	9.43	6.180
G	Trade, repair and technical services for automobiles and bike and, private properties	35.870	19.89	8.514
H	Hotels and restaurants	1.498	3.65	1.698
I	Transport, warehouse and massages	5.749	8.00	6.682
K	Private property operations, rent activities and business services	1.779	3.91	1.528
M	Education	0.060	0.27	0.003
N	Health services and social activities	1.872	5.65	1.430
O	Other social and personal activities	0.440	1.48	0.429

Enterprises (without financial organizations) by final finance result in Municipality of Shumen

(Number)

Year  Total  With profit   With loss    Without Income  2001 3 765 2 517 509 739 2002 3 673 2 442 547 684 2003 3 863 2 502 274 1087

Industrial Sector

The industrial sector is the most developed economic sector in the municipality, concentrated mostly in the city of Shumen. Main sector is the food industry with production round 40% of the industry production in municipality. The main branches are: machine-building, colour metallurgy, chemical and cosmetic industry, milk processing, meat processing, canned foods, beer industry, wine production, tobacco processing, glass, porcelain, wood processing and tailor industry.

Relatively participation of the reported firms in Shumen region by type of property

Sectors	Number firms (%)			Net incomes of selling (%)			Employed (%)
	2000	2001	2002	2000	2001	2002	2000	2001	2002
Total	100.00	100.00	100.00	100.00	100.00	100.00	100.00	100.00	100.00
Social Sector	0.96	0.73	0.79	6,28	4,90	6,24	13.70	10,95	10,66
Private Sector	99.04	99.27	99.21	93.72	95.10	93.76	86.30	89.05	89.34

The participation of the private sector in the municipal economy fix the dimension of the local initiatives for development of the economic activity and draw in local and foreign investments. As per number of the employees in Municipality of Shumen most are in micro and small enterprises (10 to 50 employees).

Agrarian Sector

The Municipality of Shumen has suitable natural resources for the development of agriculture – fertile land and favorable climate. The main crops are wheat, barley, corn, sun flowers and forage cultures. There are also well developed vine-growing, fruit-growing and stock-breeding. The agricultural land of the municipality is 455629 decares - included in this number is 390316 decares of workable area (85%). The municipality also has one of Bulgaria’s science institutes, which works on solutions for breeding pigs, horses, bulls and beetroot.

Workable land and production
of agriculture producers in Municipality of Shumen
for 2001 year

Culture	Hectares	Production (t/h)
Wheat	9 391.5	3.0
Sunflower	3 779.3	1.1
Barley	2 693.5	3.4
Corn	2 191.7	1.6
Wineyards (wine sort)	255.0	2.5
Wineyards (table sort)	52.0	2.7
Apples	45.6	6.5
Peaches	41.1	6.3
Apricots	40.4	5.1
Cherry	17.0	2.0
Potatoes	14.5	8.7
Tomatoes	11.5	3.6

Companies

Health Services

All health institutions in the Municipality of Shumen meet the requirements and standards of health laws and medical practice.

Currently, the following institutions are functioning:

• Hospital for active medication;
• Public psychical resort;
• Health-resorts — 3 number;
• Diagnostic-consultative center;
• Medical centers — 8 number;
• Medical-diagnostic lab — 8 number;
• Medical-technic lab — 14 number;
• Personal doctors — 62 persons with individual practice and 5 groups.

With its own funds, the Municipality of Shumen invests in the improvement of the health cares for the citizens of the municipality

Financial Institutions

There are 20 different bank branches in Municipality of Shumen and 10 insurance companies.The most are property of European finance and insurance institutions.The stability of the Bulgarian finance and bank system during the last years guarantee good support for all kinds of business.

Bank branches in Shumen:

TB "Alianz Bulgaria", HVB Bank, "Bulbank", "Bulgarian post bank", "Bank DSK" OTP, "Eurobank", "Investbank", "Neftinvest bank", "United Bulgarian bank", "Municipal bank", "Pro Credit bank", "First investment bank", "Raiphaizen bank", "Roseksim bank", "Economic and investment bank", "S.G.Expessbank", Bank "Hebros", "Central cooperative bank", "Unibank", "Union bank".

Real Property

Average rents and costs
of parcels, offices and temement property
in Shumen (€/m²)

Free municipal locations

The Municipality of Shumen is planning to build Park for high technology productions in the surrounding area in town Shumen. To create the optimum conditions for attracting investments, the municipality will work with the investors in developing the engineering structure. The terrain includes three municipal properties:

• Property № 075001 (area: 153.476 m2);
• Property № 076008 (area: 183.278 m2);
• Property № 053005 (area: 364.390 m2).

There are already parcels of 100 dka available, situated in the same region, for building of factory for production of bio-products.

• Description: The parcels are situated northeast of Shumen, near the main highway (Sofia-Ruse-Varna). Next to the land will be the future connection to Highway "Hemus". Also nearby is the international road for Burgas–Malko Turnovo–Istanbul. The characteristic of the terrains are: favorable and attractive location and transport approach in all directions. To the south of the parcels is the railway Sofia–Gorna Oriahovica–Varna (Komunari). The properties are situated away from populated territory — 2 km from the housing territory.
• Infrastructure: The terrain is situated 1.5 km. by project part from Highway "Hemus".
• The distance to the airports: 85 km to "Varna" airport and approximately 30 km. to "Targovishte" airport.
• The distance to ports: 90 km to the "Varna" Black Sea port and 120 km to the "Ruse" Danube river port
• Opportunities for inclusion in existing water-supply networks and delivery of electric energy. Depending on the project, it is possible to build a connection /approximately 500 m/ near a water source, which supplies part of Shumen. Energy needs over 1 500 кVV must include the construction of an electric station, connected to the "Shumen" secondary station.
• Opportunities for gas-supply –the highway gas-supply system is near the land. The gas distribution station is about 700 m away.
• Function: Currently, the properties are agricultural. Permit changes are covered by the act for territory permit change for the purpose of building after completing the necessary documents and abiding to the requirements for transport access and insurance of main resources — water, electricity. Projects for production functions are acceptable if they are without damages for environment.
• Requirements for building: Projects must have building in the area of 40% to 80% from entire area. The exact location of the buildings in dependence of their purpose conforms with ecological, hygienic and fire requirements.