Central and local authorities provide substantial cooperation to Trakia Economic Zone (TEZ), the industrial zone conglomerate near Plovdiv, Plamen Panchev, founder of TEZ and head of Cluster TEZ, has told Novinite.
Mr Panchev is among the nominees in our annual Personality in the News poll where voting will continue until February 20.
He is also a construction entrepreneur who heads the Board of Directors and Sienit Holding AD, an important name on the Bulgarian construction market and one of the key partners in TEZ, the first Bulgarian zone with targeted assistance from the state. TEZ was launched through Sienit's partnership with KCM 2000, Israeli and Italian partners and the cooperation of two clusters and nine municipalities in the area of Plovdiv, Bulgaria's second-largest city. More than EUR 1.1 B have been invested by more than 120 Bulgarian and foreign companies.
Mr Panchev, which were the factors that turned Trakia Economic Zone (TEZ) into a desired investment destination and how did state and municipal-level assistance contribute to the process?
There are several factors. Firstly, TEZ offers land for investment projects with developed infrastructure - road infrastructure, access to electricity, gas, water and sewerage, telecommunications. It also offers to set up facilities within a narrow deadline. A potential investor has the option to buy or rent completed manufacturing, logistics, retail and office spaces.It is precisely in this manner that some companies have implemented their activities in TEZ. Second come the recommendations of those who already invested here, their successful example gives the best publicity.
Thirdly, as you know, nine municipalities joined hands to form TEZ – Plovdiv, Asenovgrad, Kaloyanovo, Kuklen, Maritsa, Parvomay, Rakovski, Rodopi, Stamboliyski, two associations – Cluster Trakia Economic Zones and Information and Communications Technology Cluster (ICTC)-Plovdiv, and Sienit Holding AD (a developer of industrial zones) and KCM 2000 AD, one of the biggest Bulgarian employers. This public-private partnership is unique for Bulgaria and provides a good example of how businesses and municipalities can be successful together. Thanks to symbiosis established, not only a favorable business climate and team work to attract and retain investors was created; together they also solve problems related to vocational education and training of the workforce.
We continue to popularize TEZ and Bulgaria as a good investment destination together with the Ministry of Economy, InvestBulgaria Agency and The Bulgarian Small and Medium Enterprises Promotion Agency and with the help of serious European consultancies. The Regional Development Council has also designated TEZ as the first region of targeted state support. State and local authorities cooperate in dealing with serious problems. For example, at the initiative of the ICTC-Plovdiv, in partnership with the Regional administration of Plovdiv and the Environment Ministry, regulations were changed of conditions and order for the discharge of sewage waters from new facilities, a daily issue for investors up to this point. The regulation made it more difficult to discharge sewage waters, even those of municipal treatment plants. Now that it is changed, everyone finds it easier to work – both businesses and local administration.
More than once over the past years, projects of Chinese companies sealing partnerships with TEZ have been announced. When will one of them be finalized, in your opinion?
We have signed an initial Memorandum and at the moment documents are being prepared to star the EU-China New Economy Cooperation Pilot Zone – Plovdiv project. This will be the European office (“Porter City – European Headquarters“) of the Chinese company China Shenzhen Porter Holdings Co., Ltd.
In November 2016, we signed a trilateral agreement to build the first free-trade zone 16+1 with the executive director of the Association for the Promotion of Agricultural Cooperation between China and CEE Countries, Vasil Gelev, and ACN Worldwide Shanghai on the Chinese side.
Chinese investors don't take decisions hastily when pouring money abroad. To them it is of big importance how China-Bulgaria state relations go. It is good that our country is part of China-CEE's 16+1 initiative. Also, we are the gateway into Europe along the ancient Silk Road which the Chinese government is relaunching through economic mechanisms.
As the profile of investors into TEZ changed over the years?
In 1996, we launched the Maritsa zone, which is part of TEZ, with a cherry processing plant, for the needs of Ferrero Nahrungsund Genussmittel Industri, the German branch of world-renowned Italian company Ferrero. Agri Bulgaria, a local company, still continues delivering Bulgarian cherries for the Mon Cheri chocolates. German concern Liebherr's refrigerator plant followed suit, along with American Socotab's tobacco processing plant and the one of Schneider Electric, the global producer of electric components. As you can see, there have been diverse activities since TEZ was launched. Now, it is taking shape as a center of the automotive parts industry – eight companies are producing components for it. Two of them are world leaders – Magna Powertrain and Sensata Technologies.
The zone is also emerging as a logistics hub. The strategic geographic location, alongside the infrastructure, give investors such as Kaufland, Schenker, Jumbo. PIMK, Bulgaria's biggest international trucking transport company, is also here. More generally, Bulgaria and in particular Plovdiv has emerged as a top outsourcing and IT destination, as the Financial Times wrote back in 2015. In addition, the food processing industry is also developing successfully.
What are your expectations for 2017? Are there already companies declaring intention to invest in TEZ?
We are optimistic. There is good investment interest in Bulgaria and it is especially intense about TEZ. We did our job in 2016 by launching projects that will solve education and labour pool issues. In the first quarter of this year, negotiations which started in 2016 on three projects are to be finalized. Several strong consultants we have been working with to draw investors are optimistic about 2017, and about the foreseeable future in general. Two new consultants we rely much on have also joined our team.
Corruption, as well as the lack of skilled labour pool, are often pointed as drawbacks to doing business in Bulgaria. Do you agree and could you also point out other problems?
Foreigners find it easy to get familiar with Bulgaria's problems because we ourselves point to our weaknesses. Maybe my opinion on corruption isn't that authoritative, so I will quote the German public radio, ARD, which did a special report from TIZ. In an interview, Krasen Krastev, one of the managers of German company Mecalit which is expanding its activity here, says it clearly: “Corruption is not a problem for us! To the contrary: until now no-one has been foolish enough to ask us for a bribe.” The director of Schneider Electric said in an interview for another media outlet in 2015 he thought “Bulgaria as an investment country does not have the image it should because whoever has invested in Bulgaria is very happy.”
As regards training of the labour pool, Cluster TEZ is already working on projects with municipalities and firms to overcome these problems. It is precisely the cluster that initiates a new approach in training cadres. The mayor of Rakovski and the director of Petar Parchevich professional high school backed the Cluster's proposal to train children in the field of electronics for the needs of ABB Bulgaria EEOD – part of the multinational ABB Group, a leader in the field of technologies for production of energy and automated equipment. Last year, a class was launched to train electrical engineers.
Together with Maritsa municipality and UK company William Hughes, a similar option is being created for the school in Kalekovets. The same policy is being applied for the local school in Kuklen with German company Mecalit and the municipality. The Cluster's team has also initiated and is an active participant in discussions and forums linked to the training of cadres, to businesses, education institutions, local and municipal authorities.
On September 29 of last year, we announced the start of the first Educational-Industrial Board with Plovdiv Municipality and Industry Watch Bulgaria. Its goal is to connect employers' plans and dual high schools to meet the increased demand of manpower.
Let's not forget that the Bulgarian model in the business-education link is been working successfully for 12 years in TEZ. In 2005, KCM started a program in a professional high school in Asenovgrad to meet the need of secondary-education staff. Through the program kids are motivated to learn several types of specializations. The school's principal always notes that it was precisely due to KCM that the metallurgy class was saved – the only one in the country.
