State Agency for Information Technology and Communications ICT Development in Bulgaria – Prospects and Challenges after 1-st January 2007 Dimitar Stanchev

State Agency for Information Technology and Communications

ICT Development in Bulgaria – Prospects and Challenges after

1-st January 2007

Dimitar StanchevDeputy Chairman

New Delhi, 11 January 2007


1. The impact of ICT on Growth and Jobs

2. ICT Sector in Bulgaria

3. Bulgarian ICT Priorities - prospects

and challenges for Bulgaria in EU

Outline of presentation


1. The impact of ICT on Growth and Jobs


Macroeconomic Stability and Growth

4,1%5,4%

4,9%

4,5%

5,6% 5,8%

6,1% 6,5%

2,3%

5,8%7,4%

10,3%

0%

4%

8%

12%

2000 2001 2002 2003 2004 2005

GDP growth Inflation, avg

Sources: National Statistics Institute, Ministry of Finance, Eurostat

GDP Growth & Inflation, avg. (2000 - 2005)


Economic Impact of Structural Reforms

Product, labour and financial market reforms and increased emphasis on knowledge and innovation

Increased competition and higher investment lead to productivity gains through greater efficiency

Higher growth and more jobs


The Role of ICT in Economy

• ICT investments lead to an overall increase in capital and labour efficiency

• ICT stimulate the competitive environment and the opportunities for SMEs

• ICT raise the companies efficiency

• ICT contribute directly as well as indirectly to economic growth

• ICT are economically important because they facilitate the implementation of innovations and organizational changes in enterprises and change competitiveness and market structure

ICT use

ICT investment

ICT production


2. ICT Sector in Bulgaria


Achievements of Bulgaria Bulgaria – one of the best locations for high-tech investments in

Europe in R&D, software development, telecom services

Telecommunications sector – liberalized, modernized,

competitive

IT industry – skilled and competitive

All Bulgarian universities and institutes of the Bulgarian

Academy of Sciences are connected to the Pan-European

Research Network


Bulgarian ICT IndustryGDP (EUR BN)

88 78

200

5434 2127

0

50

100

150

200

250

CZ HU PL RO SK SL BG

ICT Industry as % of GDP

6,6%

8,2%7,2%

8,2%

6,6%

9,9%

5,3%

0%

2%

4%

6%

8%

10%

12%


Size of the ICT market per capita in CEE in 2005

(EUR per capita)

563 639

374196

422

1555

275

740

0

400

800

1200

1600

CZ HU PL RO SK SL BG EU15

Source: European IT Observatory

Size of the ICT market in CEE in 2005 (EUR BN)

5,7 6,3

14,4

4,32,3 2,01,4

0

5

10

15

20



Future Prospects for ICT in Bulgaria

2003-2007 (EUR M)

Source: European IT Observatory

328 340 356 355 355

98 116 136 157

557686 762 805

54

60

6773

80

295

403

449449

499

251

298

373389

431

81

366

0

500

1000

1500

2000

2500

2003 2004 2005 2006e 2007e

Fixed voice Fixed data Mobile CaTV Telco Equipment IT


High-Tech Successful Stories in Bulgaria

SAP Labs in Bulgaria - 100% SAP-owned

• Investor of the Year 2004• 300 young people in Sofia office

Tumbleweed

• US leading provider of secure Internet messaging software in Bulgaria

EPIQ Electronic Assembly, Botevgrad (1997), property of

EPIQ Group, Belgium

• Electronic assembly, module assembly, development and manufacture of plastic injection moulds & factory automation equipment

• 1,000 employees


3. Bulgarian ICT Priorities - prospects and challenges for

Bulgaria in EU


State Agency for IT and Communications

In 2005 the Bulgarian government established a State

Agency for IT and Communications in order to:

Conduct the state management in the fields of IT, communications

and Information Society in Bulgaria

Synchronize and actively participate in ICT development in the public sector

Coordinate Information Society activities

Support the development of networks for national security and defence

Facilitate the establishment of partnerships and encourage the development of business relationships between Bulgarian and foreign companies in the ICT sector

Coordinate the promotion and marketing of the Bulgarian ICT brand


Development of ICT infrastructure for wide Public Access to Electronic

ServicesDevelopment of the National State Network (NSN) for

communications between ministries, regional authorities,

municipalities, etc.:

Building a high-speed fiber-optic ring with an initial

transmission capacity of about 2.5 Gbps and with an option

for further increase to 10 Gbps

Connecting 27 regional centers and the capital within the

fiber-optic ring by the end of 2007

Providing national connectivity and integration of NSN with

the other more or less developed networks of the state

institutions after 2008


Prioritising ICT capacity for ICT skills acquisition

All universities are connected to Internet and 80% of the

students are on-line

The National High-speed Research Network is connected

to the European Research and Educational Network

(GEANT)

The majority of the universities provide wireless Internet

access to their professors and students

All schools are computerised and above 80% of their

students use Internet

PC density in elementary and high schools will be one PC

per 12 pupils by the end of 2007


Critical Success Factors for Attracting Investments in ICT

Government

Private sector

Educational Institutions


Investment Competitiveness

8.3%

6.5%

8.5%

6.0%5.3%

4.8%

3.1%3.4%3.9%

10.1%

Bulgaria Czech Rep Slovakia Hungary Romania

2005E 2006-2007F, avg

FDI, % GDP

Source: Economist Intelligence Unit

• Bulgaria is a leader among CEECs according to FDI as % of GDP

• Greenfield investment topped 2.3 bn Euro (2005)

• Foreign Direct Investment (FDI) for Jan-June 2006 was 1586 m Euro which is 886 m Euro more than for the same period of 2005


Investment Objective

15.7%

18.3% 18.3%19.3%

20.9%

23.8%

25.1%

15%

17%

19%

21%

23%

25%

2000 2001 2002 2003 2004 2005 H1 2006

Investment in Fixed Capital, % GDPObjective – 25% of GDP

Source: Economist Intelligence Unit


Investment Focus

DELOTTE’S STUDY

Main competitive advantages of Bulgaria:

Products for small market niches Products and services with medium and high added

value In the short-term – investment in power engineering,

transport and ICT infrastructure In the medium and long term – greenfield investments,

mergers and acquisitions

Most perspective sectors attracting investment:

ICT, outsourcing, electronics, machine-building and electrotechnical industries


Effective use of the European Structural Funds in 2007-2013

Active participation in the EU Community Programmes and initiatives (7-th Framework Programme, CIP and etc.)

Investment in ICT R&D and wider ICT take-up in the public and private sector

Building up a stable foundation for effective mobility of young researchers in ICT area

Promotion of experts who are able to capitalise on past experience and new knowledge

Strengthening innovation in ICT

Better coordination and cooperation between more developed and less developed EU regions

Key factors for ICT competitiveness - Challenges


Future Prospects for Growth in the ICT Sector

Establishment of a venture capital fund targeted at SMEs

with an ICT profile

Establishment of regional, national and international ultra-

high speed network infrastructure

Improvement of the cooperation between academic

institutions and the private sector

Encouragement of applied research and development

Greater efforts to develop and sustain human resources

Make Bulgaria a centre for ICT entrepreneurial activities in the

region


ICT State Policy Results – Failure is not an Option!

More effective institutions (combat corruption,

modernisation (e-Governance), value for money, etc.)

Higher share of ICT investment within total

investment

Enhanced investments in R&D activities both within

the whole economy and the ICT sector

Successful PPP models

Competitive, export-oriented ICT industry

Well-developed ICT infrastructure

From passive to active labour market


Thank you for your attention!

Documents

State Agency for Information Technology and Communications ICT Development in Bulgaria – Prospects and Challenges after 1-st January 2007 Dimitar Stanchev