INTERVIEW: Bulgaria's economic ambition draws it out of financial shadows

By bne IntelliNews July 5, 2007

Nadia Damon in Sofia -

As an investment proposition, Bulgaria continues to juggle the promise of an emerging economy with a reputation for old-style corruption and shady bookkeeping. One man who has worked hard to address these issues is Maxim Behar, who recently relinquished his post as chairman of the Bulgarian Business Leaders Forum (BBLF) after serving a maximum second term.

An enthusiastic businessman and patriot, Behar has worked hard to promote the concept of corporate governance and social responsibility in a country that once viewed these as alien concepts. Phrases such as "business ethics" and "transparency" were lost on the gold-rush entrepreneurs of the late 1990s and Bulgarian businesses have been notoriously slow in adopting an open financial approach.

"Seven years ago it was considered eccentric to be open or to create a business community," says Behar, who is also chief executive of the PR and marketing consultancy M3 Communications, which is an associate firm of Hill & Knowlton. "But nowadays more and more companies realise that it is the only way to do business. When [BBLF] started in this country there was no clear tax system, no social security. People were literally asking me: 'What the hell are business ethics?'"

While it may have made the political leap from Eastern bloc to EU, Bulgaria continues to struggle in putting the theory of transparency into practice. "Bulgaria's biggest challenge is probably the fast and non-resistant adoption of the rules of the EU business game – and I don't mean just adhering to legislation here. The country has to learn to operate within a normal business environment," Behar told bne in an interview.

"We know that a lot of people don't pay taxes or the proper social securities. We also know that a lot of people do not behave as they should in the market. There is corruption, but corruption is everywhere – it's not simply an issue in Bulgaria. Look at the UK, Belgium and Italy, for example. And don't forget, as a new EU member, Bulgaria is a lot more closely monitored."

Follow the leaders

For large international corporations such as Microsoft, Danone and Nokia, who have operated in Bulgaria since the 1990s and always adopted a strict policy of transparency, there has been no uncomfortable regulatory settling-in period.

"All those companies by default are socially responsible – there is no question about that," acknowledges Behar. "But more Bulgarian companies are following their example. Say we had five companies signed up to the BBLF pledge for corporate social responsibility five years ago, that figure is now 5,000."

Since joining the EU on January 1, Bulgaria has adopted international financial reporting standards, and while he admits that the country has yet to be seen baring its teeth to companies working outside of these regulations, Behar insists businesses will eventually have to fall into line to survive in the long term.

How far the Bulgarian government is prepared to push corporate governance beyond rhetoric is still a matter for debate, prompting players like Bozhidar Danev, chairman of the Bulgarian Economic Association, to call on lawmakers to take action. "We need to take all legislative and bureaucratic measures that will minimise the grey economy, which is believed to account for 35% of GDP," Bulgarian National Radio reported Danev as saying.

In spite of the greyness, Behar insists the future is black and white. "Businesses should continue to work and make profits. The rest will come. No one will allow Bulgaria – as a state – not to care about corruption within the business environment."

The shift towards transparency should be aided by the flourishing Bulgarian Stock Exchange, which is seeing a steady rise in the number of IPOs – always a good indication of increasing financial openness. In its first six-month report since joining the EU, the stock exchange, which operates its own corporate governance code, declared that from January 1 to June 21 the exchange's turnover topped BGN2.4bn (€1.2bn), with the capitalisation of the companies traded on it reaching nearly BGN19.3bn. The reported turnover for the whole of 2006, the last period before EU entry, was BGN3.4bn.

According to Behar, there has been intense interest from the emerging middle class in share trading via COBOS software, attracting greater numbers to the trading floor. "The more companies on the stock exchange, the better the business environment will be," he adds.

While extolling the virtues of the 10% corporate tax – the lowest of all the EU members – Behar states that Bulgaria still needs to attract both the medium-sized foreign companies that have plans to expand but are hesitating about where to go, as well as larger investors who want to feel there's a government in place that supports their long-term plans.

Despite the obvious economic challenges it faces, Behar insists Bulgaria will be one of the top countries in the EU within 15 to 20 years. Given the giant steps the country has made in the equivalent timeframe since rejecting communism, few here would question his confidence.

Send comments to The Editor

INTERVIEW: Bulgaria's economic ambition draws it out of financial shadows

Related Articles

Macedonia kept on hold as Balkans edges towards EU goal

Clare Nuttall in Bucharest -   Macedonia’s EU accession progress remains stalled amid the country’s worst political crisis in 14 years, while most countries in the Southeast Europe region have ... more

Austria's Erste rides CEE recovery to swing to profit in Jan-Sep

bne IntelliNews - Erste Group Bank saw the continuing economic recovery across Central and Eastern Europe push its January-September financial results back into net profit of €764.2mn, the ... more

CEE leaders call for Nato troops to help deter Russian aggression

bne IntelliNews -   Central and Eastern European leaders blasted Russian "aggression" on November 4 and called for Nato to boost its presence in the region. The joint statement, issued at an ... more

Register here to continue reading this article and 2 more for free or 12 months full access inc. Magazine and Weekly Newspaper for just $119/year.

If you have already registered, enter the information below with the same email you used previously and you will be granted immediate access.

IntelliNews Pro subscribers click here

Thank you. Please complete your registration by confirming your email address. A confirmation email has been sent to the email address you provided.

Thank you for purchasing a bne IntelliNews subscription. We look forward to serving you as one of our paid subscribers. An email confirmation will be sent to the email address you have provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

If you have any questions please contact us at

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

IntelliNews Pro subscribers click here

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

If you have already registered, enter the information below with the same email you used previously and you will be granted immediate access.

Thank you. Please complete your registration by confirming your email address. The confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.