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Greek entrepreneurs find safehaven in Bulgaria

28 june 2012, 19:14
0
Yannis Zois in his cafe. ©AFP
Yannis Zois in his cafe. ©AFP
"We're opening a new place and I'm a bit short on time," Yannis Zois, a 46-year-old Greek from Corfu, quips as he gets off his bike outside his buzzing cafe on Sofia's busiest downtown shopping street, AFP reports.

Zois opened his first espresso shop here three years ago and is now adding finishing touches to his third cafe in the Bulgarian capital.

"There was a hole to be filled here, so I chose to come here instead of going to Athens. For this kind of business over there, it's like a jungle, everybody is ready to eat each other," he said.

Growing financial uncertainty and soaring taxes chased hundreds of small Greek entrepreneurs to neighbouring Bulgaria, where their investments were safer, after recession and debt worries began five years ago.

Zois, an electronic engineer who spent 15 years in the coffee and tea distribution business in Greece, Italy and Germany, left his brothers in Corfu so he could focus more on his businesses in Bulgaria.

"If it hadn't been for the crisis, I might have thought of going back but I'm not thinking about it yet," he said, adding that investing in Bulgaria was "safer for now."

"Nothing is safe in Europe," he added quickly.

"But it seems more risky to invest in Greece now."

According to Bulgaria's national revenue agency, 3,781 companies with 100-percent Greek capital filed taxes here in 2011, up from 2,199 in 2010 and just several hundred before the crisis.

Many Greeks also now deposit money in Bulgarian banks, which they did not do before.

"The increased interest is due mostly to the lower tax and social security burden here and the stability of the economy over the past few years," the agency said in a statement sent to AFP.

Bulgaria has one of the lowest tax rates in the European Union: a flat 10 percent on all corporate profits and incomes.

Registering a new company also costs one euro ($1.27) and is relatively quick, and labour is cheaper than in Greece.

"Companies want to move as they have no security whatsoever in Greece," Christos Mouroutis, a Greek businessman and analyst who has been doing business here for the past 13 years, told AFP.

His company currently manages 250 million euros in assets in the real estate and clean energy sectors and he gets almost daily calls from firms that are considering moving to Bulgaria.

"Some just register here as an accounting trick, others -- mainly in the online services sector -- move their whole operations," he said.

"It's hard to do business in Greece right now," Kosta Kolovos, a Bulgarian of Greek origin whose accountancy firm has worked with Greeks for many years, agreed.

"Bureaucracy is very serious and tax rates change every one or two years, while in Bulgaria it's a standard 10-percent rate and that has remained unchanged for years now. That's why they run away here," he told AFP.

Bulgaria was not ideal either, however, said Zois, who employs about 50 people in his three cafes.

There was also a lot of bureaucracy and finding motivated people to do a good job as a waiter or bartender was difficult, he said.

Greece has traditionally been one of Bulgaria's top five trading partners -- annual exports to Greece returned to pre-crisis levels of 1.5 billion euros in 2010 and 2011 after a significant drop in 2009 -- and a fourth of Bulgaria's banking sector is controlled by Greek-owned banks.

About one million Greek tourists also visit the country every year, so Sofia has welcomed the influx of companies and tax revenues, while keeping an eye on developments across the border.

However, analysts have warned that foreign investors see the region as a whole and will not risk investing in Bulgaria if the worst-case scenario develops in Greece.

"The benefits we could draw are a drop in the ocean of trouble (that would emerge) from a defaulted Greece," former Bulgarian economy minister Traicho Traikov, now a think-tank chief, noted recently.

A June 16 Gallup poll also showed that one in two Bulgarians feared a spillover from the Greek crisis.

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