BST Atlas Full

Common borders. Common solutions.
TRADENET COMMERCIAL ATLAS

Common borders. Common solutions.

ROMANIA BULGARIA GREECE ARMENIA - TURKEY


CONTENT

CONTEXT 3

ROMANIA 5
- COUNTRY PROFILE 7
- INSTITUTIONAL FRAMEWORK 15
- LEGAL FRAMEWORK FOR DOING BUSINESS 19
- INVESTING IN ROMANIA 27
- IMPORT AND EXPORT ACTIVITIES 35
- SOURCES OF FINANCING BUSINESS ACTIVITIES 43
- ENTREPRENEURIAL CULTURE 45
- LOCAL RESOURCES FOR CROSS BORDER BUSINESS COOPERATION 47

BULGARIA 51
- COUNTRY PROFILE 53
- INVESTING IN BULGARIA 69

GREECE 95
- INVESTING IN GREECE 117

ARMENIA 145
- INVESTING IN ARMENIA 165

TURKEY 191
- INVESTING IN TURKEY 215



CONTEXT

Tradenet Commercial Atlas is a guideline for business relations between companies located
in the Black Sea basin, in Romania, Bulgaria, Greece, Armenia and Turkey. It is an activity of
Black Sea Tradenet Project, developed under the Black Sea Programme.

This Atlas for commercial relations has been possible due to the Joint Operational Programme
Black Sea Basin 2007-2013 that is a programme under the European Neighbourhood &
Partnership Instrument (ENPI) of the European Union*. The programme aims to contributing
to: a stronger and sustainable economic and social development of the regions of the Black
Sea Basin. The overall objective of the programme is to achieve stronger regional
partnerships and cooperation, and thus contributing to its key wider objective: a stronger
and more sustainable economic and social development of the regions of the Black Sea
Basin. Three priority axes implement the programme, and allow for promoting economic and
social development in the border areas, working together to address common challenges, and
promoting local, people-to-people cooperation.

Black Sea Tradenet Project is implemented by seven partners located in Constanta
(Romania), Dobrich (Bulgaria), Thessaloniki and Kavala (Greece), Yerevan (Armenia), Trabzon
and Zonguldak (Turkey). Five chambers of commerce and industry, one national centre for
SMEs and one foreign trade board will cooperate over one and a half year (2011-2012) to
achieve the projects overall objective to encourage and facilitate intra-regional partnerships
and cross-border cooperation aiming at sustainable development in the Black Sea Basin, based
on combined resources, activities and networks of common interest. Projects specific
objectives are to improve access of business and potential investors to intra-regional
information and trade supporting instruments, to initiate a pro-Black Sea entrepreneurial
culture by promoting business opportunities, to facilitate connectivity between business
support organizations and top build capacity among business support organizations.

The project addresses to small and medium-sized enterprises in 7 partner-towns from 5
countries, and Business Support Organizations (BSOs) from all five countries. Local business
communities of the partner towns will benefit of projects estimated inputs and result, as
follows:
Joint events for encouraging and promoting economic and trade intra-regional
partnerships, enhancing direct contact and mutual knowledge among businesses in
the Basin;
Supporting instruments in order to promote and facilitate intra-regional economic and
trade cooperation;
The Black Sea Tradenet network, with 7 contact points in Armenia, Bulgaria, Greece,
Romania and Turkey, as a common framework for developing intra-regional economic
and trade cooperation in the Black Sea Basin;
Increasing know-how and good case practices transfer among business support
organizations from all 5 countries;
Documentation on 8 subjects related to business registering, operating and
cooperating in the 5 partner-countries.


Black Sea Tradenet Project has a total budget of 380,000.00 euro, of which 90% from EU.

In this context, the Atlas facilitates and encourages regional cooperation in the business
environment of the Black Sea Basin, by providing relevant information and knowledge to
businesses seeking partners in other countries: legislative requirements to start and operate a
company, statistics about the economic and trade development in the area, financing sources
available, investment opportunities, etc.

*European Union
The European Union is a unique economic and political partnership between 27 European countries. In
1957, the signature of the Treaties of Rome marked the will of the six founding countries to create a
common economic space. Since then, first the Community and then the European Union has continued
to enlarge and welcome new countries as members. The Union has developed into a huge single market
with the euro as its common currency.
What began as a purely economic union has evolved into an organisation spanning all areas, from
development aid to environmental policy. Thanks to the abolition of border controls between EU
countries, it is now possible for people to travel freely within most of the EU. It has also become much
easier to live and work in another EU country.
The five main institutions of the European Union are the European Parliament, the Council of Ministers,
the European Commission, the Court of Justice and the Court of Auditors.
The European Union is a major player in international cooperation and development aid donor. The
primary aim of the EUs own development policy, agreed in November 2000, is the eradication of
poverty.
http://europa.eu/
ROMANIA


ROMANIA

ROMANIA


ROMANIA


COUNTRY PROFILE

General information

Official name
ROMANIA

Flag and coat of arms

Legal system
Romania is a parliamentary republic, the current Constitution was adopted in 1991 and
subsequently amended in 2003. The Parliament represents the legislative power in the state.
It is a bicameral 471-seat Parliament composed of the Senate (137 seats) and the Chamber of
Deputies (334 seats). The Government, led by a prime-minister appointed by the president of
the country, is the executive power.

Geographical location
Romania is located in the geographical center of Europe (southeastern of Central Europe), on
the Black Sea coast. It lies on north of the Balkanic peninsula, inside and outside the
Carpathian arch, on the lower Danube (1075 km) and by the Black Sea. It lies between
latitudes 43 and 49 N, and longitudes 20 and 30 E. Easterly, Romania is oriented towards
the sea, while westerly, towards the continent.

ROMANIA

Frontiers
The length of Romanias frontiers is of 3150 km, of which 1085.5 km are terrestrial frontiers,
and 2064.5 km water frontiers. Romania shares a border with Hungary and Serbia to the
west, Ukraine and Moldova to the northeast and east, and Bulgaria to the south.

Area
With a surface area of 238,391 km, Romania is the largest country in southeastern Europe
and the twelfth-largest in Europe. An area of 23 700 km of Black Sea platform should be
added to this area. Water represents 3% of Romanias area.

Relief
Romanias relief is composed of three main levels, namely the high level of the Carpathian
Mountains, the middle level of the Sub-Carpathians, hills and plateaus, and the lowlands of
plains, meadows and Danube Delta. These major relief forms are disposed in balanced
concentric areas: 31% mountains, 36% hills and 33% lowlands.

Waters
The running waters are radial, most of them springing in the Carpathian Mountains. Danube is
their main collector and it runs the southern part of Romania on a 1075 m length. Danube
flows into Black Sea and forms Danube Delta, the second largest and best preserved delta in
Europe, and also a biosphere reserve and a biodiversity World Heritage Site. The main rivers
are Mures - 761 km, Prut 742 km, Olt - 615 km, and Siret 559 km. Of great economic
importance, Black Sea Danube Canal is a 64.2 km manmade canal linking Black Sea
(Constanta) and Danube (Cernavoda), reducing the navigation way between Constanta Port
and Cernavoda with 400 km. Lakes are mainly natural, spread on all major relief forms, from
glacial lakes in the upper relief level, to river-maritime lakes. The largest natural lakes in
Romania are Razelm Sinoe maritime lagoons (41,500 ha), Lakes Oltina and Tasaul, Lakes
Brates and Dranov of over (2,000.00 ha). Manmade lakes are also numerous and many of them
are artificial dam lakes, such as Lake Portile de Fier on Danube 70,000 ha.

Climate
Due to its position between open sea and in the edge of the European continent, Romania has
a climate that is transitional between temperate and continental, with four distinct seasons.
The average annual temperature is 11 C in the south and 8 C in the north. Precipitation is
average with over 750 mm per year only on the highest western mountainsmuch of it falling
as snow, which allows for an extensive skiing industry. In the south-central parts of the
country the level of precipitation drops to around 600 mm, while in the Danube Delta,
rainfall levels are very low, and average only around 370 mm.

Natural resources
Romania enjoys important natural resources ranging from oil and natural gas, coal mainly
coal, brown coal, and lignite, large resources of salt, metal and non-metal minerals, gold,
silver and primary aluminium (bauxite), wood and timber, important arable areas. Over
2,000 mineral springs for consumption and health treatment are also considered an important
natural resource. Renewable sources for energy are also important, the wind potential of sea
coastal territories being considered to be one of the highest in Europe, while the water
energy is important on numerous rivers.

Oficial language
Romanian is the official language of Romania.

Time zone
Eastern European Time (UTC+02), Eastern European Summer Time (UTC+03)

Religion
86.7% of the inhabitants are Orthodox Christian, followed by other Christian churches:Roman
Catholic, Protestant, Pentecostal. Muslim church represents 0.3% of the total population.
ROMANIA

Currency
Romanian currency is leu lei in plural, wiht ban as subdivision. 1 leu = 100 bani.
Transactions are made with coins (1, 5 and 50 bani), and notes (1, 5, 10, 50, 100, 200 and
500 lei). Official ISO 4217 short name is ROL. The national currency course is established
daily on the inter-bank market, the refewrence currency being euro. The average exchange
rate in 2010 was of 4,2099 lei for 1 euro.

Measuring system
The standard metric system has been adopted into 1884. Excepting for remote rural areas, no
traditional metric system is in use in Romania.

Administrative organisation
Romania is organised into several types of units that correspond to the European
classification systems Nomenclature of territorial units for statistics (NUTS) and the system
meeting the demand at local level - Local Administrative Units (LAU), as per 2010, January
the 1
st
. Thus, Romania is organised into 42 counties, including Bucharest, the capital town.
They have legal identity and correspond to NUTS3 level. Counties have in average between
300,000 and over 700,000 inhabitants. At local level, the organisation is based on towns and
municipalities (municipii) 320 units of LAU2 level, and communes and villages 2861
communes encompassing 12,956 villages of LAU2 level. Towns varies between 5,000 and over
1,000,000 inhabitants, most of them having 20,000 50,000 inhabitants, while communes
varies between 1,000 and over 10,000 inhabitants, most of them 2,000 5,000 inhabitants.
For development purpose, Romania has defined 8 development regions encompassing 2 8
counties (NUTS2 level) and macroregions encompassing 2 development regions each (NUTS1
level). They do not have legal identity. There are no autonomous regions in Romania.

National holiday and other legal holidays
1
st
of December the national holiday of Romania, celebrating the union of Transilvania and
Banat historical regions (west of Romania) with the existing Romania, and thus, the
unification of all Romanian into one modern state (1918). One day-off is related to the
national day. Six other national holidays are declared by law, with one or two day-offs.

Romania, as a member in international organisations
Romania is a member of numerous international organizations, of which
1
:
United Nations (UN), since 1955
North Atlantic Treaty Organisation (NATO), since 2004
Council of Europe, since 1993
European Union (EU), since 2007
World Bank, since 1972
In terms of economy, Romania is a member of:
European Bank for Reconstruction and Development (EBRD)
European Investment Bank (EIB)
Food and Agriculture Organization (FAO)
International Chamber of Commerce (ICC)
International Bank for Reconstruction and Development (IBRD)
International Monetary Fund (IMF)
United Nations Conference on Trade and Development (UNCTAD)
World Tourism Organization (UNWTO)
World Trade Organization (WTO)
World Customs Organization (WCO)
In terms of security and cooperation, Romania is a member of:
Organization for Security and Cooperation in Europe (OSCE)
International Criminal Court (ICCt)

1
Government of Romania, Ministry for Foreign Affairs

ROMANIA

International Criminal Police Organization (Interpol)
International Red Cross and Red Crescent Movement (ICRM)
United Nations High Commissioner for Refugees (UNHCR)
World Health Organization (WHO)
In terms of regional affairs and policy, Romania is a member of:
Black Sea Economic Cooperation Zone (BSEC), since 1992
Southeast European Cooperative Initiative (SECI)
Central European Initiative (CEI)
Euro-Atlantic Partnership Council (EAPC)
Group of 9 (G9)

History and civilisation

Romanian civilization is one of the oldest civilizations in Europe, as human fossils of about
42,000 years old were discovered in the country.

The oldest written record of people living in the geographical area of the present-day
Romania is highlighted in Herodotus's book, where he mentioned about the Getae tribes.The
Dacians were a part of Thracians, the inhabitants of the area between Northern Carpathian
chain and the Balkan mountains. In the 1st century BC, the Roman Empire expanded its
border and the Dacian kingdom became a Roman province. During the 3rd century, the
Roman troops and administrative body left Roman Dacia in the face of possible attacks by the
Carpian and Goth tribes. After the retreat of the Romans, Dacia was invaded repeatedly by
numerous migratory tribes. In the middle ages, the Romanians mainly inhabited Wallachia,
Moldavia and Transylvania. During the 10th and 11th centuries, Transylvania became an
autonomous part of the Hungarian kingdom. Wallachia and Moldavia came under the control
of Ottoman Empire. Important figures in the middle age were Michael, the Brave, whose main
intention was to unite the lands inhabited by the Romanians and create a single country, and
Stephen, the Great, who ruled the Moldavia region between 1457-1504, and was a great
military leader. Transylvania, Wallachia and Moldavia had been able to maintain their
internal autonomy and some degree of independence under the Ottomans until eighteenth
century. In the eighteenth century, the Ottoman Empire witnessed a gradual decline and lost
its former power and glory. The rise of the Russian and Austrian empires affected the
political scenario of Romania, and Transylvania was captured by the Austrians, while later
on, Bukovina, a part of Moldavia, and Bessarabia also came under the rule of Austria

The desire of the Romanians to form an independent nation gave birth to many revolutions in
the three principalities. In 1848, revolution for complete independence took place in the
regions of Wallachia, Moldavia and Transylvania. On January 24, 1859, Wallachia and
Moldavia were united under the rule of Alexandru Ioan Cuza. In 1866, Alexandru Cuza was
removed from the throne, and Prince Karl of Hohenzollern (Prince Carol of Romania) was
appointed in his place. In 1877, during Russian-Turkish war, the Romanian principalities
rendered their support to Russia, and fought against the Turks. After the war, Romania
declared independence from the Ottoman Empire and got recognition as an independent
state with the Treaty of Berlin in 1878. But, in return, Romania had to give up a large portion
of Bessarabia to Russia.

Romania during World War I: in 1916, Romania entered World War I as an ally of France,
Russia and United Kingdom, on the condition that after the war it would regain its authority
over Transylvania. In May 1918, Romania discontinued the war, and signed a treaty with
Germany and again joined the war in October, 1918. By then, the Austrian and Russian
empires had collapsed; and hence, Bassarabia, Bukovina and Transylvania united with the
Romanian kingdom, that led to the formation of Greater Romania.

ROMANIA

Romania during World War II: Romania joined the world war as an ally of Germany, and
played an important role in the war as a source of oil for Germany. During the war, it lost
many regions under the pressure of Germany and the Soviet Union. The country lost southern

Dobruja to Bulgaria, northern Transylvania to Hungary, Bessarabia and northern Bukovina to
the Soviet Union.

In 1947, Romania came under the direct control of Soviet Union, and as a result communism
was established in Romania. The Russians controlled Romania till 1958. The communist
regime changed its policy, and in the 1960s, in the first years of Nicolae Ceausescus rule, the
country - the Socialist Republic of Romania - was recognised for its pro-western views and
good relations, while challenging the authority of the Soviet Union. Between 1977 and 1981,
Romania's economic condition started to deteriorate and its foreign debt increased to a large
extent. In order to repay such a huge amount of debt, Nicolae Ceausescu introduced many
policies, which further worsened the condition of the people and the economy. As a result,
Romanian revolution took place in 1989, which brought an end to the communist regime.

Romanians have succeeded in restoring democracy, stability, peace and order in the country.
Now a days Romania is rapidly integrating with Western Europe, becoming a member state of
the European Union in 2007. Romania is a pluralistic, multi-party state and a parliamentary
republic.

Socio-economic profile

Population and structure of population
Romania had 19.042.936 inhabitants by 2011, November the 20th
t
. Like other countries in the
region, the population is expected to gradually decline as a result of sub-replacement
fertility rates. The average age of the Romanians was of 69.7 years in 2010. Roughly half of
the population is living in towns, 52.8%, while 51.3% of the population are women, and 48.7%
men. Romanians make up 88.6% of the population. The largest ethnic minorities are the
Hungarians (6.5% of the population) and Gypsies (3.2% of the population).
2

Economic profile
Before the global economic recession, Romania enjoyed almost a decade of steady economic
growth, thanks to a strong demand in EU markets. Domestic consumption and investments
have fuelled strong GDP growth, but have also led to a widening account deficit. From the
2008 great economic expansion, when a credit-fuelled consumption made Romania the EUs
fastest-growing economy, the country plunged into recession in 2009 when the GDP fell by
more than 7%. This prompted the Government to seek multilateral support, including from
the IMF, the European Commission and the World Bank Group. The international community
agreed to support the reforms with a package totalling EUR 19.95 billion over the period
2009-2010. Austerity measures were implemented through 2010, yet the GDP contracted by
another 1.9% in the same year. Nevertheless, the countrys fiscal performance to date sends
encouraging signals with respect to resumed growth in 2011. Analysts forecast a growth in
GDP of 1.5% in 2011, followed by a growth of 4.4% in 2012.

Economic Data
3

Economic Data 2005 2006 2007 2008 2009 2010
2011
forecast
4

GDP per capita (Euro) 3,676 4,501 5,938 6,501 5,611 5,903 6,400

2
Results of Population and Home Census 2011 (2.02.2012)
3
Source: Institute of National Statistics, International Monetary Fund and World Bank
4
2011 IMF forecast

ROMANIA

Economic Growth (% GDP
change)
4.1 7.7 6.3 7.3 -7.1 -1.9 1.5
Government consumption (% of
GDP)
9.18 11.6 12.3 12,3 12,3 12.9 N/A
Budget balance (% of GDP) -0.78 -1.65 -2.5 -3.9 -8,3 -7.8 -6.4
Consumer prices (% change per
year)
9 6.56 4.84 4.16 5.6 5.9 5.2
Public debt (% of GDP) 28.8 29.1 21.8 13.4 23.9 40.1 40.0
Labour costs per hour (USD) 2.6 2.9 3.2 3.8 4.2 4.7 N/A
Recorded unemployment (%) 5.9 5.6 4.3 3.9 6.3 9.0 7.5
Current-account balance (% GDP) -8.9 -10.6 -13.9 -10 -4.4 -5.5 -6.0
Foreign-exchange reserves
(mUS$)
26,739 27,231 39,956 39,468 28,300 32,4300 N/A

Inflation: The inflation rate rose to 8 percent in December 2010, more than double the 3.4
percent forecast. IMF predicts that inflation will average 5.2% in 2011.

Budget Deficit: The administration plans to narrow the budget deficit to 4.4% GDP, in
2011, compared to the 7.8% in 2010, in line with its international borrowing agreements. In
December 2010, Romania's parliament approved an austere budget for 2011 that will allow
for these budgetary cuts.

Structural Reform: The authorities are making progress on reforms of the labor market and
of the social benefits system, which will improve its targeting and help mitigate the impact
of the austerity package, approved in July 2010.

Unemployment: As key reforms in public sector are advancing and a unified wage law for
the public sector was approved, the unemployment rate has begun to stabilize. At the
same time, the creation of new jobs in the private sector is more difficult. Unemployment
will be around 7% in 2011 (i.e., the lowest in the region in all three years), according to
the IMFs forecast.

Exports: With consumer confidence and economic sentiment gradually improving and
export-oriented industry continuing to grow, recent indicators suggest growth will turn
positive early in 2011.

Human Development Indicators
5

Human Development Indicators 2005 2006 2007 2008 2009 2010
Human Development Index (HDI) 0.805 0.811 0.813 0.765 0.764 0.767
Life expectancy at birth (years) 71,5 71,8 71,9 73,2 73,2 73,4
Adult literacy rate (% ages 15 and older) 97,3 97,3 97,4 98 98,3 98,3
Gross enrolment ratio for schools 75 76,8 77 79,2 79,2 79,2
GDP per capita (PPS US$) 8,439 9,045 9,927 12,001 11,013 11,203
Life expectancy index 0,78 0,78 0,81 0,81 0,81 0,82
Education Index 0,9 0,9 0,91 0,91 0,92 0,91
GDP Index 0,74 0,752 0.758 0,771 0,783 0,798

5
Source: UNDP Human Development Report

ROMANIA

Romania, part of the Black Sea community

On 25 June 1992, the Heads of State and Government of eleven countries: Albania, Armenia,
Azerbaijan, Bulgaria, Georgia, Greece, Moldova, Romania, Russia, Turkey and Ukraine signed
in Istanbul the Summit Declaration and the Bosphorus Statement giving birth to the Black Sea
Economic Cooperation (BSEC). It came into existence as a unique and promising model of
multilateral political and economic initiative aimed at fostering interaction and harmony
among the Member States, as well as to ensure peace, stability and prosperity encouraging
friendly and good-neighbourly relations in the Black Sea region. The BSEC Headquarters - the
Permanent International Secretariat of the Organization of the Black Sea Economic
Cooperation - was established in March 1994 in Istanbul.

BSEC covers a geography encompassing the territories of the Black Sea littoral States, the
Balkans and the Caucasus with an area of nearly 20 million square kilometres, located on two
continents. BSEC represents a region of some 350 million people with a foreign trade capacity
of over USD 300 billion annually. After the Persian Gulf region, it is the second-largest source
of oil and natural gas along with its rich proven reserves of minerals and metals. Also, it is
becoming Europe's major transport and energy transfer corridor.

With this aim, Romania develops its activities on two main directions
6
, first, an active
participation in actions of international cooperation aimed at fighting terrorism and cross-
border organized crime, and second, developing regional relations and cooperation for
building up stability and resolving crises. The main objectives of Romania in the Black Sea
region, which were announced in a national strategy (2006), aim at creating and
strengthening a stable, democratic, prosperous area in the Eastern neighbourhood, but also
at opening the Black Sea wider region to the European and Euro-Atlantic values and
processes.

The Black Sea Synergy emerged as a new proposal for an EU policy particularly designed for
the region. It was initiated in 2007, during the German presidency of the EU, following the
actions of Romania, Bulgaria, Greece, and with the support of other member states and the
input of the European Commission. It was officially launched on 14 February 2008, in Kiev.
The main objective of the Black Sea Synergy
7
is to build up cooperation in the Black Sea
region. It offers the guidelines for the implementation of concrete and pragmatic projects of
cooperation between wider Black Sea region states and the EU, in areas such as: democracy,
human rights, good governance, border management, protracted conflicts, energy,
transports, environment, maritime policy, fishing, migration, education, research and
development.

Building upon a rich experience of joining forces with the civil society from the Black Sea
region (during 2006-2007), Romania initiated the Black Sea NGO Forum in fruitful partnership
with the Federation of Nongovernmental Organizations in Romania (FOND) and the Black Sea
Trust. Romania underlines the importance of moving on to a straightforward, concrete
delineation and complementarities between the principles of implementation of the Black
Sea Synergy and the multilateral dimension of the Eastern Partnership, as stated in various
political declarations of the EU. These two European initiatives are now in the phase of
implementation of the projects and the recommendations proposed in the networks
established under their aegis, both at regional and macro-regional levels.

6
Romanias Role in the Black Sea Region, Jennifer D.P. Moroney and Colonel Joe Hogler (U.S.AF,
Retired) RAND Corporation
7
http://ec.europa.eu /world/enp/pdf/com07_160_en.pdf

ROMANIA


ROMANIA


INSTITUTIONAL FRAMEWORK

General consideration on the institutional network

Institutional framework in Romania is a large canvas of public and private bodies
administrating, regulating and supervising all public aspects of the Romanian society. The
term includes organizations with very different origins, purposes and constitutions
governmental and other public bodies, commercial and charitable organizations, or those
representing private individuals interests in associations, professional bodies, etc. Also, it
involves cross-border and international organisations relevant for Romanias foreign affairs
activities, international trade and partnerships.

Public institutions

The Romanian Public Administration is structured on two main levels: the central public
administration and the local public administration.

Central institutions
Besides the Presidency, the central public administration consists in the Government of
Romania that forms one half of the country's executive branch, the other half being the
President. The Government is headed by the Prime-Minister, and consists of Ministries,
various subordinated institutions and agencies, and 42 Prefectures. The Prime Minister leads
the Government and coordinates the activity of its members, in compliance with their
respective legal duties.

The Government is organised into Governments Working Apparatus and the ministries.
Fifteen ministries form currently the Romania Government:
Ministry of Administration and Interior, http://www.mira.gov.ro
Ministry of Agriculture and Rural Development, http://www.madr.ro
Ministry of Communication and Information Society, http://www.mcsi.ro
Ministry of Culture and National Cultural Heritage, http://www.cultura.ro
Ministry of Economy, Trade and the Business Environment, http://www.minind.ro
Ministry of Education, Research, Youth and Sports, http://www.edu.ro
Ministry of Environment and Forests, http://www.mmediu.ro
Ministry of European Affairs (recently created)
Ministry of Foreign Affairs, http://www.mae.ro
Ministry of Health, http://www.ms.gov.ro
Ministry of Justice, http://www.just.ro
Ministry of Labor, Family and Social Protection, http://www.mmuncii.ro
Ministry of National Defence, http://www.mapn.gov.ro
Ministry of Public Finance, http://www.mfinante.gov.ro
Ministry of Regional Development and Tourism, http://www.mdrt.ro
Ministry of Transportation and Infrastructure, http://www.mt.ro

Each ministry includes various entities under ministries subordination, coordination or their
authority, such as national agencies, authorities, inspections, national companies,
management authorities for operational programmes and national funding schemes, etc. All
of them have very technical orientation, usually being of a great specialisation and playing
regulatory and supervision roles in narrow sectors.

International business relations and foreign investments are supported by several central
administration agencies and authorities, as follows:
ROMANIA

Romanian Centre for Trade and Foreign Investment, http://www.romtradeinvest.ro
National Trade Register Office, http://www.onrc.ro
Customs National Authority, http://www.customs.ro
Romanian Police, http://www.politiaromana.ro
Romanian Office for Immigrations, http://ori.mai.gov.ro
State Office for Inventions and Trademarks, http://www.osim.ro
Competition Council, http://www.competition.ro
National Institute of Statistics, http://www.insse.ro
National Authority for Consumer Protection, http://www.anpc.ro
National Customs Authority, http://www.customs.ro
National authorities for road, water, air, and railway transportation.

The Government and a large number of ministries have decentralised and de-concentrated
representatives, namely prefectures and directorate, in each of the 42 counties. Also, various
national agencies and authorities have created local services, either in partnership with
relevant entities, such as chambers of commerce and industries and business associations.
The National Trade Register Office and Customs National Authority have local active services
in each county.

Local administration
Local administration consists in local councils, mayoralties, and county councils
(http://www.administratie.ro). According to the law 70/1992, local and county councils are
elected on the basis of the list system through direct suffrage, while mayors are elected on
the basis of uninominal system in two rounds. Bucharest municipality is organized in 6
administrative-territorial subdivisions called sectors. Currently, there are 320 towns and 2860
communes in Romania, each of them with their own local council and mayor; also there are
41 counties and county councils.

Through their activity, companies and foreign investors come in contact with services
provided by municipalities the working unit of each mayor, and by county councils.

ROMANIA

Private institutions and organisations

Private institutions and organisations relevant for companies and foreign investors are mainly
dealing with supporting starting up and developing a company, interests representation at
local and national level, as well as specialist services requiring a strong public involvement.

Thus, the Romanian chamber system is one of the most important support organisations for
businesses. One local chamber of commerce and industry is located in each county, while the
national chamber is located in Bucharest and has both a representation and mainstreaming
role: Chamber of Commerce and Industry of Romania, http://.www.ccir.ro

All economic sectors are organised into sectorial and sub-sectorial business organisations,
united at national level into federations or national associations. Besides them, at local level,
there are numerous smaller business associations, more or less active or involved in relevant
actions. The most important and visible national business association are as follows:
National Association of Romanian Exporters and Importers (ANEIR) http://www.aneir-
cpce.ro
The Romanian Association of Building Contractors www.araco.org
Automotive Manufacturers and Importers Association www.apia.ro
National Association of Software Industry & Services www.anis.ro
National Union of Road Hauliers from Romania www.untrr.ro
National Federation for Light Industry www.fepaius.ro
Romanian Association for Quality www.quality.ro
Romanian Banking Associations www.arb.ro
Romanian Union of Cosmetics and Detergents Manufacturers www@rucodem.ro
CECAR The Body of Expert and Licensed Accountants of Romania www.cecar.ro
Exchanges:
o Romanian Commodity Exchange http://www.brm.ro
o Romanian Stock Exchange http://www.bvb.ro

Black Sea specific institutions and organisations

Organization of the Black Sea Economic Cooperation came into existence as a model of
multilateral political and economic initiative aimed at fostering interaction and harmony
among the Member States, as well as to ensure peace, stability and prosperity encouraging
friendly and good relations in the Black Sea region. http://www.bsec-organization.org

Black Sea Trade and Development Bank is an international financial institution that supports
economic development and regional cooperation by providing trade and project financing,
guarantees, and equity for development projects supporting both public and private
enterprises in its member countries. http://www.bstdb.com

International Black Sea Club is an international non-governmental organisation uniting 24
cities on the Black Sea and in its vicinity. http://www.i-bsc.org

The Commission on the Protection of the Black Sea Against Pollution (the Black Sea
Commission or BSC) is the intergovernmental body established in implementation of the
Convention on the Protection of the Black Sea Against Pollution (Bucharest Convention), its
Protocols and the Strategic Action Plan for the Environmental Protection and Rehabilitation
of the Black Sea. http://www.blacksea-commission.org

Black Sea Forum for Partnership and Dialogue (BSF) is a Romanian initiative aiming at
supporting cooperation and partnership in the Black Sea area. Members: Armenia,
Azerbaijan, Georgia, Moldova, Romania, Ukraine, and observers Bulgaria and Turkey
http://www.blackseaforum.org
ROMANIA


International Centre for Black Sea Studies (ICBSS) is a think-tank based in Athens, Greece,
committed to promoting multilateral cooperation between the countries of the Black Sea
region and with their international partners http://www.icbss.org

GUAM Organization for Democracy and Economic Development is a regional organization of
four post-Soviet states: Georgia, Ukraine, Azerbaijan, Moldova, and Turkey and Latvia as
observers http://www.mfa.gov.md/guam-en/

The Community of Democratic Choice is an intergovernmental organization of nine states of
Northern and Eastern Europe from the region between the Baltic, Black Sea and Caspian Sea
("The three Seas"). Its main task is to promote democracy, human rights and the rule of law
in that region.

Black Sea Trust for Regional Cooperation promotes regional cooperation and good governance
in the Wider Black Sea region http://www.gmfus.org/blacksea

Black Sea Regional Energy Center (BSREC) acts as a focal point for energy related activities,
aimed at developing the co-operation between the Black Sea region countries and the EU in
the energy field. Apart from its international activities, the BSREC is actively involved in the
Bulgarian energy issues, acting as a Bulgarian energy society http://www.bsrec.bg

ROMANIA


LEGAL FRAMEWORK FOR DOING BUSSINESS

Legal base to register a business in Romania

A local business presence is essential to success in the Romanian market. This may take a
variety of forms, joint ventures or companies registered in Romania, local agents or
distributors that can contribute significantly by bringing knowledge of the market, industry
experience, access to key contacts, and other resources. Limited liability companies are the
most popular businesses in Romania because of their simple administrative requirements,
greater flexibility compared to other types of companies, and low capital requirement.
However, joint stock companies remain an attractive option for investors which plan to list
their companies on the stock exchange.

Legal base to register a company
There are no specific investment approvals required for setting up a business in Romania. The
procedure requires fulfilling certain legal formalities such as registering with the Romanian
Trade Registry and the Fiscal Administration, and the Trade Registry from the county where
the social headquarter is registered and the responsible Fiscal Administration. (www.onrc.ro;
www.mfinante.ro).

The general legal framework for registering a company
8
initiated by a foreign entity refers to
both the company itself, as well as to the registration process, as follows:
Law No.31/1990 concerning commercial companies, republished;
Law No. 105/1992 on the Regulation of the Private International Law Relationship;
Decree Law No. 122/1990 on the authorization and operation in Romania of the
Representative Offices of foreign companies and corporation;
Law No. 85/2006 regarding bankruptcy procedure;
Law No. 26/1990 on the Register of Commerce, republished;
Law No. 359/2004, on the simplification of formalities regarding the registration in
the trade register of natural persons, family associations and legal persons, their
fiscal registration and authorization for functioning;
Government Decision No. 913/2004 on the approval of taxes and tariffs related to the
operations performed by Trade Register Offices by Courts.
Institutions to be approached
Several institutions may be relevant for starting a business in Romania, finding a partner and
registering the company.

Searching and finding a business partner can be facilitated by the system of the Romanian
Chamber of Commerce and Industry (http://www.ccir.ro), by bilateral chambers of
commerce and industry, Romanian Trade Promotion Center and Foreign Investment (http:
//www. romtradeinvest.ro), consortia of Enterprise Europe Network in Romania
(http://www.erbsn.ro), or diplomatic representatives of in Romania (ministry of Foreign
Affairs: http://www.mae.ro). Business associations are also capable of recommending and
facilitating business contacts.

Bilateral chambers of commerce and industry:
Romanian Armenian Chamber of Commerce and Industry ccibra2004@yahoo.com
Bulgarian Romanian Chamber of Commerce and Industry http://www.brcci.eu

8
Source: National Trade Register Office

ROMANIA

Representative of the Hellenic Romanian Chamber of Commerce and Industry hell-
rom@clicknet.ro
Romanian Republic of Moldova Chamber of Commerce and Industry,
http://www.camera-de-comert-romania-moldova.go.ro
Romanian Turkey Chamber of Commerce and Industry http://www.ccirt.ro
Bilateral Chambers Union http://www.bilateralchambers.ro
Preparation of documents, along with legal assistance and counselling, is provided by private
consultancies and public institutions, such as the local Trade Register Offices and chambers
of commerce and industry. Registration is ensured solely by the Trade Register offices,
located in each county, in the main town (capital of the county). Depending on the type of
activity, on its degree of regulation, various additional permits and proofs may be required
by the Trade Register.

Forms of business cooperation and ventures
The establishment, functioning, dissolution, merge, division and liquidation of the
commercial companies are regulated by Company Law No. 31/1990, republished. In order to
develop trading activities, legal and natural persons may associate and establish commercial
companies. Commercial companies with the social headquarter in Romania are legal
Romanian persons. The commercial companies regulated by the Romania legislation may be
established in one of the following forms
9
:
general partnership;
limited partnership;
joint stock company;
limited partnership by shares;
limited liability company.
General Partnerships (Societate in nume colectiv SNC).
A general partnership can involve two or more partners. The partnership relationship is based
upon a contract and any person who is capable of entering a binding contract may enter a
partnership. Following this agreement, the parties must register their partnership with the
National Trade Register Office. In a general partnership, partners are jointly liable for the
debts and obligations of the partnership and each partner can be personally liable for the
overall debts and liabilities, which are not satisfied by assets of the partnership. The capital
of the partnership is formed of the partners contributions. These contributions can include
cash, real estate, equipment, or other property. Contributions become assets of the
partnership and comprise its registered capital. Romanian laws do not set maximum or
minimum limits on capital, nor does they indicate how much must be in cash or assets.

Limited Partnerships (Societate in comandita simpla, S.C.S.).
A limited partnership consists of one or more general partners who manage the business of a
partnership and one or more limited partners who contribute capital (money or other
property) to a partnership but do not participate in its management. Generally, limited
partners are not liable for the debts and obligations of the partnership beyond their
contributions, to the registered capital. The liability of the general partner is the same as the
liability of partners in a general partnership. For an investor, therefore, being a limited
partner is similar to have an investment in a corporation. Limited partners share the profits
or other compensation by way of income in proportion to their partnership contributions.
However, no such income or other distribution can be made if it would reduce the assets of
the limited partnership to an amount insufficient to discharge its liabilities to persons who
are not partners. Company Law No. 31/1990 generally sets out the rights, powers and
obligations of limited partners.

9
Source: National Trade Register Office

ROMANIA

Limited Liability Companies (Societate cu raspundere limitata, S.R.L.).
A limited liability company is a company formed by a limited number of partners (no more
than 50). It is based on the constitutive documents. The registered capital of a limited
liability company cannot be less than 200 RON (Romanian currency). The registered share
capital of a limited liability company is normally divided into social parts/shares with a
registered value of not less than 10 RON. Shares cannot be freely traded, making limited
liability companies similar to what are known as private companies in other legal systems.
Shares of these companies cannot be pledged as collateral for loans. Decisions are made by
majority vote in the General Meeting of the Shareholders (1 share = 1 vote). Decisions
involving changes in the constitutive documents must be agreed by all shareholders if these
documents do not state otherwise. One or more Directors/Managers are appointed in the
constitutive documents or by the General Meeting and are put in charge of the management
of the company. Limited liability companies may also be formed by a sole associate.

Joint Stock Companies (Societate pe Actiuni, S.A.)
A joint stock company is a limited liability corporation with registered capital of a minimum
of 25.000 euro, but not less than 90.000 lei and with at least two associates. When an SA is
established, at least 30% of the share capital, or 100% in respect of contributions in kind,
must be immediately contributed upon formation of the company and all registered share
capital must be fully paid up within twelve months of formation. Shares could be nominative
shares or bearer shares and can be freely traded or pledged. A joint stock company may be
set up privately or by public subscription. When a joint stock company is established by
public subscription, a notarized prospectus must be drawn-up and filled with the Trade
Register in the district where the head office of the company will be located. Decisions are
made by a majority vote in the General Meeting of the Shareholders (each share represents
one vote). General Meetings can be ordinary meeting, called at least once a year or
extraordinary, called when needed to make decisions involving changes in the Memorandum
of Association. Meetings require a quorum of of the shareholders and a simple majority
vote of the quorum is required to approve changes in the Memorandum of Association.
The management of a joint-stock company is assumed by more administrators, mandatory an
odd number. When a Council of Administration is decided, there will be elected a President
from the Administrators. The Administrators are elected by the General Assembly of the
Associates and have an administration contract.
Limited Joint Stock Companies (Societate in Comandita pe Actiuni).
A limited joint stock company is a rare form of limited partnership. It has characteristics of
both a joint stock company and a limited partnership. At the same as in a limited partnership
there are general and limited partners. Similarly to a joint stock company, the registered
capital of the limited joint stock company is represented by shares. Similarly to a
partnership, the general partners may be liable for the debts and obligations of the company
beyond amounts they have contributed. The limited partners, not active in the management
of the company, have their liability limited to their share stake. A limited joint stock
corporation is normally recognized by use of the words SCA in its name (Societate in
Comandita pe Actiuni).

Branches, Subsidiaries and Agencies of Foreign Companies
A foreign company can do business in Romania through a subsidiary, agency or a branch.
While a subsidiary has a legal personality and is considered a Romanian entity, the branch is
just an extension of the parent company and therefore has no legal personality and no
independence. Agencies are established and operate in accordance with the provisions of
Decree Law No. 122/1990, are authorized by Ministry of Foreign Affairs and undertakes on
behalf of the parent companies only transactions and activities which are consistent to its
authorized object.
ROMANIA

Law No. 105/1992 on the Regulation of the Private International Law Relationship adopts the
accepted international practice by which a branch is governed by the national law of its
parents company. Legally, the branch has no separate status from the foreign company itself.
It is merely carrying on business in Romania. The foreign company will be liable to the
employees and creditors of the branch for the actions of, and debts contracted by, its
managers and agents on behalf of the branch. On the contrary, according to the Law No.
31/1990, a Romanian subsidiary of a foreign company is a Romanian legal person and,
consequently, it is subject to Romanian laws. It is liable, on its own behalf, for the actions
assumed. Subsidiaries and branches can carry out only the activities to which the parent
company is authorized.
In practice, subsidiaries are commissioned following the same steps as the registration of
companies, i.e. notarizing the statutes, and registering the subsidiary with the National
Trade Register Office.
Requirements for registering a company
General partnerships and limited liability partnerships are set up through a contract of
company. Joint-stock company, limited partnerships with shares or limited liability company
are set through a contract of company and a statute, which might be concluded as a sole
document called Articles of Incorporation.

The Articles of Incorporation shall be signed by all associates or in case of public
subscription, by the founders and will be concluded with private signature and certain date,
or in authentic form, when a property is brought to the social capital. The signatories of the
articles of incorporation are considered founders. In general, and depending on the type of
company, the incorporation articles should contain:
first and last name, place and date of birth, domicile and citizenship for the
associates, natural persons; name, head office and nationality of the associates, legal
persons;
the type, name, headquarters and, if any, the company logo;
the object of the company, specifying the main domain of activity;
the subscribed and paid in registered capital, the shareholders contribution in cash or
in kind, the value of the contribution in kind and its valuation method as well as the
date of the full payment of the subscribed share capital; the number and nominal
value of shares as well as the number of shares subscribed to each associate for
his/her contribution;
the shareholders in charge with the representation and administration of the company
or the non-shareholder administrators individuals or legal persons, and their powers
which are to be exercised jointly or separately;
the share of profits and loses for each shareholder;
the secondary offices (branches, agencies, representative offices or other such
entities with no legal personality) whether or not are established as the same time
with the company, or the conditions of their subsequent establishment if such
establishment is taken into account;
duration of the company;
the rules for distribution of dividends and sharing losses;
secondary offices;
rules for dissolution and liquidation.

Registration of Commercial Companies:
Checking the availability and booking the companys name is the first step to registering a
company. Within 15 days from the date of authentication of the Articles of Incorporation, the
founders or the administrators of the company or an attorney-in-fact of theirs will request
the incorporation of the company in the Commercial Register in the area where the head
office of the company will be located.
ROMANIA

The incorporation application shall be accompanied by the following documents for limited
liability companies:
request for registration;
proof for companys name availability;
if the company is created by a single shareholder, the proof he/she has registered no
other company he/she is a single shareholder;
the Articles of the Incorporation of the company;
the proof for the headquarters availability rental, ownership or other forms. In case
the headquarters have an initial residential use, the approval for changing its
destination;
the proof of the transfer of the money according to the Articles of Incorporation;
the documents concerning the ownership over the distribution in kind;
the documents attesting the operations concluded in the companys account and
approved by the partners;
the declarations on oath of the founders, administrators and auditors showing that
they fulfil the conditions stipulated by the Law No.31/1990, republished;
the founders, administrators and/or auditors identity documents;
signature samples for companys representatives;
judicial records for companys representatives, foreign persons/bodies should submit
a declaration on oath that he/she/the company has no debts against the Romanian
state;
the declarations on oath on the fact that the legal conditions for functioning are
known and complied for sanitary, veterinary and food safety frame, public health,
environment and occupational health and safety (standardized statements)
if the founders are companies, their registration documents, decision to create the
new company, delegacy for the person representing the company and having the right
to sign the documents for the new company, credit worthiness for foreign companies
issued by a bank/chamber of commerce in the country of origin,
depending on the companys main activity to be declared with the Trade Register,
additional documents and approvals may be required.
Additional documents may be required for other types of companies.

The registration taxes depend on documents complexity and volume. Additionally, extra
costs will be charged if the Trade Register provides the legal assistance for preparing the
documents. Total costs generated by registering a company start from 300 Euro and can
reach 1000 Euro. In case that companies decide to use the services offered by CCINA
Constanta, total costs are aproximately 300 Euro.

The judiciary, through a delegated judge, exercises the control over the legality of the
documents and of the deeds which, according to the law, are going to be registered with the
trade register, including the request for registration of the companies. In cases where the
legal requirements are fulfilled, the delegated judge shall authorize, by way of decision, the
setting up of the company and will order its incorporation with the trade register.

The registration period provided by the law for registering companies is 5 days from the day
the request has been submitted. In the same period the trade register office issues the
registration certificate containing the unique registration code. In general terms, the
preparation and registration of a company takes between 5 and 10 days.

The World Bank Group assesses regulations affecting domestic firms through its annual Doing
Business in a More Transparent World Report. Doing Business 2012 shows the following
results: Romania ranks 72 among 183 countries assessed in what concerns the ease of doing
business, while starting a company procedures rank 63, dealing with construction permit
ranks 123, getting electricity rank 165, yet protecting investors ranks 46.
ROMANIA


Operation of a company requires permits and approvals, depending on its declared activity.
General permits for all types of activities include an operational authorisation and
daily schedule approval issued by the local municipalities.
Specialised permits are imposed by regulatory frameworks specific for such domains
as environment, public health, sanitary veterinary and food safety, fire fight,

transportation, use of certain equipments and installations, quality in tourism
services. The more complex the activity is, more regulations apply and, thus, more
complex starting the operation of a company is. Most of the mentioned specialised
regulations are to be taken in consideration when building a new construction or
modernising/extending an existing one, and equipping it, as they refer to technical
solutions and/or requirements. In order to fulfil all these regulations, it is strongly
recommended to search for qualified counselling and assistance, legal, technical and
architectural services should be enough.

Operation of Commercial Companies
The assets representing contribution in kind to the company become its property when the
company is incorporated at the Trade Register. Interest is not paid for the contribution of the
associates. The benefit quota, which will be paid to each associate, represents the dividend.
Dividends will be paid proportional with their participation to the paid social capital.
Dividends will be distributed only from real benefits, in the contrary they will be given back.
The returning of the dividends is prescribed in a period of 3 years from the date they were
distributed. If a reduction of the social capital is noticed, it has to be completed or reduced
prior to distributing any benefit.
Administrators may perform all necessary activities in order to fulfil the activity of the
company, besides the restrictions stipulated by the articles of incorporation. They are
obliged to attend the companys meetings, administration councils, and other similar bodies.
Administrators that have the right to represent the company cannot transmit it only if they
were enabled expressly to do so. Administrators are jointly liable to the company for:
the existence of the payments made by the associates;
the legality of the paid dividends;
the existence of the registers requested by the law and their correct keeping;
the fulfilment of the general assemblys decisions;
the strict fulfilment of the dispositions of the law and Articles of Incorporation.
The right to sue the administrators may also be exercised by the creditors but only upon the
bankruptcy of the company.
Any document, letter or publication issued by the company must indicate the name, legal
form, and head office, recording number in the Trade Register and the fiscal code.
Legal requirements for buildings
When building any construction in Romania, a legal building permit is required, proving that
the new building or the extension/modernisation of an existing one meet the legal framework
for construction activity, meet the legislation in such domains as the environment, do not
disturb underground networks, or have included solutions for them, include solutions for
power feeding, water and sewage, etc. Depending on the land/building location, special
attention is given to environmental solutions, if the land/building is in a reserve, or next to
water that is a source for drinking water, conservation solutions if the land/building is
located on or next to archaeological vestiges, and other less frequent cases.

The building permit is issued by the local municipality, or, for certain rural cases, by the
county council. Documentation for this permit includes the following documents:
ROMANIA

- Application, to be filled in by the applicant and his/her architecture and engineering
contractor
- Urban permit that is the first construction-related document the applicant must
obtain prior to starting all architectural and engineering plans. The local
municipalities issue urban permits informing the applicant what are the conditions
under which a construction may be developed (e.g. height of the building, permits
and approvals addressing other domains, such as environment, telecommunications,

- water and sewage, electric power, built heritage). The urban permit should be
accompanied by all permits and approvals that were required.
- Architectural documentation, including written presentation and blueprints.

Two types of buildings are identified by the Romania legislation
10
:
1. Permanent buildings, such as residential or business buildings, logistical projects,
roads, utilities, bridges, etc. Building permits for permanent buildings are obtained if
the real estate (land or building) is the applicants property or concession.
2. Temporary building, such as kiosks, display panels, etc. Building permits may be
obtained even if the real estate is under lease.

Lifecycle of a company: exit through bankruptcy, insolvency, transfer
of business

Dissolution
The company shall be dissolved through:
the expiration of the period set for the functioning of the company;
the impossibility of achieving the object of the activity or its achievement;
the notification of the nullity of the company;
the decision of the General Meeting of the Shareholders;
a court order at the request of any associate, based on founded reasons;
the bankruptcy of the company.
If the dissolution of the company is based on the decision of the associates, they can change
this decision with the requested majority for the modification of the Articles of Incorporation
as long as no asset was distributed.
The dissolution of the commercial company has to be recorded at the Trade Register and
published in the Official Journal of Romania. The effect of the dissolution of the company is
the beginning of the liquidation procedure. The dissolution takes place without liquidation in
the case of merger or total division of the company or in other cases stipulated by the law.
From the moment of the dissolution, administrators cannot undertake new operations.
Merger and Division of Commercial Companies
The merger represents the absorption of a company by another company or by merging of
two or more companies to form a new company. The division represents the division of the
entire patrimony of a company, which ceased to exist, between two or more existing
companies or which are thus set up. Merger and division are decided by each company, under
the terms stipulated for the modification of the Articles of Incorporation.

Liquidation of Commercial Companies

10
Law 50/1991 on building permits, with subsequent changes and supplements

ROMANIA

The liquidation of the company must be finished within maximum 3 months from the date of
dissolution. For founded reasons, the court may extend this period with maximum 2 years.
After completing the liquidation, the liquidators have to ask the deletion of the company
from the Trade Register. The Trade Register could make the deletion also automatically. The
liquidation does not operate a release for the associates and does not impede the
commencement of the bankruptcy proceedings of the company.

The insolvancy procedure
Insolvency is the state of the debtor's assets are characterized by lack of funds available for
payment of certain debt, liquid and payable:
- Insolvency is presumed to be obvious when the debtor, after 90 days of maturity, has not
paid his debt to the creditor, the presumption is relative;
- Insolvency is imminent when it appears that the debtor cannot pay at maturity outstanding
liabilities incurred with the funds available at maturity;
Insolvency proceedings may be required both by the company and its creditors. Insolvency is
found by the decision of bankruptcy judge.
In the procedure of judicial reorganization insolvency may be ordered to pay debts to
society. Reorganization involves the preparation, approval, implementation and enforcement
plan called plan of reorganization, which may provide, together or separately:
a) operational restructuring and / or financial debtor;
b) corporate restructuring by changing capital structure;
c) restricting the liquidation of assets of the debtor;
In the process of reorganization, bankruptcy judge appoints a judicial administrator over
management of the company.
Parties to the proceeding are: lenders - natural or legal persons, debtors - natural or legal
persons whose property is subject to the insolvency court, bankruptcy judge and the official
receiver and liquidator.

ROMANIA


INVESTING IN ROMANIA

General consideration and framework

Romania actively seeks direct foreign investment, while its marketplace offers 21.5 million
consumers, a well-educated workforce, a strategic geographical location, and abundant
natural resources. To date, favoured areas for foreign investment include IT and
telecommunications, energy, services, manufacturing, and consumer products.

Relevant institutions for facilitating foreign investment initiatives include: Romanian Centre
for Trade and Foreign Investment, http://www.romtradeinvest.ro; National Trade Register
Office, http://www.onrc.ro; National Association of Romanian Exporters and Importers
(ANEIR), http://www.aneir-cpce.ro; Foreign Investors Council, http://www.fic.ro

The general environment for investing in Romania also includes access to a large variety of
infrastructure and utilities. Thus, dense and partially modernised road and railway networks
cover all country, and excepting for remote mountainous areas or Danube Delta, there is no
inhabited locality without at least one reasonable access way. The public road network
consists in 73,435 km
11
, excluding streets in localities, of which 25% km have been
modernised. Out of the total, the national roads represent 20%, while the local and county
roads are the rest. The local roads are in the poorest condition. Highways are very limited,
113 km. The railway system is of 10,981 km length
12
.

The water transport is divided into maritime and inland ways, serviced by 35 ports
13
, of which
3 Black Sea ports, including Port of Constanta operates the largest capacity in the Black Sea
Basin (over 100 mil. Tons capacity annually), followed by ports of Mangalia and Midia. Danube
River is services by 6 maritime-river ports, and 26 river ports. Inland water ways cover 1.779
km of which 1.075 km on the international navigable Danube, 524 on navigable Danube
channels and 91 km on canals (Danube-Black Sea and Poarta AlbaNavodari). A special case is
Danube Delta which localities are accessed solely by water, and each of the village or town
has its own harbour.

Air transport is serviced by 17 airports, of which international airports in 4 towns.

Three Trans-European Corridors cross Romania: corridor IV (Berlin/Nurenberg-Praga-
Budapest-Arad-Bucharest-Constanta-Istanbul-Thessaloniki), VII (Danube, including Sulina
Channel and Danube-Black Sea Canal) and IX (Helsinki-St.Petersburg-Moscw-Pskov-Kiev-
Ljubasevka-Chisinau-Bucharest-Dimitrovgrad-Alexandroupolis).

Romanian communication market is operated by state and private operators. Currently
14
, the
major communication service providers are offering combined services for fixed and mobile
telephone, fixed and mobile internet connection, and cable TV services. Over 70 fixed
telephone service providers are active in the country, 6 mobile telephone services providers,
973 internet active providers, and 479 cable TV providers. End-users of communication
means: 3.89 million subscribers of fixed telephone services, 24.6 mil. active users of mobile
telephone services (subscribers and pre-paid SIM cards), 3.0 mil. fixed broadband internet
access connections and 6.07 mil. active mobile internet connections, and 5.74 mil.

11
Ministry of Transport and Infrastructure
12
13
14
National Authority for Communication, Report by 31.12.2010, www.ancom.ro

ROMANIA


subscribers to paid audio-visual programme retransmission services. Postal services are
offered by the national postal company Posta Romana SA, as well as by private courier
companies operating at national level.

Incentives

The National Agency for Fiscal Administration
15
(NAFA www.anaf.ro) is the specialized
institution of the Ministry of Public Finance which is designed to provide the resources for
public expenditure and administration of the state. NAFA also coordinates the Financial
Guard, the National Customs Authority, county and Bucharest public finance directorates.
Taxation in Romania is governed by the Tax Code, its last review being conducted in August
2011.

Fiscal policy in Romania is marked by government commitments to the implementation of the
Stand-By Agreement with the IMF. In this context, tax incentives remain low in number and
scope. Thus, the Tax Code provides some facilities in 2011, such as:
non-taxation of dividends received by a Romanian legal person, parent company from
its subsidiary located in a Member State;
exemption from income tax under certain conditions;
deductions for research and development expenses;
tax-exempt dividends received by permanent establishments in Romania of foreign
legal persons from other Member States, parent companies, which are distributed by
their subsidiaries located in Member States;
Tax Credit;
taxable income when calculating income tax;
tax-exempt VAT in Romania's point of view of acquisitions of goods whose total value
during the calendar year does not exceed $ 10,000;
special scheme for VAT exemption for small enterprises;
VAT exemptions for operations inside the country;
VAT exemptions for imported goods and acquisitions;
Exemptions of VAT for exports or other similar operations for intra-Community
supplies and intra-and international transport;
special VAT scheme for travel agencies;
special VAT scheme for second-hand goods, works of art, collectors' items and
antiques;
Measures to simplify the application of reverse charge.
Additionally, tax and customs privileges are available in six free zones in Romania, located in
Constanta South - Basarabi, Braila, Galati, Sulina, Giurgiu and the Court - Arad. Activities
that may take place in the free zones can be made by individuals and legal entities,
Romanian or foreign, based on licenses issued by the administration of free zones.

Also, the network of industrial and technological parks in Romania can provide facilities
including tax hosted companies in the context of aid schemes for regional development and
access to utilities and infrastructure in specific conditions.
Additional information on Investments policy can be found on www.immoss.ro.

Competition policy

In line with art.135, par 1 of the Constitution, the Romanian economy is a market economy,
based on free initiative and competition. According to these provisions all development
policies should promote competition in the context of a sustainable development.

15
Source: National Agency for Fiscal Administration, www.anaf.ro

ROMANIA

Legislative Framework and Provisions
Romanias competition regulations are well harmonized with similar EU rules, Government
Emergency Ordinance 117/2006, with subsequent changes and additions, transposes most of

the provisions and notification procedures set forth by EC Regulations 659/1999 and
794/2004. As a result, granted state aid shall be notified to and authorized by the relevant
department of the European Commission (EC), and the Romanian Competition Council acts
only as a liaising authority between state aid providers, beneficiaries, and EC. The Romanian
Competition Council remains responsible for monitoring the competitive behaviour of
businesses on the Romanian market, collusions between competitors in the Romanian market,
and the growth of market structures (mergers and acquisitions). Collusive arrangements and
anti-competitive agreements between competitors are strictly forbidden, but mergers and
acquisitions are permitted provided these do not hinder free competition in the market.

The EC Regulation 139/2004 on mergers control is applicable in Romania and sets forth the
procedure for notifying to the European Commission economic concentrations bearing a
community dimension. An economic concentration bears a community dimension if: (a)
the combined aggregate worldwide turnover of all the undertakings concerned is over EUR
5,000m; and (b) the aggregate Community-wide turnover of each of at least two of the
undertakings concerned is over EUR 250m. Approval of the Competition Council is required in
case of economic concentrations that exceed the following: i. EUR 10m in RON equivalent of
aggregate turnover of the entities involved, and ii. EUR 4m in RON equivalent of individual
turnovers generated in Romania by at least two of the entities involved.

State Aid
The established priorities are to be supported through state aid measures compatible with
the Romanian and EC legislation, respectively measure which can be framed under the
following state aid definitions:
Regional aid: creation of a new enterprise, extension of an existing one,
diversification of production, introduction of new products/services, fundamentally
changing the overall production process within an existing enterprise, etc.
Aid for SMEs: partial coverage of the operating costs during the first years of
existence, specialised consultancy services for business development offered at
preferential tariffs, risk capital, etc.
Aid for research and development: investments in instruments, equipments, land,
buildings, employment of specialised personnel, covering costs related to consultancy
services in the field of R&D, etc.
Aid for environmental protection: investments in improving the environmental
protection standards; preventing and restoring the damages caused to the
environment or to the natural resources; energy saving; producing energy from
renewable sources; sustaining the production of energy in combined heat and power
installations etc.
Employment aid: investments required for adapting the employers premises in order
to make possible the recruitment of disabled persons, partial coverage of costs
related to the employment of new persons; partial or total exemption from the
payment of certain taxes and social contributions related to the disabled persons,
newly employed.
Training aid: general training providing qualifications which are largely transferable
to other firms or activities.
Aid for rescue and restructuring firms in difficulty: when justified by arguments of
social or regional policy or by the need to take into consideration the positive role of
SMEs or, exceptionally, when there is an interest to maintain certain undertakings on
a given market structure so to avoid a monopoly or a narrow oligopoly.
ROMANIA

Aid in the form of risk capital: this type of aid aims at correcting some failures of the
financial markets as concerns their capacity to provide the required capital,
especially for start-ups and undertakings operating in the field of high technologies.
Aid for compensating net losses generated by the provision of services of general
economic interest: ensures the provision of quality essential services, in sufficient
quantities and at reasonable prices, for all citizens, irrespective of their geographic
positioning.

Aid under the de minimis threshold: the amounts granted cannot exceed the EUR
200,000 ceiling over a 3-year period, or 100,000 for transport field, and cannot be
used for subsidising the export.
Sectorial aid: in sectors considered to be sensitive, such as: coal industry, steel
sector, synthetic fibres industry, motor vehicles and shipbuilding industries,
agriculture and fishery, air and maritime transport sectors.
Currently, The National Network for State Aid created and animated by the National
Competition Council, offers support and additional information on state aid schemes and ad-
hoc state aid
16
.

Human ressources

Romania has traditionally offered a large, skilled labour force at comparatively low wage
rates in most sectors, although the labour pool has tightened in highly skilled professions,
despite growing unemployment overall. The university system is generally regarded as good,
particularly in technical fields. The quality of work of Romanian craftsmen, engineers, and
software designers is well regarded by foreign managers. With appropriate on-the-job
training, local labour performs well with new technologies and more exacting quality
requirements. However, labour shortages have appeared in certain sectors, resulting in
strong upward pressure on wages in recent years. Outward labour migration and the number
of students graduating without the practical skills needed for the modern workplace are
considered the main causes for this trend.

Labour Code has been revised in the beginning of 2011 (Law 40/2011), balancing employees
right with employers, and allowing employers to dismiss as well as hiring easier.

Unemployment officially stood at 4.93% in the end of October 2011, representing 444,000
persons, in a slow increase after a steady drop between January July 2011 and even
compared to 2010
17
.
2011
January February March April May June July August Sept. Oct.
6.3% 6.67% 6.00% 5.48% 5.04% 4.84% 4.84% 4.87% 4.89% 4.93%

Since 1989, labour-management relations have changed dramatically. Trade unions, much
better organized than employers' associations, are vocal defenders of their rights and
benefits. The national minimum wage was set at RON 670 per month (about EUR 160) on
January 1, 2011, after extensive negotiations between unions, employers associations, and
the Government.

Current law makes it very costly to engage non-EU citizen staff in Romania
18
. Foreign
companies often resort to expensive staff rotations, special consulting contracts, and non-
cash benefits. Work permits are issued for a maximum of one year (except for seasonal

16
www.stateaid.ro
17
Source: National Agency for Employment, statistics on unemployment 2010 -2011
18
Doing Business in Romania: 2011 Country Commercial Guide for US Companies, United States of
America Department of Commerce
ROMANIA

work), for a fee of 200 euro (payable in the RON equivalent of that days exchange rate).
These permits are automatically renewable with a valid individual work contract. There are
41 Romanian Immigration Authority offices one in each county to issue work permits for
foreign citizens. Citizens of other EU countries can work in Romania without work permits if
their own country does not impose restrictions on Romanian citizens. Although several
companies hire non-EU citizen employees, mainly from Turkey, China, India, Pakistan or
Moldova, most Romanian businesses are still reluctant to bring in large numbers of foreign
employees. In 2011, Romania will issue 5,500 work permits, 2,500 fewer than the previous
year.

Land and building property rights

The Romanian Constitution, adopted in December 1991 and revised in 2003, guarantees the
right to ownership of private property. Mineral and airspace rights, and similar rights, are
excluded from private ownership. Under the revised Constitution, foreign citizens can gain
land ownership through inheritance. Citizens of EU member states can own land in Romania,
subject to reciprocity in their home country.

Companies owning foreign capital may acquire land or property needed to fulfil or develop
company goals. If the company is dissolved or liquidated, the land must be sold within one
year of closure, and may only be sold to a buyer(s) with the legal right to purchase such
assets. For a period of seven years after Romania's accession to the EU, foreign investors may
not purchase agricultural land, forests, or forestry land (except for farmers acting as
commercial entities). Investors can purchase shares in agricultural companies that lease land
in the public domain from the State Land Agency.

Intellectual and industrial property rights

Romania is signatory to international conventions in the intellectual property field, mainly
the Paris Convention, the Berne Convention and TRIPS Agreement. Its domestic legislation for
all intellectual property objects is fully harmonized with the Community regulations and the
international treaties and conventions.

Industrial property
The State Office for Inventions and Trademarks - OSIM (http://www.osim.ro) is the national
administration in charge of granting protection for inventions, trademarks, geographical
indications, industrial designs and others, in the territory of Romania, under the law and the
provisions of international conventions and treaties to which the Romanian State is party.

An invention may be protected in Romania by the grant of a patent by OSIM, according to the
national legislation, or by the grant of a European patent with effect in Romania, according
to the European Patent Convention. The legislation regarding the patents consists of the
Patent Law no. 64/1991 amended si republished on the basis of Law. no 203/2002 and the
Regulations Implementing Law no. 64/ 1991.
- Patentable inventions: a patent shall be granted for any invention having as a
subject-matter a product or a process, in all technological fields, provided that it is
new, involves an inventive step and is susceptible of industrial application.
- Plant variety patents: the Law no. 255/1998 on the protection of the new plant
varieties is in compliance with the International Convention for the Protection of New
Plant Varieties (UPOV) and harmonized with the European regulations in the field. The
validity term of a plant variety patent is of 30 years for trees and vine and 25 years
for the other species.
- Trademarks and geographical indication - Trademarks: the right to a mark shall be
acquired and protected by registration with the State Office for Inventions and
Trademarks according to the Law no. 84/1998. The right to a mark shall belong to the
ROMANIA

natural or legal person who was first to file an application for registration of the mark
and trademark registrations are valid for 10 years from the date of application, and
renewable for similar periods. Geographical indications: the geographical indications
of goods are protected in Romania by registration with OSIM according to the Law no.
84/1998 or to the international conventions to which Romania is a party. They may be
used only by persons manufacturing or selling the products designated by the
registered indications, for a period of ten years, renewable for an unlimited number
of times, if the conditions under which the right has been obtained remain applicable.
- Industrial designs: the object of the application may be registered to the extent in
which it constitutes an industrial design, within the meaning of the Law, is new and

has an individual character. Throughout its period of validity, the certificate of
registration confers on its owner an exclusive right of exploitation of the industrial
design and the right of prohibiting third parties from performing the following acts
without his permission: reproducing, manufacturing, marketing or offering for sale,
using, importing or storing for the purpose of marketing, offering for sale or using a
product having the industrial design incorporated or applied thereto.
- Topographies of integrated circuits: The Law No.16/1995 protects the original
topographies of integrated circuits, which are the results of their creators' intellectual
effort. The validity term of a topography is of 10 years from the official date of its
registration.

Copyright
For Romania, Law no.8 / 1996 is the first truly completely modern copyright and related
rights law, compatible with all the Conventions and all the Treaties to which Romania had
accessed and to the first five European Directives which were into force at the moment of
the promulgation of the Romanian law. The Copyright Office of Romania (COR)
http://www.orda.ro is the unique specialized national authority for settlement,
administration of national registers, supervising, authorizing, arbitration and technical and
scientifically expertise in the domain of copyright and related rights. According to the
Romanian law there are five National Registers: The National Register for Phonograms, The
National Register for Computer Programs, The National Register for Videograms, The National
Register for Private Copy, The National Register for Multipliers / Reproductions, The National
Register for Works.

Counterfeit
While problems persist in protecting IPR from counterfeit products, OSIM, law enforcement,
and private groups have increased their efforts to combat counterfeiting while informing the
business community of how best to protect and enforce IPR protections.

Protection of Intellectual Property Rights during Customs Procedures
Intellectual property rights holders may apply to the Customs Authority requesting action
against goods infringing their rights. Goods infringing an intellectual property right may not
be imported, exported, or re-exported and may be placed under a suspension. Such
merchandise may be destroyed or, subject to the consent of the right-holder, they may be
given to non-profit organizations, depending on the nature of goods.

Public procurement

The regulatory framework of public procurement in Romania, harmonized with the European
legislation is marked by frequent and extensive changes. Primary legislation in public
procurement is Emergency Ordinance 34/2004, subsequently modified and supplemented.
The legislation applies equally to all contracting authorities, and other categories of
beneficiaries, which are imposed in the context of the use of public funds.

ROMANIA

For public contracts with values below the European thresholds, relevant national legislation
recommended by the Treaty principles, namely non-discrimination, mutual recognition,
transparency, equal treatment and proportionality.

Currently, public procurement procedures are as follows:
Open tender is a procedure in which any company has the right to submit an offer;
Restricted tender is a procedure in which any company can apply as a candidate, but
only those selected will be invited to submit tenders;
Competitive dialogue is a procedure in which any company is entitled to apply as a
candidate, the contracting authority will organize a dialogue with the candidates

selected to identify the most appropriate solutions. Solutions based on the selected
candidates will submit offers;
Negotiation is a procedure in which the contracting authority is launching
consultations with selected candidates and negotiate contract terms with one or more
candidates;
Request for offers is a procedure whereby the contracting authority request bids from
several operators;
Competition solution is a special procedure used to purchase a plan or project, and
selection is assigned to a panel of judges.

The ceiling the public procurement legislation does not apply in Romania is EUR 15,000
(September 2011).

All operators interested in participating in public procurement procedures carried out
electronically must register in Electronic Procurement System (SEAP). Also, this system is a
source of information on procedures launched by contracting authorities or other entities as
well as the registration of potential bidders. National Authority for Public Procurement
Regulation (ANRMAP) http://www.anrmap.ro is the regulatory and supervisory entity of this
domain, and the National Council for Solving Complaints (NCCC) http://www.cnsc.ro is the
administrative body competent to resolve jurisdictional appeals related to public
procurement procedures. Ministry of Finance is responsible for checking all procedural
aspects related to public procurement process, the Unit for Coordination and Verification of
Public Procurement.

Statistics and trends

Foreign direct investments attracted by Romania during 2004-2010 (Million Euro)
19

Year 2004 2005 2006 2007 2008 2009 2010
FDI value 5183 5213 9056 7250 9496 3490 2696

Foreign direct investments stock by economic activity attracted in 2009 by Romania,
according to the statistical classification of economic activities NACE Code rev. 2), were
distributed to manufacturing (31.1% of the total), out of which the largest recipients were:
Oil processing, chemicals, rubber and plastic products (6.3%)
Metallurgy (5.2%)
Transport means and equipment (4.7%)
Food, beverage2 and tobacco (4.1%)
Cement, glassware and ceramics (3.3%)

19
Source: National Bank of Romania, Balance of Payments

ROMANIA

Despite their large potential, certain sectors such as textiles, apparel, and footwear and
leather products, still hold a rather small share of the total FDI, 1.6% respectively. Other
activities that have attracted important FDI are: financial intermediation and insurance,
which include banks, non-banks and insurance companies and accounts for 19.0% of the total
FDI stock, constructions and real estate (12.9%), trade (12.3%), IT and communications
(6.5%).

At territorial level, Bucharest Ilfov region attracted the most of the FDI 63.4%, followed by
Centre Region - 7.4%, South Region 7.2%, West Region 6.2%, and South-East Region 5.9%.

Top five countries that invested in Romania were The Netherlands 21.8% of the total FDI
stock by the end of 2009, Austria 18.8%, Germany 13.4%, France 8.5%, and Greece 6.6%.

The list of top countries includes Turkey, in the fifteenth position, with 1.1% of the total FDI
stock.

Foreign direct investments attracted by Romania in 2011 (Million Euro)

Month Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Stock 240 296 379 443 799 1018 1105 1126
Monthly flow 240 56 83 64 356 219 87 21
Source: National Bank of Romania, Balance of Payments

ROMANIA


IMPORT AND EXPORT ACTIVITIES

Movement of goods and services, regulatory frame

Beginning with July 1, 2009 customs or other authorities designated by the member states
have provided businesses with a unique registration and identification number (the EORI
number) to be used for all customs activities they undertake within the European Union.

If a business (or economic operator) is not established within the EU customs territory and
does not have an EORI number, it will have to be registered by the designated authority of
the member state where it conducts one of the following activities for the first time
20
:
Submits, within the Community territory, a short customs declaration, other than:
- A customs declaration done in accordance with Articles 225 - 238 from the Community
Customs Regulation (Commission Regulation no. 2454/93)
- A customs declaration solicited within the temporary admission regime.
Submits, within the Community territory, a short statement of entry or exit.
Manages a warehouse for temporary deposit based on Article 185, 1st paragraph, from
the Community Customs Regulation.
Submits an authorization request based on the Articles 324a or 372 from the
Community Customs Regulation.
Requests an economic operator certificate, authorized according to Article 14a from
the Community Customs Regulation.

The Customs Authority is the Romanian authority in charge of regulating and supervising this
domain http://www.customs.ro.

The Customs Office requires standard documents for release for free circulation. The import
SAD (Single Administrative Document) which also applies to exports must be submitted for
acceptance and registration to the Customs Authority supported by the following documents
accompanying the customs declaration for release for free circulation:
i. the invoice on the basis of which the customs value of the goods is declared;
ii. where it is require, the declaration of particulars for the assessment of the customs
value of the goods declared;
iii. the documents required for the application of preferential tariff arrangements or
other measures derogating from the legal rules applicable to the goods declared;
iv. all other documents required for the application of the provisions governing the
release for free circulation of the goods declared.

The customs authorities may require transport documents or documents relating to the
previous customs procedure, as appropriate, to be produced when the declaration is lodged.
Where a single item is presented in two or more packages, they may also require the
production of a packing list or equivalent document indicating the contents of each package.

Goods under duty suspension require the authorization of the Customs Authority, and
relevant contracts should also be presented for clearance purposes.

20

ROMANIA

At the re-export, the Customs Authority may require documents relating to the previous
customs procedure, as appropriate, to be produced when the declaration is lodged. The
Integrated Tariff of the Community, referred to as TARIC (Tarif Intgr de la Communaut),

is designed to show various rules applying to specific products being imported into the
customs territory of the EU or, in some cases, when exported from it.

To determine if a license is required for a particular product, the TARIC should be checked.
The TARIC can be searched by country of origin, Harmonized System (HS) Code, and product
description on the interactive website of the Directorate-General for Taxation and the
Customs Union. The online TARIC is updated daily.

Romania requires import license for such products as pharmaceutical, chemicals and toiletry.
Also, sanitary and safety standards as well as special approvals for wastes and residues, toxic
substances and firearms are in force.

As regards the Romania foreign trade statistics, they indicate the following top ten products
for export and import
21
:
Top ten export products in 2010:
Transport equipment and vehicles 42.4% of the total exported value
Raw materials 6.9%
Food, beverages and tobacco 6.3%
Chemicals and similar 5.8%
Fuel, Lubricants 5.3%
Other manufactured products 33.3%
The main partners for export are in Germany, Italy, France, Turkey, Hungary, Great Britain,
Bulgaria, Spain, Netherlands, Poland (in order of exports value)
Top ten import products in 2010:
Transport equipment and vehicles 35.3% of the total
Raw materials 3.5%
Food, beverages and tobacco 7.0%
Chemicals and similar 13.2%
Fuel, Lubricants 10.1%
Other manufactured products 30.9%
The main partners for imports are in Germany, Italy, Hungary, France, China, Russia, Austria,
Poland, Turkey, Netherlands.

Tariff and non-tariff barriers

Since January 1, 2007, Romania has applied the common EU tariff system. Tariffs are
particularly high for certain items, such as cigarettes and alcohol. The Romanian Customs
Code presents certain conditions to undertake import activities.

The primary basis for determining customs value is: "... the transaction value, that is, the
price actually paid or payable for the goods when sold for export to the customs territory of
the Community..." The following conditions must be met in determining customs value
22
:
There are no restrictions as to the disposal or use of the goods by the buyer, other
than restrictions which are imposed or required by a law or by the public authorities
in the community, limit the geographical area in which the goods may be resold, or do
not substantially affect the value of the goods;

21
Source: Romania Centre for Promoting Foreign Trade and Investments, www.romtradeinvest.ro
22

ROMANIA

The sale or price is not subject to some conditional consideration for which a value
cannot be determined with respect to the goods being valued;
No part of the proceeds of any subsequent resale disposal or use of the goods by the
buyer will accrue directly or indirectly to the seller, unless an appropriate adjustment
can be made; and
The buyer and seller are not related, or, where the buyer and seller are related, that
the transaction value is acceptable for customs purposes.

The "price actually paid or payable" refers to the price for the imported goods. Thus the flow
of dividends or other payments from the buyer to the seller that do not relate to the
imported goods are not part of the customs value.

Charges added to the customs value may be commissions and brokerage, costs of containers,
packing, royalties and license fees, and the value of goods and services supplied directly or
indirectly by the buyer in connection with the production and sale for export of the imported
goods. Charges that are not included in the customs value may be charges for transport,
charges incurred after importation, charges for interest under a financing arrangement for
the purchase of the goods, charges for the right to reproduce imported goods in the
Community, and buying commissions.

Standards of products and services to be introduced on the market

The Romanian Standards Association (ASRO) is the only National Standards Body in Romania, a
specialized private body of public interest in the standardization area, a non-profit
association authorized by the Government. The Romanian Standards Body is a full Member of
the European standards organizations, CEN and CENELEC.

The National Standardization Program is issued annually and is available on internet at:
http://www.asro.ro/ the Standardization section, together with free access for the
standards users to all the standardization products and services. All Romanian standards are
voluntary. All products tested and certified in the non-member state are likely to have to be
retested and re-certified to European Union requirements as a result of the EUs particular
approach to the protection of health and safety of consumers and the environment. Where
products are not regulated by specific EU technical legislation, they are always subject to the
EUs General Product Safety Directive as well as to possible additional national requirements.

European Union standards are harmonized across the 27 EU Member States, Croatia and
European Economic Area countries to allow for the free circulation of goods. A feature of the
New Approach is CE marking. While harmonization of EU legislation can facilitate access to
the EU Single Market, manufacturers should be aware that Regulations and technical
standards might also function as barriers to trade if standards in non-member states are
different from those of the European Union.

Due to the EUs vigorous promotion of its regulatory and standards system as well as its
generous funding for its business development, the EUs standards regime is wide and deep -
extending well beyond the EUs political borders to include affiliate members such as
Albania, Armenia, Azerbaijan, Belarus, Bosnia and Herzegovina, Egypt, FYR of Macedonia,
Georgia, Israel, Jordan, Lebanon, Libya, Republic of Moldova, Montenegro, Serbia, Tunisia,
Ukraine, and Turkey.

Conformity Assessment
Conformity assessment is a mandatory step for a manufacturer to comply with specific
Romanian legislation. The purpose of conformity assessment is to ensure consistent
compliance during all stages of the production process. A positive assessment facilitates
acceptance of the final product. Romanian and EU product legislation gives manufacturers
ROMANIA

some choice in conformity assessment, depending on the level of risk involved in the use of
their product. These choices range from self-certification, type examination and production
quality control system, to a full quality assurance system. Conformity assessment bodies in
Romania are companies, RTD institutes, universities and other entities, a total of 35 entities.
Their list may be found at http://ec.europa.eu/enterprise/newapproach
/nando/index.cfm?fuseaction=country.notifiedbody&cou_id=642

Product Certification
In order to sell products on the Romanian market, as well as on the EU, Norway,
Liechtenstein and Iceland, exporters are required to apply CE marking whenever their
product is covered by specific product legislation. CE mark legislation offers manufacturers
some choices but also some decision trees to determine which safety/health concerns must
be addressed, which conformity assessment module is best suited to the manufacturing
process, and whether or not to use EU-wide harmonized standards.

Accreditation
Independent certification bodies, known as notified bodies, have been officially accredited
by competent authorities to test and certify to EU requirements. Accreditation is handled at
Romanian level, by Romanian Accreditation Association http://www.renar.to

Labelling and Marking
Romania has adopted various EU mandatory and voluntary labelling schemes, all regulated
and supervised by the National Authority for Consumer Protection which publish the
legislation in force concerning labelling: http://www.anpc.gov.ro/anpc/index.php?
option=com_content&view=category&layout=blog&id=32&Itemid=39
Manufacturers are advised to take note that all labels require metric. Romania imposes that
all labelling should include the Romanian version.

Trade Agreements
Romania has signed a significant number of bilateral Double Tax Agreements (DTAs). Most of
these agreements follow the OECD model. The Double Tax Agreements prevail over domestic
legislation, provided that a certificate confirming the foreign fiscal residency of the taxpayer
is presented to the Romanian tax authorities. Companies based in countries with which
Romania has signed DTAs benefit from a reduced level of withholding taxes. The Fiscal Code
provides for a significant simplification of taxation procedures as well as for harmonization
with European Union fiscal practices.

Taxation clearing, VAT

Since 1999, Romania has revised its tax system to bring it closer both to EU models and to the
recommendations of the World Bank and IMF.

In 2004, Romania adopted a flat tax of 16% on both personal income and corporate profit
taxes, and simplified the tax code. The Government reduced employers' payroll taxes by 2%
in 2007 and by an additional 6%, in three stages, in 2008. In 2009, the newly-elected
Government rolled back some of these reductions. For employment taking place in normal
working conditions, payroll taxes are now 31.3%, with 10.5% payable by the employee and
20.8% by the employer (up from 27.5%, 9.5%, and 18%, respectively). For jobs with high
mortality or disease rates, total payroll taxes are 36.3%, with employees paying 10.5% and
employers 25.8% (compared to 32.5%, 9.5%, and 23% previously). For certain professions such
as mining and aviation, where workers may be exposed to high levels of radiation, the
current rate is 41.3%, with 10.5% paid by the employee and 30.8% by the employer (an
increase from 37.5%, 9.5%, and 28% respectively). Accident and risk fund contributions range
ROMANIA

from 0.15% to 0.85%, depending on the company risk class (previously 0.4% to 2%). Rates for
medical and unemployment insurance have remained unchanged.
Beginning in July 2010, Romania increased the standard value added tax (VAT) rate from 19%
to 24%.

The country is fully integrated with EU customs, excise tax, and VAT transfer systems.

Corporate taxes at a glance
23
:
Profits tax rate (%) 16
Capital gains tax rate (%) 16
Branch tax rate (%) 16
Withholding tax (%)
- Dividends 0/16
- Interest 0/16
- Royalties 0/16
- Services 16
- Commissions 16
- Entertainment and sports activities 16
- Proceeds from liquidation 16
- Branch remittance tax N/A
Net operating losses (years)
- Carry-back N/A
- Carry-forward 7 (5)

Payment terms

The EU addresses the problem of payment delays with Directive 2000/35/EC. This covers all
commercial transactions within the EU, whether in the public or private sector, primarily
dealing with the consequences of late payment. Transactions with consumers, however, do
not fall within the scope of this Directive. The Directive entitles a seller who does not
receive payment for goods/services within 30-60 days of the payment deadline to collect
interest (at a rate of 7 % above the European Central Bank rate) as compensation. The seller
may also retain the title to goods until payment is completed and may claim full
compensation for all recovery costs.

Origin rule

Origin is the "economic" nationality of goods in international trade. There are two kinds, non-
preferential and preferential. Non-preferential origin confers an "economic" nationality on
goods. It is used for determining the origin of products subject to all kinds of commercial
policy measures (such as anti-dumping measures, quantitative restrictions) or tariff quotas. It
is also used for statistical purposes. Other provisions, such as those related to public tenders
or origin marking, are also linked with the non-preferential origin of the products. In
addition, the EU's export refunds in the framework of the Common Agricultural Policy are
often based on non-preferential origin. Preferential origin confers certain benefits on goods
traded between particular countries, namely entry at a reduced or zero rate of duty. In
either case, an important element in determining the origin of goods is their tariff
classification. Goods in trade are identified in the Community by a code number in the
Combined Nomenclature (CN) and before trying to determine their origin it is essential that
their CN code has been identified.

23
Ernst&Young Romania, Romania Business Passport, 2011 edition

ROMANIA

Marketing aspects

Distribution and Sales Channels
Distribution of goods and services in Romania is similar to other European countries.
Wholesale and retail tiers, and support services such as packaging, warehousing and
merchandising, are fully developed in Romania. Retail outlets, franchisees, and value added
resellers serve as channels for the provision of services ranging from mobile phone service,
consulting or software and IT. Romanias range of retail outlets includes specialty shops,

supermarkets, hypermarkets, cash and carry, department stores, gas station convenience
stores, and do-it yourself shops, kiosks, street vendors, open-air markets and wholesale
centres. Despite the rapid growth of shopping malls and hypermarkets, many urban
consumers still rely on small shops and markets for daily shopping.

Selling Factors/Techniques
Price, payment terms, value and quality are critical factors for success in Romania's business
and consumer markets. In almost any business domain, European competitors exist and enjoy
the advantages of tariff free status within the EU. Firms from non-member states may not
always compete on price but need to demonstrate a clear value proposition. Proven products
or services with benefits that emphasize cost-savings, efficiencies or for distributors
profitability and reliability, will stand the best chances of market success.

Trade Promotion and Advertising
The variety and quality of Romanian advertising is similar to that of other European
countries. Total advertising expenditures were approximately 339 million euro in 2009, with
222 million of this, roughly 65%, spent on television advertising, according to estimates by
Initiative Media Romanias Media Fact Book 2010. Multinational companies represent a large
share of spending. New media and combinations of media continue to develop to respond to
audience segmentation using several forms: internet and social networking, digital TV,
mobile telephony, radio, and print, etc.

Most major multinational advertising and public relations agencies are represented in
Romania, including Ogilvy & Mather, McCann-Erickson, Lowe & Partners (IPG member),
Tempo Advertising, Graffiti/BBDO, Saatchi and Saatchi, Young and Rubicam, Leo Burnett and
Publicis.

Specialized market research and testing are available from independent suppliers, both
Romanian and international, as well as from established Romanian institutes and
organizations such as the Romanian Audit Bureau for Circulations http://(www.brat.ro), the
Institute of World Economy, and the Romanian Chamber of Commerce and Industry
(http://www.ccir.ro).

Pricing
Pricing structures in Romania are similar to those used in most other countries: prices are
increased by wholesale and retail mark-ups as well as by taxes, especially the Value Added
Tax (VAT) that climbed from 19% to 24% as of July 2010. Product pricing is influenced
primarily by existing competition in the Romanian market, as well as by the liquidity of the
market. Common consumer goods are price-sensitive, and competition can be fierce, as local
producers compete with products from China, Southeast Asia and Turkey. In the case of
higher quality goods, the reputation of a brand - as well as technical specifications or length
of warranties can command a price premium in the market.

ROMANIA

Romania had an inflation rate of 8% in 2010. Increases in food prices (+0.73%) and fuel prices
(+2.82% for total fuels, and +4.0% for gasoline) were additional drivers of overall inflation.
The NBR envisions inflation to 3.3% by the end of 2011, and 3% in 2012
24
.

Sales Service/Customer Support
The concepts of after-sales customer service and support are still developing among
Romanian businesses, but large multinationals are providing leadership in this area. As a
consequence, Romanian consumers are increasingly sensitive to the quality of aftersales
services in making their buying decisions.

24
National Bank of Romania, 7.11.2011

ROMANIA


ROMANIA


SOURCES OF FINANCING BUSINESS ACTIVITIES

General considerations, types of sources

Doing business in Romania may be financed by several types of sources that depend both on
their origin and their destination. Grants under state-aid schemes and loans are the most
popular sources in Romania, although participation with equity and other private forms of
supporting a business have started to operate in Romania in recent years. Indirect support is
also available under certain schemes addressing social and education aspects.

Public sources EU, international, national

Initial investments in business start-ups and developed
The most of the state-aid schemes refer to initial investment that is a project for new
production/service units, extending existing units in order to produce/offer new products or
services or products/services in a new range. Excepting for certain schemes addressing
environmental issues, all schemes finance such initial investments, and mere replacements
may not be financed under the current schemes.

Very few schemes finance start-up companies, as risks related to a new business are much
higher and require additional measures:
- EU: The National Programme for Rural Development - agricultural, tourism and non-
agricultural activities in rural areas (www.apdrp.ro)
- EU: Companies created to transpose into production a RTD result www.poscce.ro
- National: Environmental Fund environmental related projects for renewable energy,
environmental-friendly industrial approaches in industrial activities or for treating
waste waters. Such applicants should have at least 6 months of activity. www.afm.ro
These schemes are not specially designed for start-ups, and they also finance existing
companies.

Existing companies, with a stable activity and, generally, with positive financial results at
least in the last fiscal year, are financed by several European and national schemes:
- EU: SOP IEC investments up and above 250.000 euro for SMEs, investments in large
enterprises. Additional support addresses training and consultancy needs, going
international, and implementing international standards.
- EU: ROP development of micro-enterprises.
- EU: The National Programme for Rural Development - agricultural, tourism and non-
agricultural activities in rural areas (www.apdrp.ro)
- National: Environmental Fund (www.afm.ro)
- National: state-aid scheme for regional investments, sustainable development,
environmental projects, and other schemes, all coordinated by relevant ministries.
- National: de minimis scheme, financing a large range of enterprises, economic
activities and types of projects.

Research and innovation
Research and innovation in industry are financed by both EU and national programmes, either
as a direct aid national programme, or through cooperating with RTD entities such as RTD
institutes and universities. EU sources: SOP IEC special axis addressing RTD project of
enterprises, in cooperation with RTD structures, or in order to create poles of excellence.
National sources: the National Programme for RTD addressing RTD project of enterprises or
developed in cooperation with RTD structures
ROMANIA


Human resources development
Three types of schemes operate in Romania to develop human recourse in companies: two
schemes addressing direct qualification and training (the difference is made by the result of
the project: either qualification or specialisation/further training for qualified staff), and the
third scheme addressing health and safety issues. Indirectly, companies may benefit of
human recourses development by participating into such project developed by public or
private training providers, universities, chamber of commerce, etc.

Private sources, including bank loans

Private sources for financing businesses are mainly represented by Investment Funds, large
NGOs involved into supporting certain disadvantaged areas, and, most numerous, by loan
schemes developed by banks. Investments Funds operating in Romania are both foreign and
Romania: http://www.kmarket.ro/fonduri/fonduri.php

NGOs involved into supporting certain disadvantaged areas, e.g. World Vision Foundation
financing small scale rural investment projects for local farmers.

Banks: all banks operating in Romania have developed several types of financing instruments,
for current activity, investment projects, and schemes to support companies accessing
European funds.

Useful links:
Romanian Authority for Structural Instrument Coordination, with links to all structural
instruments available in Romania http://www.acis.ro
The National Programme for Rural Development http://www.apdrp.ro
General information on Structural Funds http://www.fonduri-structurale.ro
Romanian Agency for Implementing Project and Programmes for SMEs
http://www.aippimm.ro
National Fund for Environment http://www.afm.ro
National Authority for Scientific Research http://www.ancs.ro
Ministry for Public Finance, incorporating the Unit for coordinating the state-aid and
de minimis schemes funded by the national budget http://www.mfinante.ro
Romanian National Bank, with links to all commercial banks http://www.bnro.ro

ROMANIA


ENTREPRENEURIAL CULTURE

General considerations

Small and medium sized enterprises (SMEs) accounted for 97.9% of the total number of
companies in Romania in 2010. Given the important role they play in generating new jobs and
their significant contribution to increased employment rates, the Plan for National
Development 2007-2013, and, subsequently, several programmes financed by structural
instruments and other European policies. Therefore, the specific actions taken so far have
mainly focused on building of the institutional, legislative and financial framework to support
SMEs development, private initiatives and investments, including promoting the
entrepreneurial culture.

Enhancing the competence through innovation, especially
technological innovation and new business schemes

Entrepreneurial initiative is stimulated in Romania through several programmes financing the
creation of new businesses. All programmes are rather successful, although two risks have
been identified: (1) too optimistic business plans leading to failure in entering the market,
and (2) new business registered by well-established entrepreneurs in order to access the
specially designed funds for newly created companies.

The funds financing such new businesses are currently aiming at stimulating the innovation-
based start-ups and spin-offs, and population of rural area with non-agricultural enterprises
that might diversify the skills and abilities in these areas:
1. Sectorial Operational Programme Increase of Economic Competitiveness, Priority Axis
2: Research, Technological Development and Innovation for Competitiveness
(www.amposcce.ro)
2. National Programme for Rural Development (www.apdrp.ro)

Lifelong learning

In the recent years, great consideration was given to the reinforcement of the initial
education and training contribution in providing employability competences to their future
graduates. Thus, the initial vocational education includes good examples for the importance
given to the need to improve the co-operation with employers and to address the individual
education and training needs. The vocational education curriculum creates the premises for
flexible and better adapted educational and offers to the labour market needs and for
promoting entrepreneurship. Entrepreneurial education is part of the key competences and is
reflected in all curriculum development activities. Entrepreneurial education is also part of
the compulsory curriculum in gymnasium education. School-enterprises co-operation as
predictor for entrepreneurship skills development is still insufficiently exploited, especially in
rural areas.
In case of university education, entrepreneurial education is less coherent and systematic
compared to pre-university education, as well as compared to the experiences and practices
of other Member States.

The public and private market is offering training courses for adults of management,
marketing, basic competencies such as communication, team working, leadership, etc.
ensures the needs for such skills and abilities: universities, chambers of commerce, training
and consultancy companies, business associations and other relevant organisers. Yet, the
ROMANIA


training programmes enjoying a higher coherence and responding in an integrated manner to
the needs defining the entrepreneurial culture are those financed under several measures,
namely:
1. Sectorial Operational Programme Human Resources Development 2007-2013,
financed by the European Social Fund and the Romania Government
(http://ww.fseromania.ro)
2. National programme addressing young generations of entrepreneurs: START
(http://www.aippimm.ro/categorie/programe/)
3. National Programme to Develop an Entrepreneurial Culture among Women Managers in
SMEs (http://www.aippimm.ro/categorie/programe/)

Corporate responsibility

Corporate social responsibility (CSR), as a concept, is becoming increasingly common in
Romanian business, driven primarily by multinational companies infusing their corporate
culture into the local market. Virtually all foreign enterprises in Romania have some kind of
CSR program, and most follow generally accepted CSR principles, such as the OECD
Guidelines for Multinational Enterprises. Romanian legislation allows companies to allocate
part of their corporate income tax (a maximum of 0.3% of turnover and 20% of total
corporate income tax due) for CSR under the sponsorship law. Two important online CSR
platforms present project, developments, and CSER-related events in Romania: www.csr-
romania.ro, and www.responsabilitatesociala.ro

ROMANIA

LOCAL RESOURCES FOR CROSS BORDER
BUSSINESS COOPERATION

Main economic sectors of cross border interest

Romania is a market with great potential, a strategic location, and a business environment
that offers opportunities amidst some risks.

After several years of strong growth, Romania slumped into a deep recession in 2009 with
GDP contracting by more than 7%. The contraction moderated in 2010 to minus 2% of GDP,
and most forecasts see a gradual return to growth of 0.5% to 1.5% in 2011, positive but still
lagging behind most of the European Union. Forecasts for succeeding years are more
encouraging, as most predict the rate of economic growth to accelerate further.

Stabilization of the economy has been due largely to a 20 billion ($27.4 billion) rescue
package led by the International Monetary Fund (IMF). Romania has shown commitment to
meeting the terms of the agreement with IMF, implementing a tough austerity program to
reduce its budget deficit to 4.4% of GDP in 2011 and to 3% of GDP in 2012.

Despite these challenges, several underlying attributes of the economy allow it to keep
forward momentum. These attributes also produce the medium term business opportunities
for foreign companies who have experience and expertise in the areas demanded by
Romanias stage of development.

Romanias membership in the European Union is one of its most persuasive advantages. As a
relatively new (2007) member, Romania offers a sizable domestic market and a
comparatively low-cost foothold for accessing the EU market. Much of the foreign investment
in retail and some manufacturing has been based on these two elements. In addition to this
larger market, Romanias membership makes it eligible for billions of euro in EU grant
funding. The set of financial supports known as Structural Instruments are available to
support investment in physical infrastructure and many other types of projects, and require a
co-financing component from the recipient, in addition to the national government. In
addition, Romanias location in Southeast Europe shortens the distance for export sales to
Turkey, the Balkans, the Middle East and markets such as Ukraine and Russia. Several foreign
manufacturers have moved into Romania, despite its economic recession, for this reason.
Romanias powerful concentration of high-end software development and services is almost
entirely export driven, serving regional or global markets. Romanias stage of development
and its requirement to conform to the standards of the EU drive many of the business
opportunities for foreign firms.

Based on market analyses, the national authorities and several important foreign economic
missions in Romania recommend the following sectors as being an opportunity for foreign
companies:
Agricultural Machinery and Equipment
Automotive Market
Energy
Environmental Technologies
Healthcare
Information Technology Market
Packaging And Packaging Waste Market
As the economy recovers, additional opportunities will emerge in areas such as franchising,
hotel and restaurant equipment, automotive parts, packaging, and other industrial
equipment.

ROMANIA


Local products and services of cross border interest (traditional
manufacturing, tourism, agricultural products, etc.)

Constanta County economy seize its competitive and natural advantages that it already has
or has developed over time: over 70 km of opening the Black Sea and Danube opening Danube
- Black Sea that links the various tourist resources (beaches, spa background, cultural and
historical heritage, protected areas), flat agricultural land, favourable conditions for
viticulture, labour large, broad and diversified educational framework, dynamic business
environment. In this context, a myriad of economic activities have developed harmoniously
and integrated, so the potential for international cooperation is expanded.

Regarding the ranking of economic sectors as a share of the total economy of Constanta, an
integrated analysis of the number of active firms, the investments they make and their
turnover.
25
At the end of 2009, Constanta held the largest share of active firms in trade,
37.5% of the county's economic activity, followed far away from a group of five types of
activities with rather equal weights, namely construction, transport and warehousing,
professional, scientific and technical, manufacturing and tourism. Investment companies in
the trade is on the lower places, leaving the top companies in manufacturing, the
construction and transport and storage. In conclusion, the three sectors remain constantly
present in this analysis, namely manufacturing, construction and transport and storage. Both
manufacturing and transport and storage already have an international activity, certainly not
exploiting all potential capacity. Construction sector has recently begun the process of
internationalization and cooperation with other companies in building and participating in
international tenders is likely to facilitate this process.

Given the vast variety of sub-sectors in manufacturing, an analysis is required to identify the
most relevant sub-processing in Constanta County. Thus, the share of manufacturing activity
determines the next most important ranking: food and beverages, manufacture of other
transport equipment (ships and boats), manufacture of metal constructions, manufacture of
rubber and plastics, textiles and clothing, non-metallic mineral production (incl. construction
materials) and mobile. Despite the small number of companies, companies active in the
manufacture of refined petroleum products have a turnover and make investments that
exceed the other sub-sectors of manufacturing. Sectors such as construction materials, food,
petrochemical, or produce other types of means of transporting (ships and boats) and large
enterprises that have generators are the sector.

Economic sectors with potential for internationalization

The total value of the international commerce of Constanta in 2010 indicate a slight increase
compared to 2009, exports recorded a figure of 1,709,807 thousand euro (up 8.34%) and
imports 2,603,918 thousand Euros (an increase of 11.82 %), causing a negative trade balance.
For the first three months of 2011 the export value is 753,162 thousand Euros (up 47.70%) and
imports of 797,650 thousand Euros (up 29.61%) compared with same period of 2010,
indicating a slight economic recovery and a decrease in the trade deficit
26
.

Absolute increase in the size of deliveries to export recorded in January-August 2011, gives
the main groups of products can be ranked as follows:
a. Fuels and mineral oils - 512.04 million Euros
b. Ships, boats and floating structures - 248.71 million Euros

25
Statistical Yearbook 2007-2010 Constanta, Constanta County Statistics
26
Monthly Statistical Bulletin, the "International Trade" for the county of Constanta, National Institute
of Statistics, 2009-2011

ROMANIA

c. Iron and steel - 161.37 million Euros

As regards imports, the highest values recorded for Constanta County:
a. Fuels and mineral oils - 1050.37 million Euros
b. Boilers, turbines, engines, machinery and mechanical appliances - 115.19 mil. Euros
c. Machinery, electrical equipment and parts thereof - 72.75 million Euros

Analysing the evolution of the key sectors with internationalization potential of Constanta:
a. National Export Strategy 2011-2015 identifies the Romanian shipbuilding, metals and
logistics as having the largest potential;
b. Over 80% of the renewable energy investments are concentrated in the counties of
Constanta and Tulcea
27
, estimates in this area are growing from 1% to 11%
contribution to the electricity system;
c. The analysis shows that FDI projects in sectors like automotive, mining and transport
were all significantly reduced in number, while business services and information
technology projects were also affected. However, other sectors
28
- perhaps those who
have survived the recession better - such as food, pharmaceutical and electricity, all
recorded an increase in the number of projects;
d. The Port of Constanta is logistic centre and is primary polarizing the county economy,
transport, storage activities recording a turnover increase;
e. The seaside hotel business is substantial annual investments that are hard to recover
in a short season on the Romanian seaside. The problems facing the seaside hoteliers
are both internal organization and the market situation that does not depend directly
on their decisions. Thus, underinvestment in infrastructure, lack of qualified labour,
wrong market positioning or lack of convergence between the interests pursued by
investors and local authorities and Coast image abroad has determined an annual rate
of slow recovery Romanian tourism. A solution for this is the internationalization of
the presence of international hotel brands.
f. The furniture produced to address a large mass of consumers has a significant share in
the consumer goods industry in most countries of the world, holding or forest
resources. From the perspective of recovery in terms of size of value added wood to a
cubic meter for the furniture industry is an important sector with growth prospects.
Constanta County contributes 2.6% of Romania's total exports in this sector.
g. The construction sector can be internationalized by the combination of companies
from participating at auctions for both infrastructure projects and real estate. The
high investment rate in Constanta County shows a slight increase in the activity and
positive forecasts for the sector.

27
Pure Power - Wind energy targets for 2020 and 2030, Report by the European Wind Energy
Association 2011
28
The investment attractiveness of the South Eastern Europe, Ernst & Young, Section Romania, 2010.
European Investment Monitor excludes portfolio investments, mergers and acquisitions and highlights
the real situation of foreign investment in manufacturing and services sector made in the continent.
Investment attractiveness of a location is a combination of image, investors' confidence and how they
perceive the ability of a country or region to offer the most competitive advantages for FDI.

ROMANIA


BULGARIA

BULGARIA

BULGARIA

BULGARIA

COUNTRY PROFILE

General presentation

Official name: Republic of Bulgaria


Form of government: Parliamentary Republic

Geography

Bulgaria is situated in the Sout-East of the
Central Europe, in the Balkan Peninsula and
shares a border with Turkey and Greece to
the south, Macedonia and Serbia to the west,
Romania to the north and the Black Sea to
the east. With an area of 110,910 sq. km.,
Bulgaria is one of the smaller countries in
Central and Eastern Europe and among the
EU member states.
The relief of Bulgaria is varied. In the
relatively small territory of the country there
are extensive lowlands, plains, hills, low and
high mountains, many valleys and deep
gorges. The mountainous South-Western part
of the country has two mountain chains - Rila
and Pirin and more to the East there are
the Rhodope Mountains, shorter but wider.
The Rila mountains include the highest peak
in the Balkan Peninsula, Musala, of 2,925 m;
the Balkan Mountains stretched chain is oriented East to West direction across the
country,
north of the famous Rose Valley. Hills can be found in the south east of the eastern Black
Sea coast and along Bulgaria's main river, the Danube in the north.

The table bellow shows the distribution of the height zones in Bulgaria:

Height zones Height (m) Area (km
2
) Area (%)
BULGARIA
Lowlands 0-200 34,858 31.42
Hills 200-600 45,516 41.00
Low mountains 600-1000 16,918 15.24
Medium-high mountains 1000-1600 10,904 9.82
High mountains 1600-2925 2,798 2.52

Hydrography
The Danube river, crossing eight European countries and being the Europe's second longest
river with a length of 2,860 km, forms most of the northern border of Bulgaria with Romania.
Other important rivers are Struma and Marita, in the South. There are about 260 glacial
lakes in the Rila and Pirin, several large lakes on the Black Sea coast and more than 2,200
artificial man-made storage lakes. Mineral springs are abundant, localized especially in the
South - West and central regions.

Climate
The sub continental climate is predominant in Bulgaria (with 2000 2400 sunny hours per
year) with four seasons: cold and sometimes humid winter with snowfalls and average
temperature 0C, cool and more often rainy spring, warm and rainy summer at the start of
the season and with hot and dry weather during the rest of the season and average
temperatures 23C and warm, sunny and windy autumn. The average annual temperature is
10.5C.

Natural resources
Bulgaria has large areas of high-quality arable land and forests. The country has considerable
natural resources including vast reserves of lignite and anthracite or non-ferrous minerals
such as copper, lead, zinc and gold. There are large deposits of manganese in the North
East. Smaller deposits of iron, silver, chromium and nickel are also present. Bulgaria is rich in
salt, gypsum, kaolin and marble.

Language
Bulgarian is the official and national language in the country. Turkish, Rromale, Macedonian
and Armenian are languages usually spoken by approx. 15% of the population. The most
commonly used business languages are Russian, German, English and French. Among people
living in the border area, many are using in commercial purposes the language of the
neighboring country.

National Day: 3rd of March (Liberation Day)

Other official holidays:
Jan. 1 2; Easter (Good Friday and Monday, the second Easter day); May 1; May 6, May 24,
Sept. 6, Sept.22; Nov.1; Christmas (December 24 26)

Local time: GMT + 2

National currency:
LEV (BGL), subdivision STOTINKA; 1 EUR=1.95583 BGN, fixed exchange rate under currency
board


The history of Bulgaria starts with the forming of the First Bulgarian Empire by Asparukh in
681 AD though previously other Bulgarian ruler ships existed, but traditionally history of
BULGARIA
Bulgaria is beginning with Asparukh and union between Bulgars and Slavs at the lands of
todays Bulgaria.
In 632 the Bulgars, originally from Central Asia, formed under the leadership of Kubrat an
independent state that became known as Great Bulgaria. Its territory extended from the
lower course of the Danube to the west, the Black Sea and the Azov Sea to the south, the
Kuban River to the east, and the Donets River to the north. Pressure from the Khazars led to
the subjugation of Great Bulgaria in the second half of the 7th century. Kubrats successor,
Asparukh, migrated with some of the Bulgar tribes to the lower courses of the rivers Danube,
Dniester and Dniepr (known as Ongal), and conquered Moesia and Scythia Minor (Dobrudzha)
from the Byzantine Empire, expanding his new kingdom further into the Balkan Peninsula. A
peace treaty with Byzantium in 681 and the establishment of the Bulgarian capital of Pliska
south of the Danube mark the beginning of the First Bulgarian Empire. (At the same time one
of Asparuh's brothers, Kuber, settled with another Bulgar group in present-day Macedonia.)
Bulgarian culture is formed by traditions of the Bulgars and to some extend Thracians, Slavic
language and after Christianisation - by Orthodox Christianity, drawing from both Western
European cultural traditions (19th, 20th century) and the Eastern, Byzantine and later in 19th
and 20th century Russian culture.
The First and Second Bulgarian Empires formed a cultural centre in Slavic Europe with its
literary schools and educators which were a major source for Slavic literature and
standardization of written literary Old Slavic language.
In political aspect Bulgaria went through radical changes (kingdom, communism and later
republic democracy) and lost independence twice in its history, once by the Kievan Rus' and
the Byzantine Empire (10181185) and once by the Ottoman Empire (1396 - 1878), which
introduced many challenges, esp. after the Liberation in 1878. Bulgarian Kingdom after the
Liberation was seeking to restore Bulgarian institutions, give place to Bulgarian science and
education (where many new models were adopted like education for women), literature
(creation of modern Bulgarian literature), standardization of the Modern Bulgarian literary
language, etc. During communism Bulgarian state was seeking to improve the economic
situation of small towns and villages, and to reduce social class differences that emerged in
the monarchy and were partially received by the social differences during the Ottoman rule,
education was made economically accessible to all, but entrepreneurship was forbidden, and
travel abroad was difficult due to inner restrictions. After the events at the end of 1989 and
early 1990 in the Eastern Europe Bulgaria changed to democratic republic giving place for
political pluralism and freedom of speech, and free market economy. Following 10 November
1989, when under the pressure of both domestic and international developments Todor
Zhivkov, Bulgaria's long-time Communist Party leader, was forced to resign, Bulgaria stepped
on the road to democracy again. Nowadays, it is a pluralistic, multi-party state and a
parliamentary republic, member of NATO and EU.


Demography
According to the preliminary data of the February 2011 census, Bulgaria has a total
population of 7.35 million inhabitants and an average density of 66 inhabitants per sq km.
83.9% are Bulgarians, 9.4% Turks, 4.7% are Rroma, 2% form other ethnic minority groups
(Macedonian, Armenian, Tatar). 82.6% of the population are Bulgarian Orthodox, 12.2% are
Muslim, 0.6% Roman Catholic, 0.5% are Protestants.
For 2008 it is estimated that the active population was 2.67 million persons, of whom 7.5%
worked in agriculture, 35.5% in industry and 57% in services.

Administrative divisions
Bulgaria is divided in 6 regions 3 in the South and 3 in the North. With the administrative
reform in 1998 the existing at that time 9 districts were transformed in 27 districts and the
metropolitan area of the capital Sofia. The provinces are named after the capital each and
are subdivided into 264 municipalities. The most important cities are Sofia, the capital, with
1.3 million inhabitants, Plovdiv 379,493 inhabitants, and Varna 352,674 inhabitants.

BULGARIA
Transport infrastructure
The crossroad geographical situation of Bulgaria is defined by the five trans - European
corridors between Europe, Asia and Africa. These are the most important capital of the
country in the international relations. These are Corridor 4 from Scandinavian countries
through Poland and Hungary towards Greece; Corridor 8 from Adriatic Sea to the Black Sea,
Corridor 9 from Scandinavian countries through Saint Petersburg and Kiev to Greece and
Turkey; corridor 10 from Western and Central Europe to India and the River Corridor 7 from
Nordic Sea to the Black Sea via the Danube river. All this defines the existing transport
infrastructure of the country.

Railways
In 2005 Bulgaria had some 6,238 kilometers of open access track owned by the state company
"National Company Railway Infrastructure", including a 125 kilometers long 760 mm narrow
gauge railway - the Septemvri-Dobrinishte. Sofia, Plovdiv and Gorna Oriahovitsa are the hubs
of the domestic system and of international rail connections. Bulgaria's rail system has not
expanded since the 1980s, but there are upgrading projects underway.

Roads
In 2008, Bulgaria had about 44,033 km of roads, of which 99% paved (43,593 km) and only 1%
unpaved (440 km), but almost 50% of paved roads were considered of minimum international
standards and only 459 km were highways. Bulgaria has delayed building some key highway
connections since the 1990s, but European Union membership is a strong incentive for
completion. The National Strategy for Integrated Infrastructure Development calls for
construction of 720 kilometers of new highways by 2015. Proposed international corridors
would pass from North to South, from Vidin to the border with Greece and from Ruse to the
border with Greece, and West to East, from Serbia through Sofia to Burgas, Varna, and Edirne
(Turkey).

Highways
Trakiya motorway: Sofia - Plovdiv Stara Zagora - Karnobat - Burgas (Stara Zagora
to Karnobat under construction)
Hemus motorway: Sofia - Yablanitsa - Shumen - Varna (Yablanitsa to Shumen still
to be constructed)
Cherno More motorway: Varna - Burgas (planned)
Maritsa motorway: Parvomay - Kapitan Andreevo (under construction)
Lyulin motorway: Sofia - Pernik
BULGARIA
Struma motorway: (Sofia) Pernik - Kulata (still under construction Dolna Dikanya
to Sandanski)

Air transport
In 2008 Bulgaria had 204 airports, 127 of which with paved runways, and 4 heliports. The
largets airport, in Sofia, has a runway longer than 3,000 meters. The second- and third-
largest airports, in Varna and Burgas, serve mainly charter flights and have regular domestic
links with the capital.

Water transport
Bulgaria has 8 river ports on the Danube (Lom, Rousse, Vidin, Silistra, Tutrakan, Svishtov,
Nikopol and Oryahovo) and 9 sea ports at the Black Sea (Burgas, Nesebar, Varna, Tsarevo,
Sozopol, Pomorie, Obzor, Kavarna, Balchik). The major and largest ports with international
significance are Varna and Burgas.

Pipelines
In 2005 Bulgaria had 2,425 kilometres of natural gas pipelines, 339 kilometres of oil pipelines,
and 156 kilometres of pipelines for refined products. The pipeline system was scheduled for
substantial changes and additions, however. Bulgaria has refused the 279 km Burgas-
Alexandroupolis Pipeline. The line would enable Russian oil arriving at the Bulgarian oil port
of Burgas to reach Greeces Mediterranean port at Alexandroupolis. Some 400 Km of the
planned Nabucco Pipeline, bringing gas from Azerbaijan and Iran to Central Europe, are
expected to cross Bulgaria.

GDP
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Millions of PPS
(Purchasing
Power
Standard)
50969.3 54298.6 58153.6 63514.0
b
69466.8 76784.0 82937.9 78424.0 80734.7 83156.7
f
86439.1
f

Purchasing
Power
Standard per
inhabitant
6500 7000 7500 8200
b
9000 10000 10900 10300 10700 11200
f
11900
f

Source: Eurostat
http://epp.eurostat.ec.europa.eu/tgm/refreshTableAction.do?tab=table&plugin=1&pcode=tec00001&language=en

Bulgaria, part of the Black Sea community

The first obligation of Bulgaria as member of the EU is to implement the principles and
priorities of EU policies. The second obligation as Black Sea country is
to support the implementation of these policies on the territory of the Black Sea basin
as progressive ones,
to apply new models of co-operation for strengthening the socio-economic
development, which is of mutual interest.
As a country that practically implements a bridging role between the Western Balkans and
the Black Sea, Bulgaria could accumulate and generate new initiatives, which could be
determined as stabilizing, taking into account also the good history of its relations with
Balkan countries and with the countries on the Black Sea coast.

Bulgaria pays its tribute by keeping good relations with all the countries from the region
and serving as an example for good practices, human rights protection and democratic
freedoms. Every year numerous forums, round tables and discussions with international
participation are organized to discuss those issues and present the opportunities and the
necessary actions in these aspects. Bulgaria also is an active member of OSCE, whose
priorities and actions concern the issues already mentioned.

BULGARIA
In order to increase the Efficiency of Border Control at the EU External Sea Frontiers,
Bulgaria is addressing the following issues:
increasing internal security in the region by improving the collaboration among
all those institutions in Black Sea countries that are concerned with national
security and navigational safety, protecting the sea frontiers and the
environment by harmonisation of risk analysis techniques;
improving the coordination of joint operations and onboard searches for illegal
immigrants, illegal shipments of drugs, weapons and hazardous substances;
jointly developing a methodology for fighting corruption in the specialized
agencies of Black Sea countries.

In order to improve Communication and Coordination between National Border Coordination
Centres of Black Sea countries, Bulgaria aims at improving coordination between border
agencies in the Black Sea Region and in particular at strengthening the capacity of the Black
Sea Border Coordination and Information Centre in Burgas and the National Border
Coordination Centres of Black Sea countries.
Bulgaria successfully implements the Integrated Border Management Strategy (which aims at
an integrated and global response to the challenges posed by the phenomenon of irregular
immigration through common external borders) .
Bulgaria is prepared to undertake a key role in strengthening the co-operation between the
Danube and Black Sea countries. Being both a Danube and a Black Sea country, Bulgaria is
well placed to contribute to the implementation of EU environmental initiatives and policies
in the region, strategic energy projects included in its Operative Program for Cross-Border
Co-operation in the Black Sea Basin and in the National Strategy for Integrated Infrastructural
Development.
Bulgaria is ready to take a proactive approach to disseminating the principles and ideas of
the future maritime policy in the region by applying the integrated, crosssector and
interdisciplinary maritime policy model as proposed by the Green Paper.
Promoting the principles of Integrated Black Sea Coastal Zone Management is consistent with
the Recommendation of the European Parliament and the Council on the implementation of
Integrated Coastal Zone Management in Europe (30 May 2002).

Being member of WTO, Bulgaria supports the efforts of the Black Sea partner countries to
join the WTO.

Bulgaria is using the possibilities for co-operation through the Research Program of the
International Centre for Black Sea Studies as well as through the establishment of a research
network, devoted to the problems of the Black Sea and the co-operation with the now
forming European network for research and policy development.
Strategic goals of Bulgaria towards the region are connected with the safeguarding of its
national security through achieving lasting stability in the region and the creation of
favourable conditions for the development of the Bulgarian economy through increasing the
co-operation in the Black Sea Region on a bilateral and regional basis.
In the context of co-operation in the Black Sea Bulgaria adheres to the principles of
consistency, continuity, respect for the rights of building bilateral relationships or
relationships in other formats of mutual interest, stability in the relations with the EU,
covering standards and norms in various sectors and policies leading to sustainable patterns
of development.
Support for the activity of the Parliamentary Assembly of Black Sea Economic Co-operation
and the Organization of Black Sea Economic Co-operation is among the Bulgarian priorities for
internal co-operation initiatives. The aim of all Bulgarian institutions and authorities is the
intensification of their activity and their participation in the current policies of the region.
In this context the successful implementation of the Black Sea Synergy in addition to the
EU Neighbourhood policy is of paramount importance for Bulgaria.
Different elements have to be used for the achievement of the long term objectives:
Strengthening security and stability, good neighbourly relations and partnership with and
among all the countries of the region;
BULGARIA
Promoting democracy, rule of law, human rights and good governance;
Providing support for a functioning market economy, encouraging economic development
and prosperity;
Extending collaboration with civil society;
Developing co-operation at municipal and regional level.
The co-operation in the Black Sea Region is based on common values and principles, shared
by all countries and defined by the UN Charter, the basic OSCE, the Council of Europe and
BSEC documents, as well as the bilateral agreements between the countries
from the region and the EU and NATO.
Bulgaria supports enhanced co-operation among the Black Sea countries, based on the
following principles:
shared responsibility for the development and prosperity of the region and ownership
of the regional co-operation process;
an inclusive approach, ensuring that no country of the region is excluded;
a pragmatic approach;
synergy between various regional initiatives and programs;
each country being able to decide whether to participate or not in a given project
developed with the initiative of concerned countries in the region;
co-financing from regional partners or other sources, including international financial
institutions, government and private funds, establishing partnerships of the Northern
Dimension type;
openness for co-operation with the EU and other international, regional and local
organizations and institutions, as well as business associations, academic and research
institutions and non-governmental organisations.
Bulgaria will actively promote the formulation and implementation of an enhanced EU policy
in the Black Sea Region.

BULGARIA

BULGARIA


General consideration on the institutional framework

Government system: Parliamentary Republic
President: Rosen Plevneliev since 22 January 2012
Prime Minister: Boyko Borissov
Foreign Minister: Nickolay Mladenov
Bulgaria is a parliamentary republic and conforms with the Constitution of the Republic
passed by the Grand National Assembly in July 1991. The Constitution of the Republic of
Bulgaria is the supreme law of the country and no other law may contravene it. All
international treaties, which are ratified pursuant to the constitutional procedure, are
considered part of the domestic legislation.
The National Assembly is a one-chamber parliament. It consists of 240 Members of Parliament
who are directly elected every four years. The National Assembly is a permanent acting body,
directed by a board of Chairmen including a Chairman of the National Assembly.
http://www.parliament.bg/
The head of the state is the President, who embodies the unity of the nation and represents
the Republic of Bulgaria in its international relations. http://www.president.bg/

Public institutions

The Council of Ministers is the executive state body and directs the domestic and foreign
policy of the country. The government (15 Ministries; http://www.government.bg ) manages
the implementation of the state budget, organizes the management of state property and
approves or rescinds certain categories of international treaties pointed out in the
Constitution.
1. Ministry of Interior www.mvr.bg
2. Ministry of Finance www.minfin.bg
3. Ministry of Regional Development and Public Works www.mrrb.government.bg/
4. Ministry of Labor and Social Policy www.mlsp.government.bg
5. Ministry of Defence www.mod.bg
6. Ministry of Foreign Affairs www.mfa.bg
7. Ministry of Justice www.justice.government.bg
8. Ministry of Education, Youth and Science www.minedu.government.bg
9. Ministry of Health www.mh.government.bg
10. Ministry of Culture www.mc.government.bg
11. Ministry of Environment and Water www.moew.government.bg
12. Ministry of Agriculture and Food www.mzh.government.bg
13. Ministry of Economy, Energy and Tourism www.mi.government.bg
14. Ministry of Transport, Information Technology and Communications
www.mtitc.government.bg
15. Ministry of Phisycal Education and Sports www.youthsport.bg
16. Minister for the Management of EU funds
http://www.government.bg/cgi-bin/e-cms/vis/vis.pl?g=&n=18&p=0232&s=001

In Bulgaria operate the following state agencies:
1. The Archives State Agency (ASA) www.archives.government.bg
2. Cadastre Agency of Bulgaria www.cadastre.bg
3. Customs Agency www.customs.bg
4. Invest in Bulgaria Agency www.investbg.government.bg
5. National Bank of Bulgaria www.bnb.bg
BULGARIA
6. National Statistic Institute www.nsi.bg
7. The Bulgarian Small and Medium Enterprises Promotion Agency
http://www.sme.government.bg/en/
The Bulgarian Small and Medium Enterprises Promotion Agency (BSMEPA) is a government
body under the Minister of Economy. It was established with the amendments of the Law for
SMEs in 2004 as a successor of the Bulgarian Trade Promotion Agency (BTPA) and the Agency
for Small and Medium-sized Enterprises (ASME). BSMEPA has four specialised opperational
Departments: Information Services and Regional Coordination General Department,
Technological Development and Innovations Department, Pre-accession Projects and
Proggrammes Implementation Department, Competitiveness and Entrepreneurial Skills
Department. Each of these departments has its own area of expertise and set of activities
and together they elaborate and implement the major functions of the Agency, namely:
information and consulting services,
support to innovative projects and new technologies,
assistance of Bulgarian companies in growing and entering into the foreign markets,
managers training and transfer of experience through the implementation of
international projects.

Local institutions
The territory of the Republic of Bulgaria is divided into 278 municipalities and 28 regions.
Municipalities are legal entities and have the right of ownership and independent municipal
budgets. Mayors of the municipalities and municipal councils are elected through direct local
elections at every 4 years, following the law regulations. The municipal council is the local
government authority, which determines the development policy of the municipality. The
municipal council consists of the directly elected municipal councilors. The executive power
body in the municipality is the mayor of the municipality.
The regions are administrative-territorial units executing the regional policy of the central
government. The regional government is performed by regional governors and regional
administration staff on municipality budget expenses. The regional governor is a monocracy
body of the executive power in the region, performing the state government in the region
and providing compliance of national and local interests in executing the regional policy. The
regional governor is appointed by the Council of Ministers.

BULGARIA

Bulgarian Chamber of Commerce and Industry www.bcci.bg (BCCI, Bulgarska targovsko-
promishlena palata) has the main task of partnership with state institutions to promote
decisions in favour of business in the country. The system of BCCI includes 28 regional
Chambers and a total of more than 52,000 members. General view is that during the last
years the role of BCCI has increased due to its closer links with branch organisations and the
increasing demands for its opinion from the state bodies. The activities of BCCI are
concentrated on the submission of opinions on the drafts of new laws, programmes and
strategies. However, it participates also in more operational bodies for the implementation
of programmes and projects.

The Bulgarian Industrial Association www.bia-bg.com (BIA, Bulgarska stopanska kamara) is
an umbrella organization with a matrix structure, vertically representing the branch (sector)
oriented organization and horizontally the regional and municipal organizations. BIA has
played a crucial role in initiating and coordinating the foundation, consolidation and
establishment of the branch (sector) and regional business organizations in Bulgaria.
As early as its foundation the Bulgarian Industrial Association directed its efforts to structure
the business environment also on a regional principle. This way more than 133 regional
associations and local bodies of the business have been set up, 26 of which have the status of
regional industrial unions and associations. At present BIA membership incorporates 102
branch organizations constituting a mirror-image of the modern Bulgarian economy. The
branch infrastructure is a pre-condition for developing the
social dialogue on a branch level.
partnership with the European sector confederations.
The efforts made helped BIA to have today a well-developed matrix structure and unite on
the one hand the branch organizations covering the whole spectrum of economy, and on the
other hand the regional structures that correspond to the administrative division of the
country.

The Bulgarian International Business Association (BIBA) is an association of foreign investors
in Bulgaria, founded in 1992. It is considered to be one of the most influential
nongovernmental organisations in Bulgaria, particularly after it opened its doors to Bulgarian
owned companies (since 2001) which are involved in international trade and strive to reach
world class operational and business standards. The main mission of BIBA is to favourably
influence the business climate in Bulgaria and to improve member companies
competitiveness (and thus national competitiveness). Among its activities are the facilitation
of a dialogue between government and business and the promotion of Public-Private-
Partnerships. The activities of its Human Resource Committee are especially relevant for
Private Sector involvement, because it prepared the Chapter on human resources in the
White Paper on Health and Education and the statements on the Operational Program
Human Resources Development of the National Plan for 2007-2013.

The Union for Private Economic Enterprise www.esc.bg (UPEE) was established in 1989 as a
non-governmental, non-profit organisation. It is the first voluntary association of Private
Sector enterprises in Bulgaria. It has several branch organisations.


The Black Sea zone is often described as a bridge to other regions the Danube region to
the west, the Caspian Basin and Central Asia to the east. In view of the numerous challenges
which are common to all these regions, Bulgaria supports the establishment of an enhanced
dialogue on matters like the environment, transport and energy.
The Black Sea Economic Cooperation Organisation (BSEC) is an international regional
economic organisation of the countries from the Black Sea region. It was first launched back
in 1992 by the Republic of Turkey and acquired the statute of a full-fledged organisation in
BULGARIA
1999. Its membership currently includes Albania, Armenia, Azerbaidjan, Bulgaria, Georgia,
Greece, Moldova, Romania, Russia, Serbia, Turkey and Ukraine. Seven EU member-states, the
United States, Egypt, Tunisia and others have an observer status, while the European
Commission and the Energy Charter are among its partner organisations. BSEC has a number
of specialised bodies like the BSEC Parliamentary Assembly, the Black Sea Trade and
Development Bank, the International Center for Black Sea Studies and the BSEC Business
Council.

BULGARIA

LEGAL FRAMEWORK FOR DOING BUSINESS

Starting a business in BULGARIA
In Bulgaria are possible 2 types of registration of companies, governed respectively by the
Law on Obligations and Contracts http://www.lex.bg/bg/laws/ldoc/2121934337 and the
Commercial Code http://www.lex.bg/bg/laws/ldoc/-14917630
The Society of Law on Obligations and Contracts (OCAC) is created by 2 or more persons to
achieve certain goals. The legal regulations of the establishment and functioning of OCAC are
specified in the Law on Obligations and Contracts Chapter XV Articles 357-364. (The creation
and dissolution of unincorporated associations; Activity; The powers of the company)
Like companies, members of the OCAC can negotiate and make property and financial
contributions to achieve their joint goal. Contributions are jointly owned by partners,
including invested in business and household goods in their quality of services, materials,
fuel, raw materials. All that was acquired by the company became the common property of
the company. Each partner is entitled to seek and obtain their share of the common property
of the company, but only exit or termination of the company. Gains and losses respectively of
civil society is distributed among shareholders in proportion to their share, if the contract is
not agreed. According to Art. 361 of the CPA is considered invalid any agreement to exclude
any members from participating in the losses and profits of the company.
Unregistered partnership shall be terminated:
Upon expiration, which was founded and which is designated in the contract;
In achieving the purpose of the company or achievement and has become impossible;
Upon death or disability of one of the partners in the event that the contract is not
agreed otherwise;
With notice of one of the partners made in good faith and in good time, provided that
the company is formed for a fixed period and if it is explicitly stipulated that the
company will continue to operate with other partners;
The Company is terminated by the court if there are reasonable grounds for this.
Form of unincorporated enterprise has special status, different from the legal status of legal
persons, but in terms of tax registration, tax , debt collection and appeal of tax assessments
shall be assimilated to legal persons [Art. 18, para. 2 of the Tax Procedure Code and
paragraph 11 of the TFP of the Corporate Income Tax Act]. Equivalent to other entities OCAC
register under the general order of the TPC, charged and paid taxes on the CITA or license
tax , fill out and submit an annual tax return , registered under VAT , if it meets the
conditions specified in the law.
The second option to register a company is in accordance with the Commercial Code, which
provides for the following kind of commercial companies:
General Partnership (GP);
Limited Partnership (LP);
Limited Liability Company (Ltd), incl. Single Member Limited Liability Company (Ltd.);
Joint Stock Company (JSC);
Limited Partnership with Shares (LPS).

Other possible business organizations forms according to Bulgarian law are:
BULGARIA
Sole trader;
Branch;
Trade Representation;
Cooperative.

Companies operating in Bulgaria are registered in the Central Commercial Register at the
Registry Agency http://www.registryagency.bg/ of the Ministry of Justice.
Once a company is officially registered, notifications must also be registered of any
subsequent amendments to the company, including its cessation. Such registrations are both
constitutive (i.e. the company is formed and the changes take effect as soon as the initial
establishment and any subsequent changes are registered) and informative (the registered
details are made publicly available).
Foreign citizens and firms can start businesses in Bulgaria under the same conditions as those
applying to Bulgarian citizens and lawful residents.

The most popular business entities in Bulgaria registered by foreign citizens take the form of
Limited Companies (OOD) and Public Companies (AD). The law also deals with other business
entities, such as Sole Traders, but in such cases a person who wants to register such a
company must have applied for and been granted permanent residency in Bulgaria
The most popular among the above listed organizational forms are the Limited Liability
Company and Joint Stock Company where the liability of the shareholders regarding the
company's obligations is limited.

Limited Liability Company (Ltd)
Limited Liability Company can be constituted by one or more individuals or legal persons, and
in case the capital is owned by one person to constitute a Single Member Limited Liability
Company (Ltd.). The company's capital cannot be less than 2 BGN(two BGN), the value of a
company share cannot be less than 1 BGN. Shares can be different sized for the individual
partners. The partners are responsible for the liabilities of the company to third persons to
the extent of their capital. The transfer of share capital from one partner to another can be
done freely, while its transfer to persons outside the company requires a majority of three
quarters of the capital, i.e. consent of almost all other members. The Limited Liability
Company differs from the Joint Stock Company by the fact that its capital is not divided into
shares, materialized in the form of securities. The Ltd. has no collective management body
(Board of Directors or Management Board), but it is managed solely by one or more
managers.

Joint Stock Company (JSC)
The Joint Stock Company is a company whose capital is divided into shares. The liability of
shareholders for the company's obligations is limited to the extent of their participation in
the share capital. The structure and the organization of the joint stock company are subject
of the Commerce Act, without depriving the founders to negotiate such clauses in the
statutes of the company that best match their specific needs. The Joint Stock Company may
be constituted by one or more individuals or legal persons, and if the capital is owned by one
person to constitute Sole Proprietor Joint Stock Company (SPJSC). The minimum amount of
the capital is 50 000 BGN and the minimum face value per share is one BGN. In case of
determination of larger face value of the shares it must be defined as whole number.
The capital of the joint stock company is divided into shares with equal face value. The
shares are securities and they can be traded on stock exchange. They may be issued
registered shares or bearer shares. Both may be privileged. The registered shares have to be
transferred by endorsement, the transfer must be recorded in the book of registered
shareholders in order to be effective toward the company. The statutes may provide other
conditions on their transferring too. The method of transfer of bearer shares is to transmit
them to the buyer.
The decisions in the Joint Stock Company have to be taken as a matter of principle of the
majority.

BULGARIA

Joint Venture (Joint Venture)
The Joint Venture (Joint Venture) is a company with participation of Bulgarian and foreign
persons. There is no limit regarding the amount of the foreign participation. The company
must be incorporated in any form of commercial companies, listed in full in the Commerce
Act:
General Partnership (GP);
Limited Partnership (LP);
Limited Liability Company (Ltd), incl. Single Member Limited Liability Company (Ltd.);
Joint Stock Company (JSC);
Limited Partnership with Shares (LPS)).

After the entering into the Commercial register, the company shall be considered as local
entity and its activities shall be governed by the Bulgarian legislation. There is no obstacle to
establish joint venture formed by several non-residents and without Bulgarian participation -
after its registration under Bulgarian law, it will enjoy all rights recognized by the law for the
local companies.
Art. 7 of the Act on Investment Promotion stipulates that a foreign person or company who is
not a legal entity may open branches in the country, if registered as entitling to perform
business under its national law. The branch shall be entered in the Commercial Register at
the court in the district where its registered address is located.
The Commercial Act regulates the procedure for registration of a branch. The Branch shall be
entered in the Commercial Register on the basis of a written application that contains:
registered office and business of the branch;
data about the person who manages the branch, and the content of the
representative authority.
Enclosed to the application shall be the following documents:
notarized consent with specimen of the signature of the person who manages the
branch;
copy of the company contract with the branch manager;
certificate of registration of foreign person as a trader;
certified copy of the decision of the competent authority to establish a branch.
The branch is not a legal entity separate from the company which established it is part of it,
but has a different registered office. However, the branch keeps commercial records as an
independent trader, and furthermore the branches of the foreign entities are obliged to
prepare a balance sheet at year end.

Trade Representation
Foreign persons who have the right to do business under their national legislation may
establish trade representation offices to be registered at the Bulgarian Chamber of
Commerce and Industry (BCCI). These representation offices are not legal persons and can
not carry out economic activity. Foreign entities may enter into transactions with residents
only for the needs of its registered representation offices as they are subject to the
provisions of Bulgarian law.
Commercial representations of foreign entities must be entered in the Commercial Register
under Article 6, paragraph 1 of the Act on Investment Promotion. In this respect, the decision
of BCCI for the registration of trade representation offices has a constitutive character.
Necessary documents for registration:
application form;
evidence of registration of the foreign entity, issued by the competent authority
under national legislation.
an official document of the persons managing and representing the foreign entity,
issued by the authority under the preceding paragraph;
decision of the Board of Directors of the foreign entity to open a trade representation
office in Republic of Bulgaria;
special, notarized power of attorney in original, issued by the person / persons /
under Item 2, to the person authorized to register and manage commercial
BULGARIA
representation office in Republic of Bulgaria and the scope of the granted rights. It is
admissible to present original certified copy of the said power of attorney;
original /s/ of specimen /s/ signed by person /s/, representative /s/ in Bulgaria - by
right or by special powers, certified from notary or filed lied in the special declaration
according to the template of the BCCI before an authorized officer of the office
"Commercial registry" the Chamber;
completed information card according to the template of the;
evidence of amount paid for registration under the Tariff for the Prices of Services
provided by BCCI .

Requirements for certification of authenticity and legalization of documents:
Documents under item 2 and 3 after their issuance by the competent authority under the
national law of the foreign entity should be certified for authenticity by:
Ministry of Foreign Affairs of the issuing country and the Consulate Republic of Bulgaria in
this country or Consulate of the issuing country in the Republic of Bulgaria, and then certified
by the "Consular relations" of the Ministry of Foreign Affairs of the Republic of Bulgaria /
where the documents are not certified in the issuing country / or other Consular Office,
which represents the interests of the issuing country in Republic of Bulgaria / if it has no
accredited office in the country / and then certified by the "Consular relations" of the
Ministry of Foreign Affairs of Republic of Bulgaria.
The documents under item 5 and 6, after certification by a notary in the foreign country
must also be certified for authenticity in the above mentioned procedure.
After certification of authenticity, the documents must be translated by an authorized
Bulgarian translator and legalized by the "Consular relations" of the Ministry of Foreign Affairs
of Republic of Bulgaria.
If the documents are issued by a State Party to the Convention Abolishing the Requirement of
Legalization for Foreign Public Documents / Hague Convention / and its original form
contains an "Apostil", they do not need further certifications but need only to be
accompanied by a translation in Bulgarian.

More registrations
Both Bulgarian and foreign entrepreneurs are obliged to register their economic activity
carried out in any of the above legal forms:
in the relevant department of the Registry Agency - for issuing of unique identification
code (BULSTAT number);
in the National Revenue Agency, if hiring employees on contract;
the relevant department of the customs administration in the cases provided by law

Lifecycle of a company: exit through bancruptcy, transfer of business,
etc.

It depends on the kind of the company and the Commercial Code provides the specifics for
each kind.

BULGARIA

INVESTING IN BULGARIA


A Bulgarian Agency for Investments is established and working in Bulgaria as a state body.
It assists the Minister of Economy in the implementation of the state policy in the field of
investment promotion. The Agency performs the following functions:
1. provide s information and individualized administrative services to investors;
2. conducts marketing research and other surveys for the account of investors;
3. performs investment marketing, presenting and advertising abroad investment
opportunities in Bulgaria;
4. prepares an annual report on investments in Bulgaria and on the conditions for
investment promotion, and presents to the Council of Ministers care of the Minister of
Economy.
The Agency keeps and maintains a uniform information system for the purposes of statistics,
pooling data on all foreign investments in Bulgaria and provides consolidated data on
investments to the Minister of Economy, to other state bodies and interested parties.

Incentives

Support for Inward Investment and Imports
Bulgaria is keen to attract foreign investment. For more information on the incentives
available to foreign investors, see the website of the Invest Bulgaria Agency, the government
agency responsible for foreign investment in the country.
Bulgaria is part of the EU customs union. Decisions regarding quotas or customs suspensions
to be applied to goods imported into Bulgaria are currently taken at the Community level.
More information on EU trade policies can be found on the following website: www.
ec.europa.eu/trade .

Competition policy

Common competition policy is one of the EU policies, which successfully complements and
builds on the provisions of the Internal Market. Competition policy at the EU level has goals
similar to those of national competition policies. It strives for creating conditions for dynamic
development, boosting economic efficiency and promoting optimal allocation of resources
and consumer protection.

Along with these main functions of competition policy of the European Community there are
other important goals to strengthen the integration processes between Member States,
establish uniform rules for the companies in the EC and create conditions for more adequate
operation of the internal market.

Competition is the main mechanism of market economy, affecting demand and supply.
Suppliers offer goods and services in the market aiming at meeting demands. Competition
makes any individual supplier search for means of achieving a balance between quality and
price with a view to meeting demand in the most effective way in order to realize purchases
and sales.

The presence of effective competition requires a market composed of independent business
operators, each of which is a subject to competitive pressure on the part of the rest. To
preserve the possibility for the business subjects obeying the rules of fair competition to
BULGARIA
withstand and adapt as equal to this pressure, the Law on Protection of Competition
prohibits:
Restrictive agreements and concerted practicies;
Abuse of dominant market position;
Merger control;
Control over the activities of public enterprises;
Control over the allocation of state subsidies;

By its first Law on Protection of Competition of 1991 Bulgaria built its original legislation, but
also created a Commission for Protection of Competition (CPC). The Commission for
Protection of Competition is the body responsible for implementing and monitoring the policy
of protection of competition. The Commission is fully independent and has broad powers to
implement competition rules. The Commission investigates and examines many cases and
takes respective decisions. One of the results of the Commission activity is increased public
understanding of the role of the policy of competition protection. The Commission
reorganized its internal structure in 2000 introducing new rules for organization and
procedure and increased the number of specialists working in it. Preliminary state aid
control is within the competence of the Commission - allowing or prohibiting aid projects
after obligatory notice.

Human resources (work force)

After Bulgaria joined the European Union, citizens of Member States may exercise their right
of free movement to work in Bulgaria without they need work permission. However, it is
different the issue of regarding foreigners who are not nationals of EU Member State, of a
state party to the Agreement on the European Economic Area or the Swiss Confederation. In
these cases is valid the Regulation on terms and conditions for issue, refusal and revocation
of work permits to foreigners in Bulgaria and it is necessary to obtain permission from the
Employment Agency.
The Regulation also sets out exceptions which do not require permits, such as for foreigners
with long-term (not to be confused with "continuous") or permanent residence in Bulgaria,
those who are employed or sent to work under an international agreement, as well as
managers of companies or branch of a foreign legal person, etc.
The procedure to request permission hiring foreigner under working contract is driven by the
initiative of the employer who wants to appoint a foreigner. This is because after issuing the
permission, the foreigner may work for this company only. The termination of the
employment contract means automatic revocation of the work permit for the foreigner.
Work permit has to be issued for the period for which the foreigner agreed an employment
contract or was assigned for business trip, but no more than one year. When a foreigner
abides as a family member of foreigner who has received permission for permanent
residence, so work permits are issued for a period of permitted stay.

In the third quarter of 2011 unemployed were 343.0 thousand persons and the
unemployment rate was 10.2%.

Average salary for Bulgaria 360 Euros, NSI (2011)
Minimal salary by law
270 BGN = 138 Euros, since
01.09.2011
Total contributions paid by the
employer, including health care,
unemployment and social security
contributions.
Around 35% over the base salary

BULGARIA
Land and buildings property rights

Before the accession of Bulgaria to the EU ownership of land could only be acquired by
Bulgarian citizens and companies duly registered in Bulgaria. Bulgarian companies 100%
owned by foreign entities or individuals were entitled to acquire land as Bulgarian entities.
Foreigners and foreign entities had limited real property rights (right of construction, right of
use) and could obtain ownership over buildings. In fulfilment of Bulgarias obligations under
the EU Accession Agreement and the Protocol for the transitional measures, respective
amendments were made to the Bulgarian Constitution.

Since 1st January 2007, foreigners and foreign entities are entitled to acquire ownership
rights over land in the following cases:
1) under the terms and conditions related to the EU accession;
2) on the grounds of international agreements and treaties, duly ratified, promulgated and
entered
into force; and
3) in cases provided by the law of inheritance.

Bulgaria, however, is entitled to restrict the acquisition of land for second homes of EU
citizens and EU entities for a 5-year period from the date of the accession; that is until 1st
January 2012. This restriction is not applicable with respect to EU citizens with a duly issued
resident permit. An EU citizen with a duly issued resident permit is entitled to freely acquire
ownership over land.

The EU is committed to implement intellectual property rights and thus to fight against
counterfeiting and piracy, which reach today alarming proportions and have a significant
impact on innovations, growth, employment and health and safety of consumers. Depending
on the legislation of the EU countries and the source of counterfeit goods, the following
bodies may be responsible: customs, market surveillance (trading standards), and police and
patent and trademark offices. The intellectual property rights are still largely protected
mainly by the national but not by the European laws. Their protection in each Member State
of the Union can be complicated and expensive; therefore it is advisable to achieve further
harmonization.
The patents are national rights granted by the national patent offices http://www.bpo.bg/ .
There is no uniform patent that provides protection throughout the Union. The European
patent application before the European Patent Organization (EPO) provides national
protection in European countries which are members of the EPO and are selected by the
applicant. The Patent Cooperation Treaty makes easier the application at international level.
Registration of the trademark and design rights is possible at national or European level. At
European level the rights shall be registered by the Office for Harmonization in the Internal
Market based in Alicante (Spain). The intellectual property rights are governed by
international conventions on the initiative of the World Trade Organization and the World
Intellectual Property Organization.
In Bulgaria, this matter is settled in the Act of Patents and Registration of Utility Models. This
act regulates the relations arising in the creation, protection and use of patentable
inventions and utility models. The provisions of this Act shall be applied to foreign citizens
and legal persons of States participating in international agreements where one of the parties
is Bulgaria. To foreign citizens and legal persons from other countries, this Act shall be
applied under conditions of reciprocity, which is determined by the Patent Office. When
bilateral agreement exists, it is applicable what is agreed upon.
BULGARIA
All Bulgarian citizens with permanent address in Bulgaria or all legal persons headquartered
in the Republic of Bulgaria shall have the right to seek patents abroad.
The Patent Office acts as receiving Office within the meaning of Art. 2, item XV of the Patent
Cooperation Treaty. The Patent Office of Bulgaria determines the International Searching
Authority and Preliminary Examining Authority. Each applicant and the Patent Office may
require examination of a national application by International Searching Authority. The
Patent Office of Bulgaria is the designated body under Art. 2, item XIII of the Treaty when
the Republic of Bulgaria is a designated country in an international application. The Patent
Office of Bulgaria is a national public authority for legal protection of the industrial property
having its headquartering in Sofia.
The European patent applications may be submitted to the Patent Office of Bulgaria or the
European Patent Office in Munich or its branch in Hague in one of the languages according to
art. 14 of the European Patent Convention hereinafter called "the Convention". The divisional
applications shall be filed with the European Patent Office only. Applicants with permanent
address in Bulgaria file European patent applications with the Patent Office, unless the
application uses the priority of an earlier application filed with the Office. When the
European patent application is published by the European Patent Office and the applicant
provides a translation of patent claims in Bulgarian language in three copies with
bibliographic data for application and pays the publication fee, than the Patent Office
provides access to the translation and publishes a notice for the received translation in the
Official Bulletin. The Patent Office shall enter the applications for European patents and
European patents with effect in Bulgaria in a separate register, and any changes in their legal
status shall be entered in the general procedure.

Public procurement
The public procurement procedures applicable in Bulgaria are equivalent to the EU rules
since the governing Law on Public Procurement (the LPP) effective as of October 1, 2004
implements on national level Directive 2004/17/EC and Directive 2004/18/EC. The LPP aims
to ensure efficiency in spending of budget and extrabudget resources, as well as of resources
associated with carrying out of relevant public activities specified in the law. The LPP has
further introduced the principles of publicity and transparency, free and fair competition and
equal treatment and non-discrimination.
Depending of the subject matter of the public procurements the LLP determines the objects
of the public procurements, namely (i) supply of goods performed by means of purchase,
lease, rental with or without option for purchase or purchase by installments, as well as all
preliminary operations necessary for use of the goods, such as installation, testing, etc.; (ii)
service procurement, and (iii) construction, including design and construction of building
sites, reconstruction, maintenance, restoration or rehabilitation of buildings or construction
facilities, integrated engineering services, etc.
In accordance with the LLP parties to public procurement award procedures shall be the
contracting authorities, the candidates, the participants and the contractors. Contracting
authorities under the LLP are (i) the state authorities, the President of the Republic of
Bulgaria, the Bulgarian National Bank, and other state institutions; (ii) the diplomatic
consular delegations of the Republic of Bulgaria abroad, as well as the permanent missions of
the Republic of Bulgaria to the international organizations; (iii) the public law organizations;
(iv) combinations formed by the parties referred to in item (i) or (iii); (v) public undertakings
and any combinations thereof, where carrying out certain activities; (vi) merchants and other
persons which are not public undertakings, where carrying out certain activities. A candidate
or participant in a public procurement procedure may be any Bulgarian or foreign individual
or legal entity, as well as any partnership thereof, whereas a public procurement contractor
BULGARIA
shall be a participant in a public procurement award procedure whereunder the contracting
authority has concluded a public procurement contract.
The different types of public procurement procedures regulated by the LPP include: (a) open
procedure, (b) restricted procedure; (c) direct negotiation procedure, (d) competitive
dialogue and (e) project tender. An open procedure is a procedure whereby all interested
parties may submit an offer, where under the conditions of a restricted procedure only
qualifying candidates invited by the contracting authority may submit an offer. These two
procedures are used if the conditions for conducting competitive dialogue or negotiations
procedure are not present, whereas the choice between the open and restricted procedure is
a matter of discretion of the contracting authority. The negotiations procedures include: (i) a
negotiations procedure with prior publication of a contract notice, whereby the contracting
authority negotiates the terms of the contract with one or more qualifying candidates after
conduct of a pre-selection procedure; and (ii) a negotiations procedure without prior
publication of a contract notice, whereby the contracting authority negotiates the terms of
the contract with one or more particular persons. Under the competitive dialogue procedure,
which is used if the subject matter of the assignment is complex, any interested party may
submit a declaration of intent; then further to a dialogue with qualified parties (i.e.
complying with the initially announced requirements) the contracting authority nominates
one or more of the candidates, who are invited to submit final offers. A project tender shall
be a procedure whereby the contracting authority acquires a plan or design selected by an
independent jury on the grounds of a tender conducted with or without award of prizes.
Most up-to-date economic data for the Republic of Bulgaria is gathered and presented by
government agencies, like the National Statistical Institute, and various supernational
organizations: National Statistical Institute (NSI); graphs are available at Stat.bg
Ministry of Finance and National Employment Agency
International Monetary Fund (IMF) and World Bank

Source Bulgarian National Bank
http://www.bnb.bg/Statistics/StExternalSector/StDirectInvestments/StDIBulgaria/index.htm?toLang=_EN

BULGARIA

source : Eurostat
http://epp.eurostat.ec.europa.eu/tgm/table.do?tab=table&init=1&plugin=1&language=en&pcode=tsier130

Major projects in Bulgaria developed by companies from the Basin

The Maritime Administration Executive Agency started two partner projects for clean
waters. Bulgaria shares the following strategic interests regarding environmental co-
operation in the Black Sea Region, as concerns the rehabilitation and protection of the Black
Sea and is working on their implementation with other BS countries:
Enhancing co-operation in the area of flood prevention along the Danube and minimizing
the risks of industrial pollution;
Introducing the water management principles provided in the Water Framework Directive
(WFD) of the EU;
Obtaining a better understanding of Black Sea status and tendencies introducing a
harmonised and effective Black Sea Monitoring System;
Introducing and disseminating the basin approach with special emphasis on the
transposition of relevant EU Directives on environment management practices in
the coastal countries;
Creating a better environment for implementation of various investment projects, including
strategic partnerships with donors and international financial institutions, and ensuring
appropriate use of various financial instruments.

Bulgaria has joined one of the Communitys major initiatives in support of intermodal
transportation the Marco Polo II program.
Project Title: Investigating the interest of operating Passenger Services Varna
Odessa Istanbul.
The aim is to create technical and organizational capabilities for operation of services
between these ports, involving also the private sector by means of Public-Private Partnership
or other forms of co-operation.

As regards development of relationships with Black Sea countries in the area of fisheries,
fish resources and aquacultures in the Black Sea, Bulgaria is working on the following
proposals:
Project Title: Establishment of a Black Sea Regional Advisory Council (RAC) RAC's main
role is to generate and provide advice on fishery management in the Black Sea to ensure
sustainable development of this sector in the region, sustainable development of fish stocks
through an integrated approach based on protection of the Black Sea and on the principle of
preemption,
ensuring better transparency of scientific advice through encouraging dialogue between
research institutions and fishermen. Stakeholders' early involvement in the RAC decision-
BULGARIA
making process is another priority for CFP formulation and is crucial for its successful
implementation. The joint formulation of fishery policies in the Black Sea will also be largely
beneficial to co-operation between the individual countries in exercising control on illicit
fishing in the region.

Project Title: Introduction of Common Provisions on the Use of Sparing Fishing Devices
as well as Sanitary Norms for Aquaculture and Transportation of Fish Products.
The project will contribute to harmonised implementation of the key aspects embodied in
the consolidated Community legislation dealing with hygienic requirements related to fish
products.

Project Title: Developing a Market Information Sharing System A Market Information
Sharing System would be an efficient tool for promoting fish trade in the Black Sea Region.
Projects for delivery of training events and seminars to third countries in the Black Sea
Region, concerning the work of fishing inspectors, inspection of fish put on the wholesale
market, sanitary/hygienic requirements and product storage requirements.

BULGARIA

BULGARIA



Free movement of goods is an essential prerequisite for the existence of the European Union
internal market. The principle of free movement of goods requires a common regulatory
framework guaranteeing free movement of products from one part of the Union to another in
the same way that it operates within the individual countries. That means that the basic
technical standards, product certification and metrological definitions should be governed by
rules established at European level. Movement of goods in international trade is hindered by
physical, technical and fiscal barriers. Physical barriers are all activities that occur on
border-crossing points. Fiscal barriers are related to duties, fares and indirect taxes - value
added tax and excise duties. Technical barriers are associated with all requirements for the
products and all regulatory conditions that must be met to allow them to cross international
boundaries - technical and other standards, import and export quotas, licensing, registration
of transactions and related to these requirements documents.
Provisions on free movement of goods apply equally to industrial and agricultural products
produced by Member States as well as to the goods imported from third countries within the
Community. Free movement of goods is one of the illustrative examples of the European
project success. It has helped to build the internal market European citizens and businesses
are benefiting from now and is considered to be in the core of EU policies. Today's internal
market enables the ease of purchase and sale of products in 27 Member States with a total
population of over 490 million people. It provides customers with a wide choice of products
and gives them an opportunity to seek the best available offer. At the same time, free
movement of goods is beneficial for the business. About 75% of Intra-EU trade is in
goods. The Single European market established over the past decades helps the companies in
the EU to found a stable platform in an open, diverse, and competitive environment. This
internal force promotes growth and job creation in the European Union and gives EU
companies resources they need to succeed in other markets around the world. Thus, properly
functioning internal market for goods is a necessary prerequisite for current and future
prosperity of the EU under the conditions of a globalized economy.

What non-tariff barriers are - Restrictive protective methods of international trade policy of
preventing the import or the export of goods except those liable to duty taxation. Such are
for example: Contingent restrictions conducted through license policy (see License),
administrative and tehnichal impediments and complications, currency-financial limitations,
non-tariff governmental and local taxes and other charges.

The Bulgarian Institute for Standardization (BDS) is the national body in charge of the
management of standardization activities in Bulgaria. According to the new Law on National
Standardization (SG No 88/2005-11-04 to be enforced on 2006-05-05), BDS becomes a non
profit non governmental association, operating in public interest.
BULGARIA
BDS major functions are:
responsibility for development of Bulgarian standards at national level and their
acceptance, approval, publication and distribution
participation in the development of and voting on standards at European and
international levels, their implementation as Bulgarian standards, their publication
and distribution.
BDS represents Bulgaria in international and regional standardization organizations. BDS
promotes voluntary standardization in the Republic of Bulgaria towards assistance provision
for further development and progress of the national economy, ensuring that products meet
the essential health and safety requirements, supporting consumer protection activities and
facilitating domestic and international trade.

Value Added Tax was introduced in Bulgaria in 1994 with a rate of 18 percent. In 1996 the
rate was changed up to 22 percent. After three years in 1999 the tax was changed again to
20 percent. Regulations governing VAT are the Law on Value Added Tax and Provisions for
Implementing the Law on Value Added Tax.
Liable to taxation is any supply of good or service for consideration:
It has been carried out by a person liable to VAT taxation under the Law on Value Added
Tax;
Within the scope of their independent economic activity;
Location of realization in the country territory;
It is not specifically identified as an exempt supply;
Taxable supply is also a supply taxable at zero rate conducted by a taxable person;
The introduction of goods into the territory of Bulgaria is considered a taxable transaction,
except for special exemptions.

Activities and supplies, out of the scope of the Law on Value Added Tax:
Supplies realized between physical persons out of their independent economic
activity;
Activities carried out by physical persons in employment relationship;
Supplies for no consideration;
All activities and supplies of state and local authorities when performed in that
capacity.

Supplies for no consideration treated as supplies for consideration:
Product or service is supplied for personal use of a taxable physical person, the
owner, his employees or third persons in cases of using goods for which at the stage of
their production, importation or acquisition a tax credit has been deducted (fully or
partially);
The ownership or other property right over the goods is transferred for no
consideration to third persons, provided that at the stage of its production,
importation or acquisition a tax credit has been deducted (fully or partially);
Supply of a free service for personal use of the taxable physical person, the owner, his
employees or third persons.
Types of Intra-Community supplies:
ICS of goods other than new means of transport and excisable goods;
ICS of new means of transport;
ICS of excisable goods;
ICS of goods transported by a registered person for the purpose of its activities in
another Member State;
ICS are zero rated with the exception of exempt Intra-Community supplies.
Intra-Community acquisitions (ICA).

BULGARIA
Intra-Community acquisition in general can be compared to the former regime "import" from
Member States of the European Union. It is a mirror-image of the Intra-Community supply and
regulates its tax treatment in the recipient country or the country of destination of
goods. Intra-Community acquisition is the acquisition of ownership over the goods as well as
the actual receipt of goods dispatched or transported to the territory of another Member
State where the supplier is a VAT registered taxable person in another Member State.

ICA types:
ICA of goods other than new means of transport and excisable goods;
ICA of new means of transport;
ICA of excisable goods;
ICA of goods transported from the territory of another Member State to the territory
of the country for the purpose of a VAT registered persons economic activity.
VIES is an information system for exchanging information on VAT (VAT Information Exchange
System) between Member States, which processes and stores the data from VIES declarations
of VAT-registered persons carrying out transactions within the EU.
The system gives traders an opportunity to examine the VAT registration of their partners
quickly and accurately accessible to the public through the Internet at address
http://www.ec.europa.eu/taxation_customs/vies/. It enables revenue administrations of
Member States to monitor and control the flow of Intra-Community trade thus preventing
irregularities and frauds.
The tax administration of each Member State maintains an electronic database containing
information about VAT registered traders. In addition, each Member State regularly collects
and processes through VIES declarations detailed information on all Intra-Community supplies
and acquisitions realized by local traders. Incoming information is summarized, analyzed and
exchanged between the revenue / tax administrations of Member States through a common
communication environment of high security.

By means of the VIES the data about declared by local traders Intra-Community transactions
is compared with the information given by other Member States. Upon finding differences
the revenue authorities take control actions to establish the actual liability of the traders
and the reasons for the discrepancies.

Payment terms

Terms and conditions of payment are agreed in the contracts signed. They should not
contradict basic financial laws. Payment deadlines are the maturities of contracts. They must
be explicitly specified in the contract. Common practice is the first payment under the
contract to be paid upon its conclusion. In case of an instalment plan payment terms are
determined at regular intervals depending on the chosen frequency. Way of payment is also
agreed in the contract. All companies allow payment to be made in cash or by bank transfer.

Origin rule

The origin is the "economic" nationality of goods in international trade. There are two types
of origin non-preferential and preferential.
Non-preferential origin gives the goods "economic" nationality and is used in various measures
of trade policy (such as anti-dumping measures, quantitative restrictions) or tariff quotas, for
statistical purposes as well as in connection with public tenders, the marking of origin and
refunds at export under the Common Agricultural Policy of the EU.
Preferential origin confers on goods traded between particular countries benefits in terms of
import at reduced or zero rates of duty.
An important element in determining the origin of goods is their tariff classification, as in
most cases the specific for particular goods rules of origin are formulated for specific items
or chapters of the tariff.
BULGARIA
Operators who are unsure of the origin of goods or just want to have legal certainty in its
determination may submit a request for a Binding Origin Information (BOI). BOI is the
customs authoritiess resolution, which is binding on the customs authorities in all Member
States of the EU in respect of goods exported or imported after the resolution issuance,
provided that the goods and the circumstances determining the acquisition of origin, are
identical in every respect to those described in the BOI. Usually, it is valid for three years
from the date of issue.

Non-preferential origin
Certificate of origin issued by Chambers of Commerce or a specific certificate of another
type under other specific regulations.

Legal framework for non-preferential origin
The legal framework for non-preferential rules of origin is Art. 22 to 26 of the Customs Code
(CC) - Council Regulation No. 2913/92, Articles 35-65 and Annexes 9 to 11 of the
Implementing Provisions of the Customs Code (IPC) Commission Regulation No. 2454/93.
Article 23 (2) CC contains the definition of "goods wholly obtained in a country."
Article 24 CC determines the origin of goods in whose production more than one country are
involved.
Article 25 CC contains a provision intended to prevent circumvention of origin. This provision
applies in cases when the sole purpose of working or processing the product is to circumvent
the provisions applicable to such goods in certain countries.
Article 26 CC provides that customs or other specific legislation may require proof of the
origin.
Articles 35-40 IPC lay down specific provisions for the implementation of the rule of last
substantial transformation of textiles and a limited number of other products.
Articles 41-46 IPC contain specific provisions regarding the origin of the accessories, spare
parts and tools that form part of the standard equipment of machines, apparatuses or
vehicles.
Articles 47-54 IPC include provisions relating to the conditions to be fulfilled by the
certificates of origin.
Articles 55-65 IPC contain specific provisions relating to certificates of origin for agricultural
products which are subject to special import arrangements and arrangements for
administrative cooperation in respect of those certificates.

Preferential origin
Preferential origin is conferred on goods from specific countries that have met certain
criteria. To obtain preferential origin these criteria usually require that the goods are wholly
obtained or have undergone sufficient working or processing.
Preferential origin confers tariff benefits (import at reduced or zero rates of duty) on goods
traded between the countries agreed, or when one of the countries on an autonomous ground
commits them unilaterally.
In order to be given a preferential origin the product must meet the conditions laid down in
the Origin Protocols to the Agreement between the respective countries or in the Rules of
Origin under the autonomous regulations. In fact, that means that the product must be either
(1) produced from raw materials or components grown or produced in the beneficiary
country, or if not so, (2) have undergone at least some degree of processing or working in the
beneficiary country. Such products are considered as originating products.
The purpose of preferential origin is to determine whether the goods have met the criteria to
be considered as goods of the respective preferential origin. If the criteria are not fulfilled
the intended product preference cannot be used and it is not required to determine the
country of origin.
In all cases there is a list of working or processing activities that any product produced from
non-originating materials must undergo in order to obtain the status of originating product.
These rules are often called "rules list". They determine the smallest amount of working or
processing required to be performed on non-originating materials in order the received by
them product to acquire origin. Further working or processing is allowed and does not affect
BULGARIA
the acquired origin, while performing less processing prevents the product from acquiring
origin.
The structure of the list of working or processing is based on the structure of the Harmonized
System. Therefore, before determining what kind of working or processing a specific product
must undergo it is necessary to know the product classification in the Harmonized System.

Each specific preferential agreement has own separate regulations.

BULGARIA

BULGARIA


General considerations, types of sources (grants, subsides, loans)

Access to finance is vital in order to start or expand a business, and the EU provides finance
for small firms in different forms - grants, loans, and in some cases, guarantees. In addition,
the EU funds specific projects. EU funding can be divided into two categories:
direct funding through grants;
indirect funding through national and local intermediaries www.eufunds.bg

Bulgarian business has a great chance to absorb a significant amount of funding for European
projects envisaged for Bulgaria in the period 2007 - 2013, he was a direct beneficiary of EU
funds under several programs:

Operational Program Competitiveness - enabling individuals to make investments in
modernization and technological renewal and innovation.

Operational Program Human Resources, enabling to promote the creation of new jobs,
increasing productivity and adaptability of employees, improving the quality of education
and training and others.

Program for rural development, supporting small and medium enterprises operating in
rural communities across the country

EU Funding Programmes 2007 2013 are as follows, but companies cannot be direct
beneficiaries in most of them

European Social Fund Programme
The European Social Fund Programme will contribute to reducing the productivity gap in
Northern Ireland by helping to reduce the level of economic inactivity and increasing
workforce skills. Northern Ireland is to receive 165.7 million from the Fund from 2007-
2013. The Managing Authority for the Programme is the Department for Employment and
Learning (DEL). Further information is available at www.delni.gov.uk.

European Fisheries Fund
The European Fisheries Fund (EFF) will provide support for the fisheries sector, including
adaptation of the fleet, processing and marketing of fishery products and the development of
sustainable fisheries. The EFF will run for seven years, with a total budget of around 3.8
billion. For more information on the application of the fund in Northern Ireland, go to
http://www.dardni.gov.uk/index/grants-and-funding.htm

Seventh Framework Research Programme
The Seventh Framework Programme for Research and Technological Development is the
EU's main instrument for funding research in Europe and is designed to respond to Europe's
employment needs, competitiveness and quality of life. Further information is available at
http://ec.europa.eu/research/fp7/index_en.cfm

Competitiveness and Innovation Framework Programme
The Competitiveness and Innovation Framework Programme (CIP) aims to encourage the
competitiveness of European enterprises. With small and medium-sized enterprises as its
main target, the programme will support innovation activities, provide better access to
finance and deliver business support services in the regions. It will encourage a better take-
up and use of information and communications technologies and help to develop the
information society. It will also promote the increased use of renewable energies and energy
efficiency. Further information is available at http://ec.europa.eu/cip/index_en.htm

PROGRESS Programme
BULGARIA
The new PROGRESS programme for employment and social solidarity will focus on
employment, social protection and social inclusion, working conditions, anti-discrimination
and diversity and gender equality. Further information is available at
http://ec.europa.eu/employment_social/progress/index_en.html.

Lifelong Learning Programme
The new Lifelong Learning Programme offers funding for organisations involved in education
and training and provides opportunities to get involved in European links. It includes the
Comenius programme for schools, Erasmus for higher education, Leonardo da Vinci for
vocational education and training and Grundtvig for adult education. Further information is
available at http://eacea.ec.europa.eu/llp/index_en.htm or
www.lifelonglearningprogramme.org.uk .

Youth in Action
Youth in Action is the new EU programme in the field of youth and is a key instrument in
providing young people with opportunities for non-formal and informal learning with a
European dimension. Further information is available at
http://eacea.ec.europa.eu/youth/index_en.htm

LIFE + (Environment)
With a budget of over 2.1 billion, LIFE + will provide support for the implementation of EU
environmental policy and legislation in respect of nature, biodiversity and other
environmental issues. Further information is available at
http://ec.europa.eu/environment/life/funding/lifeplus.htm.

Culture Programme
The Culture Programme aims to encourage the development of cultural cooperation and
intercultural dialogue across Europe. Further information is available at
http://ec.europa.eu/culture/index_en.htm

Europe for Citizens
The Europe for Citizens programme supports a wide range of activities and organisations
promoting active European citizenship, including town-twinning. Further information is
available at http://eacea.ec.europa.eu/citizenship/index_en.htm.

MEDIA 2007
MEDIA 2007 supports the European audiovisual sector and focuses on preproduction and
post-production activities, including distribution and promotion. Further information is
available at http://ec.europa.eu/information_society/media/overview/2007/index_en.htm.

EU Health Programme
The Health Programme 2008-2013 is intended to complement, support and add value to the
policies of the Member States and contribute to increased solidarity and prosperity in the
European Union by protecting and promoting human health and safety and by improving
public health. The overall budget is 321 million. Further information is available at:
http://ec.europa.eu/health/ph_programme/pgm2008_2013_en.htm

Bank loans and credits

Every company at some stage of their development experiences need to attract additional
external funding. Even in the presence of sufficient own financial resources, the use of
borrowed funds can contribute in several ways to establish the market status of the
company. Firstly, the fact that a project or activity carried out by the company received a
positive evaluation of conservative institutions such as banks, help increase the confidence of
partners, investors and customers as to the project or activity and the company as a whole.
Secondly - the cost of funds, especially long-term investment loans is relatively low. This can
help the management team to redirect some of their own resources or the use borrowed
BULGARIA
funds to improve existing operations or develop additional ones: developing new products,
improving quality of existing, cost reduction, expanding its portfolio of services offered by
the company.

Corporate loans are different: for working capital, investment objectives, specialized
products for the purchase of machinery, equipment and others. The aims of the banks
through a variety of products are to meet the variety of needs for financing of companies
from various industries and spheres of activity. Furthermore, serious diversification of the
loan products, there is an opportunity for direct negotiation of the conditions between the
company and the banking institution. This differs significantly from the corporate credit
lending to individuals and makes the choice of product according to the fullest extent of the
needs of the company extremely complex. But it also gives rise to a risk of inconsistency
between the parameters of loans, such as size, duration and manner of service reflected in
the cash outflows for the company and the growth of inflows, which is provided due to the
utilization of foreign funds. This discrepancy can lead to serious liquidity problems in the
company's risk of non-investment provided in full breach of contractual relationships with
contractors and others. Consequently, there is a need for external professional analysis of
opportunities to attract bank financing and proper choice of loan product, corresponding to
the fullest extent of the needs of the company.

Loans for start-ups are offered by limited number of banks, and mostly in the government
project "Guarantee Fund for Microcredits". This project provides access to credit for small
and medium enterprises, unemployed individuals, artisans, cooperatives and farmers who
cannot currently meet the requirements of banks. Borrowers must be part of certain social
groups. The fund provides financial guarantee bank lending, which facilitates its release. The
borrower also must provide collateral, as his business plan must meet the specific
requirements of the fund. Interest rates on loans are between 6 and 8%, and size - up to 50
000 BGN

Microcredit is a suitable option for small and medium businesses and people in the liberal
professions. Microloans are up to BGN 100 000 as collateral for them most often considered
endorsement of the solvent to 3 persons. Interest rates fluctuate between 10 and 14%.
Depending on the type of credit - investment, working capital or non-target small and
medium size companies can use a different term financing, interest and required security
parameters. Working capital loans are usually granted for a shorter period (usually up to 8
years) and the annual interest rate ranging between 7 and 12%. Loans for investment
purposes are long, reaching 20-year period, while interest rates are between 6 and 10% yoy.
For loans with non-purpose bank does not control spending. With this type of financing terms
can also be longer, and interest rates fluctuate in the range 6.5 to 14%.

Loans to corporate clients are characterized by the highest level of opportunity to negotiate
a wide range of parameters. Understandably, banks offer conditions which are far better
than the conditions prevailing in the small and medium enterprises.

Traditional bank financing is the practice to require customers to transfer most of their
payments through it, which is usually guaranteed by a clause to increase the rate initially
agreed upon failure.

In securing the loan by a mortgage on real estate liquidity, companies can achieve the
interest rate on your credit around the minimum for the type of loan. In guaranteeing the
loan of equipment, goods or other collateral, banks usually add significant interest rate risk
premium to its base interest rates. Servicing of corporate loans is often seriously aggravated
and various types of fees, commissions and statutory requirements of banks, which implies a
serious analysis of the tenders received by the financial institution.

BULGARIA

BULGARIA



Meeting & Greeting
Bulgaria on the face of it is still a formal society. This reflects in the rather proper and
reserved nature of initial meetings. Within the business context a firm handshake, direct eye
contact and the appropriate greeting for the time of day suffices. The hierarchical nature of
Bulgarians results in an emphasis on rank and position. As a result if people have official,
educational or work titles ensure you use them. If you are unsure then simply use "Gospodin"
(Mr)/ "Gospozha" (Mrs) followed by the surname.
Only friends and family address each other with first names. It is good etiquette to wait for
their Bulgarian counterparts to determine when it is appropriate to become this informal.
The normal custom is for business cards to be exchanged on initial meetings but there is little
protocol to follow. As a basic courtesy do not write on the card or treat it nonchalantly. If
your company/firm has been established a long time (25-50 years) it is a good idea to include
the founding date on the card as this gives credibility. Also add any academic qualifications
to the card. Translating cards into Bulgarian may not always be a necessity but it would
certainly impress recipients.

Communication
Until a relationship warms up the communication will be reserved and cool. However, once
the other person as an individual rather than a foreigner, they will slowly become less formal
and more relaxed.
Bulgarians generally have an indirect communication style when dealing with people whom
they do not know well. They will offer roundabout explanations rather than offer a negative
response; they prefer a non-confrontational way of doing business.
Business decisions are often heavily influenced by personal sentiments. It is therefore a good
idea to invest time in relationship building. This helps overcome the initial communication
barrier as well as increase chances of business success.
Many Bulgarians believe that speaking forcefully indicates that the person is
overcompensating for the fact that they have nothing important to say. Anyone with a
booming voice may want to consider paying attention to their tone.

Business Meetings
Meetings are formal and do follow certain etiquette and customs. The normal protocol is for
the most senior Bulgarian to open the meeting with an introduction or statement and to then
chair the proceedings.
Although a hierarchical culture where important decisions are made at the top of the
company, Bulgarians seek to have a consensus of all stakeholders before reaching a final
decision. Therefore, meetings can be extremely protracted since everyone must have the
opportunity to present their case.
Any presentations should be factual and backed with statistics. If possible try to present
information visually. Bulgarians do not appreciate too much "talk" so avoid over zealous
statements. Bulgarians are not deadline oriented. They prefer to ensure they have
comprehensively covered a topic before bringing proceedings to a close.
Be patient and do not rush meetings - successful ventures in Bulgaria will never happen
overnight.

BULGARIA

Public policy on R&D and innovation in Bulgaria is designed and implemented by different
institutions. The Ministry of Education, Youth and Science and the Ministry of Economy,
Energy and Tourism lead major reforms and programs. At the same time, the Council of
Ministers serves as a forum for coordination between ministries, and where R&D and
innovation initiatives can be debated and agreed before submission to Parliament. As in many
countries, this fragmentation of responsibilities has made it difficult to develop an integrated
national STI strategy, and it has resulted in problems such as running programs with
overlapping objectives, limited coherence and lack of rationalization of resources. Improving
the articulation of the institutional framework would help Bulgaria to fully exploit the
opportunities provided by EU funds that support competitiveness and human resource
development.
The Ministry of Economy, Energy and Tourism and the Ministry of Education, Youth and
Science are the government bodies that play the dominant roles in developing Bulgarias
national research, innovation, and technology strategy and policy.

Several other entities are involved but with a more narrow scope. The Ministry of Economy,
Energy and Tourism (MoEET) is responsible for the formulation of innovation policy and
strategy in the business sector. The National Council for Innovation is a consultative body to
the MoEET and includes representatives from
the business sector, academia, the scientific community, and nongovernmental organizations.

The Bulgarian SME Promotion Agency (BSMEPA), which reports to the MoEET, prepared and
now implements the measures of the National Innovation Strategy, including the
administration of the National Innovation Fund established in 2005.

The Ministry of Education, Youth and Science (MEYS) is responsible for national research
policy. The National Council for Scientific Research is the coordinating body for research
policy and is comprised of representatives from ministries and scientific organizations. The
National Council for Scientific Research participates in the preparation of and approves the
National Strategy for Research and Development, and defines funding priorities for the
National Science Fund, established by the MEYS in 1990. A number of other ministries also
play a role in innovation policy.
The increase in the competitiveness of the Bulgarian industry and the improvement of the
capacity to cope with the competition in the EU market are only possible through creation,
introduction and dissemination of innovations, in order to ensure a competitive edge in the
international market and satisfy in advance the new demands of domestic and international
consumers.
In 2004 THE NATIONAL INNOVATION STRATEGY OF BULGARIA and the measures for its
implementation was adopted by the Council of Ministers.
The Bulgarian innovation strategy is aiming at increasing the competitiveness of Bulgarian
industry, through the introduction of new knowledge-based products, materials technologies
for producing, management and services.
The Strategy is directed towards:
development of competitive knowledge-based industry through new mechanisms for
promotion of applied research, high technologies and innovations;
Encouraging the inside and outside integration between the research bodies and their
co-operation with the business;
BULGARIA
Development of new mechanisms for promotion of applied research and their introduction in
industry and for the attraction of private investments to finance market-oriented applied
research products.
According to the strategy the financial instrument for its implementation will be a National
Innovation Fund.
The strategic goals of the Fund are to increase the competitiveness of the Bulgarian economy
through the encouragement of market-oriented applied research for the needs of industry as
well to create the necessary background for public investments in innovations according to
the Innovation Strategy of Bulgaria.
The operational goals of the fund are:
To subsidize part of the costs for market-oriented applied research, R&D projects
intended to be implemented in the industry.
Fulfill the measurements stated in the Innovation strategy
To make use of the opportunities which are provided in the Bulgarian Law on State Aid
to support the innovative companies

Life long learning

Center for Human Resource Development is the National Agency, which operates in Bulgaria
Europe's largest program for education and training - "Lifelong Learning".

The program consists of four sectoral programs aimed at different areas of education and
training:
- "Comenius" - schooling
- "Erasmus" - Higher Education
- "Leonardo da Vinci" - Vocational Education and Training
- "Grundtvig" - Adult Education

Part of the program Lifelong Learning are also supporting actions eTwinning, Europass,
Euroguidance, study visits, whose work in Bulgaria Center also manages.
The address is : Sofia 1000; 15 Graf Ignatiev St., floor 3
tel. +359 2 915 50 10; fax +359 2 915 59 49
hrdc@hrdc.bg
www.hrdc.bg

In the recent years, the interest towards Corporate Social Responsibility issues in Bulgaria
increased considerably. As a part of the so-called New Europe, the state and the Bulgarian
business in particular, began to pay more attention on how companies manage their impact
on the environment and how they contribute to the society as a whole. Gradually, the
Bulgarian business has become more conscious on the importance of implementing CSR's
principles and policies, which have a direct impact not only on business competitiveness, but
also on social cohesion, transparency and trust among the stakeholders - employees,
suppliers, clients, partners, state institutions, and non-governmental organizations (NGOs).
During the past years, the Bulgarian companies started to realize the necessity of conducting
a socially responsible business policy and behaving in conformity with a Code of Business
Conduct or Code of Ethics. Sponsorship by businesses has deep roots in the economic history
of Bulgaria. This practice reemerged after the changes of the political system. The
community patronage/ sponsorship programs and the employee benefits policies evolved
from not so coordinated activities to more precisely directed corporate policy. Thus, the
modern conception for charity and social affairs has founded a response in more and more
BULGARIA
Bulgarian leading companies. The business is seeking options to manifest its commitment
towards the employers, concrete society's problems/concerns and the environment. Many big
Bulgarian companies are declaring to be engaged in charity and social activities as a part of
their business conduct and corporate policy.
According to Bulgarian legislation registered companies should prepare their documents
following the transparency directives set by the Financial Supervision Commission. The
Commission implements its policy mainly on the basis of the Law on Public Offering of
Securities. The primary function of the institution is to assist - through legal, administrative
and informational means - the maintenance of stability and transparency of the investment,
insurance and social insurance markets.

BULGARIA

LOCAL RESOURCES FOR CROSS BORDER BUSINESS
COOPERATION


In the Communication from the Commission to the Council and the European Parliament from
11.04.2007 for the Black sea synergy - a new regional cooperation initiative, the main
economic sectors of interest for the EU are stated. They are as follows: energy supply; -
transport; environment; maritime; fisheries; trade; R&D

At the outset, Black Sea Synergy would focus on those issues and cooperation sectors which
reflect common priorities and where EU presence and support is already significant.
Consequently, this Communication formulates a number of short- and medium-term tasks
related to these areas.

Local products and services of cross border

Real Estate Sector
Property in Bulgaria, by Western European standards is very inexpensive. Bulgaria has so
much to offer it is not surprising it is quickly getting more popular as an alternative country
for property investment from the traditional European destinations. Some shrewd investors
who bought in Bulgaria two years ago have seen the value of their property increase
dramatically.
The market of Black Sea coastal real estate in Bulgaria has grown significantly. Seafront real
estate was on average 30% more expensive than water view locations. Bulgaria is still a
popular holiday destination for lower income tourists, which is the main reason for higher
demand for smaller and cheaper real estate.
Local market of residential properties in big cities along Black Sea coast has grown notably.
During the last year demand was higher than supply, due on one hand to the increased supply
of mortgage loans and on the other to consistent migration of workforce from inside the
country to sea resorts and big coastal urban centers like Varna and Bourgas where more jobs
are available.

Tourism

Tourism is one of the fastest growing sector in the Bulgarian
economy and one of the key sectors in Bulgaria due to the
excellent geographical location, remarkably rich nature, diverse
relief and moderate continental climate. In the last years
Bulgarian tourism has been advancing progressively. According to
statistical data, the number of foreign tourists increase every
year Tourism (international and domestic) has traditionally been
our no. 1 export sector.
BULGARIA

Summer Tourism in Bulgaria
The Black Sea Coast offers attractive seaside resorts. The
sunshine record is exceptional with an yearly average of nearly
300 days of sunshine. Tourists enjoy various opportunities for
climate-treatment and balneo-treatment, yachting, surfing,
water skiing, diving, underwater fishing, other aquatic sports and
diverse entertainment opportunities. There are special itineraries
combining see tourism with active tourism and providing
opportunities for hiking, cycling, riding, photo-tourism, and eco-
tourism, as well as visits to natural, archaeological and cultural
places of interest.
http://www.investbulgaria.com/BulgarianBlackSeaResorts.php

Balneology Tourism in Bulgaria
Bulgaria has more than 600 hot, warm and cold mineral springs of
varied physical and chemical contents, mineralization, curative
gases, biologically active trace elements, temperature and
curative properties that create excellent conditions for
development of balneology tourism. A number of hotels with
state-of-the-art equipment and skilled staff offer talasso-therapy,
pearl baths, underwater massage, phyto-therapy, curative mud,
inhalations, manual therapy, paraffin treatment, acupuncture,
helio-prophylaxis, ozone and oxygen therapy, slimming
procedures, and balneo-cosmetics

Cultural Tourism in Bulgaria
Bulgaria has over 30,000 historical monuments from different
historical epochs, 36 culture reserves, 330 museums and galleries
that form an impressive base for the development of cultural
tourism.

Ecological Tourism in Bulgaria
A network of three national and nine nature parks, a number of
reserves and natural places represent a significant potential for
the development of ecological tourism. Ecological routes are
special itineraries across exceptionally beautiful landscapes,
including a system of facilities for reaching the most inaccessible
beauty spots: gorges, steep rocks, and waterfalls.

Hunting tourism
The hunting tourism in Bulgaria relies on a large variety of game:
red deer, fallow deer, roe deer, wild goat, bear, boar, grouse,
hare, partridge, pheasant and many others. Bulgaria ranks second
in the world in terms of the quality of shot trophies.

Sites Under UNESCO Protection in Bulgaria
For several decades now, under UNESCO aegis, attempts have
been made to preserve the planet's most valuable cultural and
natural heritage. The UNESCO List of World Heritage now features
over 300 landmarks. Nine Bulgarian wonders - seven cultural and
two natural sites - are included among them.

BULGARIA

Energy
The Bulgarian energy sector is undergoing a major overhaul.
Improvement of Energy efficiency
Construction of new facilities
EU directives for at least 20% renewable energy by the year 2020
Environment improvements

Nuclear energy in Bulgaria
Bulgaria is constructing a second nuclear power plant in Belene,
expected to be completed around 2012.

Hydro energy in Bulgaria
Bulgaria is actively working on the development of its
hydrological sources in an effort to limit the dependence on
foreign fuel imports. Around 63 small and micro Hydro Power
Plants were located on the National Energy Companys (NEK)
property, most of which have been privatized.

Wind energy in Bulgaria
The European Union has set a directive requiring its members to
to produce at least 20% of their electricity by environmentally
clean and renewable sources. Certain areas of Bulgaria have
favorable wind conditions and investment in wind power
generators are showing good returns.

Solar energy in Bulgaria
A sizeable portion of Bulgarias land area receives medium levels
of solar radiation.

Biomass in Bulgaria
There is good potential for utilizing biomass as an energy source
in Bulgaria. While information regarding the use and potential of
biomass has been limited, there have been recent developments
through pilot projects and preliminary evaluations that begin to
highlight Bulgarias full potential. Results have appeared
promising, although a lack of project funding has hindered the
forward progress of this resource.

Geothermal Energy in Bulgaria
Bulgaria has a sizable reserve of geothermal energy and is rich in
low enthalpy geothermal waters. The country has been utilizing
approximately 30 percent of its total potential, or about 107.2
MWt producing some 1.637 TJ of energy per year, for use in space
heating, greenhouses, drinking water, and for balneology
purposes (Geothrmie, 2000). At the present there are no
geothermal reserve sites that generate power.

BULGARIA

Agriculture
Bulgaria enjoys excellent natural conditions for developing the agriculture and forestry
sector. Cultivated agricultural land occupies about 4.9 million hectares or 44% of the total
territory of the country. The favourable climate for crop production and the availability of
agricultural land and long traditions have resulted in well-developed plant growing and
animal breeding. Other advantages are the low labour costs and the high-schools and colleges
offering training in modern farming and animal breeding. Foreigners cannot own land, but
the Foreign Investment Law removed restrictions on the acquisition of land by locally
registered companies with foreign participation. Among the main crops produced are
tomatoes, pepper, tobacco, grapes, wheat, maize, beans, potato, sunflower, peaches,
apricots, apples, melons, and nuts. There are traditions in the sheep, pig and cattle
breeding, poultry farming, and bee-keeping.

Traditionally, Bulgaria has had a leading position in exports of grapes, oriental tobacco,
tomatoes, apricots and other agricultural products to European markets.

Good opportunities in the sector exist for the creation of total production chains through a
combination of selected companies in clusters covering primary sector, processing, sales and
distribution. An important advantage of the sector is the presence of well-established food
research and development institutions.

GREECE

GREECE

GREECE

GREECE

COUNTRY PROFILE

General information

Official name
The Hellenic Republic (Greece, Hellas)


The Hellenic Republic (Greece, Hellas) has a total area of 131,990 sq. km. Based on the
temporary results of the population census carried out by the Hellenic Statistical Authority in
2011, the countrys permanent population is 10,787,690. The countrys population is
concentrated in the Region of Attiki (35.34% of the resident population) that includes the
major cities of Athens (greater area) and Piraeus and the Region of Kentriki Makedonia
(17.38%) which includes the city of Thessaloniki.

Athens is the capital city while other major cities are Thessaloniki, Patra, Iraklio, Volos. The
time zone is GMT +2 for the entire country, the official language is Greek and the currency is
the Euro. English is widely spoken as a commercial language.

The countrys climate is temperate and the terrain is mostly mountainous with ranges
extending into the sea as peninsulas or chains of islands. In terms of natural resources,
lignite, iron ore, bauxite, lead, zinc, nickel, magnetite, marble and salt are the main sources
of wealth. The metric system is used for measuring weights and distances.

The country has geographic significance because of its strategic location in the Aegean Sea,
serving as a gateway to the European Unions Single Market for the Middle East and North
Africa. It is a peninsular country possessing an archipelago of approximately 3,000 islands. Its
coastline extends to more than 16,000 kilometers. Greece has land borders with Albania (282
km), FYROM (246 km), Bulgaria (494 km) and Turkey (206 km). The geographic coordinates of
the country are 39 00 N, 22 00 E.

There are National Holidays including Independence Day (25 March) and the Military Holiday
of 28 October while other Public Holidays are New Year's Day (January 1
st
), the Day of the
Epiphany (January 6
th
), Holidays Relating to Easter -- Ash Monday (41 days before Greek
Orthodox Easter), Good Friday and Easter Monday and White Monday (50 days after Easter),

Labour Day (May 1
st
), the Day of the Assumption (August 15
th
) and Christmas Holidays
(December 25
th
-26
th
). There are also public holidays celebrated at a local level.
GREECE

In terms of other characteristics of the Hellenic Republic, it should be noted that the official
religion is Greek Orthodoxy.

Greece is a member of significant international organizations such as: Council of Europe, EU,
NATO, EBRD, EIB, IBRD, IMF, IMO, Interpol, OECD, UN, UNCTAD, UNESCO, WHO, WTO, CERN.
In terms of the Black Sea Basin Programme, eligible areas are the NUTS II Regions of Kentriki
Makedonia (Central Macedonia) and Anatoliki Makedonia and Thraki (East Macedonia and
Thrace). The largest city in these regions is Thessaloniki. According to the provisional data
of the 2011 census, the population of the Region of Anatoliki Makedonia is 606,170 and a
population density of 42.82 per sq. km. The Region of Kentriki Makedonia has a total
population of 1,874,590 (population density of 99.66 per sq. km) with the Regional Unit of
Thessaloniki accounting for 1,104,460.

Greece is often considered the birthplace of western civilization and democracy. From the
period of around 700BC, the great city states of Athens, Corinth and Sparta flourished, while
during the fifth century BC, Athens was heralded as the cultural centre of the Mediterranean.
Excellence in architecture, sculpture, drama and literature is noted. Democracy, freedom,
justice, free inquiry and opportunity are ideals conceived by philosophers of Hellenic
antiquity. The historical and cultural heritage of Greece still resonates amidst its modern
Western world development.

It can be said that the first efforts at global trade were conducted by the ancient Greeks,
who developed a maritime tradition that continues to this day. Trade by sea to destinations
near and afar characterized the commercial spirit of Greece and set the foundations for the
development of regional trade that were to have far-reaching consequences on the material
prosperity of Greece and the sense of adventure that was to be documented in literature that
we still read today.

The modern expressions of poetry, theatre, music, dance, art and architecture are also
rooted in ancient Greece. In addition, scientific inquirywhat began as philosophyhas its
origins in such thinkers as Plato, Aristotle, and Socrates. Poets, historians, and medical
pioneers Sappho, Herodotus, and Hippocratesbegan their trade in Ancient Greece, as did
lawyers such as Solon, architects such as Phideas, and mathematicians such as Archimedes.
Today, Greece is a treasure trove of museums, archaeological and historical sites, theatre,
dance, and musical performance, The Acropolis, perched on the Parthenon in Athens, is the
crown jewel of Greeces archaeological splendor. More cultural, historical and touristical
information can be found in the following sites: www.culture.gr , www.visitgreece.gr . Also,
the Greek Secretariat General of Information and Communication has published a very
usefully detailed guide entitled About Greece with detailed historic information focusing
on contemporary Greece:
http://www.minpress.gr/minpress/en/index/currevents/publ_about_greece.htm

In terms of demographic information, beyond the general population statistics referenced
above, it should be noted that Greece has a population density of 84.46/km2. Population by
age group is described as follows:
Age Group Total Number Percentage of Total
0-14 1,596,530 14.3%
15-64 7,501,190 66.7%
65+ 2,074,020 19%
The economically-active population is approximately 4.95 million while the birth rate is 9.62
births/1,000 persons.

GREECE

In terms of the Greek economy, an expansion was noted at an average annual rate of 4% from
2004-2007 and 2% during 2008 (at constant prices of 2000), one of the highest rates in the
Eurozone, according to information from the Invest in Greece web site
(www.investingreece.gov.gr). International economic uncertainty has had an impact on
Greece in 2009; growth rates of GDP (-1.9%) were slowed. The inclusion of Greece in the EU
IMF support mechanism, with restrictive economic measures that have been taken for fiscal
consolidation, has negatively affected GDP development.
However, reforms and restrictive policy implementations have already begun to bear positive
results. The public deficit decreased by 31.82% in 2010 A significant improvement in the
development trends of GDP is expected through further reforms aimed at the development of
a more attractive investment and business environment, including liberalisation of a number
of markets, faster licensing procedures, the new investment law, flexibility in the labour
market, and others.

Major Economic Indicators 2007 2008 2009 2010
GDP 4.3% 1% - 2% - 4.35%
Inflation: Annual Average 2.9% 4.2% 1.2% 4.7%
Inflation: Percentage Change December to December 3.9% 2.0% 2.6% 5.2%
Labour Productivity (EU-27=100)** 97.1 99.8 98.9 n.a.
Unemployment Rate 8.3% 7.6% 9.5% 12.5%
Public Investments (%GDP) 3.4% 3.6% 3.0% 2.8%
Exports (Goods Current Prices) 21.4* 22.8* 18.5* 20.7*
Imports (Goods Current Prices) 65.8* 71.2* 56.8* 53.4*
*billion
** Source: Eurostat; Hellenic Statistical Authority, 2011

Fiscal stabilisation and consolidation in Greece are a priority; however private investment
(both national and international) and exports are primary growth drivers, rather than an
increase in public spending, as was the case in the past. Notable is that labour productivity in
Greece continues to show an increase in 2009 and remains at higher levels than the EU-27
average.

Unemployment in Greece, up to 2008, was rather low at 7.6%, approximately the mean value
of the Eurozone. During 2009, unemployment rose as a result of the international crisis that
affected Greece as well and reached 9.5%. In 2010 a further increase of unemployment is
evident due to the restrictive fiscal policy. Unemployment also increased in the EU-27 due to
the international crisis. EU unemployment in December 2009 reached 9.6%. In 2011,
unemployment rose further.

In 2010, fixed capital formation in Greece reached 33.2 billion Euro in constant pricesThe net
FDI inflow, according to recent revised data, reached 3.1 billion Euro in 2008, showing an
increase of 100% compared with 2007. In 2009, both total and net investments remained at
rather high levels despite the increasing financial crisis. In 2009 net FDI inflows into Greece
showed a decrease of 21% compared with 2008. However, this decline was much lower than
that of international FDI inflows which, according to the recent UNCTAD Report, reached
37%. Total foreign capital inflows, which reflect the real performance of the country,
reached 4.496 billion Euro in 2009, double the net inflows for the same year (2.145 billion
Euro). Given that investors from the EU, China, and Arab countries have already expressed
significant investment interest, there are promising prospects for FDI inflows to remain at
satisfactory levels despite the international and national financial crisis.

GREECE

The export of Greek goods during 2010 showed a significant increase, reaching in current
prices 20.7 billion Euros, up from 18.5 billion Euros in 2009. This increase is due to the
gradual easing of the global financial crisis, especially in traditional markets for Greek
products, and also due to the reduction of the prices of goods, intermediate goods, and
production factors as a result of the domestic economic crisis. It is noted that imports to
Greece at current prices in 2010 amounted to 53.4 billion Euros whereas in 2009 they reached
56.8 billion Euros. Export growth in 2010 and the corresponding decrease of imports have
resulted in the further reduction of the trade deficit of Greece.
Greece, part of the Black Sea community
In terms of Greeces role in the Black Sea basin, Greece actively participates in relevant
international organizations, the most significant of which is the BSEC Black Sea Economic
Cooperation Organization with headquarters in Istanbul. The Hellenic Republic is a founding
member of the organization that was initiated in 1992 within the framework of an informal
intergovernmental meeting and developed into an international economic organization on 1
May 1999 with the coming into force of its Charter signed in June 1998 in Yalta. Greece held
the rotating Chairmanship of the organization from 1.6 31/12.2010.

According to the Hellenic Ministry of Foreign Affairs, Greece is the top financing contributor
of the BSEC, through the Hellenic Development Fund which was set up in 2008 after a
decision of the Council of BSEC Foreign Ministers which took place in Kiev. This Fund was
established with a capital of 2 million Euros for four years (2008 2011) and its aim is at
supporting small development projects in the broader Black Sea region, mainly in areas of
transport, renewable sources of energy, environment, business cooperation, trade, tourism
and culture.

In terms of Greeces economic presence in the Black Sea region, Greek companies are
strongly entrenched in the region and are among the top investors in neighboring country
markets. According to the Hellenic investment agency, over the last few years, more than
4,000 Greek companies have invested more than 15 billion Euro in Southeast Europe. In
financial services alone, more than 3,000 branches of Greek banks are active in the region.
Greece is a leading global tourism destination, an emerging regional energy hub, and
possesses human capital that is outstanding.

Greeces role in the region is also highlighted by the fact that in the educational sector, high
quality academic qualifications are provided by Hellenic academic institutions on subject
matters of relevance to the Black Sea. For example, the International Hellenic University, an
accredited English language university in Greece, offers a one-year Masters Degree in Black
Sea Cultural Studies. This MA degree offered by its School of Humanities offers two
specialisation streams: a) Archaeology-History b) Politics-Economy.

Finally, there are a number of organisations in Greece dealing with the Hellenes of the
diaspora Greek communities established in other countries, either through birth and historic
links or because of the various migratory flows of the past. One significant initiative to be
mentioned is the Center for the Study and Development of Hellenic Civilisation in the Black
Sea, an NGO established by the Regional Administration of Thessaloniki (www.nath.gr).

GREECE


General consideration on the institutional framework
The legal system in Greece is based on Roman law. The country is governed as a presidential
parliamentary democracy based on its constitution of 1975 amended in 1986 and 2001. The
legislative branch includes a 300 seat unicameral parliament, members of which are elected
by direct popular vote to four-year terms. In terms of the executive branch, chief of state is
the President, elected by Parliament for a five-year term, while the head of the government
is the Prime Minister. The cabinet is appointed by the President upon the recommendation of
the Prime Minister. The judiciary system is divided into civil, criminal, and administrative
courts.

Administratively, Greece is divided into 13 Regions (periferies) which are governed by
regional governors (periferiarches) elected every five years. According to Law 3852/2010
otherwise known as the Kallikratis Programme, the administrative division of Greece has
been reformed, and the borders of the locally, self-administrated units, the electoral
procedure related to their governing bodies, and their responsibilities, were redefined.

The Kallikratis Programme uniformly and consistently relates to and interacts with the two
levels of local government, that of (1) Municipalities and Regions, and the (2) Decentralized
Administrative Units. The administrative structure of Greece is as follows: 13 Regions
(elected region heads) that replace 76 administrative units (prefectures, expanded
prefectures) and 325 new municipalities.

Since January 1, 2011 seven Decentralized Administrative Units also operate and their
responsibilities are limited solely to state functions, according to the provisions of the
Constitution. In Greece, there is also an autonomous monastic community Agion Oros or
Mount Athos.

A complete system of public and private institutions, central, regional and local authorities,
cross border as well as international institutions exists in Greece. The internet is widely used
so interested persons can easily find all relevant information on structures through their web
sites, usually available also in English.

Public institutions
In terms of the central government, all information begins with the government web site
(www.government.gov.gr,http://www.primeminister.gov.gr/english/government,
http://www.opengov.gr/en ) with links to all Ministries and government institutions and their
branches on a regional or local level.
More specifically, the Ministries which currently form the Greek Government are the
following:
Ministry of Interior www.ypes.gr
Ministry of Finance www.minfin.gr
Ministry of Foreign Affairs www.mfa.gr
Ministry of Administrative Reform and E-Governance (Greek only) www.ydmed.gov.gr
Ministry of National Defence www.mod.mil.gr
Ministry for Development, Competitiveness and Shipping (Greek only)
www.mindev.gov.gr
GREECE

Ministry of Environment, Energy and Climate Change www.ypeka.gr
Ministry of Education, Lifelong Learning and Religious Affairs www.ypepth.gr
Ministry of Infrastructure, Transport and Networks www.yme.gr
Ministry of Labour and Social Security (Greek only) www.ypakp.gr
Ministry of Health and Social Solidarity www.yyka.gov.gr
Ministry of Rural Development and Food www.minagric.gr
Ministry of Justice www.ministryofjustice.gr
Ministry of Citizen Protection www.yptp.gr
Ministry of Culture and Tourism www.yppo.gr
Each of the above Ministries has a very useful links page which contains the public and
semi-public organizations that function under the supervision of the relevant Ministry. Also,
each Ministry maintains offices throughout Greece with public citizen services, according to
its jurisdiction.

In terms of governmental agencies and centres supporting business cooperation and foreign
investment, international companies are urged to contact the Invest in Greece Agency.
Invest in Greece SA is the official investment promotion agency of Greece that promotes and
facilitates private investment. Invest in Greece is also responsible for the implementation of
"Acceleration and transparency of implementation of Strategic Investments" law. Invest in
Greece identifies market opportunities and provides investors with assistance, analysis,
advice, and aftercare support. It identifies potential partners, locates sites, assists in legal
and licensing procedures, analyses investment proposals, furnishes pertinent economic
information, and fully explains incentives available to investors. Its very useful web site is
www.investingreece.gov.gr.

Another useful reference source for companies is www.startupgreece.gr or Kickstarting
Greece. Startup Greece is an information, networking and collaboration space, aimed at
creating a new generation of entrepreneurs in Greece. It is supported by the Ministry for
Development, Competitiveness and Shipping and the Greek Government in collaboration with
communities of young entrepreneurs. Startup Greece provides entrepreneurs with the
information necessary to start their own business (motivation, funding, legal framework,
research material). It utilises social media to bring together people, ideas, corporations,
universities, organizations, and create creative partnerships and investment opportunities.
International companies should also be aware of the creation of a General Electronic
Commercial Registry (Geniko Emboriko Mitroo-G..H.), in Greece. The operation of a
modern and updated central database of business registry aims to facilitate in reducing
bureaucratic procedures to create or change a business and also the publication and
submission of corporate information certificates for almost all transactions of a company.
Moreover, a general and single registry of companies creates broader information
requirements and operating information for the entire public sector. The GEMH project, upon
its completion will be a relevant source for company statistical analysis. The relevant web
site is www.businessportal.gr

Another, very significant information portal is the Hellenic portal "ERMIS", the new
government Internet site for the Public Administration that provides citizens and businesses
alike with a central information and e-services hub (e-Government Portal). At the web site
www.ermis.gov.gr one can find a series of useful links and information and also the link to
the portal on the EU Services Directive, the Point of Single Contact for Citizens and
Businesses in Greece. This portal, a member of the EU EUGO Initiative (www.eu-go.eu),
has the purpose of simplifying formality procedures for business providers.

Additional references for businesses:
General Secretariat for Information Systems (on-line tax and customs forms) www.gsis.gr
Hellenic Statistical Authority www.statistics.gr
National Printing-house www.et.gr
Ministry of Foreign Affairs - Translation Service
http://www1.mfa.gr/en/citizen-services/translation-service/translation-service.html
GREECE

Bank of Greece www.bankofgreece.gr
Hellenic Police www.astynomia.gr
Organisation for Employment of the Workforce www.oaed.gr
Hellenic Industrial Property Organisation www.obi.gr
Hellenic Data Protection Authority (for personal data) www.dpa.gr
It is necessary to include Chambers of Commerce and Industry in this public sector chapter
as Chambers in Greece are legal entities governed by public law. There are 59 Chambers with
a specific geographic jurisdiction throughout Greece. All Chambers are members of the
Union of Hellenic Chambers (www.uhc.gr) through which interested companies can find the
coordinates of local Chambers. It should be noted that in Athens, Pireaus, Thessaloniki and
Komotini, there are separate Chambers covering Commerce, Industry, Service Professionals
and Small and Medium Sized Industries. In all other areas there is one unified Chamber
covering all of the above categories and for this reason the general title Chamber is used.
Membership to Chambers in Greece is obligatory.

It should be noted that there are also other Chambers in Greece functioning as professional
associations which are public law legal entities. Specifically, there is an Economic Chamber
(www.oe-e.gr) for economists and accountants, a Technical Chamber (www.tee.gr) for
professionals in the construction sector (architects, engineers, mechanics, etc.), a
Geotechnical Chamber (www.geotee.gr) for professionals in the agricultural sector, a
Hellenic Chamber of Hotels (www.grhotels.gr), a Hellenic Chamber of Shipping (www.nee.gr)
and a Chamber of Fine Arts of Greece (www.eete.gr).

Local administration
Public authorities functioning on a regional level are the 13 regional authorities. The
Association of Regions (www.enae.gr) provides links to the relevant web sites of each region.

On a local level, municipalities are the relevant public bodies. Their representative
association is the Central Union of Municipalities whose web site www.kedke.gr provides
links to the relevant local entities. The municipalities have a series of jurisdictions that
include citizen registries and services, immigrant licences and services, technical municipal
services, etc.

As mentioned above, the Regional Authorities also have offices on a local level. For a full
listing of the district offices of the Regions, one can consult the web site
www.anaptixi.gov.gr

Companies can enquire as to membership in privately registered professional organisations
and business associations which can be of a horizontal or sectoral nature. Also, these
organisations oftentimes have a regional or local character. In general, they have the role of
lobby groups, also providing services to their members.

Most of these groups are members of the Hellenic Confederation of Professionals, Craftsmen
and Merchants (GSEVEE), a Third Level (tertiary) Small Enterprises Organisation and one of
the major Social Partners which co-sign the National General Collective Agreement. On the
GSEVEE web site (www.gsevee.gr ) one can find links to its 87 federation members, 58 local
association members, and 28 sectoral organizations. On a local level, indirect members are
1100 associations of professionals, craftsmen & merchants with 160.000 registered natural
persons (entrepreneurs). The following Organisations should also be noted: The National
Confederation of Hellenic Commerce (www.esee.gr), the Hellenic Federation of Enterprises
(www.sev.org.gr) and the Federation of Industries of Northern Greece (www.sbbe.gr).

In terms of entrepreneurship, it is known that Greece has been a member of the EU since
1981. As such, European business practices and standards generally apply and all company
related information is publically available on-site or through web sites with English
GREECE

translations. As Europes Single Market is a reality, along with the Greek web sites, there is
also a plethora of EU web Sites providing information on doing business in Greece and all EU
countries (http://ec.europa.eu/youreurope/, http://ec.europa.eu/small-business/) Still, it
is common practice for companies (Greek as well as foreign) to consult appropriate
professionals for advice on issues of legal and financial/taxation nature, or as the case may
be customs brokers, transport agencies, logistics companies, translation companies, etc.
Oftentimes banks also provide useful services to their clients. In fact, international
companies can begin their internationalisation plans through their local bank which can
contact their branch office in Greece, or Greek banks with offices abroad. For a full listing
of banks in Greece, including representative offices of foreign banks, one can consult the
web sites of the Bank of Greece (www.bankofgreece.gr) or the Hellenic Bank Association
(www.hba.gr).

It should be noted that the headquarters of the Black Sea Trade and Development Bank
(BSTDB), the BSECs funding mechanism, is based in Thessaloniki. According to information
from the BSTDB web site, the Bank is an international financial institution established by
Albania, Armenia, Azerbaijan, Bulgaria, Georgia, Greece, Moldova, Romania, Russia, Turkey,
and Ukraine. With an authorized capital of SDR 3 billion, the Bank supports economic
development and regional cooperation by providing trade and project financing, guarantees,
and equity for development projects supporting both public and private enterprises in its
member countries. BSTDB is rated A long term and A1 short term, with stable outlook by
Standard & Poors, and A3/P2 with stable outlook by Moodys.

In terms of its mandate and mission, the purpose of the Bank is to accelerate development
and promote co-operation among its shareholder countries. BSTDB supports regional trade
and investment, providing financing for commercial transactions and projects in order to help
Member States to establish stronger economic linkages.

As defined in the Agreement Establishing the Black Sea Trade & Development Bank, the
mission of the Bank is to effectively contribute to the transition process of the Member States
towards the economic prosperity of the people of the region. This translates into a dual
mandate for the Bank to promote a) regional cooperation and b) economic development in
Member States principally by financing operations in the private and public sectors. Further
information is available on the relevant web site: www.bstdb.org.

In terms of other international organizations, Greece is involved in the United Nations
Development Programme project -- the Black Sea Trade and Investment Promotion
Programme (BSTIP). This is a joint initiative co-financed by the Ministry of Economy and
Finance of the Hellenic Republic, the Ministry of Foreign Affairs of the Republic of Turkey, by
UNDP and by the Black Sea Economic Cooperation Organization (BSEC). According to the
UNDP the programme, being the first joint initiative co-funded by Greece and Turkey, under
the auspices of UNDP, aims at supporting the regional economic integration process among
the BSECs 12 member states. As such BSTIP has been mandated to support the expansion of
the intra-regional trade and investment links in the sub-region by identifying the untapped
investment and trade potential and putting into place the mechanisms to exploit it.

Greeces capital city of Athens is also the headquarters of the International Center for Black
Sea Studies (ICBSS), whose establishment was spearheaded by the Hellenic Republic. It is
acknowledged as the BSECs de facto think-tank. Since 1998 when it was established as a non-
profit organisation, it has fulfilled a dual function: a) as an independent research and training
institution focusing on the wider Black Sea region, and b) as a related body of the BSEC.
Through its activities, the ICBSS promotes multilateral cooperation among the BSEC member
states, the European Union and other international organisations.

GREECE

The Centre elaborates and publishes research papers and studies, organises a variety of
scientific events and manages research projects that seek to foster a comprehensive and
cohesive approach towards important issues of the Black Sea region, with an academic as
well as policy-oriented focus. Its most recent activity was the organisation of the 4th
International Black Sea Symposium on the theme of The Black Sea Region in Transition: New
Challenges and Concepts. This took place in September 2011 in Athens.

Another Black Sea Organisation with offices in Greece, Kavala specifically, is the CPMR Balkan
and Black Sea Regional Commission (BBSRC) Greek and Romanian regions had the initiative to
set up geographical Commissions in the Balkans and the Black Sea area under the umbrella of
the Conference of Peripheral Maritime Regions of Europe (CPMR). The two Commissions were
set up in April 2000 and June 2001 respectively. In 2004, they decided to come together and
to join forces.

The BBSRC currently brings together 30 Regions from Greece, Turkey, Romania, Bulgaria,
Croatia, and Ukraine. It has special partnerships with Serbian, Georgian and Moldovian
Regions. The main objective of the Commission is to encourage dialogue and cooperation
between sub-state spheres of government. The aim is to constitute a lasting institutional
framework to support the integration of these areas and improve their relations with the EU
in the context of enlargement.

Currently, the President of this Commission is Mr Pavlos DAMIANIDIS, Deputy Regional
Governor of the Region of East Macedonia & Thrace (Anatoliki Makedonia kai Thraki). The
Executive Secretary, Mr Anthony Papadimitriou, is located in Athens. It is assisted by the
CPRM General Secretariat based in Rennes. Further information on this organisation can be
found on its web site www.balkansblacksea.org .

Foreign investors can also maintain contacts with their Embassies (located in Athens) or
General Consulates (mainly located in Thessaloniki) and also with their respective
Commercial Attaches whose role it is to facilitate their nationals throughout the economic
and business venture process. The Hellenic Ministry of Foreign Affairs maintains a list of such
diplomatic missions in Greece (www.mfa.gov.gr). Also, prospective investors from Black Sea
Countries can contact bilateral Chambers of Commerce that exist. For example there are
Turkish Hellenic Chambers of Commerce in both Athens (www.etee.gr) and Thessaloniki
(www.grtrchamber.org) and bilateral Chambers exist with Bulgaria (www.gbcci.org),
Romania (www.hrcci.eu) and Ukraine (www.hucc.gr).

GREECE

GREECE

LEGAL FRAMEWORK FOR DOING BUSINESS

Legal Base to register a business in Greece
In April 2011, Greece introduced the one-stop-shop in starting up new enterprises via a
general commercial register. It is a project of national priority and a service meant to boost
transparency and reduce bureaucracy thus encouraging entrepreneurial activity. According to
the estimates of the Ministry of Development, this new service reduces the time needed to
start up a business from 19 days to one day, while costs are also reduced by 50-62%. The
implementation of this project had as its goal to boost Greeces standing in the World Banks
Doing Business ranking and indeed, the 2012 guide released on 20 October 2011 indicates
that Greece climbed 14 steps in the ranking referring to the business climate from the 149
th

position to the 135
th
. So, one can safely indicate that starting up an enterprise in Greece is
significantly simpler that it has been in the recent past.

As a general rule, prospective entrepreneurs should begin their quest for starting a new
enterprise at the local Chamber of Commerce and Industry in the geographical area where
they will set up their activity. A full listing of Chambers is available on the Union of Hellenic
Chambers web site www.uhc.gr. Chamber staff will either complete the procedure for
setting up a company through the one-stop-shop service or will direct the new
entrepreneur to the correct authority.

Forms of business cooperation and ventures recognised by the law
In Greece there is a broad range of business forms that prospective companies can choose
from. The establishment procedures for the four main legal entity forms, 1) Public Limited
Company (SA Societe Anonyme or AE Anonymos Eteria -) 2) Limited Liability Company
(EPE Etairia Periorismenis Efthynis) 3) General Partnership (OE Omorythmos Etairia) and 4)
Limited Partnership (EE Eterorythmos Etairia) are analyzed below. The information is based
on the instructions of the General Secretariat for Commerce of the Ministry of Development,
Competitiveness and Shipping and further details can be found on the Ministry Web Site
(www.startupgreece.gr). These four legal entities can be established through the one-stop-
shop service. The first two company types (SA and EPE) are created by accredited notary
publics (a listing of which is available on the General Company Register portal
www.businessportal.gr ) and the other two (OE and EE) are established and registered
through one of the 59 Chambers of Greece (www.uhc.gr).

Requirements for registering a company, including operational authorisation

Public limited company (Socit Anonyme) may be established by one or more persons, or
become a single-member public limited company when all shares are concentrated in the
hands of a single shareholder. The founding members may be legal or natural persons. The
natural persons have to be over eighteen years of age (according to article 127 of Greek Civil
Code, as it was modified by article 3 of Greek Law 1329/83). Participation of a minor in the
establishment of a public limited company is allowed only after magisterial permission. A
public limited company (SA) has the following basic characteristics:
A relatively large capital stock that is required for its establishment.
The capital is divided into equal units, otherwise called shares.
Strict publicity rules during the company establishment procedures, as well as during
its entire duration.
A long duration (usually 50 years)
The limited responsibility of the shareholders.
GREECE

Decision making procedures based on majority.
The existence of two bodies: the General Assembly of shareholders and the Board of
Directors.
In order to establish a public limited company (SA), the minimum capital required is 60.000
Euros, although certain cases require a larger amount of capital. The capital should be
deposited during the companys establishment. It is not compulsory for the capital to
comprise only cash; it may also comprise contribution in kind, that is contribution of assets
(e.g. property). However, if part of the initial capital (maximum 50%) comprises
contributions in kind, an advance valuation should be carried out, according to article 9 of
Greek Law 2190/1920.

The liability of the partners/shareholders in this company form is the total amount of the
company capital. The company is liable for debts and obligations with its own assets, not the
partners personal assets. In contrast to personal companies, the assets of a company are
clearly distinguished from the assets of the founders/partners.

In order to establish the company, a Company Establishment Note of 70 Euros must be
deposited. If the founders are more than 3 persons, the cost is increased by 5 Euros for each
additional founder. The Company Establishment Note cannot be refunded.
Additionally, companies will need to pay:
G.C.R. registration fee (10 Euros).
Chamber registration fee depending on the respective Chamber.
Registration fee to the Insurance Organisation for the Self-Employed (OAEE) that
amounts to 50% of the insurance premium of the pension branch of the third insurance
category of new insurers category 003 (approximately 111 Euros).
Capital Accumulation Tax (1% of the capital stated in the Articles of Association)
Duty paid to the Hellenic Competition Commission (1% of the capital stated in the
Articles of Association).
Also, the Notary fee amounts to 44.02 to draw up the contract plus 6 per page, plus 23%
VAT. The copies cost 5 per page, plus 23% VAT. The fee is paid directly to the Notary Public
and is not included in the Company Establishment Note. An attorney fee, if required, may
also apply. According to the law, an attorney should be present if the company capital is
more than 100.000. An attorneys minimum fee is 1% of the company capital, if the amount
is less than 44.02,5429, and 0,5% of the company capital, if the amount is more than
44.02,5429. This fee applies to each attorney present. For instance, if a company is to be
established by two parties and each party has their own attorney, then both attorneys shall
receive a fee. The fee is paid directly to the attorney and is not included in the Company
Establishment Note.

Before going to the Notary Public, certain company details for the Articles of Association
must be decided upon. The Articles of Association constitute a necessary document for the
establishment of a company, and determine a number of significant topics related to the
partners relations, company management, duration and dissolution. Article 2, paragraph 1 of
Greek Law 2190/20 determines the minimum information to be included in the Articles of
Association. Specifically, the Articles of Association of a public limited company (SA) should
contain the following provisions regarding:
Company name and purposes
Registered seat of the company
Duration of the company
Amount and method of payment of capital stock
Types of shares, quantity of shares, nominal value and issue of shares
Number of shares for each type, if more than one type of shares exist
Conversion of registered shares to bearer shares, or conversion of bearer shares to
registered shares
Meeting, formation, operation, and responsibilities of the Board of Directors
Meeting, formation, operation, and responsibilities of the General Assembly
GREECE

Auditors
Shareholders rights
Balance sheet and allocation of profits
Dissolution of the company and liquidation of assets
However, the Articles of Association do not have to contain any provisions, even if these are
referring to information stated in paragraph 1, on the condition that they are repeating valid
provisions of Greek law, unless derogation from these is granted. The Articles of Association
of a public limited company (SA) should also include:
Personal information of the legal or natural persons who signed the Articles of
Association, or on behalf of whom the Articles have been signed.
The total amount, or approximately, of all expenses required for the establishment of
the company which burden the company.
The duration of the first fiscal period, the composition and term of office of the Board
of Directors (including their capacities and duties if the contracting parties agree so)
and the auditors of the first fiscal period, if the company is subject to audit.

Limited liability company (Etairia periorismenhs efthynis EPE) - as a rule, in order to
establish a limited liability company, at least two parties will have to concur, either natural
or legal persons. However, a limited liability company may be established by a single natural
or legal person (single-member limited liability company) under certain circumstances; that
is, the founder (legal or natural person) of a single-member limited liability company cannot
establish a new single-member limited liability company. In addition, a single-member
limited liability company cannot be the sole shareholder of another single-member limited
liability company.

The natural persons have to be over eighteen years of age (according to article 127 of Greek
Civil Code, as it was modified by article 3 of Greek Law 1329/83). Participation of a minor in
the establishment of a limited liability company is allowed only after magisterial permission.
A limited liability company is a company with share capital and legal personality, and is liable
for its debts with the company assets. According to article 3 of Greek Law 3190/1955, a
limited liability company is a trade company, even if its business scope is not related to
trade. However some trade activities, such as banking, insurance, stock exchange, portfolio
management, mutual funds management, leasing, promotion and implementation of high
technology investments (only venture capital) and athletic activities are expressly excluded
from the scope of limited liability companies. Further basic characteristics include:
The capital stock is divided into participation units, each of which comprises of
company shares, of a minimal value of 30 Euros each.
Specific publicity rules during the company establishment procedures, as well as
during its entire duration.
Specific duration (although failure to record the duration does not constitute reason
for dissolution).
Limited liability of the partners.
Decision making procedures are based on majority (more than half of the total
number of the partners who represent more than half of the company capital).
The existence of two bodies: the General Assembly of Partners and the Manager or
Managers.

In order to establish a limited liability company, the minimum capital required is 4.500 Euros.
The capital should be deposited during the companys establishment. It is not compulsory for
the capital to comprise only cash; it may also comprise contribution in kind, that is
contribution of assets (e.g. property). However, if part of the initial capital (maximum 50%)
comprises contributions in kind, an advance valuation should be carried out, according to
article 9 of Greek Law 2190/1920.

In the case of the EPE, the liability of its partners/shareholders is the total amount of the
company capital. The company is liable for debts and obligations with its own assets, not the
GREECE

partners personal assets. In contrast to personal companies, the assets of a company are
clearly distinguished from the assets of the founders/partners.

The fees for establishing an EPE include the Company Establishment Note of 70 Euros. If the
founders are more than 3 persons, the cost is increased by 5 Euros for each additional
founder. The Company Establishment Note shall not be refunded.
Additionally, the company will need to pay:
Chamber registration fee depending on the respective Chamber.
Duty paid to the Lawyers Welfare Fund in Athens, which amounts to 5.80.
Notary fee It will cost 44.02 to draw up the contract plus 6 per page, plus 23%
VAT. The copies cost 5 per page, plus 23% VAT. The fee is paid directly to the
Notary Public and is not included in the Company Establishment Note.
Attorney fee, if required. According to the law, an attorney should be present if the
company capital is more than 100.000. An attorneys minimum fee is 1% of the
company capital, if the amount is less than 44.02,5429, and 0,5% of the company
capital, if the amount is more than 44.02,5429.
Attention: This fee applies to each attorney present. For instance, if a company is to be
established by two parties and each party has their own attorney, then both attorneys shall
receive a fee. The fee is paid directly to the attorney and is not included in the Company
Establishment Note.

Before going to the One Stop Shop, it is necessary to decide upon certain company-related
information to be included in the Articles of Association. The Articles of Association
constitute a necessary document for the establishment of a company, and determine a
number of significant topics related to the partners relations, company management,
duration and dissolution. According to article 6 of Greek Law 3190/1955, the Articles of
Association of a limited liability company should contain at least the following:
The partners names, surnames, professions, residence and nationality.
Company name.
Registered seat and purposes of the company (the registered seat may be a
Municipality or a Community of the Greek State).
State explicitly the type of company as a limited liability company
The capital stock, participation share and the number of company shares held by each
partner, as well as a certificate of payment of capital stock.
The types of contributions in kind, their valuation and the name of the
contributor/partner, as well as the total value of contributions in kind.
The duration of the company.
Moreover, the Articles of Association may also include and validate agreements between
partners about complementary contributions, further provisions that do not constitute
contributions in cash or in kind, non-competition agreements among partners, share transfer
prohibition, prohibition of partners withdrawal, dissolution of company for reasons other
than those provided in the Greek law. The Articles may also include provisions on
management control.

General Partnership (OE Omorythmos Etairia) In order to establish a general partnership
company, at least two parties will have to concur who are by law jointly responsible for
pursuing common purposes (article 741, Greek Civil Code). The founding members of a
general partnership company may be natural or legal persons. The natural persons have to be
over eighteen years of age (according to article 127 of Greek Civil Code, as it was modified
by article 3 of Greek Law 1329/83). Participation of a minor in the establishment of a general
partnership company is allowed only after magisterial permission.
GREECE

The partners of a general partnership company are jointly responsible for all the companys
obligations with their personal assets. The dissolution of the company does not terminate the
partners liability for any existing company debts. The establishment of a general partnership
company does not require a notarial deed; on the contrary, a private agreement is sufficient.
In a General Partnership, a general partner, is the partner with unlimited liability
(responsible for all the companys debts, not limited to a fixed amount of the companys
debts) for all the companys obligations with his/her personal assets.

In terms of capital necessary to start and OE, there is no minimum capital required by law for
establishing a general partnership company, because the company assets are not
distinguished from the partners assets, given that the partners are liable for the companys
obligations with all their personal assets.

In order to establish and OE, a Company Establishment Note of 50 Euros is required. If the
founders are more than 3 persons, the cost is increased by 5 Euros for each additional
founder. The Company Establishment Note shall not be refunded.
Additionally, the company will need to pay:
Chamber registration fee, depending on the respective Chamber.
Contribution to the Lawyers Fund (0,5% of the company capital)
Duty paid to the Lawyers Welfare Fund in Athens. For the establishment of general
partnership companies and limited partnership companies with capital more than
586.94, the duty amounts to 1% of the capital stated in the Articles of Association.
Additionally, a stamp of 3.6% on the abovementioned 1% is paid. If the capital is less
than 586.94, the duty amounts to only 5.80.

Before going to a One Stop Shop, the Articles of Association of the company must be drawn
up. According to the law, the Articles of Association should contain at least the following
information:
Name and residence of the partners
Company name
Names of managers and representatives
Type and value of contributions
Purposes of the company
State explicitly the type of company as a general partnership company
The Articles of Association constitute a necessary document for the establishment of a
company, and determine a number of significant topics related to the partners relations,
company management, duration and dissolution. The Articles of Association should be signed
by all partners.

Limited Partnership (EE Eterorythmos Etairia) - in order to establish a limited partnership
company, at least two parties will have to concur who are by law jointly responsible for
pursuing common purposes (article 741, Greek Civil Code). The founding members of a
limited partnership company may be natural or legal persons. The natural persons have to be
over eighteen years of age (according to article 127 of Greek Civil Code, as it was modified
by article 3 of Greek Law 1329/83). Participation of a minor in the establishment of a
general partnership company is allowed only after magisterial permission.

The partners of a limited partnership company are distinguished in two categories: general
and limited partners. General partners have joint and unlimited liability vis--vis the
company creditors. Limited partners have limited liability and are only liable for the amount
GREECE

of their investment in the company. The establishment of a limited partnership company
does not require a notarial deed; on the contrary, a private agreement is sufficient. The
limited partner becomes liable as a general partner when his/her name is included in the
company name, or participates in the management and representation of the company.

In terms of capital, there is no minimum capital required by law for establishing a limited
partnership company, because the company assets are not distinguished from the partners
assets, given that the partners are liable for the companys obligations with all their personal
assets. In terms of partner liability, each general partner is liable for the companys debts
and obligations with their own personal assets. Limited partners are liable for the amount of
their investment in the company.

In terms of fees, the Company Establishment Note of 50 Euros is required. If the founders are
more than 3 persons, the cost is increased by 5 Euros for each additional founder. The
Company Establishment Note shall not be refunded. Additionally, the company is required to
pay: - G.C.R. registration fee (10 Euros).
- Chamber registration fee depending on the respective Chamber.
- Contribution to the Lawyers Fund (0,5% of the company capital)
- Duty paid to the Lawyers Welfare Fund in Athens. For the establishment of general
partnership companies and limited partnership companies with capital more than
586.94, the duty amounts to 1% of the capital stated in the Articles of
Association. Additionally, a stamp of 3.6% on the abovementioned 1% is paid. If
the capital is less than 586.94, the duty amounts to only 5.80.
- Registration fee to the Insurance Organisation for the Self-Employed (OAEE) that
amounts to 50% of the insurance premium of the pension branch of the third
insurance category of new insurers category 003 (approximately 111 Euros).
- Capital Accumulation Tax (1% of the capital stated in the Articles of Association)

Before going to a one stop shop, the Articles of Association of the company need to be drawn
up and should contain at least the following information:
Name and residence of the partners, and their capacity (general partner, limited
partner)
Company name (it is prohibited to include the limited partners name in the company
name)
Names of managers and representatives (only general partners may be managers and
representatives)
Type and value of contributions
Purposes of the company
State explicitly the type of company as a limited partnership company

The Articles of Association constitute a necessary document for the establishment of a
company, and determine a number of significant topics related to the partners relations,
company management, duration and dissolution. The Articles of Association should be signed
by all partners.

GENERAL INFORMATION FOR ALL OF THE ABOVE COMPANY TYPES
Before registration it is necessary to locate the premises of the company. These premises
shall be the registered seat of the company.

It should also be noted that tax and social security clearance certificates are required.
Specifically, all founders/partners should have tax and social security clearance certificates.
When the establishment procedure is completed, the One Stop Shop shall provide, free of
charge, a certificate stating the actions undertaken and the results. In particular, the
certificate shall state at least the following: The date of establishment of the company, type
of company, company name and distinctive title, G.C.R. number and Registration Code
GREECE

Number, TIN of the company and competent Public Fiscal Service, and the registration of the
company at the relevant registers of the Chamber.

It should also be noted that the above procedures do not pertain to companies that require
an administrative approval or decision in order to commence their business activity.
Information on these companies can be obtained from the portal www.ermis.gov.gr.

There are also other forms of enterprise formation in Greece:
Branches of Foreign Companies Public corporations or limited liability companies
registered abroad, can establish a branch office in Greece. These companies are
registered with the Ministry of Development. In the case of SA/AE company types
Greek Law 2190/1920 applies, whereas for LTD/EPE companies, reference is made to
Law 3190/1955.
Joint Ventures (Koinopraxia) are informal associations of individuals or legal entities,
brought together in order to complete specific projects. These associations are
registered at the local Chamber and also have certain tax benefits.
European Economic Interest Grouping (EEIG) EU Council Regulation 2137/85/EEC as
it is implemented in Greece through Presidential Decree 38/1992 describes this
European company type which can be established in Greece.
European Company Societe Europeenne (SE) For company forms with a minimum
capital of 120.000 Euro, it is possible to form an SE in accordance with the EU Council
Regulation 2157/2001 and Greek Law 3412/2005.
Off shore company type Greek Law 89/1967 as it was amended by Law 3427/2005
provides information for foreign companies wishing to establish an off shore office in
Greece which has special tax benefits.
Foreign shipping companies may take advantage of Greek Law 27/1975 and establish a
branch office in Greece.
Self-Employed, Personal Companies - In Greece, the most common and wide-spread
form of entrepreneurship is the personal company sometimes referred to as free
lancer or sole trader. This is the most basic and simple company formation type and
has very limited requirements, both in terms of registration procedures and in terms
of accounting regulations applied. Registration is possible at the local Chamber.

In terms of company registry statistics, it is important to indicate that since the beginning of
the General Commercial Registry and One-Stop-Shop Service on April 4 2011 until 3 October
2011, 17,469 new enterprises were registered while 3,601 companies utilized the one-stop
service. With the completion of the commercial registry in Greece, full statistics will be
available.

Procedural requirements for building a standard warehouse in Greece include: Obtaining a
copy of the notarial deed (Notary Public office), obtaining a copy of land registry certificate
(Land Registry Agency), obtaining a waste disposal study (Department of Health Agency at
the Municipality), obtaining active fire protection approval (Fire Brigade Office), obtaining an
installation permit (Department of Industry), obtaining a building permit (Town Planning
Department office or Poleodomia at the Municipality), paying workers social security
(Social Security Offices IKA), obtaining police approval for the commencement of works
(Police station), obtaining municipal approval for the commencement of works and for the
occupation of the pavement (Municipality), receiving final inspection from the municipality
(Municipality), requesting and obtaining electric power connection (Public Electricity
Company DEI), obtaining water connection (local water and sewerage company),
obtaining a sewage connection (Municipality), obtaining a telephone connection (Hellenic
Telecommunications Organization S.A. OTE), and finally registering the building with the
Municipal Authorities.

GREECE

Of course, other structures have other requirements. For example in the Invest in Greece
Agency web site www.investingreece.gov.gr there is a detailed account of liscensing
procedures and building requirements for key investment sectors such as tourism, where
special construction considerations exist for hotels, pools, spas, etc. Also, it should be noted
that there are special incentives and for building within the limits of authorized Business
Parks. Further information is available from the General Secretariat for Industry
(www.startupgreece.gr/content/business-parks).

Lifecycle of a company: exit through bankruptcy, transfer of business
Business Transfers
Transfer procedures vary depending on the company type. For Single-member companies
(sole trader - natural person): through deed inter vivos (sale contract) or in the case of death
of the owner, the company is transferred to his/her heirs. In general partnerships: equity
shares may be transferred by deed of transfer inter vivos (i.e. transfer of property or interest
during a person's lifetime) if provided for in the statute or agreed by all partners. In limited
partnerships: a shareholding transfer to this type of company is possible only if agreed by all
partners. In Limited Liability Companies capital transfer is possible, unless otherwise
specified in the statutes, but it is more complicated that the transfer of shares of a Limited
Company. The transfer of Public Limited Companies occurs by transferring shares; the statute
may set limitations only for nominal shares. The source of information for the above can be
found on the Your Europe section of the EU information portal under the heading Exit
Strategies for Companies http://ec.europa.eu/youreurope/business/deciding-to-
stop/transferring-ownership/greece/index_en.htm

Company Dissolution (Closure)
Companies can be dissolved voluntarily through closure by simply deregistering
administratively at the tax authority, relevant social security office and Chamber. For
companies with capital shares (Limited Liability Partnerships and Public Limited Companies)
the relevant laws apply. The source of information for the above can be found on the Your
Europe section of the EU information portal under the heading Exit Strategies for
Companies, Winding Up with specific information on Greece http://ec.europa.eu/
youreurope/business/deciding-to-stop/winding-up/greece/index_en.htm

Bankruptcy Law
The bankruptcy code in Greece is a relatively new law (Law 3588/2007 Published in the
Hellenic Government Gazette 153/10.7/2007) It provides a simplified up-to-date, fair and
functional system of regulations based on the second chance notion, which can be
summarised as follows: giving priority to rescuing the business; giving a second chance in
business; treating the bona fide party (the innocent party as opposed to the fraudulent one)
with more leniency than has been the case to date; adoption of faster bankruptcy
proceedings in case of a company's unsuccessful reconstruction efforts; greater transparency;
introduction of a conciliation procedure; special treatment of small bankruptcies.

According to the Bankruptcy Code, a debtor unable to pay their overdue financial obligations
must be declared bankrupt. Bankruptcy conditions are as follows:
- The commercial status of the debtor (natural or legal person). An exception to this
are legal persons pursuing economic purposes, even if they have no commercial
status, and which may go bankrupt.
- The cessation of payments by the debtor, as defined by law as the failure to pay
overdue financial obligations, in a general and permanent way. Bankruptcy may
be declared on the basis of mere "threatened" failure to perform, when requested
by the debtor himself.
The source for the above information and point of reference for further details is:
http://ec.europa.eu/youreurope/business/deciding-to-stop/handling-bankruptcy-and-
starting-afresh/greece/index_en.htm

GREECE

Still, further simplifications are to take place in pre-bankruptcy legislation as a safety net for
businesses at risk because of the economic crisis. A new law introduced by the Minister of
Development, Competitiveness and Shipping on "Pre-bankruptcy Reorganisation of
Enterprises gives a second chance to companies which, for any reason, are in economic
difficulties, increases the possibility of consolidation for firms that are viable, ensures
protection of creditors and is meant to save jobs. At the time of printing, the draft law was
not yet voted into effect. Further information can be found on the Invest in Greece Agency
site www.investingreece.gov.gr.

GREECE

GREECE

INVESTING IN GREECE

According to the Hellenic investment agency, Greece can be considered the economic hub of
Southeast Europe. Greece is highly appealing as an investment location because it offers
businesspeople a wide variety of investment opportunities that take advantage of the
countrys strategic geographic location and unique competitive advantages. Greece is a
natural gateway to more than 140 million consumers in Southeast Europe and the Eastern
Mediterranean, a region with a GDP of almost 1 trillion Euro. As the hub of diverse emerging
markets, Greece provides access to populations with a strong demand for consumer goods,
infrastructure modernisation, technology and innovation networks, energy, tourism
development, and light manufacturing. Greece is a leading global tourism destination, an
emerging regional energy hub, and possesses human capital that is outstanding.

It is important to consider the infrastructure currently in place in Greece. In terms of
transportation, there are a total of 2,600 km of railways and roadways total 117,000 km.
Major highways include the Egnatia Highway, the PATHE Motorway, the Ionian Motorway, the
Attiki Odos Motorway and the Rion-Antirrion Bridge.

There are 12 major international ports: Piraeus, Thessaloniki, Volos, Patra, Alexandroupoli,
Elefsina, Igoumenitsa, Iraklio, Kavala, Kalamata, Lavrio, Chalkida, Astakos. As far as
airports, there are 15 international airports and 25 domestic airports servicing 20 million
passengers annually. The main airports are: Athens International Airport (Eleftherios
Venizelos), Thessaloniki, Iraklio (Crete), Rhodes, Corfu, Kos, Chania, Zakynthos, Samos,
Mykonos and Santorini (Thira).

In terms of telecommunications, there are approximately 6 million telephone lines in use
while mobile cellular phone use reaches 16 million. The mobile phone market penetration is
150+%. The main mobile phone operators are Cosmote, Wind, Vodafone, Q Telecom.
Internet market penetration is currently 33.9%.

Incentives
Fast Track
In order to attract investments, Greece has introduced the "Acceleration and transparency in
the realisation of Strategic Investments" Law (Fast Track), which provides the international
and Greek investment community with a stable and transparent investment framework that
includes regulations, procedures, and administrative mechanisms for the implementation of
major public and private projects. Through the Law, critical factors that have inhibited
major investment in Greece are abolished. The Law allows businesspeople to proceed
without bureaucracy, legal framework complexity, and opacity which, to date, have
discouraged investors and significantly delayed the implementation of major projects.

The legislation is aimed at the development of investment projects that deliver long-term,
high-impact positive results for Greeces national economy. In turn, it is considered that this
will lead to the creation of a more modern infrastructure, advanced transport and telecom
networks, and better services to citizens. Improved economic competitiveness, job creation,
the production of innovative, high-tech, value-added products and services, and the
development of environmentally friendly and socially responsible companies are also
expected to be achieved. The Fast Track Law as it is commonly called, aims to facilitate
strategic investment projects and to accelerate their licensing process, identifying as
GREECE

strategic investments those with positive multiplier effects to boost economic growth,
build a green economy, advance R&D, and create new, sustainable jobs.

Fast Track focuses on the construction, reconstruction, or modernisation of projects in the
energy, industrial, tourism, transportation, telecommunications, health, waste management,
innovation and high tech sectors. Investments may either be Public, Private, or Public Private
Partnerships. The prerequisites for Fast Track projects are:
The value of the investment must exceed 200 million Euro, or the value of the
investment must exceed 75 million Euro and the investment must create at least 200
new employment contracts
At least 3 million Euro must be invested every three years, regardless of the
investment value, in advanced technologies and innovation projects integrated into
the strategic investment, or in projects that increase Greeces value and enhance the
environmental protection of the country or, in projects creating value for the country
in the areas of education, research, technology and a qualitative or quantitative
increase in knowledge or the investment creates 250 new employment contracts.

Fast Track includes a well-defined appraisal process for private investments that is
coordinated by Invest in Greece and through the newly formed Interministerial Committee
for Strategic Investments (ICSI).
The Interministerial Committee for Strategic Investments (ICSI) is responsible for the final
decision on inclusion in Fast Track. Investment projects are screened and judged on a variety
of criteria:
Sustainability of the proposed investment
Solvency of the investor
Development and transfer of knowledge and know-how
Regional development resulting from the investment
Anticipated increase in employment
Reinforcement of the national economic business activity and competitiveness
Integration of innovation and high technology
Increase in exports
Environmental protection/sustainability
Energy savings
All applications of investment proposals are submitted to Invest in Greece. Files should
include a complete and detailed business plan and an impact assessment study on the Greek
economy. Both are binding. Under Fast Track, all relevant licenses are to be issued within
two (2) months. If the 2-month limit expires, it is assumed that the requested license has
been granted.

Invest in Greece, acting as a one-stop shop to facilitate Fast Track, has defined
responsibilities:
Receipt of the investors application
Examination and evaluation of investment proposals
Request additional data from investors
Recommendation to the Interministerial Committee for Strategic Investments on
including the investment proposal under the Fast Track process
Supervising the licensing process
Invest in Greece likewise has the responsibility of informing the Interministerial Committee
for Strategic Investments on possible inefficiencies in the Fast Track process and proposing
solutions. Fast Track relies on the cooperation of state authorities acting in concert on
proposed projects.Invest in Greece is the organisation responsible for the implementation of
"Acceleration and transparency in the realisation of Strategic Investments" (Fast Track) and
interested investors are advised to contact this agency for further information
(www.investingreece.gov.gr).

GREECE

INVESTMENT LAW
Beyond the Fast Track Law, Greece has a general investment framework that was voted
2011 (Law 3908). The new law provides for three general and four special categories of
investment schemes, which correspond to different investment regimes.
The general investment regimes:
1. Reinforce competitive and viable investment schemes with documented prospects
of profit
2. Support investments in technological development and innovation
3. Promote regional cohesion and green development
The special investment regimes address specialised challenges of the developmental process
and correspond to sectors where special emphasis is given. They deal with:
1. Young entrepreneurship
2. Major investment schemes
3. Integrated business plans for the technological and organisational modernisation of
enterprises
4. Investment in synergies and clusters.
The abovementioned regimes combine a series of reinforcement mechanisms:
1. Tax exemptions on profits, six years for existing businesses and eight years for new
businesses
2. Targeted capital subsidisations
3. Leasing subsidies, depending on the developmental target
4. At the same time, ETEAN (National Fund for Entrepreneurship and Development), is
activated to immediately ensure market cash flow with the granting of favourable and
low interest loans to businesses that invest.
The new Investment Law provides for:
The setting up of Investor Service Offices, where all necessary information will be
available and submission of applications and checking of all required documentation
will be performed
The setting up of a Unified Register of Evaluators for the whole country from which,
using random selection, evaluators will be selected for each investment scheme
The development of an Integrated IT System which will support procedures of
evaluation, grading, and monitoring of the implementation of the investment
schemes. There will be committees which will investigate the evaluators decisions.
Inspection of the evaluators and also of the members of the above committees by
special inspectors
The right of the investor to appeal in case he believes his schemes evaluation was
not objective.
Also, of great importance is the adoption of a specific time frame. With the new system the
evaluation procedure will not only have a specific commencement date but also an expiration
date. The whole procedure, regarding the obligations of the State at least, will not exceed
six months. Before the new period for tenders begins, every April and October, the
evaluations of the previous period will have been completed. Furthermore, the new law, by
using tax exemptions as the main incentive, aims to promote dynamic investment schemes
with clear prospects of profit.

Regarding subsidies, they will continue to be available, combined with tax exemptions and
low interest loans, but will apply only to targeted activities for exercising a developmental
policy. In other words, the State will specify and adjust, depending on the circumstances, the
priorities of the developmental policy regarding technological development and regional
cohesion, and distribute subsidies accordingly. Two important points regarding existing
reinforcement regimes:
In the provision regarding investment schemes of Regional Cohesion, credit
distribution as well as evaluation tables will be formed per Region. This ensures that
total reinforcements per Region will be specific and there will be no room for
deviations from the developmental planning at the time.
GREECE

Very favourable regulations for new entrepreneurs. This is a strategic choice to
encourage new, youthful and innovative entrepreneurship. The law assists new
businesspeople under 40 years old for a period of five years, from the commencement
of their businesss operation, for the sum of their expenses, even for their operating
costs. Total reinforcement may reach up to 1 million Euros.

Competition policy

In terms of competition policy, Greece complies with all the rules and regulations of a free-
market economy and the EU Single Market. Specifically, the Hellenic Competition
Commission exists as an independent administrative authority whose goal it is to protect the
proper functioning of the market and ensure the enforcement of the rules on competition. It
has full administrative and financial autonomy. Its general goals are: To maintain or restore
fair trading in the market, to protect consumers' interests and to ensure economic growth. It
means to fight against 1) practices which impede or distort competition and cause damage to
consumers and 2) entry barriers in the market which must be free and open to all
undertakings. In order to implement the above, it cooperates and applies common standards
with the other European Competition Authorities and the European Commission.

The Hellenic Competition Commission is the authority responsible for the enforcement of
Greek law 703/1977, "On the Control of Monopolies and Oligopolies, and on the Protection of
free Competition". Law 2296/95 established the Competition Commission as an independent
authority with administrative autonomy, and law 2837/2000 awarded it financial autonomy.
Establishes the existence or not of cartels between undertakings that have as their
object or effect the restriction of competition, according to the provisions of article 1
(1) of law 703/77.
Decides whether to exempt those cartels which restrict competition but contribute
positively to economic progress, benefit the consumers, do not create conditions for
eliminating competition, or do not excessively bind the participating undertakings,
according to the provisions of article 1 (3) of law 703/77.
Determines whether undertakings have abused their dominant position in the market,
according to article 2 of law 703/77.
Determines whether one or more undertakings are abusing the relationship of
economic dependence upon them of another undertaking which is their client or
supplier, even if this relationship of dependence concerns only one type of product or
service, and does not have an equivalent alternative, according to article 2a of law
703/77.
Conducts preventive controls on concentrations in respect of their impact on
competition, according to the provisions of articles 4 - 4f of law 703/77.
Imposes sanctions for infringement of the provisions of law 703/77.
Takes interim measures in case of suspected infringement of articles 1, 2, 2a and 5 of
law 703/77.
Conducts investigations, either upon request of the Minister of Development or ex
officio, of specific sectors of the Hellenic economy, and if it concludes that there are
no conditions of effective competition in the said sector, it may, take any absolutely
indispensable measure which concerns the structure of the market and aims at the
creation of conditions for effective competition.
Delivers opinions on competition issues either upon request of the Minister of
Development or of any other competent Minister or by associations of Chambers and
industrial or commercial associations.
Is competent to enforce the provisions of articles 81 and 82 of the EC Treaty.
Co-operates closely with the European Commission and the competition authorities of
the other member states of the European Union in order to enforce the Community
competition rules.
GREECE

Monitors the implementation of decisions taken by the Hellenic Competition
Commission, the Ministries and the decisions by Courts on appeals against the former
decisions.

The Hellenic Competition Commission has no jurisdiction over the application of the
provisions of law 146/1914 on unfair competition, the application of which is in the
competence of civil courts. Further information and updates on the activities of the
Competition Commission can be obtained through their web site: www.epant.gr

Greeces human capital is considered a strong asset for investors seeking to employ
personnel. According to the Invest in Greece agency, during the last three decades in Greece,
demographic shifts, EU integration, and global trends have been reshaping the economic
landscape so that human resources are meeting the needs of todays service and knowledge-
based economy. The economic focus of Greece has witnessed significant shifts so that today
roughly 67% of the workforce is involved in the service sector, 21% in industry, and 12% in
agriculture. Contemporary trends have resulted in a vastly different workforce than that of
20 years ago, and training and education increasingly reflect the needs of today's globalised
economy.

The tourism sector, accounting for more than 16% of GDP, has absorbed the largest increase
in human resources. Many of the country's post-secondary educational institutions offer
specialized courses in tourism studies, with an emphasis on language training. As a result,
Greece ranks favorably in the EU for its number of speakers of a second language. English is
by far the most widely spoken second language in Greece. Increasingly, in multinational
companies and organizations, English is the language of business on a daily basis.
Professionals in the workplace are well educated and the level of university degrees in
management is by far the highest in Southeast Europe. During the past five years, there has
been a 54 percent increase in students taking post-graduate university courses, from 50,057
to 77,167. Of these, 39,455 students are enrolled in Masters programs and 37,712 in Doctoral
programs.

Other service sectors, such as banking, finance, and insurance have also grown considerably
as market deregulation and privatization have created thousands of new positions in these
sectors. In parallel, technology has become a focal point of training and interest among the
nation's young. At the same time, there is a good supply of skilled, semi-skilled, and
unskilled labor in Greece.

Educational level of the Greek labour force (000s and %), 2009 (3
rd
quarter)
PhD and/or Masters degree 103.1 2.27%
University degree 760.5 16.75%
Technical degree 763.6 16.82%
Secondary Education Certificate (Lyceum) 1,473.5 32.45%
Basic Education 522.5 11.5%
Lower Education 916.9 20.2%
Total 4,540.1 100%
Source: National Statistical Service of Greece
GREECE

GDP per hour worked [annual growth rate, 2008 (%)]

Source: OECD, Productivity Database, 2009

The procedure for purchasing real estate in Greece is relatively simple. To begin with,
Greece has a very developed network or registered real estate agents throughout the country
that can facilitate the search for property. A listing of such real estate agents can be found
from the local Chamber where they are required to register (www.uhc.gr). There are also
various associations of real estate agents providing member listings (www.omase.gr , www.e-
akinita.gr)

Once the property has been located, it is necessary for a full legal review of ownership titles
to take place. This research is carried out at the competent Land Registry (ypothikofylakeio)
and, where available, the Land Titles Office (ktimatologio). Further research may be
necessary depending on the location of the property. For example, the Department of
Forestry Inspection, Department of Antiquities or Municipal Authorities may need to be
contact. This research is normally carried through by a lawyer.

The Purchase/Sales Deed is prepared by and signed in the presence of a notary public. The
terms of payment or arrangements thereof are usually taken care as part of the signature
process. Following the signature of the contract, the deed is registered with the competent
authorities.

In calculating the total cost of the property, it is necessary to research the cost of acquisition
taxes, transfer taxes and value added taxes. These costs vary depending on the property and
a specialized accountant can provide accurate information in this regard. For a general
overview, the Invest in Greece agency has useful information in this regard on their web site
(www.investingreece.gov.gr). Additional costs include professional services (notary, lawyer,
real estate agent and accountant or tax consultant) and land registration fees.

As national significance is attached to attracting foreign investments, it should be noted that
procedural simplifications and cost minimalization are being pursued. It should be noted that
as recently as October 2011, and in conformance with EU Directive 2009/81/EC, the Greek
government passed legislation easing and simplifying the procedures for foreigners, especially
non-EU citizens, to acquire real estate in border areas. It is now easier for citizens of third
countries to purchase real estate in areas that were considered sensitive for national
defence.

GREECE


Greece is a member of the World Intellectual Property Organization, the Paris Convention for
the Protection of Industrial Property, the European Patent Convention, the Washington
Patent Cooperation Treaty, and the Bern Copyright Convention. As a member of the E.U.,
Greece has harmonized its legislation with E.U. rules and regulations. The WTO-TRIPS
agreement has been incorporated into Greek legislation since February 28, 1995 (Law
2290/1995). The Greek government has also signed and ratified the WIPO Internet treaties
and incorporated them into Greek legislation (Laws 3183 and 3184/2003) in 2003.
According to art. 18 par. 18 of Law 2557/1997 the international term intellectual property
includes both copyright and related rights and industrial property, such as inventions, models
of usage, rights on vegetal varieties, signs, industrial plans and protected geographical names
of origin. Intellectual property includes the rights that arise from the creation of a product of
the intellect, which is an intangible asset.

Copyright Protected Material
Law 2121/1993 with all its subsequent modifications is the legislative instrument deployed
for the protection of intellectual property. Every original creation of speech, art or science,
expressed in any form, is copyright protected. For instance: written or oral texts, musical
compositions, theatrical plays, choreographies, pantomimes, audiovisual works, visual arts
works, including architecture and photography, translations, adaptations, customizations and
other modifications of folklore creations or expressions, encyclopaedias, collections and
databases, if the selection or arrangement of their content is original, computer programs
and the preparatory design material.

Ideas are not protected, as the purpose is to ensure their free propagation and circulation.
What can be protected is the specific way by which the idea is specified and shaped into a
particular and original creation. Furthermore, there is no protection for laws, court orders,
administrative documents, folklore expressions (e.g. folk poetry and songs, sayings, proverbs
and folk dances, the authors of which are unknown and their protection has lapsed due to the
long period of time that has passed), news and simple events, mathematical theories and
discoveries, business methods and creations whose copyright protection has expired (70 years
after the death of the author). All these are not protected per se; however, if they undergo a
certain process, i.e. if some traditional songs are adapted, this adaptation can be copyright
protected.
Copyright law also recognizes six (6) types of related rights:
rights of performers or performing artists
rights of producers of audio and/or video media
rights of broadcasting organizations
rights of publishers
rights of database makers
rights to previously unpublished creations

The Hellenic Copyright Organization (abbreviated as "OPI") is the only institution responsible
for issues dealing with Copyright protection in Greece under the supervision of the Ministry of
Culture and Tourism. Within the framework of its responsibilities, OPI deals with any issue in
general that may be raised in the field of copyright and related rights. It represents Greece
before the competent international organizations, organizes seminars and provides
information on matters as such (www.opi.gr).

Industrial Property
The Hellenic Industrial Property Organisation (abbreviated as "OBI") is the only legally
qualified institution for the protection of inventions and industrial designs. It also provides
technological information from worldwide patent databases. Additionally, OBI operates 3
regional electronic patent libraries (in Thessaloniki and Herakleion of Crete) in order to
promote the technological information in more areas of Greece (www.obi.gr).

GREECE

Patents are granted for any inventions which are new, which involve an inventive step, and
which are susceptible for industrial application. The invention may relate to a product, a
process or an industrial application (Article 5 of L. 1733/1987 on Technology Transfer,
Inventions and Technological Innovations). An invention is considered new if it does not form
part of the state of the art (Article 5 3). An invention is considered as involving an inventive
step if, having regard to the state of the art, it is not obvious to a person skilled in the art
(Article 5 4). Finally, an invention is considered as susceptible of industrial application if its
subject matter may be produced or used in any sector ,f industrial activity (Article 5 5).

Industrial design or a model is protected to the extent that it is new and has individual
character (Article 12 1 of Presidential Decree 259/1997 on Industrial Designs). The term of
protection of a registered design or a model shall be five years from the date of filing the
application at the OBI. The term of protection may be renewed for periods of five years each
up to a total term of twenty-five years from the date of filing of the application for the
registration of the design or the model owner (Article 29 1 of PD 259/1997)

Utility models are protected in Greece by utility model certificates. The utility model
certificate is granted for each novel and industrially applicable three-dimensional object with
definite shape and form, such as a tool, an instrument, a device, an apparatus or even parts
thereof, proposed as novel and industrially applicable and capable of giving a solution to a
technical problem (Article 19 1 of Law 1733/1987 on Technology Transfer, Inventions and
Technological Innovations). Whoever files a patent application may request up to the date of
grant of the patent the conversion of his patent application into an application for a utility
model certificate (Article 19 2 of L.1733/1987). The application for the grant of a utility
model certificate is submitted to the OBI. The requirements for filing the application, the
relevant supporting documentation, and all other pertinent details are determined by
decision of the Minister of Industry, Energy, and Technology (Article 19 4 of L. 1733/1987).
If the application for a utility model certificate complies with the requirements set out by
the law, OBI grants a utility model certificate without prior examination of the novelty and
industrial applicability of the utility model at the responsibility of the applicant (Article 19
5 of L. 1733/1987). As regards all other matters, the respective provisions of Law 1733/1987
regarding patents apply (Article 19 6 of L. 1733/1987).

Trademark is any sign capable of being represented graphically which is capable of
distinguishing goods or services of one undertaking from those of other undertakings (Article
1 1 of L. 2239/1994 on Trademarks).
A trademark may consist of words, names, illustrations, designs, letters, numbers, sounds,
the shape of a product and its packaging. Articles 3 and 4 of law no.2239/1994 provide for
the cases where a trademark cannot be accepted for registration. A common case that arises
in practice is the prohibition on registering signs, which may be used in trade to indicate the
type, quality, attributes, quantity, destination, value, place of origin or for the
manufacturing time of the product, the provision of services or other characteristics of the
product or services. In order to register a trademark in Greece, the applicant must file a
application in the Register of Trademarks which belongs to the Ministry of Development. The
application is submitted with 4 copies and must contain the following: the form concerning
the registration of the mark, a printed copy of the latter, the full details of the business
concerned, a list of the products or services which it will identify and the appointment of an
attorney at law with special powers.

Public procurement
Relevant legislation
The Greek legislative framework concerning public procurement has incorporated the EU
public procurement rules and this is structured upon the basis of the distinction between the
procurement supplies and services and the construction of public works.

GREECE

Procurement of supplies and services
The procurement of supplies and services by the State and all the legal entities subject to
public law is governed by Presidential Decree 118/2007 (entitled "Regulation for the
procurement of the State"), save for certain types of procurement subject to the following
specific rules:
supplies and services contracts subject to Presidential Decree 60/2007 (transposing
Directive 2004/18/EC into Greek law); and
procurement of supplies by local authorities which are subject to Article 209 of Law
3463/2006 and Article 100 of Presidential Decree 30/1996.

Constructions of public works
Law 3669/2008 has codified the legislation governing public works contracts, including
the relevant provisions of the following principal legislative acts:
Law 1418/1984, which governs the assignment and construction of public works and
its implementing legislation, Presidential Decree 609/1985;
Law 3263/2004, which governs the award of public works contracts upon the basis of
the lowest offer, and implementing Presidential Decree 609/1985, as amended;
Presidential Decree 60/2007 which concerns public works contract awards;
Law 3310/2005, as amended by Law 3414/2005, which implements Article 14 of the
Constitution and provides for additional measures aimed at ensuring transparency and
the prevention of circumvention resulting from the participation of a contractor in a
media sector company(ies); and
Law 3060/2002 and Presidential Decree 774/1980 concerning the pre-award audit of
contracts (with a value of EUR 1 million or more) by the Court of Auditors.

Certain other legislative acts are of general application or apply to specific types of public
procurement:
Presidential Decree 59/2007 (transposing Directive 2004/17/EC into Greek law), in
relation to the procurement of supplies and services and the award of public works
contracts in the field of water, energy, transport and post utilities;
Law 3316/2006, in relation to certain types of studies and framework agreements,
and ancillary services thereof;
Articles 79-85 of Law 2362/1995 concerning the procedures for the approval of all
types of public sector expenditure;
Articles 40-44 of Legislative Decree 496/1974 concerning the procedures for the
approval of expenditure of entities governed by public law (e.g. public hospitals); and
Law 4013/2011 which provides for the establishment of a single independent
regulatory authority for public procurements.

Types of contracts
"public works contracts"
"public services contracts"
"public supply contracts"

Types of Award Procedures
The fundamental principle underlying the EU public procurement rules is that a qualifying
contract must be opened up to EU-wide competitive tender. In accordance with this
principle, the Greek public procurement rules provide for four types of tender procedure:
open procedure;
restricted procedure;
negotiated procedure; and
competitive dialogue procedure, for supplies and services contracts (only under
Presidential Decree 60/2007).
Useful links: www.opengov.gr

GREECE

Foreign Direct Investment
Despite the severe economic crisis Greece is facing since 2010, the country's performance in
attracting foreign investment in 2010 was satisfactory in comparison with the previous year.
The total (gross) capital inflows to the country in 2010 amounted to 4 billion Euros, while net
inflows exceeded 1.6 billion Euros (www.investingreece.gov.gr).

Inflows of FDI in Greece during the period 2003-2010 (in million Euros)

Investment capital by country of origin
Countries with strong investment presence in Greece in recent years include 'traditional'
capital exporting countries such as Germany, France, the United Kingdom, Belgium,
Luxembourg and the Netherlands (www.investingreece.gov.gr).

Total FDI inflows by country of origin of capital during the period 2003-2010 (in million Euros)
GREECE

Total Value: 36.265.8 billion Euros
Sectoral Breakdown of Foreign Investment
FDI inflows by sector of economic activity in Greece in recent years focus primarily in the
tertiary sector, followed, with a significant gap, by the secondary sector. The majority of
developed countries shows a similar structure of FDI (www.investingreece.gov.gr).

Total FDI inflows by sector of economic activity for the period 2003-2010

Total value: 36,265.8 billion Euros

Major projects in Greece developed by companies from the Basin
Country Company Sector
GREECE

Bulgaria BULGARIAN ENERGY HOLDING
EAD
energy
Turkey IPEKYOL

fashion
Turkey KOTON fashion
Turkey ISTIKBAL furniture

GREECE



Upon the establishment of the Single Internal Market as of 1.1.1993 the customs control
among the E.U. countries was abolished and the movement of goods and services is now
freely implemented, subject only to V.A.T liability control. The intra- community trade is
now designated as purchases and sales, while the terms import and export refer only to
extra-community trade. However, the customs control on exports and imports from and to
E.U. countries continues to exist and the customs documents being used in all of the customs
offices of the European Community is now called Single Administrative Document (S.A.D.).

The S.A.D. is a customs document, it is filled in by the exporter or the importer, it signed by
them, it contains their full details, a full description of the commodity and the tariff heading
and is accompanied by an invoice issued by them and mentioning the V.A.T. number and the
full details of the purchaser of the commodity. The S.A.D. is called bill of entry or customs
declaration and the declarant or the declarants lawful representative is obliged to know the
references pertaining to the drawing up of the declaration, depending on the customs
procedure to which these persons have asked for the goods to be subject, according to the
provisions in force [Council Regulation (EEC) No 2913/92 and Regulation (EEC) No 2454/93].
According to the National Legislation [Law 718/1977] only the customs broker may act as the
declarants lawful representative. (Greek law digest, Nomiki Bibliothiki SA)

Import-export controls
I m p o r t s - Restrictions over imports are imposed only in limited cases, in compliance with
quantitative quotas, agricultural and commercial policy measures, tariff quotas and tariff
ceilings laid down at EU level. The import or export of products that are subject to
quantitative quotas requires the issuance of a license by the appropriate department of the
Ministry of Finance.
In addition, certain goods such as firearms and explosives are subject to special rules or
require product clearance prior to importation.
Customs authorities are authorized to carry out all the controls they deem necessary to
ensure that customs legislation is correctly applied (inspections of the imported goods and
their accompanying documents and samples). Customs authorities are also empowered to
carry out controls and investigations subsequent to the importation. As of 1 January 2011,
Greece has implemented the Import Control System (ICS) of the EU
Anti-dumping measures are imposed in compliance with EU anti-dumping legislation.
Similarly, countervailing duties are imposed in compliance with the anti-subsidy measures
adopted at community level for the protection of the common market from subsidized
imports from non-EU countries.
Main countries (2010) Import profile of basic commodities:
Germany
Italy
China
France
Holland
UK and USA
Machinery
Vehicles for transportation
Fuel
Chemical products
Food

E x p o r t s - Entrepreneurs who wish to export goods from Greece to non-EU countries in
general need to qualify as exporters and must register with the Special Exporters Registry in
GREECE

Greece. If a potential exporter is a foreign enterprise, it must first register for VAT purposes
in Greece through the appointment of a Greek VAT representative, who will be responsible to
effect the registration with the Special Exporters Registry in Greece on behalf of the foreign
entity.
Main Countries (2010) Export profile of basic commodities:
Germany
Italy
Cyprus
Bulgaria
UK
USA
Russia
Switzerland

Food and beverages
Industrial products
Petroleum products
Chemical products
Textiles

Further information and updates regarding the movement of goods can be obtained through
the following web sites: www.gsis.gr, http://www.gsis.gr/teloneia/main_teloneia.html
www.minfin.gr


Imports from EU Member States are exempt from all duties. Imports from non-EU countries
are regulated by the Community Customs Code, the Common Customs Tariff and the Greek
Customs Code, which has been harmonized with Community customs legislation.

When applicable, import duties are calculated on the customs value of the imported goods,
which is the transaction value plus all other expenses incidental to the purchase and delivery
of the goods to Greece (commissions and brokerage, cost of transport and insurance). The
rates of import duties vary depending on the classification of the imported goods pursuant to
the combined provisions of the Common Customs Tariff and the Integrated Tariff of the
European Communities (Taric).

Special rules apply when goods are placed in customs controlled free zones and free
warehouses, thus avoiding payment of any duties, taxes, or VAT until the goods are released.
Payment of such amounts may be avoided altogether even when goods are released
depending on their ultimate destination. Special rules also apply for temporary importation
or for processing.

Duties and VAT must be paid at the time goods are cleared through customs. The use of
agents and customs brokers is common. Although an import license is not required, terms of
payment must normally be arranged through a commercial bank.
Even though acquisitions from EU countries are no longer considered imports as such, terms
of payment for such transactions must also normally be settled through commercial banks.
Sales to EU VAT residents are not subject to VAT in Greece provided that the VAT registration
numbers of the supplier and purchaser are shown on the invoice. Where goods are purchased
from an EU resident supplier, VAT is not payable at the border but must be accounted for
using the reverse charge mechanism.


The Hellenic Organization for Standardization was established in 1976 as a non-profit legal
entity under private law, subsidized by the State and supervised by the Minister of Industry.
Since 1997 ELOT operates as "Socit Anonyme", with the distinctive title "ELOT S.A" under
the supervision of the Minister of Development. According to ELOT statutes (Law 372/1976),
the Hellenic Organization for Standardization is the sole Body, in national level, for
preparing, issuing and delivering standards.

Standards/Standardization documents
GREECE

Standardization documents, is the result of national, European or international
standardization processes. According to ELOT EN 45020, standardization documents may be
standards, technical specifications, codes of practice, rules or technical regulations.

Standardization Process
All national standards and standardization documents are prepared by technical
standardization bodies of ELOT which are Sectoral Committees (SC), Technical Committees
(TC), Working Groups (WG) and Specific Working Groups (SWG). The operation rules for those
Committees in described in the document Rules for the establishment and operation of ELOT
technical standardization bodies.

More than 1100 scientists participate actively in the ELOT standardization processes, either
as delegates from the public or private sector or as experts.
For the preparation, public enquiry, approval and issue of national standards and
standardization documents, ELOT has established and follows the document Rules for the
preparation and issue of Greek standards and Specifications
Each interested party, a person or a legal entity of public or private sector, may request to
ELOT the preparation of a national standardization document. The request is reviewed,
taking into consideration the relevant existing standards.

If ELOT decides the preparation of a standardization document a relevant notification to EC
is made, according to Directive 98/34/EEC. The draft national standardization document is
prepared by a SC or TC, according to the relevant ELOT rules. If an SC or TC does not exist,
then ELOT creates one, according to ELOT relevant Rules.

Standards classification
The classification of ELOT standards consists of a unique identification number assigned by
the Standardization Division with the prefix (ELOT) for standards and (PRD) for
specifications.

Participation in European and international Standardization
The following Standardization bodies perform standardization activities in Europe and
worldwide:
European Committee for Standardization -CAN
European Committee for Electrotechnical StandardizationCENELEC
European Telecommunications Standards Institute- ETSI
International Organization for Standardization-ISO
International Electrotechnical Commission- IEC
The procedure for the preparation of European and international standards (at least in
English) follows specific rules. If a decision is taken to prepare a normative document, a
Technical Committee (TC) is appointed for this work. Both at European (CEN, CENELEC) and
international (ISO, IEC) level, the standardization work is appointed to relevant TCs. The
participants in those TCs are representatives of the national standardization bodies. The
Greek delegates are ELOT representatives.

Conformity Marks /Conformity Certificates
Conformity Marks /Conformity Certificates granted by ELOT, in accordance with the
requirements of Hellenic and European Standards or other normative documents issued by
the European Organizations (CEN/CENELEC/ETSI), are defined as Hellenic Conformity Marks /
Hellenic Conformity Certificates and are exclusively granted by ELOT.

CE marking
CE marking ensures the free movement within the European market of products that conform
to the requirements of EU legislation (e.g. safety, health and environmental protection and is
a key indicator of a products compliance with legislation. The CE marking is affixed by
manufacturers to their products. By placing CE marking on a product, manufacturers declare
on their sole responsibility that the products comply with all the legal requirements in force
GREECE

in Europe. It is the manufacturer's responsibility to verify that the goods they are selling
comply with all relevant legislation or if necessary to have it examined by notified
conformity assessment body for that purpose. For more information:
http://ec.europa.eu/enterprise/policies/single-market-goods/cemarking/about-ce-
marking/index_en.htm

Hellenic Accreditation System S.A
The Hellenic Accreditation System S.A., under the distinctive title ''ESYD'', was established in
2002 and succeeded the Hellenic Accreditation Council, which under the same distinctive
title, had operated within the Ministry of Development after 1994. ESYD is a private liability
company operating in favour of the public interest with the responsibility of the management
of the accreditation system in Greece. The share capital of the company has been
undertaken by the Greek State.

The Hellenic Accreditation System (ESYD) has been appointed as the National Accreditation
Body of Greece according to the requirements of Article 4 of the Regulation (EC) No 765/2008
according to which each Member State shall appoint a single national accreditation body.
For more information : www.esyd.gr


Taxation of Profits of Legal Entities
The taxation of legal entities has been significantly amended. Hence, the corporate income
tax rate of legal entities has been set at 24% for income in the financial year 2011 and at 20%
for income from the financial year 2012 onwards.

In addition, 25% withholding tax is imposed on profits distributed by Greek Societe Anonymes
and Limited Liability Companies in the form of dividends, Board and Directors fees, profits
distributed to personnel, as well as interim dividend payments, made to individuals or legal
entities, Greek or foreign. The tax is triggered independent of whether the payments are
made in cash or in kind (shares/parts). For profits distributed within 2011, however, the
withholding tax rate is 21%.

The withholding tax on dividends may be reduced or eliminated subject to Double Tax
Treaties or EU Parent Subsidiary Directive conditions. Dividends distributed by a Greek
subsidiary (company A) to a Greek parent entity (company B) are not exempt from such
withholding but a credit is provided for the tax already withheld upon further distribution of
such dividends by company B. Moreover, in case the parent of the Greek entity company B
receiving the dividend is an EU entity, a refund can be requested for the dividend tax
originally withheld by company A, if the conditions of the EU Parent Subsidiary directive are
met (minimum participation of at least 10% for 2 years).

A participation exemption is introduced on dividends received by qualified EU subsidiaries
(i.e. subsidiaries qualifying under the EU Parent Subsidiary directive conditions). Such
dividends are not subject to tax at the Greek parent company level on the condition that
such dividends are recorded in a special reserve.

Finally, dividends/profits distributed by foreign SAs or LLCs to a Greek individual shareholder
will be, in principle, subject to a final dividend tax in Greece at a rate of 21% for 2011 and
25% for 2012 onwards.

Capital Gains from the Sale of Listed Shares
For shares acquired prior to December 31, 2011, the existing special stock exchange duty of
0.15% applicable on the sale of shares listed in the Athens Stock Exchange is increased to
0.2%.
For shares acquired after January 1, 2012, the taxation of capital gains arising from the sale
of listed shares, introduced through previous legislation, has also been amended.
GREECE

In particular, capital gains from the sale of shares listed on the Athens Stock Exchange, which
are acquired from January 1, 2012 onwards, will be taxed based on the general income tax
provisions. Any loss, arising within the same year and for the same reason, shall be set off
against such capital gains. Any excess loss following is carried forward - reference is made to
the provision on the carrying forward of tax losses (5 years carry forward period). The special
stock exchange duty of 0.2% will not apply on the sale of shares originally acquired after
January 1, 2012.
Taxation of Government and Corporate Bonds
The withholding tax of 10% on accrued interest upon the transfer of corporate bonds issued
by Greek corporations by a Greek entity is abolished. In any case, foreign bond holders
continue to be exempt from withholding tax on Greek bond interest.

Further information and updates regarding taxes: www.gsis.gr

Payment terms

For business-to-business payments the general deadline is 30 days unless otherwise stated in
the contract. If both parties agree, it is possible to go up to 60 days. The payment period
may be extended beyond 60 days only if "expressly agreed" by the creditor and the debtor in
the contract and provided that it is not "grossly unfair" to the creditor.

For public-to-business payments the general deadline is 30 days. If the two parties wish to
extend the payment period, this has to be "expressly agreed" and "objectively justified in the
light of the particular nature or features of the contract".

Origin rule

Origin is the "economic" nationality of goods in international trade. There are two kinds, non-
preferential and preferential.

Non-preferential origin confers an "economic" nationality on goods. It is used for determining
the origin of products subject to all kinds of commercial policy measures (such as anti-
dumping measures, quantitative restrictions) or tariff quotas. It is also used for statistical
purposes. Other provisions, such as those related to public tenders or origin marking, are also
linked with the non-preferential origin of the products. In addition, the EU's export refunds in
the framework of the Common Agricultural Policy are often based on non-preferential origin.

Preferential origin confers certain benefits on goods traded between particular countries,
namely entry at a reduced or zero rate of duty.
In either case, an important element in determining the origin of goods is their tariff
classification. Goods in trade are identified in the Community by a code number in the
Combined Nomenclature (CN) and before trying to determine their origin it is essential that
their CN code has been identified.

Movement of goods within Customs unions is not based on their originating status but on the
fact that they comply with provisions on free circulation. However, some products in trade
with the countries concerned do not fall within the scope of the customs union but remain
subject to a preferential treatment based on origin.
For more information :
http://ec.europa.eu/taxation_customs/customs/customs_duties/rules_origin/introduction/i
ndex_en.htm

Marketing aspects

Distribution is a major sector of Greece's economy. In 2010, the Greek retail market was
worth 54.3 billion EUR. Commercial establishments represented 45% of companies in the
secondary and tertiary sector. Last three years many small shops closed because they could
GREECE

not cope with falling demand and rising consumer prices. As a result, department stores,
supermarkets and hypermarkets are becoming key components of industry retail sales in
Greece, particularly in the context of the economic recession which is currently affecting the
country.

Traditional distribution networks - small sized independent merchants serviced by regional
wholesalers, continue to be widespread. However, more modern distribution networks have
now sprung up and the leaders in food distribution in Greece are now large groups:
- the group Marinopoulos Carrefour
- the group Delhaize-Alpha Vita Vassilopoulos

The other visible trend is the development of discount supermarkets. However, the discount
market remains relatively small in size .

Until 2000, the non-food distribution market was mainly dominated by national groups but
the trend has completely changed since then: international groups have started making
investments. Thus, the British group Dixons (specialized in electrical home appliances) took
over Kotsovolos, Fnac has set up in Athens in 2006 (commercial center The Mall Athens) and
Ikea opened its first store in 2001 and today has already 5.

Trade practices
As a means of protecting consumers and in an attempt to curb inflation, price controls have
been imposed in the past on a wide range of essential products and services. Such controls
have taken the form of setting either maximum selling prices or maximum profit margins.
Progressively, price controls have been relaxed in Greece and today only a few products
(mainly pharmaceuticals) are subject to price controls.
Other controls, over quality, product labeling, safety, and advertising are also exercised by
the Government. The controls are primarily exercised by the Ministry of Regional
Development and Competitiveness through its "Consumer Protection" and "Price Control"
departments and the "Public Health Office" as well as by the Ministry of Health through the
"State Laboratory for Drug Control".

GREECE


Greece has set up a number of funding mechanisms and investors have a wide selection of
alternatives for their financing needs to implement their projects.

Private capital continues to be the main funding source for businesses, and choosing the
appropriate financial means and instruments is vital for a small or medium business to staying
competitive.

The Investment Law is the principal legislation in support of business, providing attractive
incentives for investment in all sectors of the economy, which are implemented by
companies in the entire Greek territory regardless of their size. These mainly focus on small
and medium enterprises and emerging sectors of the economy.
Venture Capital and Private Equity financing are at a quite mature stage of development in
Greece and have enabled many investors to realize their plans.


The Investment Law provides strong financial incentives to realize projects in numerous
sectors throughout the country. The new Investment Law provides for aid rates from 15% to
55% dependent on the Region that the investment is realised, and on the size of the
company.

Investment categories:
1. General Entrepreneurship
2. Regional Cohesion
3. Technological Development
4. Youth Entrepreneurship
5. Large Investment Plans
6. Integrated, Multi-Annual Business Plans
7. Partnerships and Networking (Clustering)

For more information: www.ependyseis.gr

The National Fund for Entrepreneurship and Development SA (ETEAN) up by substituting N
3912/17-2-11 to all rights and obligations of the SA Guarantee Fund for Small and Very Small
Enterprises (TEMPME SA). The ETEAN aims to promote entrepreneurship and facilitate small
and medium enterprises (SMEs) to access smart financial products primarily for the
implementation of investment projects. So many companies want to increase production,
create new products, expansion and internationalization will help, apart from the
guarantees, for the provision of low interest and favorable terms of financial products
ETEAN. The ETEAN SA supports all types of businesses, whatever their age (under
establishment, start and existing) and the three sectors (primary, secondary, tertiary) of the
economy. Particular emphasis will be given to supporting businesses focused on activities
and products of the new demand of the 21st century and a viable, profitable business and
extroverted.
For more information: www.etean.com.gr

GREECE

The New Economy Development Fund () is the first company in the competitive
development of business risk funds aimed at small to medium-sized enterprises. It was
developed as part of the "Competitiveness" operational programme.
For more information: www.taneo.gr

The National Strategic Reference Framework (NSRF) 2007 - 2013 is the reference document
used for the planning of EU Funds at a national level for 2007-2013.
All notices/invitations published in the context of implementing Business Schemes falling
under the National Strategic Reference Framework 2007-2003 are available on the website
www.espa.gr

Useful links: European Union / An overview of the main funding opportunities available to
European SMEs (January 2012 edition)
http://ec.europa.eu/enterprise/newsroom/cf/itemdetail.cfm?item_id=5778

Research and innovation

The General Secretariat for Research and Technology (GSRT), provides a central resource for
the management of the Greek Research, Technological Development (R&D) and Innovation
system. National research programmes implemented by the GSRT and R&D programmes
coordinated by the EU at the national level, are the main means of financing R&D in Greece.
As regards the utilisation of research funds, the lion's share belongs to universities, followed
by research centres and businesses.

The "Competitiveness and Entrepreneurship 2007-2013" operational programme supports
research, technology, and innovation in all business sectors. Its main priorities are:
increasing investment in knowledge and excellence;
promoting innovation;
dissemination of new technologies; and
the enhancement of entrepreneurship.
For more information: www.antagonistikotita.gr

Useful links:
European Union/ Research and innovation http://ec.europa.eu/research/index.cfm
European Commission/cordis/FP7 http://cordis.europa.eu/fp7

A series of programs, which target the development of the human potential and the
improvement of their professional skills, are available today to all those that are interested.
The programs are implemented from public and private companies, are referring to the
employed as much as the unemployed.

The universities and the centers of occupational institution (private and public) offer also a
variety of programs and award with certificates of specialization.

In national level, companies can avail from OAEDs (Manpower Employment Organisation of
Greece)program laek that gives them the ability to train their personnel by using the
amount which corresponds to the employer contribution (0.45%) that spend each month for
the personnel training ( www.oaed.gr )

The current season, through the Operational Program Development of Human Resources
which is placed among the NSRF 2007-2013, are funding actions for the prevention of
unemployment, the social embedment and the reformation of health sector
(www.epanad.gov.gr )

Useful links:
Operational Program Education and Lifelong Learning www.edulll.gr
GREECE

National Organisation for Accreditation of Qualifications & Vocational Guidance,
www.eopp.gov.gr
Ministry of education, lifelong learning and religious affairs : www.minedu.gov.gr

Business "incubators" are companies that support start-ups by providing premises,
infrastructure and funding.
For more information: www.thestep.gr , www.stepc.gr

Venture capitals provide another possible source of funding. It is a type of private equity
provided to promising businesses in exchange for a percentage of the shares (approx. 30%) for
a period of 3 to 7 years. In Greece there are some 20 companies providing this type of
funding.
For more information: www.hvca.gr

Financial Institutions, ( Banks), offer to the entrepreneur a wide selection of customised
financial instruments and complement the above mentioned financial tools to cover financing
needs which cannot be met from other sources or shareholder capital.
For more information: www.hba.gr

GREECE

GREECE


Micro, small and medium-sized enterprises (SMEs) are the engine of the Greek economy. They
are an essential source of jobs, create entrepreneurial spirit and innovation and are thus
crucial for fostering competitiveness and employment.

The National Development Planning in the past decade supports the creation of new SMEs and
encourages the development of innovative ideas that lead to new products and services and
thus increase productivity and competitiveness of the country.

This is found by the National Strategic Reference Framework (NSRF) for 2007-2013 which aims
through all programs (sectoral, regional and European Territorial Cooperation) in the
development of entrepreneurship and innovation.

The NSRF and the Investment law are the main sources of financing for development of
entrepreneurship and new SMEs.

An overview of the operational programs that promote entrepreneurship and innovation:

Operational Programme (OP) Competitiveness and Entrepreneurship
Priority 1: Creation and development of innovation, supported by research and
technological development
This priority aims to accelerate the transition to a knowledge economy by developing
innovation and strengthening the roles of research and technology in the countrys
production sectors. It focuses on the concept of innovation being the main factor behind
development and competitiveness in the Greek economy and society. The priority aims to
contribute to increasing the percentage of national income spent on research and
technological development.
Priority 2: Support for entrepreneurship and cross-border mobility
This priority seeks to increase outward-looking entrepreneurship as a means of upgrading
production in Greece towards high value-added goods and services offering quality,
environmental awareness, knowledge and innovation. It also aims to increase foreign direct
investment in the Greek economy and to encourage support for the competitive presence of
Greek companies on national and foreign markets. Actions will focus on small and medium
sized enterprises (SMEs), but will also include tourism, where emphasis will be put on
increasing alternative and special forms of tourism.
Priority 3: Improvement of the entrepreneurial environment
The existence of an appropriate and healthy environment in support of entrepreneurship is a
vital factor for flourishing entrepreneurship and reduced entrepreneurial risk. The aim of this
priority axis is to work towards achieving this. Actions will notably seek to modernise
financial tools and improve the financial services available to businesses, in addition to
ensuring appropriate conditions for free markets to operate in by supporting features such as
one stop shops, infrastructures and development tools. Actions in the field of consumer
protection will also be funded. Overall, this priority seeks to strengthen market
competitiveness and increase investment possibilities.

Operational Programme (OP) Education and Lifelong Learning
GREECE

Priority 10, 11, 12: Enhancing human capital in order to promote research and innovation
1. Enhancing research and innovation through basic and applied research programmes and
attracting high level researchers from abroad.
2. Upgrading the level of postgraduate studies in order to contribute to the production and
dissemination of new knowledge, with main thrust on MST studies and ICTs.
Priority Axis 1: Improvement of Productivity by Utilising Information and Communication
Technologies - Specific goals:
Promotion of the use of Information and Communication Technologies (ICTs) by
enterprises.
Offer of digital services to enterprises and improvement of productivity of the Public Sector
through the use of ICTs.
Strengthening the ICT sector of the economy.
Promotion of entrepreneurship in sectors that make use of ICTs.

Lifelong learning
The national strategic for the education and the occupational training is focused at the need
for development and enforcement of political in national and peripheral level with a way
that will allow the development of a contemporary, flexible, dynamic, competitive and fair
system of education and occupational training, within the context of European Union, which
will be adjusted and correspond to the contemporary conditions, needs and challenges.

The Operational Program Education and Lifelong Learning (www.edulll.gr) within the new
Programmatic Period 2007-2013, is targeting the modernization of the educational system
and the upgrade of the educational quality in all levels. It is focusing in four (4) Strategic
Targets:
1st Strategic Target: Enhancement of the educational quality and promotion of social
inclusion
2nd Strategic Target: System upgrade of the initial educational institution and educational
training and connecting the education with the labor market
3rd Strategic Target: Reinforcement of the adult education for life
4th Strategic Target: Reinforcement of the human capital for the promotion of research and
innovation

Useful links:
Ministry of education, lifelong learning and religious affairs (www.minedu.gov.gr)
National Organisation for Accreditation of Qualifications & Vocational Guidance,
(www.eopp.gov.gr )

Corporate Social Responsibility is still in a developing stage in Greece. There are companies
that adopt it and are trying to improve it and expand it each year. The majority of the
companies that publish a yearly CSR report are mainly private multinational companies.

More information for Corporate Social Responsibility in Greece:
Hellenic Network for Corporate Social Responsibility (www.csrhellas.gr)
EuroCharity (www.eurocharity.gr)
European Business Ethics Network (www.eben.gr )

GREECE

COOPERATION

Map of Northern Greece


Services represent the largest and fastest growing sector of the Greek economy. Trade,
banking, insurance, transportation and shipping, communications, healthcare, education, and
tourism are the largest service sub-sectors. The world-wide economic slowdown has
negatively impacted some of these sectors.

Energy is a best prospect sector for companies because of recent deregulation of Greeces
energy sector. There are many opportunities for businesses in the electricity, gas and
renewable energy sectors.

Greeces proximity to other countries in south-eastern Europe, and the traditional trade ties
of Greek business people with these neighbouring countries, offer a variety of additional
opportunities for businesses with Greek partners. Greece, particularly through its northern
port city of Thessaloniki, sees itself as a natural gateway to the Balkan countries. Greek firms
enjoy good commercial ties to central and eastern European markets as well, including the
Black Sea region.

GREECE

Local products and services of cross border interest

KAVALA, the most developed urban center of Eastern Macedonia and Thrace is located just on
the road axis of the Thessaloniki-Turkish border. Its geostrategic image is completed by the
second largest commercial port of Egnatia Odos which is on the eastern side of the city of
Kavala. With a major port and an equally large marina in the city center, in conjunction with
the Port of Nea Peramos and Nea Iraklitsa, Kavala is, apart from everything else, one of the
major fishing centers of the country. The city is one of the largest fish markets in the
Mediterranean, where goods are traded on domestic and international markets. The
development of fishery, made urgent the need to create in Kavala, one of the five Fishery
Research Institutes operating in Greece.
Kavala has a top spot in the area of rendered services, with 40% of residents employed in the
tertiary sector. A large part of the local economy is based on the services sector, particularly
tourism enterprises, commerce and banking/finance.

The only plant in the country that extracts and desulphurises oil operates in Kavala, KAVALA
OIL. Beyond the advantage of having this deposit of black gold on the coast of Thassos,
Kavala also has the only, phosphate fertilizer plant in Greece. Tens of other units in the
industrial district of the city, most important of them being the units of processing glass and
marble, offer thousands of jobs to the citizens of Kavala.

The area of Kavala produces an abundance of agricultural products (grapes, olives,
asparagus, kiwi, hazelnuts, honey, etc.) There are many fruit and vegetable packing plants
and companies that produce food and wine products.

For more information: www.kavalagreece.gr, www.pekavalas.eu, www.kcci.gr

GREECE

SOURCES

Along with the sources referenced above, the following web sites have been utilized for the
documentation of this Atlas.

Hellenic Republic Sources
Hellenic Ministries www.government.gr
Ministry of Foreign Affairs www.mfa.gr
General Secretariat of International Economic Relations and Development Cooperation
www.agora.mfa.gr
Hellenic Statistical Authority www.statistics.gr
Invest in Greece Agency www.investingreece.gov.gr
Greek National Tourism Org. www.visitgreece.gr
Ministry portal for new enterprises www.startupgreece.gr
International Hellenic University www.ihu.edu.gr
Bank of Greece www.bankofgreece.gr

International Sources
Black Sea Trade and Development Bank www.bstdb.org
International Centre for Black Sea Studies www.icbss.org
Agencies of the United Nations System in Greece www.ungreece.org

GREECE

ARMENIA

TRADENET COMERCIAL ATLAS

THE REPUBLIC
OF
ARMENIA

ARMENIA


ARMENIA


COUNTRY PROFILE

General Information

Government type: Presidential Republic
Area: 29,743 sq km
Population: 3,1 million (2010)
Ethnic Group: Armenian 98%, Yezidi 1.2%, Russian 0.5%, other 0.3%
Major religion: Christianity - Armenian Apostolic Church 94.7%,
other Christian 4%, Yezidi 1.3%
Climate: Continental, with lower temperatures and more
precipitation in higher elevations. In central plateau temperature
varies widely with cold winters and hot summers.
Time: Local Time = UTC +4h
Life expectancy: 71 years (men), 78 years (women) (UN 2010)
Capital: Yerevan

Official language: Armenian
Business language: English, Russian
Monetary unit: 1 dram = 100 lumas
Average Altitude Above sea Level: 1,800m
Highest Mountain Peak: 4, 090m
Independence: 21 September 1991
Public holidays: 28 May Independence Day 1918 public holiday, 21 September
Independence Day 1991 public holiday
Other Holidays: 1 January New Year's Day, 6 January Armenian Christmas, Movable feast
Easter, Movable feast Easter Monday. Monday after Easter, 24 April - Armenian Genocide, 1
May Labour Day
Internet domain: .am
International dialing code: +374
Head of State: President Serzh Sargsyan (www.president.am)
ARMENIA


Prime Minister/Premier: Tigran Sargsyan (www.gov.am)
Foreign Minister: Edward Nalbandian (www.armeniaforeignministry.com)
Membership of international groupings/organisations:
ACCT (observer), ADB, BSEC, CE, CIS, CSTO, EAEC (observer), EAPC, EBRD, FAO, GCTU, IAEA,
IBRD, ICAO, ICCt (signatory), ICRM, IDA, IFAD, IFC, IFRCS, ILO, IMF, Interpol, IOC, IOM, IPU, ISO,
ITSO, ITU, MIGA, NAM (observer), OAS (observer), OIF (associate member), OPCW, OSCE, PFP,
UN, UNCTAD, UNESCO, UNIDO, UNWTO, UPU, WCO, WFTU, WHO, WIPO, WMO, WTO.

History and civilization

One of the world's oldest civilizations, Armenia
once included Mount Ararat, which biblical
tradition identifies as the mountain that Noah's ark
rested on after the flood. It was the first country in
the world to officially embrace Christianity as its
religion (c. 300). In the 6th century b.c.e.,
Armenians settled in the kingdom of Urarty (the
Assyrian name for Ararat), which was in decline.
Under Tigrane the Great (fl. 95-55 c.c.e.) the
Armenian empire reached its height and became
one of the most powerful in Asia, stretching from
the Caspian to the Mediterranean Seas.
Throughout most of its long history,
however, Armenia has been invaded by a
succession of empires. Under constant
threat of domination by foreign forces,
Armenians became both cosmopolitan as
well as fierce protectors of their culture
and tradition.

After the Turkey defeat in World War I, the independent Republic of Armenia was established
on May 28, 1918, but survived only until November 29, 1920, when it was annexed by the Soviet
Army. On March 12, 1922, the Soviets joined Georgia, Armenia, and Azerbaijan to form the
Transcaucasian Soviet Socialist Republic, which became part of the USSR. In 1936, after
reorganization, Armenia became a separate constituent republic of the USSR.

On May of 1990, elections were held in the
Supreme Council (SC) of Armenia , which
includes the Communists and the opposition -
Armenian National Movement (ANM). In August,
the Chairman of the ANM, Levon Ter-Petrosyan
was elected as the chairman of Supreme
Council. On August 23th, 1990, "Declaration of
Independence of Armenia" was adopted at the
first session of the SC, according to which the
Armenian SSR was abolished, and proclaimed the
independent Republic of Armenia.


In this decade, the government of Armenia continued tight fiscal and monetary policy and
managed to maintain macroeconomic stability. This was backed up by the successive
development of export-oriented sectors, such as the inward-processing of precious metals and
stones, information technology, and metallurgy and mining. Inflation has been kept at a
moderate level as the Central Bank of Armenia centered its policy on price stability, and the
local currency, the dram, was allowed to appreciate. Currently, the main policy issue is
introducing new instruments for coping with a deep recession and beginning sustainable growth.

ARMENIA


Continuous improvements have been made in the business operating environment in Armenia,
and the legislative framework for businesses is quite favorable. Past developments include
simplification of licensing and tax registration procedures for companies, simplification of the
process for registering property in terms of the number of procedures, time and cost, etc. The
country now ranks 55
th
out of 183 economies in the World Bank's Doing Business 2012
report. Recent improvements have been notable in the procedures for starting a business. In
particular, access to credit information has been strengthened for local businesses and legal
procedures for enterprise registration have been further simplified. In addition, the measures
to reduce the number of goods requiring inspection and streamline the number of documents
needed to clear goods have improved trading across borders in Armenia.
Armenia's economic structure has changed significantly since its independence, and services
and construction experiencing strong growth became the leading sectors of the economy. Their
contribution to GDP reached to 34.7% and 26.9%, respectively, in 2008. The growing importance
in services and construction has pushed agriculture's and industry's shares of GDP down to 15.8%
and 13.1%, respectively, in 2008. Agriculture showed improved performance in recent years
owing to rehabilitation of the irrigation network and the development of more efficient
marketing systems. Industry benefited from increasing investment in metallurgy and mining,
which together with energy led the sector growth, followed by the food processing subsector.
The economy was growing at double-digit rates between 2002 and 2007; growth in 2008 was
slowed down to 6.8%, reflecting the impact of the global financial crisis. Economic performance
in 2009 has been marked by further difficulties caused by the crisis. The government takes
comprehensive measures to reduce the impact of the global financial crisis.
Armenia ranks as the most economically free nation in the Commonwealth of Independent
States (CIS). Armenia was included also in a list of countries with a high degree of economic
freedom in 2011 occupying 36
th
place, higher than France, according to the annual survey
"Index of Economic Freedom" conducted by the Heritage Foundation / the Wall Street
Journal
1
.
The largest trade partners of Armenia are EU and CIS member countries. In 2010, 48.1% of the
total export has been directed towards EU member countries, 19.1% of export was directed
towards the CIS countries. The volume of import correspondingly comprises 42.1% and 30.5%.

Main Financial and Economic Data in Armenia, 2002-2010
2

Financial and Economic Data 2006 2007 2008 2009 2010
Real GDP growth (%) 13.3 13.7 6.9 -14.2 2.6
Inflation Rate (%, average) 2.9 6.6 5.2 6.5 8.2
Total FDI (USD million) 250.7 669.8 1132.4 906.2 693.4
Export (USD million) 985.1 1152.3 1057.2 710.2 1041.1
Import (USD million) 2191.6 3267.8 4426.1 3321.1 3749.0
Trade Balance (USD million) -483.8 -732.8 -3342.5 -2610.4 -2707.9
External Debt (USD million) 2010.0 1372.1 1577.1 2966.7 3299.0
Unemployment Rate (thousands persons) 88.9 82.8 74.9 81.4 83.3
Exchange Rate (AMD/USD annual average) 415.5 342.1 306.0 363.3 373.7
Exchange Rate (AMD/EURO
annual average)
521.2 467.8 450.2 507.4 496.0

1
http://www.heritage.org/Index/Country/Armenia
2
National Statistical Service of the RA
ARMENIA


GDP Structure by key fields of activities from 2002-2010 (%)
Sector / Year 2006 2007 2008 2009 2010
Industry 18 16 13 13.6 23.8
Agriculture 18 17.5 15.8 16.2 18.4
Construction 24.5 26 27.1 18.8 16.7
Trade 18 17.5 17.5 20.7 33.4

Industries
Diamond-processing, metal-cutting machine tools, forging-pressing machines, electric motors,
tyres, knitwear, hosiery, shoes, silk fabric, chemicals, trucks, instruments, microelectronics,
jewellery manufacturing, software development, food processing, brandy.

Export Commodities
Diamonds, mineral products, foodstuffs, energy.

Import Commodities
Natural gas, petroleum, tobacco products, foodstuffs.

Main import partners
Russia, China, Ukraine, Turkey, Germany, US, Iran.

Main export partners
Russia, Germany, Netherlands, Belgium, Georgia, Bulgaria, USA.

Transport infrastructure
Armenias primary roads total 10,818 kilometers (km), and are divided into interstate (1,686
km), republican (1,747 km), local (4,271 km), and urban (3,114 km). The road network serves
as the backbone of the countrys economic development, providing connectivity within the
country, to neighboring countries, and to mainland Asia and Europe (sees below the
Communication map of Armenia
3
).
Being a landlocked country, Armenia has an economy that depends on transport and cross-
border access. Only two international borders are open: those with Georgia to the north and
Iran to the south. The eastern border with Azerbaijan was closed in 1991, and the western
border with Turkey in 1993. However, the country's air, rail, and highway networks serve the
nation's needs adequately, and the network capacity is adequate for accommodating estimated
transport demand up to 2020.

Railway Transport
Armenias railway network plays a crucial role in providing mobility for people and freight.
Armenia relies on its railway system for about 70% of imports and exports.

Air transport
Civil aviation infrastructure consists of two international airports: Zvartnots and Gyumri,
and nine local (nonmilitary) airports. Several local and international airlines (such as Armavia
(national carrier), Aeroflot, Air France, BMI, Czech Airlines and Lufthansa) provide a number of
flights to the largest cities in the CIS, Europe, and Asia. Scheduled flights operate to
Amsterdam, Athens, Aleppo, Beirut, Dubai, Istanbul, Frankfurt, Kiev, London, Moscow, Munich,
Paris, Prague, Tehran, Tbilisi, Vienna, and other major cities in the world.

Armenia, part of the Black Sea community
The Black Sea region
4
is a distinct geographical area rich in natural resources and strategically
located at the junction of Europe, Central Asia and the Middle East. With a large population,

3
This map was developed by the cartography unit of Asian Bank of Development.
4
The Black Sea region includes Greece, Bulgaria, Romania and Moldova in the west, Ukraine and Russia in the north,
Georgia, Armenia and Azerbaijan in the east and Turkey in the south. Though Armenia, Azerbaijan, Moldova and
Greece are not littoral states, history, proximity and close ties make them natural regional actors.
ARMENIA


the region faces a range of opportunities and challenges for its citizens. The region is an
expanding market with great development potential and an important hub for energy and
transport flows. In spite of significant positive developments in the last years, differences still
remain in the pace of economic reforms and the quality of governance among the different
countries of the region.
Armenia is one of the founder-countries of the BSEC. Armenia has the BSEC representation in
Istanbul. There is a representative of the Republic of Armenia in the BSEC Permanent
International Secretariat who is responsible for international economic policy and BSEC-EU
cooperation - one of the key operational sectors of the organization. A representative of the
Armenian Foreign Ministry is a board-member of a number of the BSEC related bodies. As for
the main priority areas, it can be singled out the following root issues for Armenia within the
framework of BSEC cooperation: transport and energy, agriculture, science, technology and
communications, education, small and medium entrepreneurship, environment and tourism,
public administration, cooperation in emergency assistance and combating crime etc. Armenia
has joined to almost all agreements signed in these areas, particularly on transport and energy
cooperation.

ARMENIA


ARMENIA



The Institutional framework for supporting private sector development in Armenia consists of
several public and private institutions, as well as cross border and international organizations.
Below are presented the description of public and local administration and main institutions
which are directly or indirectly engaged in business supporting activities in Armenia.

Public Administration
The Republic of Armenia is a sovereign, democratic, social, rule of law state.
The state power is administered pursuant to the Constitution and the laws based on the
principle of separation of the legislative, executive and judicial branches. The Republic of
Armenia has a presidential system of government.
The President:
The President of the Republic of Armenia is the head of State. The President ensures adherence
to the Constitution and provides for regular functioning of legislative, executive and judicial
authorities. The President is the guarantor of Republic of Armenia's sovereignty, territorial
integrity and security. The President of Republic is elected by the citizens of the Republic of
Armenia for a five year term of office (http://www.president.am).

The Executive Power:
Executive power is exercised by RA Government. The Government is composed of Prime
Minister and Ministers. Based on consultations held with National Assembly factions, the
President of Republic appoints the person nominated by the parliamentary majority to be Prime
Minister or - where impossible - the person nominated by the largest number of NA
membership. The President of the Republic appoints and discharges members of government on
Prime Minister's proposal (http://www.gov.am).

The Legislative Power:
The single-chambered National Assembly is the supreme legislative authority of the Republic of
Armenia. The National Assembly consists of 131 deputies /90 of which are elected on the basis
of proportional representation and 41- majority representation/. The National Assembly is
elected through general elections for a term of five years. Parliamentary elections were last
held in 2007 (http://www.parliament.am).

The Judicial Power:
In the Republic of Armenia justice shall be administered solely by the courts in accordance with
the Constitution and the laws. The courts operating in the Republic of Armenia are the first
instance court of general jurisdiction, the courts of appeal, the Court of Cassation, as well as
specialized courts in cases prescribed by the law. The highest court instance in the Republic of
Armenia, except for matters of constitutional justice, is the Court of Cassation, which shall
ensure uniformity in the implementation of the law. The Constitutional Court shall administer
the constitutional justice in the Republic of Armenia.

Structure of the Government
Ministry of Territorial Administration /http://www.mta.gov.am/
Ministry of Agriculture /http://www.minagro.am/
Ministry of Culture /http://www.mincult.am/
Ministry of Defense /http://www.mil.am/
Ministry of Diaspora /http://www.mindiaspora.am/
Ministry of Economy /http://www.mineconomy.am/
Ministry of Education and Science /http://www.edu.am/
ARMENIA


Ministry of Emergency Situations /http://www.mes.am/
Ministry of Energy and Natural Resources /http://www.minenergy.am/
Ministry of Finance /http://www.minfin.am/
Ministry of Foreign Affairs /http://www.mfa.am/
Ministry of Healthcare /http://www.moh.am/
Ministry of Justice /http://www.moj.am/
Ministry of Labor and Social Affairs /http://www.mss.am/
Ministry of Nature Protection /http://www.mnp.am/
Ministry of Sport and Youth Affairs /http://www.msy.am/
Ministry of Transport and Communication /http://www.mtc.am/
Ministry of Urban Development /http://www.mud.am/

Adjunct bodies
General Department of Civil Aviation /http://www.aviation.am/
National Security Service /http://www.sns.am/
State Nuclear Safety Regulatory Committee by the Government
/http:// www.anra.am/
Republic of Armenia Police /http://www.police.am/
State Committee of the Real Estate Cadastre /http://www.cadastre.am/
State Property Management Department /http://www.privatization.am/
State Revenue Committee /http://www.petekamutner.am/

Local Administration
The territory of the Republic of Armenia is
divided into 10 marzes (administrative units)
and the capital of the country Yerevan
which is administered through the law On
Local Administration in the City of Yerevan.
State governance in the marzes of Armenia is
regulated in accordance with the Presidential
decree On State Governance in the Marzes of
the Republic of Armenia and other laws.
Marz governors implement the regional policy
of the government. After the adoption of the
Constitution of the RA (5 June, 1995) the
system of local self-government was
established in parallel with the establishment
of the state government in public
administration of the RA. Powers of the local
self-government bodies consist of own
responsibilities funded by the local budget,
and delegated responsibilities funded by the
state budget. Regions are divided into urban
and rural communities and Yerevan into
districts. Marzes differ in their territories, population size, number of communities and level of
economic development. In Armenia local self-government is exercised only within communities
level. There are 926 communities of which 48 are urban, 865 are rural and 12 are Yerevan
district communities.

Public and private institutions and organizations
Below is presented a brief description of main public-private and private institutions which are
supporting the establishment of business enabling environment in Armenia, supporting business
cooperation and foreign investors, as well as providing business development services:
ARMENIA


Business Support Council of the RA. Business Support Council was created according to decree
N 768 of the President of the Republic of Armenia on December, 2000. The Prime Minister of
the Republic of Armenia is the Chairman of the Council. The members of the council are
representing different government structures as well business community
(http://www.ada.am/eng/secretariats/bsc/).
Small and Medium Entrepreneurship (SME) Development Council was established by the
Government of Armenia
5
in July 2011 as an advisory board to state institutions on development
of business enabling environment in Armenia. The Council headed by the Minister of the
Economy of the RA, includes 11 member representing state institutions, business unions and
associations and international organizations.
Armenian Development Agency (ADA) was established in 1998 by the Government of the
Republic of Armenia to facilitate foreign direct investments and promote exports. ADA acts as
"one-stop shop" agency for investors assisting them in setting up their business in Armenia,
helping in project implementation, performing a liaison role with the Government, providing
information on investment opportunities in the country, as well as investment related
regulations and laws. In its export promotion activities ADA helps to find markets for products,
undertakes market studies and seeks out partners for joint ventures aimed at increasing the
volume of exports and development of Armenian enterprises. ADA also organizes international
conferences, business-forums, trade fairs and exhibitions (http://www.ada.am).
Fund SME Development National Center of Armenia (SME DNC of Armenia) has been
established by the Government of Armenia in 2002. The support is provided through
implementation of Annual SME State Support Programs with resources allocated from State
budget. SME DNC of Armenia is governed by Board of Trustees headed by the Minister of
Economy. The members of the Board are representing different Government structures and
public organizations advocating the interests of SMEs. Fund implements wide range of activities
to support business establishment, growth and development including: provision of business
information, consulting, training, export promotion programs, innovation support programs,
support to start ups, as well as financial support via provision of loan guarantees, seed capital
and equity financing. All aforementioned support programs are available to SMEs operating all
around the country, through well developed network of regional branches of the SME DNC of
Armenia, located in all 10 regions of Armenia (www.smednc.am).

Enterprise Europe Network. Starting from 2008 SME DNC of Armenia has become a host
institution for Enterprise Europe Network and functions as a Correspondence Center in Armenia.
Currently the Enterprise Europe Network brings together business support organizations from
across 48 countries with more than 600 member organizations. This European initiative gives an
opportunity to Armenian SMEs to participate in the European business stimulation processes and
take advantage of network services on identification of new business partners, establishment of
business relations, carrying out the negotiations and endorsing cooperation agreements,
promotion of export/import activities, getting and upgrading knowledge and skills for doing
business in European Single market and other related services.(http://www.smednc.am).

The National Competitiveness Foundation of Armenia is an independent entity founded
through a partnership between the Government of Armenia and a group of leading
representatives of the private sector from the United States, Russia, the European Union and
the Middle East. The mandate of the Foundation is to achieve breakthrough development
toward national competitiveness in key areas of economic activity. The Foundation is focused
on Education, Healthcare and Tourism (http://www.cf.am).

The Enterprise Incubator Foundation (EIF) is one of the largest technology business
incubators and consulting companies in the region, operating in Yerevan, Armenia. Established
in 2002 within the framework of the World Banks Enterprise Incubator project, EIF is called
to support the development of information and communication technology sector in Armenia

5
Decree of the Government of the RA, N638, 07.07.2011
ARMENIA


through creating a productive environment for innovation, technological advancement and
company growth (http://www.eif.am).

The Union of Manufacturers and Businessmen (Employers) of Armenia UMB(E)A. The UMBA
was founded in 1996, is a not-for-profit non-governmental organization that unites businessmen
which hold the leading position in economic entities. The main activities of UMBA are aimed at
legal protection of the interests of businessmen and improvement of economic legislation,
development of international relations and promotion of export, advocacy of the domestic
manufacturers, development of small and medium businesses (http://www.umba.info.am).

The Republican Union of Employers of Armenia was established on 15 November 2007, is a
self financing, self-governing, non-profit organization and as a legal entity. The mission of RUEA
is to be a powerful and influential structure assuring improvement of business environment and
advocacy of business community. RUEA unites 6 regional and 9 sectorial unions. Sectoral unions
are: Farmers and Leather-Maker Union, Metalworking and Electronics Industry Union, Union of
Information Technology Enterprises, Union of Incoming Tour Operators, Quality Association, SME
Development Centre, Union of Builders of Armenia, Union of Tare Packing (Armenpack), Union
of Taxi Service (http://employers.am).
The Chamber of Commerce and Industry of RA (ArmCCI) was founded in April 2002 in
compliance with the RA law on "Chambers of Commerce and Industry". The system of the
Chambers of Commerce and Industry includes the CCI of the RA, Yerevan and 10 Regional CCIs,
as well as wide range of organizations founded by the CCI of RA including "Armexpertiza" LLC
which is the authorized body responsible for issuing Certificates of country of origin of goods
based on the expertise. The primary mission of the Chamber is the improvement of business
environment, promotion of export and investments, support to small and medium enterprises,
providing economic growth of the economy as a final result.
Presently, CCI of Armenia is a full member of the following international organizations:
International Chamber of Commerce (ICC)
World Chambers Federation (ICC WCF)
Eurochambres
Associations of the CCI of the Black Sea Zone
Black Sea Economic Cooperation Business Council
CCI board of CIS participant countries
The Union of banks of Armenia is a union of banks operating in the territory of Republic of
Armenia which was founded on the 27th of July, 1995. At present all 21 commercial banks are
considered to be the members of the Union in Armenia. The major tasks of the union are
protection of interests of Union members, contribution to the development and consolidation of
interbank relations, promotion and integration of the advanced bank methods and technologies,
as well as promotion of the integration of bank system of Republic of Armenia into the
international one, etc. (http://www.uba.am)
Black Sea specific institutions and organizations
Black Sea Trade and Development Bank

The Black Sea Trade and Development Bank (BSTDB) is an international financial institution
established in 1999 by Albania, Armenia, Azerbaijan, Bulgaria, Georgia, Greece, Moldova,
Romania, Russia, Turkey, and Ukraine. With an authorized capital of SDR 3 billion, the Bank
supports economic development and regional cooperation by providing trade and project
financing, guarantees, and equity for development projects supporting both public and private
enterprises in its member countries.
At end 2010, BSTDB active portfolio in Armenia amounted to 10 operations approved by the
Board of Directors (BoD), involving an investment of EUR 52.7 million. Armenia ranks ninth in
terms of BoD approved operations, with 4.6% of the total portfolio and signed operations with
5.2% of the total portfolio. The country ranks sixth in terms of outstanding financing, with 5.9%
of the total portfolio.
ARMENIA


Based on the 2011- 2014 Business Plan, the Bank would expect on average to approve new
operations in Armenia for approximately EUR 10-15 million per year or approximately EUR 51
million over the four year period (http://www.bstdb.org).

Black Sea Economic Cooperation (BSEC)
The Organization of the Black Sea Economic Cooperation (BSEC) was established on June 25,
1992, in Istanbul, when the Summit Declaration was signed by the Heads of State and
Government of eleven countries including Armenia. The Organization covers the geography
with an area of nearly 20 million square kilometers, including the Black Sea, the Balkan and
Caucasian countries, situated on the two continents and representing a region of some 350
million people.
One of the key areas of cooperation is trade and economic development. A number of
workshops, trainings and exhibitions are being organized yearly within the relevant Working
Group in the Member States to facilitate and promote regional trade and attract investments.
The complex issues on free trade zone and/or facilitated trade regime in the region are on the
agenda of cooperation in trade. (http://www.bsec-organization.org,
http://www.mfa.am/en/international-organisations/BSEC/)

ARMENIA


ARMENIA


LEGAL FRAMEWORK FOR OPERATING BUSINESS

Starting a business in Armenia

Legal entities are subject to State registration in the Republic of Armenia and they are
considered established in the Republic of Armenia as of the moment of their State registration.
There are certain options for a person to perform business (commercial) activities in the
Republic of Armenia. In particular, a person can either register as an individual entrepreneur or
establish a commercial (profit-making) legal entity. Another option is for legal entities
(including foreign legal entities) to establish a separated subdivision (a representative office or
a branch).
Following the recent reforms carried out by the Government of Armenia, the one-stop-shop
principle has been introduced for legal entities and individual entrepreneurs. The One Stop
Shop, launched within the Ministry of Justice on March 10, will streamline start-up procedures
for new businesses, reducing the business registration process. The new system features a one-
stop-shop business registration facility. This new simplified business start-up procedures and
improved customer service will enable Armenian businesses to save significant time and
resources.
According to Doing Business 2012 report the globally Armenia stands at 10 in the ranking of 183
economies on the ease of starting a business.

Legal base for procedure to register a company in Armenia

Below is a list of relevant legislative acts:
Civil Code of the RA (#AL-239, 5 May, 1998),
Law on state registration of legal entities (AL-169, 26 April 2001),
Law on individual entrepreneur (#AL-167, 25 April 2001),
Law on limited liability companies (AL-252, 21 November 2001),
Law on joint stock companies (AL-232, 27 October 2001),
Law on licensing (AL-193, 27 June 2001),
Law on protection of economic competition (AL-112, 5 December 2000),
Law on trade names (#114, 10 June 2008)
Law on trademarks (#AL-59, 29 April 2010)
Law on permission fees (#AL- 209, 22 December 2011)
ARMENIA


As a result of the reforms carried out by the Government of Armenia in 2010 the citizens for
registering company will no longer have to turn to several agencies in order to collect the
required documentation. The application form should be submitted only to the State Registrar,
who coordinates with the State Patent Department for registration of the company name and
Tax Service for obtaining tax identification number (TIN).
Several public and private institutions are providing relevant services for start-ups for
registering their companies, including legal consultancy on registration procedure, preparation
of relevant documentation, partner search, advisory services on tax and customs administration
and financial reporting, etc. The list of relevant institutions with links and described services
are presented in the section Institutional Framework of this Guide.

Forms of business cooperation and ventures recognized by the law

The Civil Code dated 5 May 1998 (and effective as of 1 January 1999), establishes the following
legal forms of business: entrepreneurs/Sole proprietors business partnerships (full partnerships
and trust partnerships) limited liability companies, supplementary liability companies, joint-
stock companies (open and closed) cooperatives representative offices and branches.

Individual Entrepreneurs
This form allows individuals to perform commercial activities. Although this form is distinct
from legal entities, the provisions applicable for commercial organizations also regulate the
activities of entrepreneurs in general. An entrepreneur is allowed to have his/her own seal, a
bank account and employees. However, it should be noted that an entrepreneur has unlimited
liability for all debts incurred.

Business partnerships
Partnerships are a specific type of commercial organizations along with business companies.
Partnerships have certain peculiarities, which allow distinguishing them from companies.
Partnerships can be established in Armenia in the form of full partnerships or trust (special)
partnerships, whilst business companies may choose other forms, in particular a joint stock
company, a limited liability company, a supplementary liability company or a cooperative.
As an association of partners, a partnership cannot be established by one person. The partners
personally participate in the management of a partnership. Therefore, it is not permitted to be
a partner in more than one partnership. The partners are personally liable (jointly and
severally) for the debts of the partnership.
Business entities
Limited liability companies
A limited liability company (llc or ltd) is a type of business entity, which can be established by
one or more persons (called members), each member having a share in the capital. The
members have limited liability for the debts of the company and are only liable to the extent of
their share in the charter capital. There is no minimum charter capital requirement established
for the limited liability companies, except for the limited liability companies acting in specific
fields (for example, banks). The members of a limited liability company also have a preemptive
right to purchase the share of other members. It should be taken into consideration that it is
prohibited by law for companies with only one founder or shareholder to establish limited
liability companies in Armenia. Additionally, it should be mentioned that the overwhelming
majority of business companies (more than 55%) in the Republic of Armenia are operating under
the legal status of a limited liability company.

Supplementary liability companies
This form of business entities is rather similar to limited liability companies. The main
difference is that the members of a supplementary liability company bear secondary liability
for the debts of the company, which bears the primary responsibility. The liability of the
members is limited to a multiple of their share in the capital. In the event of the bankruptcy of
ARMENIA


a participant, his portion of liability is transferred proportionally to the remaining participants,
unless otherwise prescribed by the charter of the company.

Joint-stock companies
A joint-stock company is a business company, the charter capital of which is divided into
shares. Joint-stock companies have the exclusive right to issue special type of securities -
shares. Joint-stock companies can be established as an open joint-stock company (ojsc) or a
closed joint-stock company (cjsc). The shares of open joint-stock companies can be purchased
in the open market and can be listed in stock exchanges. There are auditing and information
publication requirements for open joint-stock companies. This information is publicly available.
The number of shareholders in closed joint-stock companies is limited by law (not to exceed 49
shareholders) and a right of preemptive purchase of shares is provided for the shareholders.
There is no minimum charter capital requirement established for joint stock companies, except
for the joint stock companies operating in specific fields (for example, banks).

Cooperatives
Cooperatives are a specific type of legal entity, being associations of persons joined together
for material and other benefits. Cooperatives are formed on the basis of contributions of their
members. Certain types of cooperatives (for instance, consumers cooperatives, condominiums)
are non-profit organizations and therefore, are not allowed to perform business activities.

Representative offices and branches of legal entities
Another option available for performance of activities in the Republic of Armenia is by way of
establishing a representative office or a branch. These establishments do not obtain the status
of a legal entity. The scope of activities of a representative office is limited to representation
and protection of the interests related to the head office. The scope of activities of a branch is
larger since the branch is allowed to perform all the functions of the head office or part of
them, which means that the branch can perform business activities. Both representative offices
and branches operate on behalf of the head office, which provides property thereto.
Representative offices and branches have a simpler structure and the management is
performed by a director, who is appointed by the head office and acts on the basis of a power
of attorney. Representative offices and branches operate on the basis of their charters, which
should be approved by the head office. A branch of any foreign company must be registered in
the State Register. For this the company must submit the following documents: application of
the head of the executive body of the founder or the authorized person of the founder or the
head of the branch, the decision taken by the foreign company on opening the branch, the
charter of the branch executed by the authorized person of the founding company, the charter
of the latter, as well as a document proving that the company is registered in the manner
established by the legislation of its country of origin.

Cumulative data on number of commercial legal entities and individual entrepreneurs
registered in Armenia as of 01.09.2011
6

Name During
2011
As of
01.09.2011
As of
01.09.2010
Data as of
01.09.2011
towards data as
of 01.09.2010, %
Individual enterprises 0 7143 7170 99.62
Family enterprises 0 526 529 99.43
Business Partnerships 0 1150 1159 99.22
Subsidiary companies 0 549 551 99.64
Cooperatives 3 4979 5001 99.56
Farms 0 230 232 99.14
Limited liability companies (LLC) 1628 45244 43036 105.1
Closed joint-stock companies 63 3236 3218 100.6

6
Report on Social-economic situation of the Republic of Armenia for January-August 2011, National Statistical
Service of the RA http://www.armstat.am
ARMENIA


Opened joint stock companies 6 905 910 99.45
State enterprises 0 127 197 64.47
Union of commercial legal entities 2 99 96 103.1
Total 1702 64188 62099 103.4
Individual entrepreneurs 6868 88361 81228 108.8

Requirements for registering a company, including operational
authorization

For registering a company the application form should be filled in and submitted to the State
Registrar, who coordinates with the State Patent Department for registration of the company
name and Tax Service for obtaining tax identification number (TIN).
The state duty for registration of individual entrepreneurs is 3000 AMD. The total registration
cost for legal entities is AMD 17,000, including 5,000 for registration of the company name for
all business entity types (except for banks, investment funds, and insurance companies, where
the fee is AMD 40,000) and 12000 is a state duty for registration.
The registration fees could be paid at any Bank.
The State Registrar must either approve or deny registration applications within maximum 5
working days following the submission of the required documents. According to the law on state
registry of enterprises, a registration may be refused only if the legal entitys founding
documents are either incomplete or inaccurate. The rejection of registration may be appealed
in court.
The online mode of registration will allow Armenian citizens to register their business without
having to visit an agency (https://www.e-register.am). Now citizens who would like to register
business can file and submit an on-line application. The process of enterprise registration could
be carried out within 15 minutes. This web site provides the following services: registration of
companies and organizations online; check the status of their applications online; search
existing companies and purchase full information about any company.
The seal is not required by law but entrepreneurs tend to obtain the company's seal that may
be asked during the operations of the company (for instance, by Tax authorities). The fee for
seal issuance varies according to turnaround time as following. - 1 day: AMD 15,500, 30 days:
AMD 2,800.

The following documents are submitted to the State Register for registration of Individual
entrepreneurs:
An application signed by the authorized person.
Photo of 3X4 size.
Copy of the passport.
State duty payment receipt.

The following documents are submitted to the State Register for registration of legal entities:
An application signed by the authorized representative of the founder.
Decision of authorized body on state registration of company name.
Receipt certifying payment of the state duty.
Resolution of the founder on the establishment of company and approval of its Charter.
At least 2 Copies of the founders charter (If the founder is a foreign entity, this
document should be certified by a notary and apostiled).

A foreign physical entity who wants to open a firm in Armenia must also attach a translated and
notary certified copy of his/her passport to the list of the above required documents.
If founder is a foreign legal entity or there is a foreign legal entity in the list of founders, then
the Founder must submit the following documents, which should be translated into Armenian
and be notary certified:
extract from the commercial register of the country of origin of the enterprise, which
contains information on organizational form of the enterprise declared at the time of
the registration of the legal entity and its legal status;
ARMENIA


founding documents of the foreign legal entity, for instance, the Charter of the
enterprise or other equivalent documents;
decision of the authorized managing body of the foreign legal entity on founding an
enterprise.
These documents should contain the following information:
the legal status and organizational form of the legal entity;
the registration date in the country of residence;
the juridical name of the enterprise;
the place of residence of the enterprise;
the length of activity;
the competences of the management bodies of the enterprise (Assembly of the
founders, Council, Executive body, Board);
the management body, which is competent to make decisions on the foundation of this
enterprise, acquiring a share in the charter capital and termination of participation.

Legal requirements for building

The following steps should be completed in order to get the permit to build a construction in
Yerevan:
Apply and obtain architectural - constructional assignment (APZ) (no charge) from
Yerevan Municipality (Architectural and Urban Development Department). According to
legislation the official time limit to issue the APZ is 20 days. However, because the
technical conditions are obtained individually the APZ is issued subsequent to having all
technical conditions from utilities.
Request and obtain the following approvals:
- technical conditions approval from Yerevan Water and Sewage Company (YWSC),
- Request and obtain architectural plan approval from telecommunications provider,
- Request and obtain architectural plan approval from electricity provider,
- Request and obtain ecological expertise approval from Ministry of Ecology.
Request and obtain building permit from Yerevan Municipality: In some regions and
districts, as determined by the central authorities, the fee ranges from AMD 21,000 to
AMD 350,000. Permit must be issued in 7 days. After obtaining the building permit, the
company will need to notify State Inspection of Urban Development of Ministry of Urban
Development before construction is started. Additional fees apply for industrial rubbish
produced. With a purpose of inspection the construction site may be visited during
entire duration of the project at least twice, provided all works are done properly. The
Inspections are conducted by Municipal Construction Inspection (once a year) and State
Inspection of Urban Development of Ministry of Urban Development (once a year).
Request and connect to electricity services and water and sewage services.
Request final municipal inspection to obtain occupancy permit from Municipality/State
Inspection of Urban Development of Ministry of Urban Development. Cost to complete:
AMD 150,000.
Register the building with the cadastre. The company must register the building with
the cadastre by submitting the land title, the allocation permit, the building permit,
and the construction plans. The next step is an on-site inspection, required for metering
the building.

The overall procedure will last about 4-5 months and costs about 1-15 mln AMD.

Lifecycle of a company: exit through bankruptcy, transfer of business

A legal entity shall be deemed as closed down on the date of state registration of its
closedown. State registration is required also in case of reorganization (merger, unification,
split, separation) and transformation of Legal Entities, which is regulated by the Civil Code of
the RA (adopted on July 28, 1998) and Law on State Registration of Legal Entities (adopted on 3
April, 2001).
Liquidation of a legal person shall entail its termination without transfer of rights and duties by
way of legal succession to other persons.
ARMENIA


A legal person may be liquidated:
1) by a decision of its founders (or participants) or of the body of the legal person
empowered thereto by the charter, including in connection with the expiration of the
time period for which the legal person was created or with the achievement of the
purpose for which it was created;
2) in case of declaration by a court that the registration of a legal person is invalid in
connection with violations of a statute or other legal acts committed at its creation;
3) by a decision of a court in case of conduct of activity without appropriate permission
(or license) or of activity prohibited by a statute, or with other multiple or gross
violations of a statute or other legal acts, or in case of systematic conduct by a societal
organization or fund of activity contradicting its charter purposes, and also in other cases
provided by the present Code.
For the purpose of registration of liquidation of a legal entity the following documents shall be
submitted to State Registrar:
a) an application;
b) the liquidation balance sheet and the decision of the founders (participants) of a legal
entity or the decision of a body of the legal entity on approving the liquidation balance;
c) statements issued by tax and social security authorities on absence of outstanding
liabilities;
d) a document confirming the return of the stamp;
e) the state registration certificate.

For the purpose of registration of liquidation of the individual entrepreneur the following
documents shall be submitted:
a) an application;
b) statements issued by tax and social security authorities on absence of outstanding
liabilities;
c) the state registration certificate.
Where a legal entity is being liquidated, the given regional unit of the State Register shall make
a record in the state register book concerning the liquidating legal entity and shall issue a
respective annex of the state registration certificate to the applicant basing on the decision on
liquidation taken by the founders (participants) of a legal entity or an application and/or a
decision of a body vested with respective powers by the charter of the legal entity, as well as
the relevant declaration published in the press.
A legal entity shall be deemed as liquidated and its business closed down (including the
business of a sole proprietor) on the date of entering a relevant record into the state register
book, which will be certified by a relevant document issued for that purpose.
A legal person also may be liquidated as the result of bankruptcy.
If the value of the property of a liquidated legal person is insufficient for satisfaction of the
claims of creditors, it may be liquidated only as the result of bankruptcy. The exit of legal
entities and individual entrepreneurs through bankruptcy are regulated by the RA Law on
Bankruptcy adopted in 25.12.2006. This Law shall determine the reasons for adjudging a
bankrupt (an insolvent debtor) a legal entity/entrepreneur, and the procedures of liquidation
of the debtors property rights and outlines the obligations of the participants of the
procedure.

ARMENIA


INVESTING IN ARMENIA

The investment policy of Armenia is directed to the formation of the favorable investment and
business environment, growth of transparency of the regulating environment, detection of
competitive advantages of the country, growth of volumes of investments, on development of
market infrastructures and the solution of problems of economic development on the basis of
all the above mentioned.
The government of Armenia is promoting foreign investment and carrying out an open door
policy. The main law regulating the field of FDI is the Law On Foreign Investment adopted in
1994. With small changes it is still considered the main regulatory act. Foreign investment is
defined by the Law as investments with no less than 30% of foreign participation at the moment
of foundation. There are no legal restrictions to the participation of foreign investors in any
economic activity in Armenia. The only exception is set by the Constitution (Article 31), which
denies foreign citizens and persons without citizenship the right to own land in Armenia.
However, foreigners are allowed to use land through lease contracts with an Armenian
counterpart. Furthermore, foreigners have the right to own real estate properties built on
Armenian land, and to exploit renewable and non-renewable natural resources on the basis of
concession contracts granted by the Government.
The current Law of the Republic of Armenia On Foreign Investments is considered as one of
the most liberal and successful among the similar laws of the other emerging economies.

The main principles of investment policy of RA are:
application of liberal principles of economic activities in investment sphere;
maintenance of attraction and stability of the legislation regulating the investments;
maintenance equal, not discriminatory economic conditions for foreign and internal
investors;
granting of the national treatment and most favored nation treatment to foreign investors
and investments;
maintenance of protection of legitimate interests of investors and investments.

The basic purposes of investment policy of RA are: maintenance of stable economic growth and
increase of a living standard of the population by means of increase of economic activity,
increase in volumes of investments and creation of a favorable investment climate.

Incentives

The following incentives for foreign investors are available in Armenia:
Attractive legislation regulating the investment,
Investment guarantees*,
Policy pursuing by the Government on attraction of FDI,
Stable economic growth,
Easy entry to the markets of CIS and the Middle East,
Well-educated and skilled labor force,
Unlimited recruitment of labor,
Profit tax exemption for companies involved in agri-business,
Permission of foreign100% property,
Stable banking system and monetary unit,
ARMENIA


Competitive price of energy resources,
WTO membership since 2003,
Liberal trade regime, absence of quote and import licenses,
Absence of export duty and VAT return for exported commodities and services,
Free exchange of foreign rate,
Free repatriation of profit,
Worldwide Diaspora,
Political and economic stability.

*The Law On Foreign Investments guarantees that, in the event of amendments to the legislation on
foreign investment, the law in force at the time the investment were made can, upon the request of a
foreign investor, continue to be applied for a maximum of five years from the date of the investment.
The Law also restricts the ability of the Government to confiscate or nationalize the property of foreign
investors and, where it might occur, requires full compensation. Foreign investors and employees are
guaranteed the right to freely repatriate their property, profits, and other goods legally earned as a
result of investments or as compensation for services.
Under the General Agreement on Trade in Services (GATS) Armenia has scheduled no limitations
to foreign investment with respect to both market access and national treatment for practically
all activities, with the exception of a few specific services activities (Chapter VI(4)).
The Armenian Government has signed bilateral Treaties for the Reciprocal Promotion and
Protection of Investments with 44 countries including the USA, Germany, Russia, and France,
providing additional guaranties to foreign investors/investments. Additionally, to avoid the
double taxation of income and property, Armenia has signed bilateral treaties with 36
countries. Armenia is a signatory to the Convention on the Settlement of Investment Disputes
between State and citizen of another state and a member of the International Centre for
Settlement of Investment Disputes (ICSID). It also gives extra confidence to foreign investors,
provides fast, efficient and high quality resolution of investment disputes.
Inflows of foreign direct investment grew at annual average rate of 38.9% between 2003 and
2008, and the net stock of FDI in Armenia reached US$3.4 billion in December 2008.

Types of foreign investments

Foreign investors may make the following types of investments:
Establishment of a fully foreign-owned company (including representations, affiliates
and branches), or the purchase of an existing company.
Establishment of a new joint venture company with the participation of Armenian
companies or citizens, or the purchase of the portion of the shares in an existing
company.
Purchase of different types of securities.
Procurement of permit to use the land, or a concession agreement for the use of
Armenian natural resources with participation of Armenian companies or citizens.
Procurement of other property rights.
Other forms of investments.

Competition Policy

The State Economic Policy of the Republic of Armenia in the field of improvement of
competitive environment and market protection is aimed at bringing existing legislation of
concerned field in compliance with the international standards, exercising of effective control
over the adherence to the legislation on the protection of competition, revelation of the
existing problems, drawing up proposals on elimination of this problems, protecting domestic
producers and consumer rights, ensuring an appropriate environment for fair competition and
preventing of anti-competitive practices.

Basic principles in the field of improvement of competitive environment and protection of
market of the Republic of Armenia are:
ensuring the fair trade and free market,
ARMENIA


application of non discriminated and transparent legislation,
ensuring the application of WTO rules and principles,
promotion of reforms in the related field.

As a result of the consecutive economic policy of the Government of Armenia became a
member of the World Trade Organization /WTO/ in 2003, which is of a huge importance to our
country for effective integration to the world economy, neutralization of the negative influence
of restrictions of domestic market, as well as, resistance to adverse foreign influence, if
necessary. Becoming WTO member, let it possible domestic producers to enter into new
markets and participate in international competition and apply protection measures by the
country, if necessary.
For establishment and improvement of necessary legal base for liberal market economy
development and competitive environment formulation in the Armenia the following laws was
adopted by the Government of Armenia. The Law On Protection of Economic Competition
adopted on November 6, 2000 defines the relations within market parties related to the unfair
competition. Pursuant to this law the State Commission for the Protection of Economic
Competition (Commission) was established. The main tasks of the Commission are follows: to
protect and promote the economic competition, to ensure an appropriate environment for fair
competition, prevention and restriction of anti-competitive practices. The Law On protection
of domestic market /safeguard Measures/ adopted on 18 April, 2001 determines the relations
concerned to application of safeguard measures on the import of products into the territory of
the Republic of Armenia. The Law On antidumping and countervailing measures adopted on
19 June, 2002 defines the rules regulating the implementation of anti-dumping and
countervailing measures on products imported into the territory of the Republic of Armenia.

The main wealth of Armenia is probably its young and highly qualified population (68 % of the
population ranges from 15 to 59 years old), among which the level of education is more than
satisfactory. As of 2010, the unemployment rate in Armenia made 7% according to the country's
National Statistical Service data, which is representing 83.3 thousands officially registered
unemployed persons.
The labor legal capacity in the Republic of Armenia arises in full from the moment of reaching
the age of 16 and in some cases at the age of 14. The retiring age established by the law is 63.
Education continues to be one of the main values in Armenian society. Today there are about
68 universities (including 8 foreign universities: American University of Armenia, French
University, European University and 5 Russian Universities and 5 Russian Universities), enrolling
more than 115,000 students.
Armenia ranks 86
th
in the UN Human Development Index out of 187 states (2011). Its position
goes down by 10 points compared to last year
7
. Between 1995 and 2011, Armenias HDI value
increased from 0.595 to 0.716, an increase of 20.0 % or average annual increase of about 1.2%.
The labor legislative framework in the Republic of Armenia is contained in the Constitution, as
well as the Labor Code and other legal acts in the social and economic field. Article 48 of the
Constitution emphasizes that the basic tasks of the State in the economic, social and cultural
spheres is, first and foremost, to contribute to employment and the improvement of working
conditions for the population.The Labor Code of the Republic of Armenia (LC) was adopted on
9 November 2004. The Labor Code deals with various aspects of collective and individual labor
relations.

Real estate ownership right is regulated by the Constitution of the Republic of Armenia, while
the land and realty legislation includes laws on property, law on political division, Civil Code,
Land Code, Law On (land privatization) farms and collective farming, Law On local self-
government, Law On town planning, tax law on land and real estate, etc.

7
The report is based on combined indicators of life expectancy, literacy, school enrolment and
gross domestic product (GDP) per capita.
ARMENIA


According to the Article 28 of the Constitution every citizen has the right of property and
succession. The foreign citizens (physical persons) as well as the persons without the right of
citizenship do not enjoy the right of land property, except for the cases provided by law. If
these citizens own any property under ownership right, then they can enjoy only the right to
land plot usage, but never an ownership right. Disqualification of the property right may be
realized only juridical, only in cases provided by the law. The disqualification for the needs of
the society and the state may be realized only in exceptional cases, basing on the law, along
with preliminary reimbursement.

Intellectual property rights (IPR)
As a member of the World Intellectual Property Organization (WIPO), Armenia has signed a
number of international agreements on intellectual property rights.

However, there are several
key documents which werent signed by Armenia, such as follows: the Patent Law Treaty, the
Singapore Treaty on the Law on Trademarks, the Trademark Law Treaty, or the International
Convention for the Protection of New Varieties of Plants. The authorities noted, however, that
recent amendments to Armenia's Law on Trademark and the new Law on Patents have prepared
the way for it to join these treaties in the near future. Armenia is a member of the Eurasian
Patent Office.
Armenia has notified the Agency of Intellectual Property (Agency) as the contact point under
Article 69 of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS
Agreement). The Agency was established as separate division acting within the Ministry of
Economy, in 2002, following the merger of the Patent Office and the National Agency of
Copyright. The Agency is responsible for policy formulation and implementation in industrial
property and copyright, including processing applications for patent protection, and trade mark
and design registration. It has a cooperation agreement with the European Patent Office (EPO)
http://www.aipa.am.
The main policy developments in the field of IPR are directed towards improving the legislation
aimed at harmonizing it with international standards, making the public active, and making the
intellectual property mechanisms more effective and reliable. Recent legislative developments
include: adoption of the Law On trademarks (July, 2010), which is in full conformity with
the EU relevant directives and the Law On Geographical Indications (July, 2010) to regulate
the registration, legal protection and use of appellations of origin and traditional names of
products.
Public procurement
Based on the Strategy of the Public Procurement System improvements approved by the
government in 2009 and procurement system assessment reports of the EU and World Bank
experts, a government decree on amending the current government decree on the rules and
procedures of procurement has been approved and the new Law of the RA On Procurement
has been adopted on December, 2010. The Public procurement policy aims to broaden the
circle of participants and to foster a competitive, efficient, transparent and non-discriminating
procurement process. The Law does not contain any provision to promote domestic suppliers or
local content, and it explicitly guarantees equal rights for foreign providers.
Armenian legislation allows for the following methods of procurement:
open tender,
closed tender,
restricted tendering,
request for quotations,
competitive negotiations,
and single-source procurement.

Open tenders can be periodic or targeted. A periodic tender involves procurement of
periodically used or recurrent items from a list compiled by the Ministry of Finance. All other
ARMENIA


items are procured using targeted tendering. Under the Law, open tender is the preferred
method of procurement, but the Law also defines exceptions. For example: closed tenders
may be used if the procurement involves state secrets (e.g. military purchases); restricted
tendering may be applied due to technical specifications of the procurement item; and single-
source may be used in cases of urgent need, of a complementary order or due to copyright or
licence restrictions. Armenia has been trying to put in place an electronic procurement system
which hopefully will be officially launched in 2012.

The price of procurement subject does not exceed the Procurement base unit. Procurement
base unit - an amount equal to 1 million AMD (about 2,600 USD).

From an institutional perspective, government procurement is the responsibility of the Ministry
of Finance; the State Procurement Agency (SPA), which is a semi-autonomous Government body
under the Ministry of Finance; and procuring entities (including local governments). The
Ministry of Finance is responsible for procurement policy and regulation. The SPA is responsible
for the actual conduct of procurement in collaboration with procuring entities, and for signing
all contracts concluded through open tenders. The role of procuring entities (i.e. budget
spending units) is to: prepare technical specifications, delivery schedule, and payment terms;
establish tender committees; and supervise contract performance and contractual payments.

8

Foreign investments in the Armenian real sector per sector/business, 2010

Sector FDI (thousand USD)
2010
Communication 190655.0
Production and distribution of electricity, gas, hot water
and heat
101767.0
Mining Industry 32288.7
Agriculture, hunting and services in these sectors 4784.0
Chemical Industry -
Air Transport Activities 24967.8
Food and Beverage Production 1668.4
Real Estate deals 24871.6
Hotels and Restaurants Services 11065.0
Research 727.7
Wholesale Trade 912.7
Accounting 20.2
Transport 37857.6
Other 51413.7
TOTAL 482999.4

Foreign Direct Investment by countries

Country FDI (thous. USD)
2009
FDI (thous. USD)
2010
Russia 384831.2 194539.8
France 197421.4 146787.2
Argentina 48258.2 29751.8
Italy 33480.3 4908.7
Lebanon 13548.8 11292.5

8
National Statistical Service of the Republic of Armenia

ARMENIA


USA 12982.9 6058.3
Germany 19358.0 21951.2
Cyprus 6939.7 11975.9
Netherlands 4569.2 3501.8
Luxemburg 2487.0 5168.0
Belgium 1213.1 1565.5
Other 7028.7 45498.7
TOTAL 732118.5 482999.4

Foreign Direct Investments in Armenia, 2000-2010

Year FDI level, mln. US$ (per year) %
2000 124.7 2.8
2001 75.9 1.7
2002 141.0 3.2
2003 153.5 3.5
2004 226.7 5.2
2005 244.4 5.6
2006 250.7 5.7
2007 582.3 13.2
2008 1000.9 22.7
2009 906.2 20.6
2010 693.4 15.8
TOTAL 4399.7 100

Major projects in Armenia developed by companies from the Basin

Country Armenian Company Sector Year
Bulgaria Teletec-M Restaurant Business 2008-09
Greece "MASIS TOBACCO" LLC Manufacturing, sale and export of
tobacco products
2000
Greece Intracom Armenia Telecommunication and IT solutions
provider
2005
Greece "Coca-Cola Hellenic
Bottling Company Armenia"
CJSC (CCHBCA)
Soft drink manufacturer 1997

ARMENIA




The Government of Armenia has adopted a policy of free international trade.
The objectives of the trade policy of the Republic of Armenia are:
Foreign trade liberalization, simplification of the mechanism of export and import tariff
and nontariff regulation;
Protection interests of producers, promoting an increase in exports of local products;
Promotion of external economic relations;
Promotion of targeted interventions to ensure the quality of imported products in order
to protect consumer rights,
to help prevent the illegal move across the customs border of drugs, weapons, objects
of historical, ethnographic and cultural values as well as for destruction of plants and
animals.

Foreign trade and free trade agreements
Armenia has entered into a number of international trade agreements that include:
Full membership status in the World Trade Organization since February 2003.
Free-trade agreements with most of the CIS countries.
Bilateral free trade agreements of the Republic of Armenia have been ratified and are legally
binding with the Russian Federation (1993), Tajikistan (1994), Kyrgyzstan (1995), Moldova
(1995), Ukraine (1996), Turkmenistan (1996), Georgia (1998), Kazakhstan (2002) and Belarus
(2003).
For the period 2009-2011 the European Commission has selected Armenia to be one of the 16
beneficiary countries that have qualified to receive the additional preferences offered under
the GSP+2 incentive arrangement.
Armenia, along with Ukraine, Georgia and Moldova, is one of four countries to the east of the
European Union (EU) that has been targeted by the EU for negotiation of the Deep and
Comprehensive Free Trade Agreement (DCFTA). Notably, a DCFTA would include negotiation of
liberalization of business service sectors, and the considerable emphasis on harmonization of
standards with the EU and improved trade facilitation and lower border costs.
Foreign Trade of the Republic of Armenia 1997-2010
9

(Million USD)
Year Export % Import % External
Trade
Turnover
%
1997 330.0 3.46 952.0 3.52 1282.0 3.51
1998 360.0 3.77 1000.0 3.70 1360.0 3.72
1999 383.0 4.01 919.0 3.40 1302.0 3.56
2000 300.5 3.15 884.7 3.28 1185.2 3.24
2001 341.8 3.58 877.4 3.25 1219.2 3.34

9
National Statistical Service of the Republic of Armenia

ARMENIA


2002 505.2 5.29 987.2 3.66 1492.4 4.08
2003 685.6 7.18 1279.5 4.74 1965.1 5.38
2004 722.9 7.57 1350.7 5.00 2073.6 5.67
2005 973.9 10.20 1801.7 6.67 2775.6 7.59
2006 985.1 10.32 2191.6 8.11 3176.7 8.69
2007 1152.3 12.07 3267.8 12.10 4420.1 12.09
2008 1057.2 11.07 4426.1 16.39 5483.3 15.00
2009 710.2 7.44 3321.1 12.30 4031.3 11.03
2010 1041.1 10.90 3749.0 13.88 4790.0 13.10
TOTAL 9548.8 100 27007.8

100 36556.5

100

Indexes of export and import in dollars, and GDP Growth, 2000=100%

Volume of export and import by main trading partners, 2008-2010
10

Export

10
Armenia in Figures, 2011, National Statistical Service of the RA http://www.armstat.am
23.6
19.5 19.1
54.1
43.7
48.1
22.3
36.8
32.8
0%
20%
40%
60%
80%
100%
2008 2009 2010
Other countries
EU countries
CIS countries
ARMENIA


Import

Requirements for registration and documentation

Individuals and entrepreneurs engaged in foreign trade should be registered in the customs,
which are performed customs clearance of goods crossing customs border. In these organs
for each participant of foreign trade is opened an individual folder organization, which
stores copies of all documents submitted by them to Customs.
In order to exercise customs control in accordance with Decree adopted by the Government
of the Republic of Armenia as of 21 November, 2003 1779-N for registration at the
Customs Service as a participant of foreign trade it is required the following documents:
organizations charter (copy),
instrument of state registration by the taxpayer (copy),
certificate issued by the servicing bank on the company's current account (copy),
power of attorney from the organization for permission to establish a relationship
with customs authorities,
customs declaration,
copy of customs clearance of goods smuggled through the customs border of the
Republic of Armenia,
the declaration of the details of the customs value,
a document justifying the carriage of goods (waybill),
the originals of non-tariff regulation,
a passport or other identity document,
a document proving payment of customs , and checks,
a receipt of purchase of excise stamps,
other documents in order to provide benefits under the legislation of the Republic
of Armenia.
Customs clearance
Customs clearance of goods and vehicles moving across the customs border of the Republic of
Armenia is exercised in compliance with 15 regimes established by the Customs Code of the
Republic of Armenia.
The selection of the Customs regime is made by a declarant (physical person or company),
which implements import/export transaction.
In order to perform a custom clearance of goods imported by companies and individual
entrepreneurs, the declarant must submit the following documents:
customs declaration,
28.5
31.4 30.5
30.7
27
27.4
40.8 41.6 42.1
0%
20%
40%
60%
80%
100%
2008 2009 2010
Other countries
EU countries
CIS countries
ARMENIA


invoice or contract of sale of goods,
cargo customs notification (waybill).
Imported goods are subjects for preliminary external examination in the customs points. After
preliminary external examination of imported goods, on the basis of supporting documents, a
shipping list must be filled. According to filled out shipping list goods and vehicles are sent to
the customs authority, which must carry out customs clearance.
In the customs authority, which carries out custom clearance, cargo is declared by a computer
system TWM .
On the basis of documents and customs declaration submitted in the process of documentation
the inspection of goods is carried out according to the following procedures:
- release of goods and vehicles without inspection,
- release of goods and vehicles with partial inspection,
- release of goods and vehicles with full inspection.

After the paperwork and presenting by the declarant of the document certifying the payment of
relevant customs payments, goods and vehicles are released. Goods transported across the
customs border by physical persons, also to be declared in accordance with applicable law.
If necessary, state authorities of the Republic of Armenia may conduct veterinary, sanitary and
other controls.
Armenia uses the Harmonized system of tariffs classification. Tariffs are in ad valorem and
levied on C.I.F. values. Armenia simplified its tariff structure by maintaining two ways of
charging: 0% and 10%. According to the State Revenue Committee affiliated to the Government
of the Republic of Armenia, no tariff increase will be exercised and many products are
exempted from import duties (for example, equipment, raw materials, pharmaceutical
products, manure, and cosmetics). The complete list of all products subjected to 10% can be
found on the web site of the Customs Committee. Exported goods are subject to customs duties
at the rate of 0%.
While most imports are free of prohibitions, quotas, or licensing requirements, there are
restrictions for health, security or environmental reasons. These restrictions include requiring
authorization for weapons, components used in the production of weapons, explosives, nuclear
materials, poison, drugs, strong psychotropic substances, devices for use in opium smoking, and
pornographic materials. The import of medicines must be authorized by the Ministry of Health
and import of agricultural chemicalsby the Ministry of Agriculture. Armenia is a member of the
World Customs Organization and uses the transaction value method of customs valuation, based
on the provisions of the 1994 GATT Agreement on the implementation of Article VII.
A customs declaration form must be presented along with a pro forma of the goods being
imported. Tobacco and spirits require certificates of quality issued by the national certification
body, Armexpertiza.
Armenia has no export licensing; however for some products exporters need to obtain prior
State permission for export operations. Today, Armenian enterprises are successfully exporting
their goods and services to the international market. Some examples include processed
diamonds, jewelry, molybdenum, gold, copper, silver, synthetic rubber, cables, electricity,
alcohol products, cigarettes, canned food, natural juices, mineral water and software products.
As of the end of 2008 the major trading partners of Armenia were Russia, Germany, China,
Ukraine, USA, Turkey, Iran, Belgium and Italy. The European Union is the major origin of
Armenian imports and most favored export estination, followed by the CIS.

ARMENIA



Issues related to technical regulations and standards are the responsibility of different
governmental bodies within the Ministry of Economy of the RA. In July 2003, the Code of Good
Practice for the Preparation, Adoption, and Application of Standards was accepted by the
Department of Standardization, Metrology and Conformity Assessment of the Ministry of
Economy of the RA.

The National Institute of Standards (SARM), a closed joint stock company
under the Ministry of Economy of the RA, is Armenia's Technical Barriers to Trade (TBT) enquiry
point. Armenia is a member of the International Standardization Organization (ISO) since 1997
(www.sarm.am).
Armenia has notified its main legislation regulating its national metrology, standardization, and
conformity assessment systems. The Law on Ensuring Uniformity of Measurement, adopted on
26 May 2004, regulates the relationship between governmental bodies and private enterprises,
and defines the processes of metrological testing and calibration. The Law on Standardization,
adopted on 26 May 2004, regulates the principles of development and application of technical
regulations and normative documents on standardization. The Law on Conformity Assessment,
adopted on 26 May 2004, defines the legal basis and procedures of licensing of those who
participate in the process of conformity assessment.
In 1996, Armenia concluded an agreement on mutual recognition of certificates and
cooperation in the sphere of standardization, metrology, and certification with Ukraine.
Armenia also signed similar agreements with Belarus, Bulgaria, Georgia, Iran, Kazakhstan,
Kyrgyz Republic, Moldova, Russian Federation, and Tajikistan. In addition, Armenia has simple
cooperation agreements on issues related to standards and technical regulations with China,
India, and Slovakia.
As in other trade policy areas, Armenia is working closely with the European Commission to
bring its regulatory and standards' systems into conformity with the EU system. In 2007, for
example, Armenia became a member of the European Committee for Standardization.
According to the European Commission, Armenia has made significant progress in the last few
years with respect to the harmonization of TBT (Technical Barriers to Trade) legislation;
however more needs to be done to improve also the TBT-related infrastructure.

The Testing Laboratory of the SARM carries out tests with the purpose of attestation, if
requested by private persons or if ordered by public bodies. In addition, there are around 60
accredited testing laboratories in Armenia.

Product certification can be compulsory or voluntary. The Law on Conformity Assessment
provides that compulsory assessment should be implemented in accordance with the
requirements of specific technical regulations. Compulsory certification activities are
coordinated by the Ministry of Economy, which is responsible for accrediting certification
bodies. Certification is conducted by the 19 accredited certification bodies.
Decree of the Government of Armenia (No. 976, 29 August 2008) on the Mandatory Conformity
Assessment of Products and Services, lists the products subject to compulsory conformity
assessment and defines their respective requirements. The number of products was reduced
from 65 in 2003 to 17 in 2009; the list includes fish and fish products, vegetable oils, bread and
bakery products, toys, radio equipment, and firearms. Certificates are issued based on sample
testing, analysis of production systems, quality system certification, or supplier declaration
depending on the specific certification. Mandatory certification procedures, as well as fees
imposed, are the same for imported and domestically produced goods.
In the specific case of pharmaceutical products, both domestic and foreign firms require import
permission from the Ministry of Health of the RA, which must be preceded by an application for
a license to perform pharmaceutical activities in general. According to the authorities, the
procedure of granting import permission is not discretionary and is aimed at verifying the
compliance of the medicines with technical regulations, as well as their quality; decisions must
be made within ten days of receipt of an application. Permission to import is not transferable
ARMENIA


among importers. Imported pharmaceutical products, like domestic medicines, must be
registered with the Ministry of Health of the RA; veterinary vaccines and serums must be
registered with the Ministry of Agriculture of the RA
11
.

Taxation- clearing, VAT

Main taxes in Armenia are:

Type Rate

Profit Tax (corporate income tax) 20%

Income Tax (personal income tax) 10-20%

Value Added Tax 20%

Other taxes and obligatory payments :

Property tax; excise tax (oil, spirits, wine,
beer, etc.); land tax; social security
payments.

Value Added Tax (VAT)

The Value Added Tax (VAT) levied on value of goods imported to Armenia by the Import for
Free Turnover customs regime. VAT on goods imported to the domestic territory of Armenia
shall be calculated and charged by customs authorities at the border of the Republic of
Armenia, except:
Goods imported by organizations and individual entrepreneurs, included in a statutory
list, the import customs duty rate that is set to 0% and are not subject to excise tax;
Goods supplied by foreign states, international intergovernmental organizations,
international, foreign and public (including charities), religious and other organizations
of the Republic of Armenia of a similar nature, individual philanthropists in programs of
humanitarian aid and charity programs;
Goods exported from the Republic of Armenia.
For goods imported to Armenia are liable to VAT at the time of importation, is calculated on
the total sum of the customs value of the goods, customs duty and excise tax. The current VAT
rate is 20%.
For goods importing to Armenia calculation and collection of VAT by customs authorities
justified with customs declarations and payment documents filled in for custom clearance.
Customs Valuation

Armenia is a member of the World Customs Organization and uses the transaction value method
of customs valuation.
To determine the customs value is taken as the basis of transaction price (in fact, the amount
paid or the amount to be paid for the goods). Customs value of goods determined in accordance
with the Customs Code of the Republic of Armenia, which meet the standards of the Agreement
on customs valuation of goods WTO (GATT Article VII).
Payment terms

Customs formalities should take 10 days. Payments must be paid within 3 days after the
customs formalities, however not later than 10 days after filling the transfer list. Customs
charges may be paid through bank branches located in the customs office.

11
Scientific Centre of Drug and Medical Technology Expertise online information, "Medicines Registration".
/http://www.pharm.am/
ARMENIA


In case of late payments of the customs duties exceeding the stipulated periods a penalty shall
be levied from the payer in the amount of 0.2 % of the overdue payment of the customs duties
for every day of the delay.
Customs user fees are mandatory payments levied on behalf of the State Budget pursuant to the
procedure and in the amounts stipulated by Customs Code.
Origin rule

According to 158 Article of Customs Code of the RA as a country of origin of the goods shall be
deemed the country, where the goods have been produced entirely or undergone sufficient
processing.

It shall be obligatory to present origin country certificate with the purpose to apply privileges
defined by the international contracts (agreements) to the goods transported through the RA
Customs border. The absence of origin country certificate shall not be basis to forbid
transportation of goods through the RA Customs border.
The Chamber of Commerce and Industry of RA
12
is the authorized body responsible for issuing
Certificates of the country of origin of goods. The mentioned process is regulated by a number
of normative documents. The process of certification is carried out on the basis of business
organization's application and embraces the following two parts: expertise and issue of the
certificate of origin. The Expertise is conducted by the Certification Department of the
Chamber of Commerce and Industry by "Armexpertiza" LLC and the Certificate of Origin is
issued on the basis of the Examination Act. At the moment, it is possible to present all required
documents for acquiring certificate of origin also by the e-mail: havastagir@armcci.am.
Marketing aspects
a) Distribution and Sales Channels
Armenias domestic distribution channels are adequate for the countrys small size, population,
and market. The main storage facilities and wholesale companies are based in the capital
Yerevan, the hub for domestic distribution. Retail and wholesale operations are often
combined. Brand name recognition depends on the type of product and the Armenian public
tends to give loyalty easily to established brands. Armenian and foreign freight-forwarding
companies have established a reliable system for transporting goods to and from Armenia.
While Armenia's two closed borders limit export-import routes and raise the cost of
transportation, Armenian producers, importers, and freight forwarders have adopted reliable,
but expensive, transport routes through Georgia. Goods from or bound for Europe and beyond
enter or exit the Georgian ports of Poti and Batumi on the Black Sea coast. The overland trip
between these posts and Yerevan often constitutes the most expensive part of the journey.

b) Electronic Commerce
E-commerce is underdeveloped in Armenia because of limited use of the Internet and credit
cards, as well as computer network security issues. Inconsistent and inequitable application of
customs duties is yet another impediment to e-commerce development. Use of e-mail for
business communication, however, is common in Yerevan and some businesses have recently
initiated on-line ordering and other e-commerce techniques.

c) Trade Promotion and Advertising
Radio, television and print media are widely available for advertisers, and creative businesses
have adopted more modern means, such as painting the sides of public buses. Glass stands with
flipping ad posters and billboards have become a common method of advertising. Television
holds the majority of the advertising industry's market share. Advertising can be arranged
through local advertising agencies, or directly with TV stations, radio stations, and the press.

12
www.armcci.am
ARMENIA


In 1996, Armenia adopted the Law On Advertising that sets advertising standards and principles,
including a mandate making Armenian the official language for advertising. Armenian text may
be accompanied by text in a foreign language, provided the latter appears in smaller script.
This provision does not apply to newspapers, special publications, trademarks, etc., that are
issued or printed in foreign languages. An advertisement may be copyrighted under Armenian
law.
d) Pricing
Prices are largely determined by supply and demand. When making pricing decisions, market
entrants should consider:
The populations low purchasing power;
The high cost of transportation;
Value-added tax of 20 %;
The lack of competition or locally-manufactured products in many categories.
The market in Armenia is considerably price sensitive. The public is likely to recognize small
price differences among various brands.

e) Sales Service/Customer Support
The Law On Consumer Protection was adopted in 2001 on June 26. This law regulates the
relationship between consumers and producers (performers, sellers) on the sale of goods
(works, services), establishes the rights of consumers to purchase goods (services) of good
quality and safe for life and health of consumers receive information about goods (works,
services) and their producer (executor, salesperson), state and social protection of their
interests, but also defines a mechanism for enforcing such rights. In Armenia the concept of
customer support for products and services is not well developed. Most stores, including brand
name operations, are reluctant to allow returns of purchased items. There are an increasing
number of companies, however, that provide explicit warranty services and consulting follow-
up on the services rendered. Phone-based sales service or customer support is not common. In
most cases, customers need to approach the vendor in person.

ARMENIA




A wide range of business financing products and services to individual as well as corporate
customers are available in Armenia, including loans, project financing, equity financing,
leasing, factoring, guarantees, subsidies, etc.
Financial system reforms of the recent years focused on banking sector development and
banking supervision, capital markets development, micro-finance, SME development,
accounting and legal framework. The government has outlined a program to increase financial
intermediation by establishing deposit insurance, thereby building the publics trust and
confidence in the system and resulting in the attraction of more savings deposits. In addition,
with the support of the government a number of SME lending facilities have been initiated
recently to boost lending to the private sector. Through these facilities the government has
made available much-needed resources in local currency for lending to the private sector to
weather the effect of the financial and economic crisis. The international community renders
significant assistance to the banking sector.
The assets of the Armenian banking system increased by 15.9% (1,560 billion AMD as of
31.12.2010) and capitalization by about 14.5% (318.9 billion AMD as of 31.12.2010) during 2010.
The net profit of Armenian banks reached 30.2 billion AMD.
The banking system is mostly regulated by three laws: the Law On the Central Bank of the
Republic of Armenia, Law On Banks and Banking Activity and the Law On Bankruptcy of
Banks, Credit Organizations, Investment Companies, Investments Funds Managers and
Insurance Companies.
The number of services provided by the banks has increased significantly over the past few
years. In addition, the financial sector is developing with the establishment of nonbanking
financial institutions such as credit organizations, insurance companies, investment funds and
brokerage companies, which constitute an additional driving force towards aiding foreign
investments. Leasing is also very powerful tool for trade facilitation. A few Armenian Banks and
credit organizations are specialized on leasing deals, including ACBA Leasing Credit
Organization, AGRO Lizing, Farmcredit, etc.
The biggest player of the Armenian financial market is banking sector that accounts for about
92 percent of assets of the financial system.
As of June 30 2011, the Armenian financial market numbered 21 commercial banks (with 418
branch offices.

As at June 30 2011, other players of the Armenian financial market included:
31 credit organizations (with 60 branch offices)
9 insurance companies and 4 insurance brokerage firms
119 pawnshops
236 exchange offices
1 legal entity currency dealers
10 money transferring companies ('HayPost' CJSC, 'Armenian Express' CJSC, 'Depi Toun'
LTD) and 6 organization dealing with processing and clearing of payment instruments
and payment documents ('Armenian Card' CJSC)
8 investment companies, NASDAQ OMX Armenia and Armenian Central depositary
15 reporting issuers
www.banks.am, www.cba.am, www.finport.am,
Note: USD or EUR equivalent of amounts indicated in AMD may be calculated using the official
exchange rate established by the RA Central Bank (www.cba.am)

ARMENIA


Public sources national, international

Private Banks limit their lending operations to short-term loans in local currency at high rates
of interest (18-24%). These banks usually demand collateral of adequate or higher market value
(houses, cars, gold, etc.). Project financing is very limited unless implemented through
subsidized loan programs funded either by Government of Armenia or by foreign governments
and multilateral financial institutions, and aimed at private business development. Even semi-
guaranteed loans tend to have annual interest rates of up to 15-16%.

National Programs

Government of the RA has initiated the implementation of the anti-crisis program since 2008.
The main purpose of the anti-crisis program was to ensure the macroeconomic and financial
sustainability, identification and introduction of additional incentives for economic growth. One
of the main steps on the way to achieve aforementioned goals was the provision of temporary
support to entrepreneurship, particularly via direct crediting, provision of loan guarantees,
subsidies and equity financing. Support has been provided through financial support programs of
the Fund SME Development National Center of Armenia (Start-up credits, Loan Guarantees,
Equity financing) and "SME Investments" Universal Credit Organization (direct crediting and
equity financing). Detailed information on financing procedure, terms and conditions could be
found following the links http://www.smednc.am , http://www.smeinvest.am.

With the decision of the Armenian government additional recourses have been provided in
spring 2011 to the Ministry of Finance for subsidizing the loans provided to the sphere of
agriculture. Agricultural subsidized loans are being provided in Armenian dram by 10% of annual
interest rate.

In the framework of the Rural finance component of the Farmer Market Access Program in
Armenia the Fund for Rural Economic Development in Armenia (FREDA) was established on
January 8, 2009, which is a joint activity between the Government of Armenia and the
International Fund for Agricultural Development (IFAD). The Fund carries its operations since
September 1, 2009. FREDA is the first investment fund in Armenia with a rural focus that
makes investments in rural SMEs by providing innovative financing instruments and capital and
management assistance, thus enabling the enterprises to improve their competitive position
and thus contribute to accelerate rural development. FREDAs overall objective is as to
alleviate poverty through the economic development of rural areas in Armenia. FREDA is
governed by the Board of Trustees headed by the Prime Minister of the Republic of Armenia.
(http://www.freda.am).

International Programs
The following are the key donors in Armenia active in the financial sector: EBRD, IMF, World
Bank, IFC, KfW and USAID. The IMF has largely focused on macroeconomic issues of critical
importance to stability. This has mainly comprised monetary and fiscal matters, along with
statistical work. The World Bank has been active with structural reform in Armenia. This has
included legal reform, efforts to strengthen the business environment, public-private
partnerships in the energy and infrastructure fields, and initial improvements in pension
administration. Active projects of relevance to financial sector reform include agricultural
reform, municipal development, title registration, judicial reform, irrigation development, and
an enterprise incubator project. The International Finance Corporation (IFC) finances project
investments and insurance in Armenia. IFCs priorities in Armenia include supporting the
development of small and medium enterprises to create employment opportunities expanding
access to finance, promoting energy efficiency to increase the competitiveness of local
companies and mitigate climate change, and helping banks and companies overcome the
consequences of the global financial crisis
(http://www.ifc.org). The European Bank for Reconstruction and Development (EBRD) also
actively supports public and private sector development in Armenia. The EBRD offers a wide
ARMENIA


range of financial instruments and takes a flexible approach in structuring its financial
products. The principal forms of direct financing that the EBRD may offer are loans, equity and
guarantees (http://www.ebrd.com). The BAS Programme, administered by the TurnAround
Management (TAM) and Business Advisory Services (BAS) Programme Team at the EBRD, was
established in 1995 to support the continuing development of private enterprises. The
Programme works directly with enterprises to define their consultancy needs and to specify the
terms of reference for services to be provided by local consultants. EBRD BAS Programme for
Armenia offers a wide range of professional consulting services to eligible SME's, paying up to
50% of consultancy costs for approved projects (http://www.bas.am).

Research and Innovation

Supporting Exceptional Armenian Science

The Science and Technology Entrepreneurship Program (STEP) Business Partnership Grants
competition (BPG) has been initiated by CRDF Global, the Enterprise Incubator Foundation (EIF)
and the Ministry of Economy of the Republic of Armenia promoting research and development
partnerships between companies (Company Team) and teams of scientists (Science Team) to
develop new commercial opportunities of economic benefit to both parties. STEP BPG projects
must have research and development (R&D) as their core task and must include a preliminary
market assessment; a customer needs analysis, and business development components. STEP
BPG projects are limited to a maximum of 12 months. Funds for projects are provided by the
CRDF Global and the Ministry of Economy of the Republic of Armenia and are limited to
$15,000. All funds must be used for Science Team expenses. In support of the goals of the
Business Partnership Grant competition to increase the number of linkages between the science
and business sectors, preference will be given to newly-formed science- business partnerships.
Since 1996, CRDF has awarded 141 grants to 560 Armenian scientists, including 163 former
weapons researchersand has committed more than $5.9 million. Additionally, the Armenian
government has committed more than $172 thousand to further support these projects.

Eurasia Partnership Foundation in Armenia

Eurasia Partnership Foundation through its Open Door Grant Program supports innovative and
sometimes risky pilot projects and testing new ideas on a small scale. When projects supported
through the Open Door Grant Program demonstrate success, the Foundation can help to
replicate them on a larger scale or in different geographic areas.
The Foundation accepts and reviews unsolicited grant proposals on a rolling basis. Any
organization registered in Armenia (or registered in another country and working in partnership
with an Armenian organization) is eligible to apply. There are no deadlines for Open Door grant
applications.
Current programmatic priorities are:
Creating Opportunities for Civic and Economic Participation
Building Capacity for Evidence-Based Research to Improve Policy-Making
Fostering a Culture of Corporate and Community Philanthropy
Cross-Border Cooperation
http://www.epfound.am
EU 7
th
Framework Program for research and Technological Development

The Seventh Framework Programme (FP7) bundles all research-related EU initiatives together
under a common roof playing a crucial role in reaching the goals of growth, competitiveness
and employment; along with a new Competitiveness and Innovation Framework Programme
(CIP), Education and Training programmes, and Structural and Cohesion Funds for regional
convergence and competitiveness. FP7 National Information Point (NIP) in Armenia was
established at the National Academy of Sciences of RA. The main objective of the NIP is
promoting more active participation of Armenian Academic institutes, universities and branch
research institutions and SMEs in European research programmes through wider dissemination of
ARMENIA


information about European Research Area (ERA) and Framework Programmes and providing
consultancy to Armenian research community (http://nip.sci.am).

All banking transactions are possible in Armenia (opening a bank account, banking transfers,
currency exchange, collection of liquid assets, letters of credit, bank guarantees, credit card
services, check books), even if some of them are less frequent than others. The majority of the
banks, for instance, offer checks issuance services, but this method of payment is hardly ever
used in the country. Operations with credit cards are more frequent, even though this system
of payment is not yet widely spread. All banks offer their own credit cards and ATMs. More and
more shops are accepting payments by credit cards.
As of the end of June 2011, the following 21 commercial banks are operating in the Republic of
Armenia (http://www.banks.am/am).
The capital of the Armenian commercial banks significantly increased in recent years, with:
Total equity amounted to AMD 339.7 billion (30.06.2011)
Total assets amounted to AMD 1trillion 759 billion (30.06.2011)
Total liabilities amounted to AMD 1trillion 520 billion (30.06.2011)
Business Lending
Many banks extend the business loans to traders in the form of short-term (usually from 3
months to 1 year) working capital loans, as well as longer 1-3 year loans for capital
expenditures. The banks working with international financial institutions such as KFW-German
Armenian Fund, EBRD Lending Program, Eurasia Partnership Foundation, etc. are able to
provide up to 5 years or in some cases even longer term loans. Those credits in general cover
the needs of enterprises involved in export/import businesses as well, by providing them
flexible terms and conditions. The banks use various lending instruments such as credit lines,
roll over credits, etc. to match the companies business cycles and existing trade arrangements
to repayment schedules. The annual interest rates vary between 12%-24%, with the max loan
size of 200,000,000.00 AMD, in some cases even more.
Specific Export Credit is not available in Armenia, thus bank loans at high interest rates or own
resources are used to finance exports. Trade Finance in Armenia is provided by commercial
banks in form of documentary credits (letters of credit) and bank guarantees. These services
are provided by majority of Armenian banks.
Multinational companies present in Armenia use intercompany financing methods whereby their
parent company or a sister affiliate provides an intercompany loan at a favorable interest rate.
Often multinational companies can raise working capital without applying to the local financial
institutions for credit.
The commercial credit and trade facilities provided by the banks generally require adequate
security cover to be provided by the customer. Security is not the primary factor for the
assessment of a proposal; however the availability of adequate collateral securing the
requested commercial credit and trade facilities is necessary.
It is worth mentioning that all Armenian banks are audited every year by an authorized
independent auditing company with international exposure. Anyone may legally open foreign
currency accounts in commercial banks. Foreign currency deposits may be made in these
accounts, without any restrictions to withdraw. Companies may convert currency without any
limitation. They can open foreign currency accounts in Armenian or foreign banks. There are no
limits on the transfer of funds through banks.
According to the Doing Business 2012 report globally, Armenia stands at 40 in the ranking of 183
economies on the ease of getting credit.

ARMENIA


Ranking of Armenia in Getting Credit - Compared to good practice and selected economies:

ARMENIA


ARMENIA




Historically, Armenia has always been notable for its craftsmen and artisans, and, since
Armenia has had to develop new sectors of its economy since the dissolution of the Soviet
Union, skilled labor has made a resurgence with the creation of precious stone processing,
jewelry-making, and information and communication technology.
Armenian women and men have long expressed their creativity through exquisite wood carving,
fine metal work, and complex, high-quality needle laces, knitting, crochet, and embroidered
textiles intended for household use, everyday clothing, and traditional costumes. Many designs
link artisans to family regions where crafts were often village-based. Armenians consider
knowledge of needle art techniques a heritage of critical importance for successive generations
of women.
Enhancing the competence through innovation, especially technological
innovation and new business schemes

Using intellectual potential, capabilities and achievements of scientific-technical complex of
the Republic of Armenia, as well as introduction into the economy of scientific and
technological activities considered by the Government of the Republic of Armenia as one of the
main directions of economic development. At the same time the most important task is
promotion of high performance knowledge-based economy to enhance the competitiveness of
domestic products at world markets.
The most effective way to develop the real sector of the economy of the Republic of Armenia is
creation of a national innovation system. To implement the Concept of plants nominated by the
Government of the Republic of Armenia, the Program on development of innovative systems for
the period 2005-2010 in the Republic of Armenia has been adopted. Targeted implementation
of complex measures presented in the Program, is the basis of the national innovation
system. In 2006, it was adopted the Law of the Republic of Armenia "On State Support for
Innovation", which defines the basis of formation and implementation of state innovation
policy, the mode of state support to innovation activity. In 2007, the decision Government of
the Republic of Armenia adopted procedure of financing of innovative projects on a competitive
basis and procedure for implementing programs to support innovation.
The scientific-technical sphere of the Ministry of Economy of the RA represents multiple-
discipline system. It incorporates about 20 scientific and scientific-technical organizations,
which include joint-stock companies and the state noncommercial organizations that carried
out the fundamental, applied and technological investigations, research-development works (
National Center of Innovation and Entrepreneurship, Gyumri Technopark, TUMO center, etc).

Lifelong learning
The legislative and political frameworks of Adult Education and Learning are reflected in the
number of legislative documents of the Republic of Armenia (RA).

The Law on Education of the Republic of Armenia was adopted in 1999 and contains the
basic, framework approaches and principles of the management, financing and methodological
support of the whole field of education.

Article 26 of the above mentioned Law concerns the issues of additional education, creating
certain frameworks for adult education:

1. Additional educational programs are implemented with a purpose to satisfy the needs of the
citizens and the public in education. Within the framework of each level of professional
ARMENIA


education the main objective of additional education is the continuous growth of the
qualification level of a person.

2. Additional education is provided by educational facilities of general, vocational and
additional education, as well as through individual pedagogical activity, the regulations of
which are established by the Government of the Republic of Armenia.

One of the strategy tasks for achieving that goal was Lifelong education, which includes
adjustment or updating of any kind of the knowledge or skills of the workforce, required from
the employees in order to keep their job or from unemployed to find a job. Workforce shall
have an opportunity to learn during his/her whole working life, upon his/her desire and/or
according to the requirements of the job market.
The priority goals of Adult Education in the Republic of Armenia are defined by the RA
Concept Paper and the Strategy on Adult Education and the Concept Paper on Non
formal Education. According to these documents: The goal of Adult Education is to provide
the citizens, according to their abilities and health conditions, with new professions and jobs
as well as to facilitate their ability to get adjusted to social conditions.

Under the conditions of absence of the Law on Adult Education in the Republic of Armenia, at
present, a certain system of state regulation of that field is also missing. However, a number of
Ministries (RA Ministry of Education and Science, the Ministries of Justice, Health Care, Culture
etc.) and agencies (RA Police, Customs, Tax and other services) organize training and quality
raising courses for the specialists, working in their respective fields as well as for unemployed
and job seekers organized by the RA Ministry of Labour and Social Affairs.

Corporate Responsibility
According to Decree of the Government of the Republic of Armenia 97-N as of 21
January, 2010, the Project was approved on Corporative Governance Code adoption in
Armenia. The objective of this Project is to promote high standards in regulation of corporate
entities and protection of rights of shareholders. The Project aims to increase corporate
governance standards applied by Armenian companies and ultimately increase the
attractiveness of the Armenian market. To this extent the Project is resulted in the elaboration
and introduction of a set of corporate rules and procedures that lay the ground for a fair and
flexible corporate policy and business administration, including improvement of relations
between companies and their shareholders and creditors.
The application of good Corporate Governance Practices will help Armenian companies to have
access to foreign capital and gain the trust of domestic and foreign investors.
The Armenian Corporate Governance Principles are recommendations to all types of companies,
especially for joint stock companies and those which are willing go public.
The Armenian Corporate Governance Code, in addition to the national legislation, is an effort
to improve corporate governance at the national level. The basic principles of the Code are
recommendations for the companies in order to ensure that the bases of effective corporate
governance are covered. The code is intended to give generally accepted recommendations on
the principles of good Corporate Governance.

ARMENIA


LOCAL RESOURCES FOR CROSS BORDER COOPERATION


Despite its small size, Armenias economic structure is very diversified. Contrary to other
economies in the region, this condition shielding Armenia from dependency on one or two
major sectors and negative global trends. The Armenian government promotes an equitable
treatment for all sectors while continuously improving the overall business climate.
Armenia is strong in many sectors. The main priority sectors of cross border interest are
information and communication technologies (ICT), tourism, mining, food products, Jewelry,
Textile and Clothing.
The main trading partners of Armenia are EU, CIS countries and USA.
The EU has become the main trade partner of Armenia since 2004 comprising 48.1% of overall
exports and 27.4% of overall imports of Armenia for 2010.

Share of main trade partners by countries in the exports of the Republic of Armenia
(2006-2010)

2006 2007 2008 2009 2010
Russia 12.3% 17.5% 19.7% 15.1% 15.4%
Germany 15.0% 14.8% 17.4% 16.2% 12.7%
Netherlands 12.9% 13.5% 12.4% 7.3% 9.5%
Belgium 11.0% 8.7% 8.5% 6.6% 7.0%
Israel 8.9% 2.3% 0.5% 0.1% 0.4%
Switzerland 7.3% 4.3% 1.1% 3.5% 1.6%
USA 6.6% 4.5% 5.0% 9.4% 7.9%
Georgia 5.5% 7.6% 7.7% 7.4% 4.7%
Iran 3.0% 3.3% 2.4% 4.7% 8.1%
Italy 2.9% 2.6% 2.6% 1.0% 0.5%
Spain 2.7% 1.4% 1.1% 1.1% 1.5%
Bulgaria 0.1% 4.1% 5.6% 8.5% 15.0%
Other 11.8% 15.4% 16.0% 19.1% 15.7%

Share of main trade partners by countries in the imports of the Republic of Armenia
(2006-2010)

2006 2007 2008 2009 2010
Russia 13.9% 22.0% 19.2% 23.9% 22.3%
Ukraine 7.4% 7.7% 7.1% 6.1% 6.1%
Kazakhstan 7.3% 0.5% 0.4% 0.1% 0.3%
Germany 6.6% 6.8% 5.8% 5.3% 5.6%
Belgium 5.5% 3.5% 2.1% 1.8% 1.9%
Iran 5.2% 4.3% 4.6% 4.9% 5.3%
China 5.1% 6.0% 8.6% 8.6% 10.8%
USA 4.8% 4.4% 4.9% 3.6% 3.0%
Turkey 4.4% 4.0% 6.1% 5.3% 5.6%
Israel 4.0% 1.1% 0.6% 0.3% 0.4%
Italy 4.0% 3.5% 3.6% 3.4% 3.3%
Switzerland 0.9% 0.7% 0.4% 3.7% 1.9%
France 3.2% 4.6% 2.9% 2.2% 2.0%
Other 27.7% 30.9% 33.7% 30.8% 31.5%

ARMENIA


Export and Import by principal commodity groups are presented below
13
:

Export of the Republic of Armenia by principal commodity groups (2006-2009)

Import of the Republic of Armenia by principal commodity groups (2006-2009)

Local products and services of cross border interest
Information Technologies
Armenia is one of the leading information technology nations among the neighboring CIS and
Middle East countries. The growth of the present-day IT industry in Armenia can be traced back
to the Soviet era during which time Armenia was a key science, R&D, and high-tech
manufacturing center of the former USSR. At the peak of its growth in 1987, the science and
technology sector in Armenia employed, according to various estimates, around 100,000
specialists. Independence in 1991 opened up new opportunities for the industry and particularly
for entrepreneurs and IT professionals. The focus of the industry shifted from major
manufacturing operations to the software and services segment, which has witnessed
substantial growth during the period from 1998-2008. Nowadays the Armenian software and IT
services sector is one of the most successful and fastest growing industries in Armenia and its
contribution to GDP is comparable to countries like Germany and India. Armenia can

13
Statistical Yearbook of Armenia 2010, National Statistical Service of the RA http://www.armstat.am
0%
20%
40%
60%
80%
100%
2006 2007 2008 2009
other
textile
ready food product
equipments
mineral products
non - precious metals
and things of them
precious stones and
metals, things
0%
20%
40%
60%
80%
100%
2006 2007 2008 2009
other
non - precious metals
and things of them
ready food product
chemicals
products of vegatable
origine
precious stones and
metals, things of them
equipments
mineral products
ARMENIA


competitively satisfy the needs of IT companies seeking access to a highly qualified talent pool
of IT specialists at very cost competitive rates.
In recent years, the sector has witnessed major inflow of foreign investors who have located in
Armenia to capitalize on the young and highly qualified workforce. Around 62% of the industrys
output is exported to over 20 countries, mainly USA, Europe, and NIS. The major specializations
include embedded software and semiconductor design, custom software development and
outsourcing, financial applications, multimedia design, Internet applications, web
development, MIS and system integration.

Food & Drinks
Armenia has a fast growing food processing sector with great export potential, based on
domestic ecologically clean agro-products and excellent climatic conditions. Today, the
Agriculture sector is the largest employer in the country and accounts for approximately a 17%
of GDP.
Fruits and vegetables grown in Armenia are distinguished by taste and absence of chemical
fertilizers. Grain crops, vegetables and fruits including grapes, figs, pomegranates, apricots,
peaches, potatoes, sugar beets, tobacco, cotton, specific oils (such as geranium), peppermint,
and special teas are cultivated in Armenia. The proof of the quality of Armenian foodstuff is
shown by the growth of exports.
Since 1995 food processing has been one of the leading industrial sectors. Food processing
enterprises mainly specialize in fruit and vegetable canning (fruit juices, jams, tomato paste,
marinade, child nutrition etc); beverages (wines, beer, champagne, mineral water, etc.); meat
and meat products (smoked meat, sausages etc.); milk and other dairy products (different
types of cheese, sour-cream, matsun (yogurt), curd, ice-cream, etc.); flour and bread; tobacco
and cigarettes. Large growth has been recorded in fishing, sausages, beverages, and
nonalcoholic drinks.
Fast growth in the agricultural sector has led to import substitution by domestic production
during the last years.
Investing in food processing will give foreign investors the opportunity to enter the CIS market,
and to enjoy the high quality - low cost - high profit triangle.
Even in Soviet times Armenian cognac was well known in the world, and it was Churchills
favorite drink. In 1998, the Yerevan Brandy Company (YBC) became part of the International
Group Pernod Ricard. YBC brandies are exported to more than 20 foreign countries and are well
recognized not only in Russia, but also in the USA, Canada, Japan, France, Germany, Israel, and
the Baltic States.
Jewellery and Diamonds
Jewellery and diamond processing are considered a very attractive field for investment in
Armenia based on the existence of skillful diamond cutters with competitive wage rates,
modern equipment and tax privileges (no taxes on the import of raw materials and on the
export of finished products) in Armenia.
Precious and semi-precious stones are one of the main exporting products constituting about
16% of all exports as of 2009. Large proportions of these exports are polished diamonds,
imported into Armenia in their rough state for finishing, thus taking advantage of Armenia's
skilled jewelers with competitive labor costs. Over the past years, Armenia has become a
sparkling participant in the diamond industry. There is even a finishing method known as the
Armenian cut. Currently Armenia specializes in diamond cutting and polishing.
Diamond processing is a predominant part of this sector's activities. Nevertheless, jewelry,
including gold accessories, golden wristwatches, jewelry articles and processing of semi-
precious stones are also important and have a long tradition in Armenia.

Tourism
Armenia is one of the most ancient countries in the world existing since the times of Babylon,
Assyria and Egypt and once counted among the great powers. Greek Historians first referred to
ARMENIA


the land of Armenia about 3000 years ago. Armenia was the first country to adopt Christianity
as the state religion in 301 AD.
Armenia is an emerging market for most of the trends in tourism industry, especially spa
resorts, agro tourism, organic hotels, etc.
The key benefits of Armenia as a tourism sector investment location are: Excellent Investment
and Business Climate, New and Developing Niches in Tourism Sector, Outstanding Sanative
Factors of Wide Range of Minerals Waters, Diversified Ecosystem, Unpolluted and Beautiful
Nature, Growth of the Number of Incoming Tourists.
Foreigners call Armenia The Museum under the Open Sky. There are more than 5,000
historical and cultural heritage monuments in the country including the best examples of early
Christian Art.
One of the key facts to indicate tourism sector development potential is an annual number of
incoming tourists. During the last decade the number of incoming tourists in Armenia was
increasing by 20% in average. In 2009 it constituted 575,281 tourists, which is approximately 15-
20% of the countrys population.
Armenia is also famous for its wide range of mineral water springs all over the country. 700 of
them are studied to the present moment. They differ in their gas/chemical composition and
temperature varies from 4C at Gridzor to 83C at Sevaberd. The most famous are mineral
water springs are Jermuk, Bjni, Arzni, Dilijan, Sevan and Hrazdan where spa resorts and rest
houses are situated. The bottled waters are also exported.
Tourism sector has large opportunities for development and considered as one of the priority
sectors by the Government of Armenia.
Mining
Armenia possesses important reserves of copper, molybdenum, lead, zinc, iron and gold. It is
also rich in construction stones (tuff, marble, granite, basalt, lime-stone, etc.), semi precious
stones (obsidian, agate, jasper, etc.) and other materials such as bentonite, perlite, zeolit and
diatomite. A major part of mining production is exported. These products ranked third in total
Armenian exports (11%) in 2000 and 2001.
There are plans to implement a program for reviving and developing the mining industry, with
the objective of raising the extraction of cooper and molybdenum, increasing the degree of
processing and exporting semi-finished products instead of raw materials.
The copper, copper-polymetal and copper-molybdenum deposits in the north of Armenia
contain about 475 million tonnes of mineable ore. The largest producers of copper and
molybdenum concentrates are the Zangezur and Agarak Copper-Molybdenum Complexes,
followed by the Kapan and Akhtala Mountain-Enrichment Complexes.
Armenia is the biggest manufacturer of aluminum foil in the region, as well as the largest
producer of aluminum household foil and related products in the Middle and Near East.

TURKEY

TURKEY

TURKEY

TURKEY

COUNTRY PROFILE

General presentation of Turkey

Official name, flag and coat of arms
Republic of Turkey

Flag: Coat of arms:

Legal system
Turkey is a republican parliamentary democracy and constitutional state. It is also the only
secular democracy where the majority of the population is Muslim.
The Turkish Grand National Assembly (TGNA) forms the unicameral legislature. There are
550 deputies elected every 5 years to the TGNA, but the parliament can decide to call
elections before then, or postpone elections for up to one year in case of war. Elections are
single stage and use proportional representation. The dHondt system is applied to share
deputies among the parties. Every administrative province receives one deputy from the total
of 550, and then the total number of remaining deputies are divided and distributed
according to size of the population. Provinces with between 1 and 18 deputies have one
election area, those with between 19 and 35 have two areas, and those provinces with more
than 36 deputies have three areas. Civil servants, judges and prosecutors, members of
Turkish armed forces and secondary education students are ineligible to join political parties.
A party must also have at least 10 percent of the votes to enter the parliament.

Geographical location
Turkey is situated in Anatolia and the Balkans, bordering the Black Sea, between Bulgaria and
Georgia, and bordering the Aegean Sea and the Mediterranean Sea, between Greece and
Syria. It is located in the northern hemisphere between the 36 - 42 northern parallel and
the 26 - 45 eastern meridian.

TURKEY

Frontiers
The territory of Turkey is more than 1,600 kilometers long and 800 km wide, with a roughly
rectangular shape. Turkey has land borders of 269 km with Bulgaria, 203 km with Greece, 276
km with Georgia, 325 km with Armenia, 18 km with Azerbaijan (Nahjivan), 529 km. with Iran,
378 km with Iraq and 877 km with Syria.

Area
Turkey's area, including lakes, occupies 783,562 square kilometers (300,948 sq. mi), of which
755,688 square kilometers (291,773 sq. mi) are in Southwest Asia and 23,764 square
kilometers (9,174 sq. mi) in Europe. Turkey is the world's 37th-largest country in terms of
area. The country is encircled by seas on three sides: the Aegean Sea to the west, the Black
Sea to the north and the Mediterranean to the south. Turkey also contains the Sea of
Marmara in the northwest.

Relief
Examination of Turkey's topographic structure on a physical map of the world shows clearly
the country's high elevation in comparison to its neighbours, half of the land area being
higher than 1000 meters and two thirds higher than 800 meters. Mountain ranges extend in an
east-west direction parallel to the north and south coasts, and these are a principal factor in
determining ecological conditions. The Asian part of the country, Anatolia, consists of a high
central plateau with narrow coastal plains, between the Krolu and Pontic mountain ranges
to the north and the Taurus Mountains to the south. Eastern Turkey has a more mountainous
landscape and is home to the sources of rivers such as the Euphrates, Tigris and Aras, and
contains Lake Van and Mount Ararat, Turkey's highest point at 5,165 metres (16,946 ft). Lake
Tuz, Turkey's third-largest lake, is a macroscopically visible feature in the middle of the
country. Examination of Turkey's topographic structure on a physical map of the world shows
clearly the country's high elevation in comparison to its neighbours, half of the land area
being higher than 1000 meters and two thirds higher than 800 meters. Mountain ranges
extend in an east-west direction parallel to the north and south coasts, and these are a
principal factor in determining ecological conditions. The highest mountain is Mount Ararat
with 5165 m. This is followed by Buzul Mountain (4116 m), Uludoruk (4135 m), Sphan
Mountain (4058 m), Erciyes Mountain (3917 m) and Small Mount Ararat (3896 m).

Waters
Anatolian peninsula covers a large area of Turkey, approximately 97% of the total area. It's
generally a high plateau covered with several high mountains and mountain ranges especially
in the east of the country. The existence of many valleys and high mountains, snow
TURKEY
precipitation and therefore its melting in the Spring, and the climate of different regions
favour the formation of lakes and rivers. Some of the important and big rivers of Turkey are:
- Euphrates (Firat in Turkish) is 2,800 km long, out of which 1,263 km is in Turkey. It
rises from Eastern Anatolia and ends in the Persian Gulf in Iraq after joining with the
Tigris at Shatt al-Arab. Please Click Here for more information.
- Tigris (Dicle in Turkish) is 1,900 km long, out of which 523 km is in Turkey. It rises
from the mountains near Elazig province and empties into the Persian Gulf in Basra
after joining with the Euphrates at Shatt al-Arab. Please Click Here for more
information.
- Kizilirmak, meaning Red river in Turkish, is 1,355 km long and is the longest river of
Turkey which rises and ends within the country.
- Yesilirmak, meaning Green river in Turkish, is approximately 519 km long. It rises
from Kse mountain in the north of Sivas, passes from Tokat, Amasya and Samsun
provinces, and empties into the Black Sea. Some of the dams built on Yesilirmak are;
Almus, Ataky, Hasan Ugurlu and Suat Ugurlu.
- Byk Menderes, is 584 km long and the largest river in the Aegean region. Its
headwaters are Kufi Suyu ve Banaz stream near Afyon province, passes from Usak and
Aydin provinces.
Most of the water from these rivers are used for the irrigation of the agricultural fields, but
most important of all for the hydroelectric energy with several dams built on them.

Climate
The coastal areas of Turkey bordering the Aegean Sea and the Mediterranean Sea have a
temperate Mediterranean climate, with hot, dry summers and mild to cool, wet winters. The
coastal areas of Turkey bordering the Black Sea have a temperate Oceanic climate with
warm, wet summers and cool to cold, wet winters. The Turkish Black Sea coast receives the
greatest amount of precipitation and is the only region of Turkey that receives high
precipitation throughout the year. The eastern part of that coast averages 2,500 millimetres
annually which is the highest precipitation in the country.
The coastal areas of Turkey bordering the Sea of Marmara (including Istanbul), which
connects the Aegean Sea and the Black Sea, have a transitional climate between a temperate
Mediterranean climate and a temperate Oceanic climate with warm to hot, moderately dry
summers and cool to cold, wet winters. Snow does occur on the coastal areas of the Sea of
Marmara and the Black Sea almost every winter, but it usually lies no more than a few days.
Snow on the other hand is rare in the coastal areas of the Aegean Sea and very rare in the
coastal areas of the Mediterranean Sea.
Conditions can be much harsher in the more arid interior. Mountains close to the coast
prevent Mediterranean influences from extending inland, giving the central Anatolian plateau
of the interior of Turkey a continental climate with sharply contrasting seasons.

Natural resources
As a result of the geological structure it is sitting upon, our country is one of the rare
countries in the world that can supply a significant portion of its own raw material
requirements thanks to the diversity of its minerals. It is ranked 28th in the world in terms of
total mining production and 10th in terms of the diversity of mines produced. Only 13 out of
the 90 types of minerals traded throughout the world have not so far been discovered in our
country. Our country is either rich or very rich in terms of the remaining 50 types of minerals
and has insufficient resources in terms of 27 types of minerals.
As far as reserves, Turkey is among the leading reserve-rich countries in the world starting
with boron, trona, bentonite, marble, feldspar, mangesite, limestone, pumice stone, perlite,
strontium and calcite.
There are nearly 3,500 known metallic and close to 2,000 industrial raw materials beds and
resources in Turkey. In addition there are more than 600 hot water springs and more than 140
geothermal energy fields that have been discovered.

Official language
Turkish is the official language of Turkey.
TURKEY

Time zone
Turkey is in the Eastern European Time Zone. Eastern European Standard Time (EET) is 2
hours ahead of Greenwich Mean Time (GMT+2).

Religion
Turkey is officially a secular country with no official religion since the constitutional
amendment in 1924. Islam is the largest religion of Turkey. Around 99.8% of the population is
registered as Muslim (mostly Sunni), followed by other religions as Christians (Oriental
Orthodoxy, Greek Orthodox and Armenian Apostolic) and Jews (Sephardi).

Currency
The Turkish currency is called Turkish Lira (TL 1), which was introduced, instead of New
Turkish Lira as from 1 January 2009. In addition, six digits were dropped from Turkish Lira
denominations as from 1 January 2005. On the other hand, together with the TL, Kurush (Kr),
which is a hundredth of TL 1, has become in use again as from 1 January 2005. The Turkish
Central Bank has issued notes of TL 1, TL 5, TL 10, TL 20, TL 50, TL 100 and TL 200. There
are also coins in circulation in denomination TL 1, Kr 50, Kr 25, Kr 10, Kr 5 and Kr 1.

Measuring system
The standard metric system has been accepted in 1931 within the law of Measurements and
Adjustments and being applied since 1933.

Administrative organisation
The foundation and principles of the Turkish government are based on Central Administration
and Local Administration concepts. Accordingly, the administrative structure of the Turkish
Republic is divided into two, namely `Central Administration and Local Administrative
Institutions.
Central administration
The organization of the Central Administration in the capital consists of the President of the
Republic, the Council of Ministers, the Prime Minister, the Ministries and other auxiliary
bodies such as the State Council, the Court of Accounts, and the National Security Council.
The provincial organization of the Central Government has been created to administer public
services to its citizens throughout the entire country. In Turkey there are three kinds of
provincial administrations: province, county, and district.
The Province is the largest provincial administrative unit of the Central Administration. The
administration of the provinces is based on the Provincial Administration Code No. 5442.
There are 81 provinces in Turkey. Provincial administration consists of the Governor, the
Department Heads of the provincial administration, and the Provincial Administrative
Council. The Governor is the head of the Provincial Administration.
Provinces are divided into counties. Just as for the Provincial Administration, the County
Administration also consists of the County Chief, the Department Heads of the County
Administration, and the County Administration Council. The District Administration also has
three bodies: the District Administrator, the District Assembly, and the District Commission.
Local administrative institutions
Local administration bodies are divided into two categories, Those bodies based on locality
(local government organizations) and those based on services provided (public institutions).
Local government organizations:
These are public legal personalities that have been established outside Central Government
to meet the common needs of provincial, municipal, and village residents. They have
separate legal personalities from that of the State; a certain degree of autonomy; and their
members are locally elected. According to the Constitution, there are three kinds of local
Government Organizations: Provincial Administration, Municipality, and Village
Administration. The Ministry of the Interior has jurisdiction over local government bodies.
The Ministry exercises this authority through the General Directorate of Local Government.
The principles governing the organization and duties of Provincial Administrations have been
specified in the Special Provincial Administration Code No. 5302. Unlike the Provincial
TURKEY
Administrations, Municipalities are the administrative organizations not of a specific
geographical region but of limited residential areas where people live in neighbouring houses
in regions called districts. The organization and duties of Municipal Administrations have
been specified in Municipal Law No. 5272. According to the legislation, a municipality may be
established in places having a population of more than 2,000 people. It is compulsory to
establish a Municipal Administration in provincial and district centres regardless of their
population. As of 2005, there are 3,215 municipalities in Turkey.
Based on the authority granted by the Constitution, Metropolitan Municipalities were
established in 1984. A Metropolitan Municipality is a public legal personality established in
cities made up of at least three counties or first stage municipalities. It is responsible for
coordination among these municipalities, and for fulfilling its responsibilities and duties using
the authority granted to it by law. It has administrative and fiscal autonomy and its decision-
making body is elected by the people. For these Municipal Administrations, Metropolitan
Municipality Code No. 5216 is applied. As of 2005, there are 16 Metropolitan Municipal
Administrations.
The smallest and most common type of local government is the Village Administration.
Villages are administered according to the Village Code No. 442, dated 1924. As of
14.06.2004, there are 35,181 villages in Turkey.
Public Institutions:
These institutions have been set up for the delivery of services which require specilised
information and expertise through an organization outside the State or Local Government.
They are established through the granting of a separate legal personality. Public institutions
have public legal personalities and they function under some form of public administration
(State or Local Government). However, Public Institutions have a certain degree of
independence from the Public Administrations which set them up. They are not subject to
hierarchical control. They are self-administrated and internally monitored.
There are several different kinds of Public Institutions:
- Administrative Public Institutions (e.g. the General Directorate of Highways, the
General Directorate of State Hydraulic Works, the General Directorate of Foundations)
- Economic Public Institutions (Ziraat Bank, the Republic of Turkey State Railways
Administration, the Tobacco and Cigarette Industries etc.)
- Social Public Institutions (the Pension Fund of the Republic of Turkey, the General
Directorate of Social Insurances, the Employment Agency (-Kur) etc.
- Scientific, Technical, and Cultural Public Institutions (universities, Turkish Scientific
and Technical Research Agency (TBTAK), the Turkish Standards Institute, the
Turkish Academy of Sciences)

National holiday and other legal holidays
The official holidays in Turkey are established by the Act 2429 of March 19, 1981 that
replaced the Act 2739 of May 27, 1935.
Public Holidays
Date English Name Local Name Remarks
January 1 New Year's Day Ylba First day of the Gregorian new year
April 23
National Sovereignty and
Children's Day
Ulusal Egemenlik ve
ocuk Bayram
Commemoration of the first opening of the
Grand National Assembly of Turkey at Ankara
in 1920. Dedicated to the children.
May 1 Labour and Solidarity Day Emek ve Dayanma Gn May Day
May 19
Commemoration of
Atatrk, Youth and Sports
Day
Atatrk' Anma Genlik
ve Spor Bayram
Commemoration of the beginning of national
liberation movement initiated in 1919 by
Atatrk's landing in Samsun. Dedicated to the
youth.
August 30 Victory Day Zafer Bayram
Commemoration of the victory at the final
battle in Dumlupnar ending the Turkish
Independence War in 1922, dedicated to the
armed forces.
October 29 Republic Day Cumhuriyet Bayram
Commemoration of the proclamation of the
republic in 1923. Also the halfday in the
afternoon of previous day.
TURKEY
After the end
of Islamic
month
Ramadan
Ramadan Feast
Ramazan Bayram or
eker Bayram
Religious holiday for 3 days. Also the half day
in the afternoon of previous day.
70 days after
the end of
Islamic
month
Ramadan
Sacrifice Feast Kurban Bayram
Religious holiday for 4 days. Also the half day
in the afternoon of previous day.

Turkey, as a member in international organisations
Turkey is a member of numerous international organizations, of which:
ADB (non-regional member), Australia Group, BIS, BSEC, CE, CERN (observer), CICA, D-8,
EAPC, EBRD, ECO, EU (candidate country), FAO, FATF, G-20, IAEA, IBRD, ICAO, ICC, ICRM,
IDA, IDB, IEA, IFAD, IFC, IFRCS, IHO, ILO, IMF, IMO, IMSO, Interpol, IOC, IOM, IPU, ISO, ITSO,
ITU, ITUC, MIGA, NATO, NEA, NSG, OAS (observer), OECD, OIC, OPCW, OSCE, Paris Club
(associate), PCA, SECI, UN, UNCTAD, UNESCO, UNHCR, UNIDO, UNIFIL, UNRWA, UNWTO, UPU,
WCO, WFTU, WHO, WIPO, WMO, WTO, ZC.


Turkish Migration
Before the Turkish settlement, the local population of Anatolia had reached an estimated
level of 12 to 14 million people during the late Roman Period. The migration of Turks to the
country of modern Turkey occurred during the main Turkish migration across most of Central
Asia and into Europe and the Middle East which was between the 6th and 11th centuries.
Mainly Turkish people living in the Seljuk Empire arrived Turkey in the eleventh century. The
Seljuks proceeded to gradually conquer the Anatolian part of the Byzantine Empire. In the
following centuries, the local population began to be assimilated into the Turkish people.
More Turkish migrants began to intermingle with the local inhabitants over years, thus the
Turkish-speaking population was bolstered.
Seljuq Dynasty
The House of Seljuk was a branch of the Knk Ouz Turks who resided on the periphery of the
Muslim world, north of the Caspian and Aral Seas in the Yabghu Khaganate of the Ouz
confederacy in the 10th century. In the 11th century, the Turkic people living in the Seljuk
Empire started migrating from their ancestral homelands towards the eastern regions of
Anatolia, which eventually became a new homeland of Ouz Turkic tribes following the Battle
of Manzikert on August 26, 1071.
The victory of the Seljuks gave rise to the Seljuk Sultanate of Rum, a separate branch of the
larger Seljuk Empire and to some Turkish principalities (beyliks), mostly situated towards the
Eastern Anatolia which were vassals of or at war with Seljuk Sultanate of Rum.
Mongol Rule
On June 26, 1243, the Seljuk armies were defeated by the Mongols in the Battle of Kosedag,
and the Seljuk Sultanate of Rm became a vassal of the Mongols. This caused the Seljuks to
lose its power. Hulegu Khan, grandson of Genghis Khan founded the Ilkhanate in the
southwestern part of the Mongol Empire. The Ilkhanate State ruled Anatolia by Mongol
military governors. Last Seljuk sultan Mesud II, died in 1308. The Mongol invasion of
Transoxiana, Iran, Azerbaijan and Anatolia caused Turkomens to move to Western Anatolia.
The Turkomens founded some Anatolian principalities (beyliks) under the Mongol dominion in
Turkey. The most powerful beyliks were the Karamanids and the Germiyanids in the central
area. Along the Aegean coast, from north to south, stretched Karasids, Sarukhanids, Aydinids,
Mentee and Teke principalities. The Jandarids (later called Isfendiyarids) controlled the
Black Sea region round Kastamonu and Sinop. The Beylik of Ottoman Dynasty was situated in
the northwest of Anatolia, around St, and it was a small and insignificant state at that
time. The Ottoman beylik would, however, evolve into the Ottoman Empire over the next 200
years, expanding throughout the Balkans, Anatolia.
Ottoman Dynasty
TURKEY
The Ottoman beylik's first capital was located in Bursa in 1326. Edirne which was conquered
in 1361[15] was the next capital city. After largely expanding to Europe and Anatolia, in
1453, the Ottomans nearly completed the conquest of the Byzantine Empire by capturing its
capital, Constantinople during the reign of Mehmed II. This city has become the capital city
of the Empire following Edirne. The Ottoman Empire would continue to expand into the
Eastern Anatolia, Central Europe, the Caucasus, North and East Africa, the islands in the
Mediterranean, Greater Syria, Mesopotamia, and the Arabian peninsula in the 15th, 16th and
17th centuries. The Ottoman Empire's power and prestige peaked in the 16th and 17th
centuries, particularly during the reign of Suleiman the Magnificent. The empire was often at
odds with the Holy Roman Empire in its steady advance towards Central Europe through the
Balkans and the southern part of the Polish-Lithuanian Commonwealth. In addition, the
Ottomans were often at war with Persia over territorial disputes. At sea, the empire
contended with the Holy Leagues, composed of Habsburg Spain, the Republic of Venice and
the Knights of St. John, for control of the Mediterranean. In the Indian Ocean, the Ottoman
navy frequently confronted Portuguese fleets in order to defend its traditional monopoly over
the maritime trade routes between East Asia and Western Europe; these routes faced new
competition with the Portuguese discovery of the Cape of Good Hope in 1488.
The Treaty of Karlowitz in 1699 marked the beginning of the Ottoman decline; some
territories were lost by the treaty: Austria received all of Hungary and Transylvania except
the Banat; Venice obtained most of Dalmatia along with the Morea (the Peloponnesus
peninsula in southern Greece); Poland recovered Podolia. Throughout the 19th and early 20th
centuries, the Ottoman Empire continued losing its territories, including Greece, Algeria,
Tunisia, Libya and the Balkans in the 19121913 Balkan Wars. Faced with territorial losses on
all sides the Ottoman Empire forged an alliance with Germany who supported it with troops
and equipment. The Ottoman Empire joined the World War I on the side of the Central
Powers, after granting two German warships as refugees.
On October 30, 1918, the Armistice of Mudros was signed, followed by the imposition of
Treaty of Svres on August 10, 1920 by Allied Powers, which was never ratified. The Treaty of
Svres would break up the Ottoman Empire and force large concessions on territories of the
Empire in favour of Greece, Italy, Britain and France.
Republic of Turkey
The occupation of some parts of the country by the Allies in the aftermath of World War I
prompted the establishment of the Turkish national movement. Under the leadership of
Mustafa Kemal, a military commander who had distinguished himself during the Battle of
Gallipoli, the Turkish War of Independence was waged with the aim of revoking the terms of
the Treaty of Svres. By September 18, 1922, the occupying armies were expelled. On
November 1, the newly founded parliament formally abolished the Sultanate, thus ending 623
years of Ottoman rule. The Treaty of Lausanne of July 24, 1923, led to the international
recognition of the sovereignty of the newly formed "Republic of Turkey" as the successor
state of the Ottoman Empire, and the republic was officially proclaimed on October 29, 1923,
in the new capital of Ankara. Mustafa Kemal became the republic's first President of Turkey
and subsequently introduced many radical reforms with the aim of founding a new secular
republic from the remnants of its Ottoman past. According to the Law on Family Names, the
Turkish parliament presented Mustafa Kemal with the honorific surname "Atatrk" (Father of
the Turks) in 1934.
Turkey remained neutral during most of World War II but entered on the side of the Allies on
February 23, 1945, as a ceremonial gesture and in 1945 became a charter member of the
United Nations. Difficulties faced by Greece after the war in quelling a communist rebellion,
along with demands by the Soviet Union for military bases in the Turkish Straits, prompted
the United States to declare the Truman Doctrine in 1947. The doctrine enunciated American
intentions to guarantee the security of Turkey and Greece, and resulted in large-scale U.S.
military and economic support.
After participating with the United Nations forces in the Korean War, Turkey joined NATO in
1952, becoming a bulwark against Soviet expansion into the Mediterranean. Following a
decade of intercommunal violence on the island of Cyprus and the Greek military coup of
July 1974, overthrowing President Makarios and installing Nikos Sampson as a dictator, Turkey
TURKEY
invaded the Republic of Cyprus in 1974. Nine years later the Turkish Republic of Northern
Cyprus (TRNC) was established. Turkey is the only country that recognises the TRNC.
The single-party period was followed by multiparty democracy after 1945. The Turkish
democracy was interrupted by military coups d'tat in 1960, 1971, 1980 and 1997. In 1984,
the PKK began an insurgency against the Turkish government; the conflict, which has claimed
over 40,000 lives, continues today. Since the liberalization of the Turkish economy during the
1980s, the country has enjoyed stronger economic growth and greater political stability.


Population and structure of population
Turkey had 78,785,548 inhabitants by 2011, July and its the 17
th
biggest population of the
world. The average age of the Turkish people is 28.5 years. 70% of the populations is living in
the cities. Men are forming 50.3% and women are 49.7% of the population. Turkeys
population has a growth rate of 1.235% according to estimations in 2011.

Economic profile
The Turkish economy has shown remarkable performance with its steady growth over the last
eight years. A sound macroeconomic strategy in combination with prudent fiscal policies and
major structural reforms in effect since 2002, has integrated the Turkish economy into the
globalized world, while transforming the country into one of the major recipients of FDI in its
region.
The structural reforms, hastened by Turkeys EU accession process, have paved the way for
comprehensive changes in a number of areas. The main objectives of these efforts were to
increase the role of the private sector in the Turkish economy, to enhance the efficiency and
resiliency of the financial sector, and to place the social security system on a more solid
foundation. As these reforms have strengthened the macroeconomic fundamentals of the
country, inflation drastically decreased to 6.4% by the end of 2010, down from 30% in 2002,
while the EU-defined general government nominal debt stock fell to 41.6% from 74% in a
period of eight years between 2002 and 2010. Hence, Turkey has been meeting the 60% - EU
Maastricht criteria for the public debt stock since 2004.
As the GDP levels more than tripled to USD 736 billion in 2010, up from USD 231 billion in
2002, GDP per capita soared to USD 10,079, up from USD 3,500 in the given period.

The visible improvements in the Turkish economy have also boosted foreign trade, while
exports reached USD 114 billion by the end of 2010, up from USD 36 billion in 2002. Similarly,
tourism revenues, which were around USD 8.5 billion in 2002, exceeded USD 20 billion in
2010.
Significant improvements in such a short period of time have registered Turkey on the world
economic scale as an exceptional emerging economy, the 16th largest economy in the world
and the 6th largest economy when compared with the EU countries, according to GDP figures
(at PPP) in 2010.
Prior to the recent global recession which hit all economies throughout the world, the Turkish
economy sustained strong economic growth for 27 quarters consecutively, making it one of
the fastest growing economies in Europe. However, the global financial crisis has
considerably challenged the macroeconomic and financial stability of many economies by
adversely affecting financing facilities and external demand, thus causing a significant
slowdown in all global economic activities.
While the financial markets in Turkey proved resilient to the crisis, the decrease in external
demand and slowing international capital flows have had a negative impact on the economy,
thus causing an economic contraction in 2009. However, the perceived positive developments
in the economy showed signs of a fast recovery beginning as early as the last quarter of 2009,
with an impressive 5.9% economic growth rate, hence making Turkey one of the fastest
recovering economies in the world. Its robust economic growth continued in 2010 as well,
having reached 12%, 10.3%, 5.2% and 9.2% in the first, second, third and fourth quarters of
2010 respectively, thus achieving an overall growth rate of 8.9% throughout 2010. Turkey,
TURKEY
with such a robust economic performance, stood out as the fastest growing economy in
Europe and one of the fastest growing economies in the world.

Country statistical profile: Turkey 2011-2012
Unit 2005 2006 2007 2008 2009 2010
Production and Income
Gross domestic product (GDP)
Bln USD curr.
PPPs
781,2 894,6 976,4 1 063,5 1 022,3 1 116,0
GDP per capita
USD current
PPPs
11 391 12 887 13 897 14 962 14 218 15 320
Economic Growth
Real GDP growth Annual growth % 8,4 6,9 4,7 0,7 -4,8 8,9
Gross fixed capital formation % of GDP 17,4 13,3 3,1 -6,2 -19,0 29,9
Economic Structure
Real value added: agriculture, forestry,
fishing
Annual growth % 7,2 1,4 -6,7 4,3 3,6 1,6
Real value added: industry Annual growth % 8,6 8,3 5,8 0,3 -6,9 12,9
Real value added: services Annual growth % 2,3 3,8 3,1 1,4 1,9 0,8
Trade
Imports of goods and services % of GDP 25,4 27,6 27,5 28,3 24,4 26,6
Exports of goods and services % of GDP 21,9 22,7 22,3 23,9 23,3 21,1
Goods trade balance: exports minus imports of
goods
Bln USD -43,3 -54,0 -62,8 -70,0 -38,8 -71,6
Imports of goods Bln USD 116,8 139,6 170,1 202,0 140,9 185,5
Exports of goods Bln USD 73,5 85,5 107,3 132,0 102,1 114,0
Service trade balance: exports minus imports of
services
Bln USD 15,2 13,6 13,3 17,3 16,7 14,2
Imports of services Bln USD 11,7 12,0 15,6 17,8 16,7 19,4
Exports of services Bln USD 26,9 25,5 28,9 35,1 33,5 33,6
Current account balance of payments % of GDP -4,6 e -6,1 e -5,9 e -5,6 e -2,2 e -6,5 e
Foreign Direct Investment (FDI)
Outward FDI stocks Mln USD .. .. 12.210 17.846 22.338 21.570
Inward FDI stocks Mln USD .. .. 154.022 80.227 143.590 185.780
Inflows of foreign direct investment Mln USD 1.064 924 2.106 2.549 1.554 1.464
Outflows of foreign direct investment Mln USD 10.031 20.185 22.047 19.504 8.409 9.258
Source: Turkish Statistical Institute

Turkey, part of the Black Sea community

BSEC was founded in 1992 as an initiative of Turkey. In the last decade of the 20th century,
the Black Sea region was going through a dramatic transformation which had brought the
region to a new threshold. The BSEC was established to serve the interest of security and
stability both within and outside the Black Sea region, and it led to the creation of an
environment conducive to the initiation of rapid reform towards the development of market
economies as the basis for economic recovery and prosperity in the region.
On 25 June 1992, the heads of state or government of the eleven founding members (Albania,
Armenia, Azerbaijan, Bulgaria, Georgia, Greece, Moldova, Romania, Russia, Turkey and
Ukraine) signed in Istanbul the summit declaration on the BSEC, thus setting up a regional
structure of multilateral cooperation in various fields of economic activity.
With the establishment of the permanent International Secretariat in Istanbul, the Black Sea
Trade and Development Bank in Thessalonica and the BSEC coordination centre for the
exchange of statistical data and economic information in Ankara, the BSEC has created the
necessary institutional, financial and analytical instruments for its efficient functioning and
for the attainment of the objectives set forth in the summit declaration.
The Yalta summit of the heads of state or government convened on 5 June 1998 and signed
the BSEC Charter. Following the ratification formalities, the charter came into force marking
the official inauguration of the organization of the BSEC on 1 May 1999. Upon the resolution
of the Tenth Council of Ministers of Foreign Affairs and the ratification of the BSEC Charter
by its parliament, Serbia and Montenegro became a full-fledged Member of the BSEC
Organization as of 16 April 2004.
TURKEY
BSEC is playing an important role in the development of economic and social development
and sustaining peace in the region. Improving economic and commercial ties between the
member countries is seen as the most efficient means to achieve the ends mentioned above.
As the initiator of the BSEC concept, Turkey is working to improve its bilateral economic and
commercial ties with each of the member countries and also to contribute to the
development of multilateral structures. The private sector is playing a key role in improving
the relations and the Turkish government is supporting the business circles in order to
provide them with a competitive edge.

TURKEY


General consideration on the institutional network

The Republic of Turkey is a democratic secular constitutional republic (although nominally,
98% of the population is Muslim, most belonging to the Sunni branch of Islam). The head of
state is the president (currently Abdullah GL), elected every seven years by the Grand
National Assembly.
Executive power rests in the Prime Minister (currently Recep Tayyip Erdoan) and the Council
of Ministers, while Legislative power rests in the 550-seat Grand National Assembly
representing 81 provinces.
Each province is administered by a governor (vali) appointed by the Council of Ministers with
the approval of the president. Each district in a province has its own administration
consisting of a district chief (kaymakam), central government representatives, and a district
administrative board. Each district chief is responsible to the governor, serving essentially as
his or her agent in supervising and inspecting the activities of government officials in the
district. Municipal governments exist in each provincial and district capital, as well as in all
communities with at least 5,000 inhabitants. Municipal governments are responsible for
implementing national programs for health and social assistance, public works and
transportation. Each municipality (belediye) is headed by a mayor (belediye bakan), who is
elected by the citizens to a five-year term and is assisted by deputy directors of departments
and offices.

Legal and Political Structure
Constitution - The Republic of Turkey adopted its first Constitution in 1924. It retained the
basic principles of the 1921 Constitution, notably the principle of national sovereignty. As in
the 1921 Constitution, the Turkish Grand National Assembly was deemed the "sole
representative of the nation." The second Constitution of the Republic of Turkey was
adopted in 1961 and introduced a bicameral Parliament: the National Assembly with 450
deputies and the Senate of the Republic with 150 members elected by general ballot and 15
members elected by the President. These two assemblies constitute the Turkish Grand
National Assembly. The third Constitution of the Republic of Turkey was passed in 1982 by a
national referendum and is still in effect today. Under the 1982 Constitution, sovereignty is
vested fully and unconditionally in the nation. The Constitution emphasizes that the Turkish
state, with its territory and nation, is an indivisible entity, and a secular, democratic, social
state under the rule of law. All individuals are equal without any discrimination before the
law, irrespective of language, race, skin colour, gender, political orientation, philosophical
creed, religion and sect, or any such considerations. The 1982 Constitution recognizes all
basic human rights and freedoms such as freedom of speech, freedom of the press, freedom
of residence and movement, freedom of religion and conscience, freedom of thought and
opinion, freedom of expression and dissemination of thought, freedom of association,
freedom of communication, the right to privacy, right to property, right to hold meetings and
demonstration marches, right to legal remedies, guarantee of lawful judgment and right to
acquire information.
Parliament has passed many constitutional amendments to make the 1982 Constitution more
democratic and to expand democratic rights and freedoms in the country. These efforts
gained significant momentum after the EU recognized Turkey as a candidate country in 1999
and later agreed to start full membership talks with Turkey in 2005.
Legislature - Legislative power is vested in the Turkish Grand National Assembly (TGNA) on
behalf of the Turkish nation and this power cannot be delegated. TGNA is composed of 550
deputies, while Parliamentary elections are held every four years. Deputies represent the
entire nation and before assuming office, take an oath.
TURKEY
The functions and powers of TGNA comprise the adoption of draft laws, and the amendment
and repeal of existing laws; the supervision of the Council of Ministers (Cabinet) and the
Ministers; authorization of the Council of Ministers to issue governmental decrees having the
force of law on certain matters; debating and approval of the budget draft and the draft law
of final accounts, making decisions on the printing of currency, the declaration of war,
martial law or emergency rule; ratifying international agreements; making decisions with 3/5
of the TGNA on proclamation of amnesties and pardons in line with the Constitution.
Judiciary - Judicial power in Turkey is exercised by independent courts and high judicial
organs on behalf of the Turkish nation. The judicial section of the Constitution is based on
the principle of the rule of law. The judiciary is founded on the principles of the
independence of the courts and the security of tenure of judges. Judges work independently;
they rule on the basis of personal conviction in accordance with constitutional provisions, law
and jurisprudence.
The legislative and executive organs must comply with the rulings of the courts and cannot
change or delay the application of these rulings. Functionally, a tripartite judicial system was
adopted by the Constitution and accordingly, it was divided into an administrative judiciary,
a legal judiciary and a special judiciary.
The Constitutional Court, the Supreme Court of Appeals, the Council of State, the Supreme
Military Court of Appeals, the Supreme Military Administrative Court and the Court of
Jurisdictional Conflicts are the supreme courts stipulated in the judicial section of the
Constitution. The Supreme Council of Judges and Public Prosecutors and the Supreme Council
of Public Accounts are two additional organizations having special functions which are set out
in the judicial section of the Constitution.
Executive - The executive branch in Turkey has a dual structure. It is composed of the
President of the Republic and the Council of Ministers (Cabinet).
President - The President of the Republic is the head of State and represents the Republic of
Turkey and the unity of the Turkish nation. The President is elected by popular vote among
the Turkish Grand National Assembly members who are over 40 years of age and have
completed higher education or among ordinary Turkish citizens who fulfill these requirements
and are eligible to be deputies. The President's term of office is five years and one can be
elected for two terms at most.
The President of the Republic has duties and power related to the legislative, executive and
judicial branches, and is responsible for ensuring the implementation of the Constitution, and
the regular and harmonious functioning of the organs of state.
Prime Minister and Council of Ministers - The Council of Ministers (Cabinet) consists of the
Prime Minister, designated by the President of the Republic from members of the TGNA, and
various ministers nominated by the Prime Minister and appointed by the President of the
Republic. Ministers can be assigned either from among the deputies or from among those
qualified to be elected as a deputy. Ministers can be dismissed from their duties by the
President upon the proposal of the Prime Minister when deemed necessary.
The fundamental duty of the Council of Ministers is to formulate and implement the internal
and foreign policies of the state. The Council of Ministers is accountable to the Parliament in
the execution of this duty.
On June 8, 2011, Prime Minister Recep Tayyip Erdoan announced that his ruling Justice
and Development Party (AK Party) government is set to overhaul the current Cabinet
structure, introducing six new ministries while making changes to the others.
The Cabinet is:
Ministry of Food, Agriculture and Livestock (www.tarim.gov.tr)
Ministry of Culture and Tourism (www.kultur.gov.tr)
Ministry of Energy and Natural Resources (www.enerji.gov.tr)
Ministry of Environment and Urban Planning (www.csb.gov.tr)
Ministry of Finance (www.maliye.gov.tr)
Ministry of Foreign Affairs (www.mfa.gov.tr)
Ministry of Health (www.saglik.gov.tr)
Ministry of Science, Industry and Technology (www.sanayi.gov.tr)
Ministry of Interior (www.icisleri.gov.tr)
Ministry of Justice (www.adalet.gov.tr)
TURKEY
Ministry of Labour and Social Security (www.csgb.gov.tr)
Ministry of National Defence (www.msb.gov.tr)
Ministry of National Education (www.meb.gov.tr)
Ministry of Transport, Maritime Affairs and Communications (www.ubak.gov.tr)
Ministry of Family and Social Policies (www.aile.gov.tr)
Ministry of European Union (www.ab.gov.tr )
Ministry of Youth and Sport(www.gsb.gov.tr)
Ministry of Customs and Trade (www.gumruk.gov.tr)
Ministry of Development (www.dpt.gov.tr)
Ministry of Water Affairs and Forestry (www.ormansu.gov.tr)
Ministry Of Economy (www.ekonomi.gov.tr)

The new structure of the public bodies under Ministries in Turkish Republic.
The Prime Minister's Office
Capital Markets Commission
Secretariat of the State Planning Organisation
National Intelligence Organisation
Office of the Prime Minister, Directorate General of Press and Information
General Directorate on the Status of Women
General Directorate of Land Registers
General Directorate of Meteorology
Secretariat of Treasury
General Directorate of Minting and Printing
State Personnel Administration
Religious Affairs Administration
Privatization Administration
Turkish Statistical Institute
Atomic Energy Authority of Turkey
Competition Authority
General Directorate of Security
General Directorate of Local Administrations
Secretariat of Defence Industries
General Directorate of Agricultural Research
General Directorate of Protection and Control
General Directorate of Forestry
Directorate of Nature Conservation and National Parks
General Directorate of Forestry and Village Relations
General Directorate of Desertification and Prevention of Erosion
General Directorate of Budget and Fiscal Control
Revenue Administration
General Directorate of Public Accounts
General Directorate of Medicines and Pharmaceutics
General Directorate of Treatment Services
Turkish Patent Institute
General Directorate of Criminal Registration and Statistics
Social Security Administration
General Directorate of Construction
General Directorate of Highways
General Directorate of Civil Aviation
General Directorate of State Railways of the Republic of Turkey
General Directorate of State Airports Operations
Information and Communication Technologies Authority
The Scientific and Technological Research Council
Turkish Standards Institution
General Directorate of Mineral Research and Exploration
Council of Higer Education
Turkish Armed Forces
TURKEY
Directorate for Political Affairs
Directorate of Accession Policy
Directorate of Single Market and Competition
General Directorate of Imports
General Directorate of Exports
General Directorate of Free Zones, Overseas Investment and Services
Directorate General of Customs
Directorate General of Tradesmen and Craftsmen

In Turkey, Public Administration is basically made up of two levels: Central Administration
(the Ministries and other public bodies depending on the central government, as well as their
units and services deployed on the territory); and Local Administration (public corporations
managed by officials elected by the citizens of the respective local community - Villages,
Municipalities, Metropolitan Municipalities and Special Provincial Administrations - and the
secondary public entities created by them)
In the context of a broader strategy to modernize and democratize the Turkish administrative
system, so as to align it with EU standards and to strengthen the administrative capacities for
future EU membership, the Government of Turkey has undertaken a programme aimed at the
reform and modernisation of the Local Administration in the country.

The Map of Turkish Provinces:

Private Sector Leaders

TOBB (The Union Of Chambers And Commodity Exchanges Of Turkey)
The Union of Chambers and Commodity Exchanges of Turkey (TOBB) is the highest legal
entity in Turkey representing the private sector.
Similar to the patterns of guilds and syndicates, which traditionally organized and
represented tradesmen and producers throughout the Turkish History, TOBB, too, adopted a
representative role in a democratic and modern society.
Today, TOBB has 365 members in the form of local chambers of commerce, industry,
commerce and industry, maritime commerce and commodity exchanges.

TMMOB (The Union of Chambers Of Turksh Engineers And Architects)
The Union of Chambers of Turkish Engineers and Architects (UCTEA) was established in 1954
by the Law 7303 and the Decree-Laws 66 and 85 amending of the Law 6235. UCTEA is a
corporate body and a professional organization defined in the form of a public institution as
stated in the Article 135 of the Constitution. At the establishment stage, UCTEA had 10
Chambers and 8.000 members. However, as of December 31, 2009, the number of Chambers
TURKEY
has increased to 23, while the number of members reached 354.182.UCTEA is maintaining its
activities with its 23 Chambers, 197 branches of its Chambers and 45 Provincial Coordination
Councils. Approximately, graduates of 70 related academic disciplines in engineering,
architecture and city planning are members of the Chambers of UCTEA.

TSK (Turkish Confederation of Employer Associations)
TISK was founded on 15 October 1961 when the following six employer associations were
organized under the title of "Union of Istanbul Employer Associations":
The Metal Products Industrialists' Association
The Wooden Products Industry Employers' Association of Istanbul
The Textile Industry Employers' Associations of Istanbul
The Food Industry Employers' Associations of Istanbul
The Printing Industry Employers' Associations of Istanbul
The Glass Industry Employers' Associations of Istanbul

After completing its nationwide organization, the name of the Union was changed to the
"Turkish Confederation of Employer Associations" on 20 December 1962 when the Second
Ordinary General Assembly was held. The Confederation held its main offices in Istanbul until
mid-1960, and on 5 August 1965, an Extraordinary Meeting of the General Assembly modified
the Articles of the Association and transferred its headquarters to Ankara.

TEMA (Turkish Foundation for Combating Soil Erosion, for Reforestation and the
Protection of Natural Habitats)
Since the establishment of Turkish Foundation for Combating Soil Erosion, for Reforestation
and the Protection of Natural Habitats (TEMA) in 1992, TEMAs mission is to raise public
awareness of environmental problems, specifically soil erosion, deforestation, biodiversity
loss and climate change. In this endeavour, TEMA collaborates with several organizations and
institutions working in environmental protection and sustainable development. TEMA has
launched numerous initiatives to influence government and business practices. We believe
that we can only combat with soil erosion by alleviating poverty in rural areas. Therefore, we
implement model projects where we create environmentally friendly alternative income
opportunities for the local people. So far, TEMA has designed and carried out around 63
model projects in sustainable rural development and 66 projects in reforestation.
TEMA is Turkeys fastest growing and largest NGO, already serving around 350.000
supporters, 80% under age 25, clubs in 60 universities, 550 regional managers (voluntary
representatives) and over 100 scientists and legal advisors who offer their time and expertise
voluntarily on a gratis basis. 150 employees are engaged on a full time basis. TEMA graduates
from universities and children are getting organized. We try to reach out internationally as
well. Accordingly, in 1998 TEMA-D (Germany), in 2002 TEMA-NL (The Netherlands) and TEMA-
EU (Belgium) representations were established. The international outreach will continue.

KV (Economic Development Foundation)
Economic Development Foundation (IKV) was established on the initiative of Istanbul
Chamber of Commerce and Istanbul Chamber of Industry in 1965, in order to inform the
Turkish business world and the public about developments in the European Union (EU) and
Turkey-EU relations. Since its establishment, IKV has become a respectable and effective
specialised organisation on EU and Turkey-EU relations both in Turkey and in the EU, through
its seminars, researches, publications, lobbying activities and the close cooperation it has
conducted with foreign and domestic institutions.
Over the years, IKV has broadened the area of its activities as well as the number of its
trustee institutions and supporters, in parallel to the developments in Turkey-EU relations.
Particularly, following the confirmation of Turkey's candidacy for EU membership at Helsinki
Summit in December 1999, IKV intensified its activities taking into account the requirements
of the membership process. IKV, with the support of the representative organisations of the
Turkish business world, has also undertaken the task of coordinating the relations of Turkish
business world with the EU and the government in the areas concerning Turkey-EU relations.
TURKEY
As agreed on December 17 2004 by the heads of state and government of the 25 EU member
states, accession negotiations with Turkey started on the 3rd of October 2005. In the course
of this important and challenging process, IKV's activities are focused on informing the
Turkish public concerning the issues formulating the agenda of European Union and Turkey-
EU relations. Special emphasis will be given to the accession negotiations; ensuring the active
participation of the business world and NGOs in the process; and promoting Turkey in the EU
members.

TURKEY

LEGAL FRAMEWORK FOR DOING BUSSINESS

Legal base to register a business in Turkey

Foreign Direct Investment Law No. 4875 emphasizes the key elements of the liberal
investment environment in Turkey. We believe that foreign investment legislation of any
country is the representative of the nation's attitude towards international investments. With
Turkey's new Foreign Direct Investment Law, our equal (level playing field) and liberal
approach to international investments is clearly reflected. Our new law is the "legal guide" to
international investors about their rights and obligations, with explicit messages.
Company Establishment in One Day
It is possible to establish a company in just one day by applying to the relevant trade registry
office with the required documents. The company gets its legal entity status upon
registration with the trade registry.
Types of Companies
Incorporated companies such as:
Joint-stock company (A.S)
Limited liability company (Ltd.)
Commandite company
Collective company
Unincorporated companies such as:
Joint-venture
Business association
Consortium

Companies with Special Legislation
Banks, private finance institutions, insurance companies, financial leasing companies,
factoring companies, holding companies, companies operating foreign currency exchange
offices, companies dealing with public warehousing, publicly held companies subject to the
Capital Markets Law, while companies that are founders and operators of free zones are
subject to a permit from the Ministry of Industry and Trade.

Joint stock company
A joint stock company is defined as a corporation having its own trade name and a
predetermined amount of capital divided by shares. The liability of the shareholder is limited
to their capital. The structure and organisation of joint stock companies is subject to
regulation by the Turkish Commercial Code. However, the founders of joint stock companies
are afforded significant flexibility in drafting the Articles of Association, thereby serving the
needs of the specific venture. Capital Market Board regulations also apply to joint stock
companies whose shareholders number at least 250, or who have issued bonds or whose
shares are quoted on the Istanbul Stock Exchange. A minimum of five shareholders, who may
be either real persons or legal entities, are required for the formation of a joint stock
company. The overall share capital must be a minimum of TRL 50,000TL. The capital of a
joint stock company is divided into shares of equal value which are treated as negotiable
commercial paper. The shares may be issued in either registered or bearer form. Registered
shares are freely transferable subject to approval by the board of the company, unless
prohibited by the companies Articles of Association. Bearer shares are freely transferable
under the Code of Obligations, unless otherwise agreed by the parties. Decisionmaking in a
joint stock company is by majority vote, but the Turkish Commercial Code includes certain
provisions to protect minority interests. Minority shareholders may also request the
appointment of a special auditor on their behalf.

TURKEY
Limited Company
Limited liability companies may be composed of real persons or legal entities and must
consist of at least two and no more than 50 partners. The overall share capital must be a
minimum of TRL 5,000TL. All partners are personally liable for the debts of the company up
to the maximum of their contribution, however, partners are not held liable for the unpaid
portions of others contributions. They are also more directly exposed to
the tax liabilities of the company, limited, however, to their own shares. Shares held in a
limited liability company are nonnegotiable and may be transferred only with the approval
of the other partners. Transfers must be approved by at least a 75% majority vote, with at
least 75% of the total capital represented. Limited liability companies are also prohibited
from engaging in banking or insurance business. A limited liability company differs from the
joint stock company in that its capital is not divided into shares of stock nor represented by
share certificates. There is no board of directors for a limited company. Instead, the
appointed manager has the authority to run the company.
Commandite Company
It is the company established to operate a commercial enterprise under a trade name.
Whereas the liability of some shareholders is limited to the capital subscribed and paid by
the shareholder (commanditer), for some shareholders there is no limitation of liability.
Legal entities can only be commanditer. No minimum capital is required. The rights and
obligations of the shareholders are determined by the articles of association.
Collective Company
It is the company established to operate a commercial enterprise under a trade name and,
the liability of none of the shareholders is limited only to the capital subscribed and paid by
the shareholder. No minimum capital is required. It is mandatory that all the shareholders be
real persons. The rights and obligations of the shareholders are determined by the articles of
association.
Branches and Liaison Offices
Foreign companies may also operate through liaison offices or branches provided that they
are established in accordance with the relevant legislation. The income of a branch is taxed
in the same way as resident corporations. Liaison offices may be used to establish a presence
in Turkey, but cannot be involved in any commercial activity and must be funded by the
parent company abroad.
Representative offices
Representative offices should not have any commercial activities. The salaries of the
employees should be paid from abroad. A simple permission from the Treasury is required to
set up a Rep. Office.
Joint Ventures or Consortia
A joint venture or a consortium may be set up for international contracts to be carried out in
Turkey. It is a simple formation of a special contract. It can be freely established based only
on the international contract signed. Without any obligation to establish a company, the joint
venture or the consortium can carry out the business activities. The only requirement would
be registration with the tax office and the Social Security Institution. When the contract is
completed, the Turkish joint venture dissolves.

TURKEY
Company Establishment procedures

To establish a company, the draft Articles of Associations is submitted to the Trade Registry
Office. Items of the Articles of Associations are examined and the title screening is
conducted for the articles of association. Articles of Associations approved for start-up shall
be notarized and an application shall be made to the Trade Registry Office for registration.
Registration shall be conducted within 15 (fifteen) days following the notarization.

Documents to start-up a business
1) A Letter of Application addressing the Trade Registry Office
2) A letter of Application addressing the Chamber of Commerce and Industry
3) Articles of Association (whose text is already examined and approved) notarized (6
copies)
4) A Letter of Commitment
5) A Declaration of Chamber Registration
6) Certificates of Identity Register, Certificates of Residence and Authorized Signatory
Lists of the founding members of the company (if any, also those of managers
appointed or proxies) 2 copies
7) Declaration of Establishment Forms (3 copies)
8) A petition on main area of operation

Documents and forms required are available for download at www.gumruk.gov.tr

Details on Starting a Business in Turkey

Procedure 1
Execute and notarize articles of association, signature declaration of the managers, copies of
each managers identity card or passport and commercial books.
Time to complete(days): 1
Cost to complete: Articles of Associations 900 TL.
Signature declaration: 100 TL.
The following documents are required:
Notarized articles of association (three, one original).
Notarized signature declarations (two copies).
Notarized identity cards of company managers (two copies).
According to amendments to the Stamp Tax Law (effective January 1, 2004), the
incorporation documents are exempt from the stamp tax. The certification fee will be paid to
the notary public for executing the articles of incorporation.
The updated fee schedule for notarizing incorporation documents:
Articles of association (three copies, each of 10 pages): TL 900 (estimate).
Signature declarations of company managers (two, each with five signatures): TL 100
(estimate).

Procedure 2
Deposit a percentage of capital to the account of Competition Authority
Cost to complete: 0.04% of capital
To register with the Commercial Registry, founders must obtain the original receipt from
Ziraat Bank. This receipt shows that 0.04% of the companys capital has been paid to the
Competition Authority at the central bank or a public bank.

Procedure 3
Deposit the initial capital in a bank and obtain the certificate of paid-in capital
Cost to complete: no charge
TURKEY
Comment: If the whole capital of the Company is not paid in advance, the capital of the
Company can also be paid in within three months following the registration. Kindly note that
another option is; 25% of the capital can be paid in the first 3 months following the
registration of the company, and the balance of the subscribed capital shall be paid within 3
years of incorporation.

Procedure 4
File the incorporation notice form, commitment letter, and Chamber registration
statement at the Trade Registry Office
Cost to complete: TL 680 (commercial registration including first managers signature) + TL
246.20 (for each additional manager) + TL 0.30 per word for publication+ TL 2.00 (Trade
Registry Gazette fee) + TL 50 (fee for start-up announcement) Founders must submit the
incorporation notice form, the commitment letter, and the chamber registration statement
the Trade Registry Office. However, the formation of a limited liability company does not
require a court application. Thus, upon gathering the following documents, founders may
begin the registration process:
- For each individual shareholder who is not a Turkish citizen, one copy of the shareholders
passport notarized by a Turkish notary.
- For each individual shareholder who is a Turkish citizen or for a Turkish representative of
such shareholder, two certified copies of the identity card.
- Three copies of an establishment notification form.
- Three copies of the notarized articles of association.
- Bank deposit receipt from the Competition Authority Account (0.04% of the companys
capital).
- An undertaking covenant signed by the authorized company representatives.
- For each person authorized to represent the founders of the limited liability company, two
copies of the signature.
The Commercial Registry Office notifies the Tax Office and the District Employment Office
about the company incorporation. The Registry arranges for an announcement in the
Commercial Registration Gazette within about 10 days of company registration.
A tax identification plaque must be obtained from the local tax office after the Commercial
Registry Office notifies the local tax office. The Registry Office also notifies the Ministry of
Labor and Social Security, Directorate of the Social Security Institution of the incorporation.
A social security number must be obtained from the relevant Social Security Administration
office, and company employees must be registered with that administration.
The registration fee for a limited liability company has been increased to TL 680:
Publication or advertisement fee: TL 0.30 per word.
Start up notice: TL 50.
Trade Registry Gazette fee: TL 2.00
Publication: TL 90460
Registration fee for managers signature
First manager's signature: TL300
Each additional managers signature: TL 246.20
Fee schedule for annual membership in the Istanbul Chamber of Commerce (based on
capital): - TL 1 - 999 (capital): TL 70
- TL 10 - 24.(capital): TL 100
- TL 25 - 249 (capital): TL 150
- TL 250 - 999(capital): TL 200
- TL 1000 and up (capital): TL 225

Procedure 5
Have a notary certify the legal books
Cost to complete: Journal (200 pages) TL 51, Ledger (100 pages) TL 38, Case book (100
pages) TL 42.50, Inventory book (100 pages) TL 42.50
TURKEY
The founders must certify the legal books the day they register the company with the
Commercial Registry. The notary public must notify the Tax Office about the commercial
book certification.
Fee schedule for legal book certification:
Certification up to 100 pages: TL 45
Certification up to 200 pages: TL 56

Procedure 6
Follow up with the tax office on Commercial Registrys notification
Cost to complete: no charge
The Commercial Registry Office notifies the Tax Office and the Social Security Administration
of the companys incorporation. In practice, to expedite the registration process, company
representatives follow up on whether the notification has been received. A tax officer comes
to the company headquarters to prepare a determination report. There must be at least one
authorized signature in the determination report. According to "The Law Number 4884
Regarding the Amendments on Turkish Commercial Code, Tax Procedure Law, Stamp Act,
Labor and Social Security Law Trade Registry Officers send company establishment form
which includes tax number notification to Tax Office.

A legal building permission is required, when constructing a new building in Turkey, proving
that the new building or the extension/modernisation of an existing one meet the legal
framework for construction activity, meet the legislation in such domains as the
environment, do not disturb underground networks, or have included solutions for them,
include solutions for power feeding, water and sewage, etc.
The related laws are listed below;
Municipality Zoning Procedures Assistance Regulation (Belediyeler mar Uygulamalar
Yardm Ynetmelii)- August, 1983
Regulation Concerning Implementing Procedures and Principles of Building Inspection
(Yap Denetimi Uygulama Usul ve Esaslar Hakknda Ynetmelik)- August, 2001
Law on Building Inspection No. 4708 (Yap Denetimi Hakknda Kanun) - July, 2001
Municipality Law No. 5393 (Belediye Kanunu)- July, 2005
Environmental Inspection Regulation (evre Denetim Ynetmelii) - January, 2002
Environmental Law No. 2872 (evre Kanunu) - August 9, 1983
Greater City Municipality Law No. 5216 - July, 2004
Earthquake Regulation (Deprem Ynetmelii) - January, 2007.

Lifecycle of a company: exit through bankruptcy, insolvency, transfer
of business, etc.
Dissolution
A.S. company may be dissolved in one of the following cases:
1) The expiration of the term for which they have been constituted by statute,
2) The realization of the object of the company or the impossibility of its realization,
3) The loss of 2/3 of the share capital or the requisition of creditors by this reason,
4) The reduction of the number of shareholders below 5,
5) The realization of any cause of dissolution provided for by the articles of association,
6) Bankruptcy of the company.

If the dissolution results from a cause other than bankruptcy, the board of directors shall
have it registered with the Trade Register and announced three times at intervals not
exceeding one week. The creditors of the company shall be called upon to apply within one
year and present their documents.

TURKEY
Liquidation
Except in the cases of merger with another company and conversion into a limited liability
company or transfer to a public law corporation, the dissolved company shall enter into
liquidation.
In the absence of any liquidators having been designated by the articles of association or by a
resolution of the general meeting, the board of directors shall carry on the winding up
operations. The board of directors shall have the names of the liquidators entered in the
Trade Register and advertised three times at intervals not exceeding one week. The creditors
of the company shall be called upon to apply within one year and present their documents.
The official liquidation formalities to be executed with the local authorities takes around 12-
18 months and all the fiscal requirements should be met during the liquidation period.

Transferring Assets
The transfer of assets is described as the transfer of the ownership of a property from one
legal party to the other. Mergers and Acquisitions (M&A) by themselves are not specifically
addressed in Turkish legislation. However, certain Turkish laws need to be analysed to ensure
desired results from an M&A type of activity.
Article 179 and Article 180 of the Turkish Obligation Code refer to asset and business transfer
in terms of mergers and acquisitions. In general, companies tend to avoid any risk of tax
obligations and liabilities arising from an asset transfer. According to the above-mentioned
articles, if a legal entity takes over a business (company) with its assets and liabilities, then
it is liable for the debts and credits of the same company. As it can be derived from Article
179 of the Turkish Obligations Code, starting from the notification to the creditors or
announcement, the transferee and the transferor shall be jointly liable to indemnify the
debtors for a period of two years.
In some cases where the purchaser may not want to be liable for the debts and legal
liabilities of the acquired company during the asset transfer, the legal documentation may
vary depending on the nature of the asset.
The relation between the transferor and transferee is based on the agreement made for the
transfer of assets and liabilities of a business. Both parties are subject to the signed contract.
The legal validation of the transfer should be announced through various means of
communication.
The asset transfers are taxable since they may be considered to be the income of selling a
company, therefore a corporate tax liability applies. The asset transfer is generally subject
to VAT based on the sales value of the assets. Although the VAT rate may differ according to
the different assets (1%, 8% and 18%), the general rate for VAT is 18%. VAT liability can be
reduced by different methods, such as the investment incentive certificate.

Important articles in asset transfer:
a) Turkish Obligation Code: Articles 179 and 180
b) Bankruptcy Law: Article 280
c) Law on the Procedures for the Collection of Public Receivables: Article 30

TURKEY

INVESTING IN TURKEY

Why Invest In Turkey

Turkey is a country offering significant opportunities for foreign investors with its
geographically perfect position to function as a gateway between Europe, Middle East and
Central Asia. The opportunities exist not only in the dynamic domestic market, but also
throughout the region.
Hospitality and tolerance being the traditional cornerstones of the Turkish way of life, the
country is open to foreign investors with many attractions to offer.
Successful Economy
Booming economy (USD 230 billion to USD 736 billion of GDP from 2002 to 2010)
Sustainable economic growth (4.8 percent annual average real GDP increase for the
last 8 years)
Promising economy with a bright future as it is expected to be the fastest growing
economy among the OECD members during 2011-2017 with an annual average real
GDP growth rate of 6.7 percent
16th largest economy in the world and 6th largest economy compared with EU in 2010
Institutionalized economy fueled by over USD 94 billion of FDI in the last 8 years and
ranked as the 15th most attractive FDI destination for 2008-2010 (UNCTAD)
Population
A population of 74 million people
Largest youth population compared with the EU
Half the population under the age 29
Young, dynamic, well-educated and multi-cultural population
Qualified and Competitive Labour Force
Over 25 million young, well-educated and motivated professionals
Increasing labor productivity combined with decreasing real unit wage
4th largest labor force compared with EU
The longest working hours, and the lowest sick day leaves per employee in Europe
(53.2 hours worked per week and annual average of 4.6 sick days per employee)
Approximately 500,000 graduates from 156 universities; around 663,000 high school
graduates, including one third from vocational and technical high schools
Liberal and Reformist Investment Climate
A dynamic and mature private sector with USD 114 billion worth of exports and an
increase of 225 percent between 2002 and 2010
Business-friendly environment with average of 6 days to set-up a company, while the
average in OECD members is more than 13 days
Highly competitive investment conditions
Strong industrial and service culture
Equal treatment for all investors
More than 25,000 companies with international capital
International arbitration; guarantee of transfers
Infrastructure
New and highly developed technological infrastructure in transportation,
telecommunications and energy
Well-developed and low-cost sea transport facilities
Railway transport advantage to Central and Eastern Europe
Well-established transportation routes and direct delivery mechanism to most of the
EU countries

TURKEY
Centrally Located
A natural bridge between both East-West and North-South axes, thus creating an
efficient and cost effective outlet to major markets
Easy access to 1.5 billion customers in Europe, Eurasia, the Middle East and North
Africa
Access to multiple markets worth USD 23 trillion of GDP
Energy Corridor and Terminal of Europe
An important energy terminal and corridor in Europe connecting the East and West
70 percent of energy resources are located in the south and the east of Turkey, while
the largest energy consumer, Europe, is located in the west of Turkey.
Low Taxes & Incentives
Corporate Income Tax reduced from 30 percent to 20 percent
Individual Income Tax varies from 15 percent to 35 percent
Tax benefits and incentives in Technology Development Zones, Industrial Zones and
Free Zones could include total or partial exemption from Corporate Income Tax, up to
80 percent grant on employers social security share, as well as land allocation.
R&D and Innovation Support Law
Region and sector-based incentive system
Customs Union with EU Since 1996
Customs Union with the EU since 1996, and Free Trade Agreements (FTA) with 20
countries
More FTAs underway
Accession negotiations with the EU
Large Domestic Market
35 million internet users in 2010, up from 4 million in 2002
62 million GSM users in 2010, up from 23 million in 2002
46 million credit card users in 2010, up from 16 million in 2002
Over 102 million airline passengers in 2010, up from 33 million in 2002
28.5 million international tourist arrivals in 2010, up from 13 million in 2002

Incentives

The Investment Incentive System in Turkey
The investment incentive scheme is continuously being amended to encourage investments in
manufacturing and services, the energy sector and exports. Local and foreign investors have
equal access to: the general investment incentive regime; incentives for large-scale;
investments; region and sector-based incentives; R&D support; support for SMEs; industrial
Thesis (SANTEZ) program ; loans for technology development projects; training support; state
aid for exports.

TURKEY
A. General investment incentive regime

The general investment incentive regime is mainly a tax benefit program, in some cases with
credit possibilities. The implementation of the Turkish incentive regime varies depending on
the location, scale and subject of investments.

The major incentive instruments are:
1) Exemption from customs duties: Customs tax exemption for imported machinery and
equipment for projects with an incentive certificate
2) VAT exemption: VAT exemption for locally purchased or imported machinery and
equipment for projects with an incentive certificate

B. Incentives for large-scale investments

Corporate tax rates between 2-10 percent for investments started before 31.12.2011
Social security premium contribution for employers for up to 7 years for investments
started before 31.12.2011

Allocation of state land:
Chemicals
Investments totaling a minimum of TRY 1 billion in raw chemical materials production.
Investments totaling a minimum of TRY 300 million in other chemical production.
Oil industry
Investments totaling a minimum of TRY 1 billion.
Transit pipeline services
Investments totaling a minimum of TRY 50 million.
Automotive
Railways
Ports
Electronics
Investments in LCD/plasma screen manufacturing totaling a minimum of TRY 1 billion.
Investments in modular panel manufacturing totaling a minimum of TRY 150 million.
Investments in Laser TV, 3D TV and OLED TV and other electronics sector investments,
including information and communication technologies, totaling a minimum of TRY 50
million.
Medical and optical devices:
Pharmaceuticals:
Aviation industry:
Machinery:
Mining:
Investments in ore processing facilities and integrated metal (only IV/c group metals
defined in Mining Law No. 3213) production mills totaling a minimum of TRY 50
million.

TURKEY
REDUCED CORPORATE TAX (%)
LARGE SCALE INVESTMENTS

INVESTMENTS STARTED BEFORE 31/12/2010 INVESTMENTS STARTED BEFORE 31/12/2011
ZONES
RATE OF
CONTRIBUTION TO
INVESTMENT*
APPLICABLE
CORPORATE TAX*
RATE OF
CONTRIBUTION TO
INVESTMENT*
APPLICABLE CORPORATE
TAX*
1 30 10 25 10
2 40 8 35 8
3 50 4 45 4
4 70 2 65 2
*Reduced corporate tax shall be applied until the reduced tax amount reaches contribution-to-investment rates.
Source: Eastern Blacksea Development Agency

SOCIAL SECURITY PREMIUM CONTRIBUTION FOR EMPLOYERS*
LARGE SCALE INVESTMENTS
ZONES INVESTMENTS STARTED BEFORE 31/12/2011 INVESTMENTS TO START AFTER 01/01/2012
1 2 years -
2 3 years -
3 5 years 3 years
4 7 years 5 years
*Duration of social security premiums to be covered by the Treasury up to a minimum wage ceiling.

However the social security contribution on the employees' share offered by the government
cannot exceed:

ZONES
Contribution Rate to Investment / Large Scale Investments
(%)
1 2
2 3
3 5
4 7

C. Region and sector-based incentives
Corporate tax rates between 2-10 percent for investments started before 31.12.2011
Social security premium contribution for employers paid for up to 7 years for
investments started before 31.12.2011

Allocation of state land / Interest support (Zones 3 and 4)
Zone 1: Investments that generally require the use of advanced technology, such as the
automotive and supply industry, electronics, pharmaceuticals, machinery, medical and
optical devices will be covered by incentives.
Zone 2: Technology-intensive sectors will be generally supported. In this framework,
machinery, smart multi-functional textiles, non-metal mineral products, paper, and food &
beverage investments will be incentivized.
TURKEY
Zone 3 and Zone 4: Investments in agriculture, agriculture-based manufacturing industry,
ready-to-wear clothing, plastics, rubber, metal goods, tourism, health and education will be
covered by incentives.

Some additional sectors will be incentivized regardless of location:
1. The investment types, which are covered by Specialized Organized Industrial Zones
established by the Ministry of Industry and Commerce may benefit from regional incentives
(except for the zones in Istanbul) even if they are not among the selected sectors operating
in the region.
2. Investments related to the transportation of cargo and/or passengers by sea may benefit
from the incentives applied in Zone 2, whereas investments related to cargo and/or
passenger transportation by air can benefit from the incentives available in Zone 1.
Meanwhile, no incentive is provided to air taxi operations.
3. Railway investments by the private sector for inter-city cargo and/or passenger
transportation, as well as railway investments for local cargo transportation are subject to
incentives in all regions. In cases where transportation activities are available in more than
one region, the expenditure related to the procurement of carriers is covered within the
scope of the incentives granted to the region with the lowest development level.
4. Housing heating/cooling investments, achieved through geothermal energy and/or power
plant waste energy, may benefit from regional incentives.

REDUCED CORPORATE TAX (%)
REGION AND SECTOR-BASED INVESTMENTS

INVESTMENTS STARTED BEFORE 31/12/2010 INVESTMENTS STARTED BEFORE 31/12/2011
ZONES
RATE OF
CONTRIBUTION TO
INVESTMENT*
APPLICABLE
CORPORATE TAX*
RATE OF
CONTRIBUTION TO
INVESTMENT*
APPLICABLE CORPORATE
TAX*
1 20 10 15 10
2 30 8 25 8
3 40 4 35 4
4 60 2 55 2
*Reduced corporate tax shall be applied until the reduced tax amount reaches contribution-to-investment rates.

SOCIAL SECURITY PREMIUM CONTRIBUTION FOR EMPLOYERS*
ZONES INVESTMENTS STARTED BEFORE 31/12/2011 INVESTMENTS TO START AFTER 01/01/2012
1 2 years -
2 3 years -
3 5 years 3 years
4 7 years 5 years
*Duration of social security premiums to be covered by the Treasury up to a minimum wage ceiling.

However the social security contribution on the employees' share offered by the government cannot
exceed:
ZONES
Contribution Rate to Investment / Region and
Sector-based Investments (%)
1 6
TURKEY
2 8
3 10
4 14

INTEREST SUPPORT* (POINTS)
ZONES LOAN IN TRY LOAN IN FOREIGN CURRENCY
1 - -
2 - -
3 3 1
4 5 2
*TRY 300,000 for R&D and environmental investments, TRY 500,000 for other investments, max.implementation period
is 5 years.

R&D support
1) R&D Law
The R&D Law provides special incentives for R&D investment projects in Turkey if a minimum
of 50 personnel are employed in an R&D center. The incentives within the new law will
remain in effect until 2024 and include:
100 percent deduction of R&D expenditure from the tax base if the number of
researchers exceeds 500, then in addition to the 100 percent deduction, half of the
R&D expenditure increase incurred in the operational year compared to the previous
year will also be deducted.
Income withholding tax exemption for employees (this item will be effective until
December 31, 2023.)
50 percent of social security premium exemption for employers for a period of 5 years
Stamp duty exemption for applicable documents
Techno-initiative capital for new scientists up to TRY 100,000
Deduction from the tax base of certain funds granted by public bodies and
international organizations

2) Support for Technology Development Zones
The advantages in Technology Development Zones are:
Offices ready to rent, and infrastructure facilities provided.
Profits derived from software development and R&D activities are exempt from
income and corporate taxes until 31.12.2023.
Deliveries of application software produced exclusively in TDZs are exempt from VAT
until 31.12.2023.
Wages of researchers along with software and R&D personnel employed in the zone
are exempt from personal income tax until 31.12.2023.
50 percent of the employers share of the social security premium will be paid by the
government for 5 years until 31.12.2024.

3) TUBITAK (Scientific and Technological Research Council of Turkey) and TTGV (Turkish
Technology Development Foundation) both compensate or grant R&D related expenses
and capital loans for R&D projects.
Projects eligible for TUBITAK incentives:
Concept development
TURKEY
Technological research & technical feasibility research
Laboratory studies in the translation of a concept into a design
Design and sketching studies
Prototype production
Construction of pilot facilities
Test production
Patent and license studies
Activities concerning the removal of post-sale problems arising from product design

Support for SMEs
SMEs are companies with less than 250 employees and less than TRY 25 million in revenue or
turnover per year. Incentives granted to SMEs include:
Exemption from customs duties
VAT exemption for imported and domestically purchased machinery and equipment
Credit allocation from the budget
Credit guarantee support
In order to meet financial needs of SMEs, a TRY 1 billion fund was transferred to the
Credit Guarantee Fund (KGF) by the Treasury to create credit capacity worth TRY 10
billion. The guarantee limit is TRY 1,000,000 per SME and TRY 1,500,000 for the risk group
that the SME related to. KGF covers up to 80 percent of the loan.

KOSGEB support to SMEs (www.kosgeb.gov.tr)
The Small and Medium Sized Industry Development Organization (KOSGEB) makes significant
contributions to strengthening SMEs by various support instruments in financing, R&D,
common facilities, market research, investment site, marketing, export and training.

Industrial Thesis (SANTEZ) program
Direct financial support for new technology, process development, quality improvement
and environmental modification projects achieved via university partnerships:
Up to 75 percent of the project budget could be supported by direct grants
Project term is 3 years, with a possible extension of 6 months
Laboratory analysis and test materials and equipment are supported
The application file could be approved within 4 months, and the project supervision
committee is independent

Loans for technology development projects
The Technology Development Foundation of Turkey (TTGV) offers long term interest-free
loans for technology development, renewable energy production, energy efficiency
improvement and environmental impact-reduction projects.
Exemplary support for environmental projects:
The maximum contribution rate is 50 percent per project
Maximum budget of USD 1 million per project
The pay-back term is 4 years in total after project execution, including a one-year grace
period

Training support
ISKUR, the National Recruitment Agency, may support vocational training projects for a
maximum period of 6 months.
Direct salary support for interns, and unemployed candidates that are registered at
ISKUR, (partial wage=TRY 15/day) during the pre-employment training session
Social security premium expenses (Occupational accidents and occupational diseases) are
covered by ISKUR.
Program expenses such as the trainer's fee, energy and water bills are partially paid to
the employer by ISKUR. The total amount is calculated by the cost per trainee and the
employer must bill ISKUR for the services given.
ISKUR considers the employer (company) the legal party in this training program.
TURKEY
A certain number (percentage) of trainees must be employed after the program.
The Ministry of National Education cooperates for:
Vocational schools with the desired programs could be opened according to the decision
of the Ministry.
The general cost of a trainee team for the adaptation of every requested program on a
present vocational high school could be supported by the Ministry.

State aid for export
The main aims of this scheme are to encourage exports and to increase the competitiveness
of companies in international markets. This specific package mainly covers R&D activities,
market research, participation in exhibitions and international fairs, and expenditure for
patents, trademarks and industrial design.

TURKEY


Foreign trade

The Turkish economy has shown remarkable performance with its steady growth over the last
eight years. A sound macroeconomic strategy in combination with prudent fiscal policies and
major structural reforms in effect since 2002, has integrated the Turkish economy into the
globalized world, while transforming the country into one of the major recipients of FDI in its
region.

The structural reforms, hastened by Turkeys EU accession process, have paved the way for
comprehensive changes in a number of areas. The main objectives of these efforts were to
increase the role of the private sector in the Turkish economy, to enhance the efficiency and
resiliency of the financial sector, and to place the social security system on a more solid
foundation. As these reforms have strengthened the macroeconomic fundamentals of the
country, inflation drastically decreased to 6.4 percent by the end of 2010, down from 30
percent in 2002, while the EU-defined general government nominal debt stock fell to 41.6
percent from 74 percent in a period of eight years between 2002 and 2010. Hence, Turkey
has been meeting the 60 percent-EU Maastricht criteria for the public debt stock since
2004.

As the GDP levels more than tripled to USD 736 billion in 2010, up from USD 231 billion in
2002, GDP per capita soared to USD 10,079, up from USD 3,500 in the given period.

The visible improvements in the Turkish economy have also boosted foreign trade, while
exports reached USD 114 billion by the end of 2010, up from USD 36 billion in 2002. Similarly,
tourism revenues, which were around USD 8.5 billion in 2002, exceeded USD 20 billion in
2010.

Significant improvements in such a short period of time have registered Turkey on the world
economic scale as an exceptional emerging economy, the 16th largest economy in the world
and the 6th largest economy when compared with the EU countries, according to GDP figures
(at PPP) in 2010.

Prior to the recent global recession which hit all economies throughout the world, the Turkish
economy sustained strong economic growth for 27 quarters consecutively, making it one of
the fastest growing economies in Europe. However, the global financial crisis has
considerably challenged the macroeconomic and financial stability of many economies by
adversely affecting financing facilities and external demand, thus causing a significant
slowdown in all global economic activities.

While the financial markets in Turkey proved resilient to the crisis, the decrease in external
demand and slowing international capital flows have had a negative impact on the economy,
thus causing an economic contraction in 2009. However, the perceived positive developments
in the economy showed signs of a fast recovery beginning as early as the last quarter of 2009,
with an impressive 5.9 percent economic growth rate, hence making Turkey one of the
fastest recovering economies in the world. Its robust economic growth continued in 2010 as
well, having reached 12 percent, 10.3 percent, 5.2 percent and 9.2 percent in the first,
second, third and fourth quarters of 2010 respectively, thus achieving an overall growth rate
of 8.9 percent throughout 2010. Turkey, with such a robust economic performance, stood out
as the fastest growing economy in Europe and one of the fastest growing economies in the
world.
TURKEY
Due to the implementation of the liberalization process since the 1980s, the Turkish economy
has experienced a period of substantial growth. Foreign trade, in respect of both exports and
imports, has grown rapidly and notable changes in the structure of exports have been
observed. In this regard, industrial products have gained prominence over agricultural
products.
Turkey became a member of the World Trade Organization (WTO) in 1995. Following this
move, it finalized an agreement with the European Union, enabling it to join the Customs
Union on January 1, 1996.

Balance of Payments:
Financing of Current Account Deficit (USD billion)
2003 2004 2005 2006 2007 2008 2009 2010
1. Current Account
Balance
-7.5 -14.4 -22.3 -32.2 -38.4 -42 -14 -48.5
2. Total Capital Inflows
(Excluding Currency and
Deposits & Reserve Assets)
6.4 20.1 37.7 48.5 48.2 45.3 3 43.3
FDI Inflows 1.7 2.8 10 20.2 22 19.5 8.4 9.1
External Borrowing of Non-
Bank Private Sector (net)
2.3 7.7 12.6 17.1 28.7 26 -12.9 -5.2
Other (net) 3.1 9.7 15.1 11.2 -2.5 -0.2 7.4 39.4
3. Errors and Omissions 4.5 1.1 2.8 0.2 1.8 4.7 5.1 4.6
4. Currency and Deposits 0.7 -6 -0.3 -10.3 -3.5 -9.1 6.1 13.5
5. Change in FX Reserves -4 -0.8 -17.8 -6.1 -8 1.1 -0.1 -12.8
Source: Central Bank of the Republic of Turkey (CBRT)

Current Account Deficit / GDP (%):
Source: Central Bank of the Republic of Turkey (CBRT), Under secretariat of the Treasury
(*) with 2002 energy prices

TURKEY
Exports and Tourism Revenues have increased at a record pace over the last few years.

Source: Turkish Statistical Institute (TurkStat)

In 2008, Turkeys exports and imports reached an all-time high; exports increased by 23
percent, reaching USD 132 billion, while imports rose by 19 percent, hitting USD 202 billion.
In 2009, the year of the global financial crisis, Turkey managed to secure USD 102 billion of
exports and USD 141 billion of imports. In 2010 exports grew by 12 percent to reach USD 114
billion.

Foreign Trade Statistics :
USD million
2003 2004 2005 2006 2007 2008 2009 2010
Exports (FOB) 47,253 63,167 73,476 85,535 107,272 132,002 102,143 113,930
Imports (CIF) 69,340 97,540 116,774 139,576 170,063 201,961 140,929 185,493
Foreign
Trade
Volume
116,593 160,707 190,251 225,111 277,334 333,963 243,072 299,423
Foreign
Trade
Balance
-22,087 -34,373 -43,298 -54,041 -62,791 -69,959 -38,786 -71,563
Exports /
Imports (%)
68.1 64.8 62.9 61.3 63.1 65.4 72.5 61
Exports / GDP
(%)
15.5 16.2 15.3 16.2 16.5 17.8 16.5 NA
Imports / GDP
(%)
22.7 25.0 24.3 26.5 26.2 27.2 22.8 NA
Source: Central Bank of the Republic of Turkey

Exports
In line with the policies implemented as part of the export-led development model followed
since 1980, exportation has become important to Turkey in both qualitative and quantitative
terms.
Starting in particular in 1980 and continuing up to the mid-1990s, significant developments
have been observed in the market share held by labor-intensive industrial products such as
textiles and clothing, iron and steel, and foodstuffs.
TURKEY
In 1996, following the establishment of a Customs Union with the European Union, Turkey's
exports entered a new structural transformation process. Developments in recent years show
that production and exportation have increased substantially in high-technology sectors,
where goods include electrical and electronic machinery and equipment, as well as in the
automotive industry. In this respect, it can also be observed that the export market share of
manufactured industrial products has increased.

Exports by Economic Activity:
USD million
2003 2004 2005 2006 2007 2008 2009 2010
Agriculture
and Forestry
2,121 2,542 3,329 3,481 3,725 3,937 4,347 4,941
Fisheries 81 103 140 131 158 240 189 156
Mining and
Quarrying
469 649 810 1,146 1,661 2,155 1,683 2,677
Manufacturing 44,378 59,579 68,813 80,246 101,082 125,188 95,449 105,518
Other 204 294 384 531 646 507 474 63
Total 47,253 63,167 73,476 85,535 107,272 132,027 102,142 113,929

Exports by Country Groups:
USD million
2003 2004 2005 2006 2007 2008 2009 2010
Total Exports 47,253 63,167 73,476 85,535 107,272 132,027 102,129 113,930
A-EU Countries 27,394 36,581 41,365 47,935 60,399 63,390 47,013 52,670
B-Turkey's Free
Zones
1,928 2,564 2,973 2,967 2,943 3,008 1,957 2,082
C-Other Countries 17,931 24,022 29,137 34,633 43,930 65,622 53,172 59,177
Other European
Countries
3,362 4,507 5,855 7,962 10,843 15,678 11,318 11,388
Africa 2,131 2,968 3,631 4,566 5,976 9,063 10,154 9,302
North African
Countries
1,577 2,203 2,544 3,097 4,030 5,850 7,416 7,042
Other African
Countries
554 765 1,087 1,469 1,947 3,212 2,739 2,260
Americas 4,269 5,733 5,960 6,328 5,603 6,532 4,878 6,085
North American
Countries
3,973 5,207 5,276 5,439 4,541 4,802 3,578 4,249
Central American
Countries and
the Caribbean
166 334 411 548 549 829 622 599
South American
Countries
131 193 274 341 514 901 678 1,237
Asia 7,813 10,465 13,213 15,257 20,309 32,505 25,898 31,899
Near and Middle
Eastern Countries
5,465 7,921 10,184 11,316 15,081 25,430 19,193 23,320
Other Asian
Countries
2,348 2,544 3,029 3,942 5,227 7,074 6,706 8,578
Australia and 158 264 271 327 343 435 362 403
TURKEY
New Zealand
Other Countries 197 84 208 192 857 1,410 561 102

Selected Country Groups:
OECD Countries 30,425 40,518 44,355 54,481 65,675 70,472 55,832 61,491
EFTA Countries 538 667 821 1,189 1,328 3,262 4,336 2,420
Organization of the
Black Sea Ec.
Cooperation
5,044 6,779 8,619 11,584 16,784 20,867 12,273 14,464
Ec. Cooperation
Organization
1,569 2,206 2,670 3,341 4,700 6,248 5,948 7,617
Commonwealth of
Independent States
2,963 3,962 5,057 6,993 10,088 13,938 7,957 10,295
Turkic Republics 899 1,194 1,409 1,982 2,874 3,749 3,399 3,922
Organization of the
Islamic Conference
7,205 10,214 13,061 15,007 20,311 32,597 28,627 32,509

Imports
The Turkish import regime highlights the liberalization of Turkish imports in line with its
commitment to complete the Customs Union with the EU, its relationship with EFTA, and its
obligations under the World Trade Organization (WTO). Turkey has placed special emphasis
on its commitment to reduce customs duties in order to align itself with the Common
Customs Tariff. Turkey has made some necessary modifications to its import regime, and by
January 1, 1996 the Customs Union with the EU became effective.
The basic aims of Turkeys import policy since the early 1980s can be summarized as follows:
To reduce protectionist measures in conformity with the new GATT rules
To reduce bureaucratic procedures
To secure a supply of raw materials and intermediary goods at suitable prices with
certain quality standards

Turkey's Membership of International Trade Organizations
Turkey has been a member of the World Trade Organization (WTO) since 1995. The countrys
commitment to integrating regional and international trade norms can be seen in its
participation in and membership of various organizations, including the Economic
Cooperation Organization (ECO), the United Nations Conference on Trade and Development
(UNCTAD), the Organization of the Black Sea Economic Cooperation (BSEC), the World
Customs Organization (WCO), the International Chamber of Commerce (ICC), D-8, and various
other organizations.
In addition to the Customs Union with the EU, Turkey has signed Free Trade Agreements
(FTA) with Iceland, Norway, Switzerland and Lichtenstein, Georgia, Israel, the Former
Yugoslav Republic of Macedonia, Croatia, Bosnia-Herzegovina, Tunisia, Morocco, the
Palestinian Authority, Syria, Egypt, Albania, Montenegro, Serbia, Chile, Jordan, and Lebanon
(where Lebanon is in the ratification process).

Import Regime of Turkey
The Turkish Import Regime is based on the Import Regime Decree which was originally
published in the Official Journal, dated 31 December 1995 and No: 22510. At the end of each
year, this decree is amended by a Supplementary Decree which specifies the upcoming year's
regime details.
For the year 2010, the Supplementary Decree for the Import Regime Decree - 2009/15710
was published in the Official Journal, dated 31 December 2009 and No: 27449 bis. 2 (came
into force as of 1 January 2010). In the current import regime there are 6 different lists as
defined below:
TURKEY
Agricultural Products (List I)
Industrial products (List: II )
Processed agricultural products (List: III )
Fish and fishery products (List: IV )
Suspension list (List: V )
Civil Aircraft and Goods for Use in Civil Aircraft (List VI)
The Annexes of the Import Regime Decree - Along with the 6 different lists mentioned above,
there are 6 annexes to the current import regime decree:
Annex I - Additional Code-by Composition (Meursing Table)
Annex II - Agricultural Component table
Annex III - The List of Countries and Territories which benefit from Generalized
System Of Preferences (GSP)
The List of Developing Countries (also shows the Chapters Excluded from GSP)
Countries Benefiting from Special Incentive Arrangements
The List of The Least Developed Countries
Annex IV - Chapter List
Annex V- Product Group List (listing the Sensitive and Non-sensitive products within
the Generalized System Of Preferences (GSP) concept)
Annex VI - Abbreviations

The Additional Code-by Composition (Meursing Table) and Agricultural Component table
Are used to define the agricultural component of certain products. Here you can find
additional codes for agricultural products by entering the products content of milk fat, milk
protein, sugar/invert sugar/glucose and starch/glucose.

Customs Union and Free Trade Agreements (FTA)
A Customs Union Agreement between Turkey and the European Union has been in effect since
1996. The agreement allows trade between Turkey and the EU countries without any customs
restrictions. The EU-Turkey Customs Union is one of the steps towards full Turkish
membership of the EU itself. Turkey has FTAs with 20 countries, creating a free trade area
in which the countries agree to eliminate tariffs, quotas and preferences on most goods and
services traded between them.

TURKEY


General considerations, types of sources

Turkey provides various incentives and grants to the investors for the purpose of facilitating
larger investments and capital contributions by the local and foreign investors and
eliminating the regional imbalances. Although a new incentive regime is being discussed in
order to boost exports and diminish imports, the current incentive regime is in line with
Turkeys commitments under the WTO and EU Customs Union, hence, it is within the scope of
international liabilities and commitments of Turkey.


National Programs

Initial Investments in business start-up and development
EU FUNDS - From 2007 onwards, EU is channelling its pre-accession funding through one single
instrument called the Instrument for Pre-Accession Assistance (IPA).
This new instrument is drawn from the European Commissions experience with previous
enlargements and the needs of candidate and potential candidate countries.
IPAs aim is to be a bridge between external assistance and internal policies.
IPA objectives are the following:
Support Turkey in its bid for membership, including the necessary economic, political
and social reforms
Help prepare the country for the management of structural funds
IPAs five components are:
Transition Assistance and Institution Building Component I
Regional and Cross-Border Co-operation Component II
Regional Development Component III
Human Resources Development Component IV
Rural Development Component V
This components includes programmes affecting SMEs directly or in-directly.

GRANTS

KOSGEB (Small and Medium Enterprises Development Organization) - www.kosgeb.gov.tr

Entrepreneur Support Programme Objectives:
Developing and disseminating the entrepreneurship as the basic factor for solving the
economic development and employment issues,
Establishing successful and sustainable enterprises,
Disseminating the entrepreneurship culture,
Developing entrepreneurship by establishing the Business Improvement Centers (BICs),
Raising the employment level,
Supporting the entrepreneurship based on the local dynamics

SME Project Support Program Objectives:
Need for a program in which the problems specific to the enterprises are handled in
those enterprises' projects that can financially be supported.
Developing the project preparation culture and awareness in SMEs,
Enhancing enterprises' project developing capacity,
TURKEY
Need for flexible supporting system

R&D, Innovation and Industrial Application Support Program Objectives:
Developing the SMEs and entrepreneurs possessing new ideas and inventions
Supporting techno-promoters who have technologic ideas,
Disseminating R&D awareness throughout the SMEs and expanding R&D capacity
Enhancing actual R&D support
Supporting innovative activities
Need for support mechanism for the commercialization and the industrial application of the
R&D and innovation project's output

KOSGEB Cooperation, Collaboration, Support Program
The Program aims at bringing together the SMEs under the mentality of Cooperation-
Collaboration for
Finding common solutions for common problems,
Finding solutions for problems such as supply, marketing, low capacity utilization, low
competitiveness and finance for which SMEs find it too difficult to find solutions on
their own,
Transforming SMEs into enterprises with high capacity utilization and competitiveness,
Making source-saving by means of scale economy, Developing a partnership and
cooperation culture among SMEs.

R&D, Innovation and Industrial Application Support Programme Objectives:
Developing the SMEs and etrepreneurs possesing new ideas and inventions
Supporting techno-promoters who have technologic ideas,
Disseminating R&D awareness throughout the SMEs and expanding R&D capacity
Enhancing actual R&D support
Supporting innovative activities
Need for support mechanism for the commercialization and the industrial application
of the R&D and innovation project's output

TKDK (Agriculture and Rural Development Support Institution) - www.tkdk.gov.tr
Within the scope of IPARD, the EU distributes rural development grants through TKDK in
Turkey. The grants will be distributed in 42 cities until 2013.
to contribute to the modernisation of the agriculture sector (including processing)
through targeted investments while at the same time
encouraging the improvement of EU acquis related food safety, veterinary, phyto-
sanitary, environmental or other standards as specified in the Enlargement Package
to contribute to the sustainable development of rural areas."
as well as "preparatory action for implementation of the agri-environmental measures
and local rural development strategies."

Regional Development Agencies (RDA)- Objectives:
to provide the technical support to the planning works of local authorities
to support activities to carry out regional plan and programme, follow and report to
The Ministry of Development
to support to improve capacity
to observe projects are carried out by public sector, private sector and non-
governmental organizations in that zone
to enhance cooperation between public sector private sector and non-governmental
organizations
to use of sources are available to regional plan and programme
to determine regional resources and facilities, enhance social development and
support researches for increasing competitive capacity
to introduce business and investment facilities of that zone national and international
to coordinate and follow warrant and permission procedure of investors in that zone
TURKEY
to support small and medium entrepreneurs in different ways.
to introduce international programmes that turkey joined

There are 26 development agencies in Turkey and they are shown at table below:

Names of The Development
Agencies
Provinces covered by the development agency Websites
zmir DA zmir www.izka.org.tr
ukurova DA Adana, Mersin www.cka.org.tr
stanbul DA stanbul www.iska.org.tr
Dou Anadolu DA Btlis,Hakkari,Mu, Van www.daka.org.tr
Orta Karadeniz DA Amasya, orum, Samsun, Tokat www.oka.org.tr
Kuzey Dou Anadolu DA Bayburt, Erzincan,Erzurum
www.kudaka.org.tr
Mevlana DA Karaman, Konya
www.mevka.org.tr
pekyolu DA Adyaman,Gaziantep,Kilis
www.ika.org.tr
Karacada DA Diyarbakr, anlurfa www.karacag.org.tr
Dicle DA Batman, Mardin,rnak, Siirt www.dika.org.tr
Trakya DA Edirne,Krklareli,Tekirda www.trakyaka.org.tr
Gney Marmara DA Balkesir,anakkale www.gmka.org.tr
Gney Ege DA Aydn, Mula
www.geka.org.tr
Kuzey Ege DA Afyonkarahisar, Ktahya, Manisa,Uak
www.egekalkinmaajansi.org
Bursa, Eskiehir, Bilecik
DA
Blecik, Eskiehir, Bursa
www.bebka.org.tr
Dou Marmara DA Bolu, Dzce, Kocaeli, Sakarya, Yalova www.marka.org.tr
Ankara DA Ankara
www.ankaraka.org.tr
Bat Akdeniz DA Antalya, Burdur, Isparta
www.baka.org.tr
Dou Akdeniz DA Hatay, Kahramanmara, Osmaniye
www.dogaka.org.tr
Ahiler DA Aksaray, Krkkale, Nevehir,Krehir, Nide www.ahi-ka.org.tr
Orta Anadolu DA Kayseri, Sivas, Yozgat www.oran.org.tr
Bat Karadeniz DA Bartn, Karabk, Zonguldak www.bakka.org.tr
Kuzey Anadolu DA ankr, Kastamonu, Sinop www.kuzka.org.tr
Dou Karadeniz DA
Artvin, Giresun, Gmhane, Ordu, Rize,
Trabzon
www.doka.org.tr
Serhat DA Ar, Ardahan, Idr, Kars www.serka.org.tr
Frat DA Bingl, Elaz, Malatya, Tunceli www.fka.org.tr
Source: Ministry of Development

Turkish Technology Development Foundation (TTGV) www.ttgv.org.tr
The Turkish Technology Development Foundation was set up to raise the industrial sectors
awareness of R&D and to support technological development projects in the Turkish Industry
through the funds provided by the Under Secretariat of Treasury from the resources of the
World Bank. This Foundation continues its activities as a successful example of Private and
Public Sector cooperation. In this respect, the Foundation promotes the R&D activities of the
industrial sector; contributes to the creation of the necessary infrastructure for technology to
produce a commercial and marketable product, system or service; provides financial support;
and undertakes studies aimed at improving the legislative and institutional framework for
R&D.

TURKEY
Technology and innovation funding programmes directorate (TEYDEB)
Aiming to fasten the process of conversion of the technology to profit, Technology and
Innovation Funding Programs Directorate (TEYDEB) was established to fund the technology
development and innovation activities of the companies in Turkey. Thus, it is targeted to
increase research-technology development capability, innovation culture, and
competitiveness of Turkish companies. In line with these objectives, TEYDEB designs and
executes various funding programs. TEYDEB contributes to the process of transformation of
technology in to the common good considering that it is the most important economic
development source. In line with these targets, TEYDEB encourages research and
development activities of private companies settled in Turkey. TEYDEBs vision is to support
Turkish private companies to be more competitive around the world in the fields of research,
technology management and innovation and become worldwide known enterprise with
exemplary applications. TEYDEBs mission is to boost the global competitiveness of Turkish
private companies equipped with research, technology development and innovation
capabilities and play a leading role in the creation of entrepreneurship culture to improve
prosperity of the country. TEYDEB has been using the following means to reach the mission:
Designs, develops and implements project based on Research, Technology and
development (RTD) funding instruments so as to share risks of companies resulted by
RTD activities,
Facilitates the formation of co-operation between industry and academia to get them
actively involved in design of the technology transfer mechanisms,
Designs and implements evaluation and monitoring systems to determine socio-
economic impact of its funding programs.
Organizational structure of TEYDEB is flexible to deal with new programs and activities.
There are currently five technology groups in TEYDEB:
Machinery and Manufacturing, Electrical and Electronics, Material, Metallurgical and
Chemical, Biotechnology, Agricultural, Environmental and Food, Information Technologies.
These technology groups were established not only to evaluate and monitor R&D projects in
their domains but also to assist companies to mature their project ideas, give an impetus
them make collaborations with academia.

Industrial Thesis (San-Tez) Program http://sagm.sanayi.gov.tr
The Industrial Thesis (SAN-TEZ) Program will help our SMEs forming a large proportion of our
industry acquire an R&D and Technology Culture, solve their problems by using the
knowledge produced at universities, and gain the habit to solve their problems in cooperation
with universities, and is also a support mechanism which will help the academics who carry
out studies for to-be-commercialized products turn their studies into value added.

EU Programs
From 2007 onwards, EU is channeling its pre-accession funding through one single instrument
called the Instrument for Pre-Accession Assistance (IPA).
This new instrument is drawn from the European Commissions experience with previous
enlargements and the needs of candidate and potential candidate countries.
IPAs aim is to be a bridge between external assistance and internal policies.
IPA objectives are the following:
Support Turkey in its bid for membership, including the necessary economic, political
and social reforms
Help prepare the country for the management of structural funds
IPAs five components are:
Transition Assistance and Institution Building Component I
Regional and Cross-Border Co-operation Component II
Regional Development Component III
Human Resources Development Component IV
Rural Development Component V
This components includes programmes affecting SMEs directly or in-directly.

TURKEY
Research and Innovation
European Union Framework Programme FP7 http://www.fp7.org.tr/
EU Framework Programme is the main Community Programme which supports multinational
research and technology development projects in the EU.
FP7 aims at collecting all EU initiatives concerning research under one single umbrella in
order to achieve the Lisbon objectives.
FP7 is composed of the Special Cooperation Programme, Special Ideas Programme, Special
Individual Support Programme and Special Capacities Programme.
Eureka Programme http://www.eureka.org.tr/
It is the international cooperation platform through which market-oriented projects for
development of products and processes that are easy-to-be commercialized are supported.
EUREKA, established in 1985 by European Union and 18 countries including Turkey, has
supported more than 4000 R&D project and created more than 29 billion-Euro R&D volume
since then. EUREKA aims at ensuring standing R&D cooperation among large industrial
enterprises and SMEs, universities and research institutes in member countries in order to
enhance the competitiveness of Europe.
ISKUR Skills 10 support Programme http://bbs.beceri.org.tr/BBS/kurs.do
The Specialized Vocational Course Centres (SVCC) Skills 10 Project was initiated in order to
solve the problem of unemployment stemming from the supply and demand mismatch in the
labour market. This programme is a mobilization for skill-acquisition and employment. The
project started with the protocol concluded by and between Turkish Union of Chambers and
Stock Exchanges, Ministry of Labour and social Security, Ministry of National Education and
TOBB Economy and Technology University in 19 provinces and is today operational in 81
provinces. You can apply for the employment-guaranteed courses under the SVCC Skills 10
Project at the following web address:
Life-Long Learning Programme
The overall objective of this programme is to create an institutional framework, in harmony
with the EU practices and in line with the life-long learning perspective, in order to support
development and implementation of consistent and comprehensive strategies for enhancing
life-long learning and to provide individuals with the access to education to increase their
employment opportunities. The indicative total amount allocated for this call for proposals is
5.000.000 Euros, 85% of which is funded by the EU Commission and 15% by general budget of
Republic of Turkey as a co-financing activity.


World Bank http://www.worldbank.org
The World Bank provides vital financial and technical assistance for developing countries
worldwide. It consists of two development institutions: International Bank of Restructuring
and Development (IBRD) and International Development Association (IDA). Low-interest or
interest-free loans and grants are available through these institutions for developing
countries in field of education, health, infrastructure, agriculture and so on.

Turkish Development Bank http://www.kalkinma.com.tr/
The overall objective is to provide loans for joint stock companies under the mentality of
profitability and productivity, and provide them with finance and operational support by
means of participation, to direct both domestic and international savings towards
development-oriented investments, to contribute in development of capital markets, to
finance both domestic and international joint investments and to carry out any development
and investment banking function.

Turkish Eximbank www.eximbank.gov.tr/
TURKEY
Main objectives of Turkish Eximbank include improvement of exports, diversification of goods
and services exported, finding new export markets, increasing the share of exporters in
international trade and supporting them in their initiatives, giving contractors and investors
operating in international arena competitiveness and guarantees they need, and supporting
and promoting foreign investments and production and marketing of goods and services
produced for exporting purposes.
Turkish Eximbank has branch offices in Istanbul and Izmir, and contact offices in Denizli,
Kayseri, Gaziantep, Bursa, Adana and Trabzon.

Turkish Investment Support and Promotion Agency (TISPA) www.invest.gov.tr/
The goal of Investment Support and Promotion Agency (TISPA) of Prime Ministry, Republic of
Turkey, is to promote the investment environment Turkey is offering towards the global
business community and to support the investors in any stage of the investment they make in
Turkey. TISPA renders services including
Market surveys and analysis,
Industry and sector reports,
Evaluations of investment conditions,
Field selection,
Finding companies for possible partnerships and joint ventures,
Ensuring correspondence and communication with relevant public authorities and
institutions,
Simplification of legal procedures and legislations in establishment of companies,
incentive applications, licensing and working/residence permits.

TURKEY



Turkey offers quite a sophisticated platform for entrepreneurs. It has a diversified industrial
base, a relatively stable political and economic environment, a critical mass of willing early
adopters, a considerable talent pool, a strong domestic market and underserved neighbouring
markets. Yet, currently only 6 out of 100 people are entrepreneurs a very low rate given
the countrys level of development.

Some researches have identified many obstacles, including the high costs of navigating the
inefficient and inconsistent bureaucracy, the difficulty in protecting intellectual property
rights, and monopolistic marketplace dynamics in which dominant players abuse smaller
suppliers. It is also difficult to hire and fire in Turkey. According to the World Banks Doing
Business indicators, Turkey ranks among the most difficult countries in this regard (143 out
183 countries). Then there is the problem of limited access to capital. For Turkeys youth,
entrepreneurship seems like a pipedream given this financial limitation. Accordingly,
Endeavors (an entrepreneurship platform) entrepreneurship experts recommend that the
government launch alternative capital markets, incentivize small business lending and enact
regulatory reform labor laws (to allow for part-time, flex-time and long-term consultants).
Perhaps most difficult to change, as is often the case around the world, is culture. Although
entrepreneurs by necessity are generally respected for their work ethic, entrepreneurs by
choice who have other promising career options are often discouraged by their families.
High-impact entrepreneurs are admired but considered lucky. In addition, the absence of a
win-win social and business culture undermines entrepreneurship and innovation. Thus,
Turkey is in as much need for cultural capital as financial capital.

Beyond culture, there also lie challenges with skills and within the education system. Among
young Turks, vocational high school students are more inclined to explore entrepreneurship
as a career path than the more skilled students, but they lack business skills and the
necessary self-esteem due to a vocational school stigma. Endeavor has also found that the
average persons ability to identify business opportunities is low. Introducing entrepreneurial
thinking and entrepreneurship education early at all levels can go very far in nurturing a
culture that rewards prudent risk-taking. Turkey could also incentivize university-private
sector collaborations to expose students to the power of entrepreneurship.

Turkey has a lot of work to do to truly tap its entrepreneurial potential and reap the rewards
of its investment in R&D (according to the Legatum Prosperity report, Turkish investment in
R&D ranks in the top 30 worldwide). The good news is that there is recognition within the
government about the urgent need to remove barriers and create incentives. There is a tidal
wave of 12 million youth aged 15-24 about to enter the labour market and significant lay-offs
during the economic crisis have spurred new interest in entrepreneurial activity. Perhaps
added encouragement by President Obama later this month will connect the dots for Turkeys
government, universities and youth communities in seeing the powerful role
entrepreneurialism can play in turning this into an economic opportunity.

Since the beginning of the 1990s, there has been in an increase in womens entrepreneurship
development activities by public institutions and civil society organizations as well as
international organizations in Turkey. This unforeseeable increase is the result a growing
interest in womens entrepreneurship in relation to womens economic participation in
Turkey. Promoting entrepreneurship among women has been seen increasingly as a solution
to womens unemployment, as well as a means through which women can have a certain
degree of economic independence.
TURKEY

Despite the rapid proliferation of policies, programs and activities in the area, there has
been no thorough and systematic account of these efforts to understand the current state of
womens entrepreneurship. What have the states policies towards womens
entrepreneurship been? What kinds of measures have been taken to encourage and support
women entrepreneurs by government agencies and other public institutions? Which NGOs
have been actively involved in activities aiming to encourage women to become small
entrepreneurs? Who are the targets of the projects? How many projects have been
implemented in recent years and where have they been located geographically? What has the
role played by international organizations been? Have womens entrepreneurship projects
been started as a result of a real need raised by the women involved?

Main characteristics of entrepreneurial activity
During 2010, 3.73 % of the adult population in Turkey was nascent entrepreneurs and 5.08%
new business owners. The TEA was 8.59%, slightly higher than the average of 6% recorded for
2006 2008. The established business ownership rate (owned and managed a business older
than 42 months) was 10.73% indicating that the survival of early-stage businesses in Turkey is
much higher than the year of 2008 (5.46%).

In terms of motivation, almost 1.43 times as many respondents cited opportunity (4.58%) as
opposed to necessity (3.19%) as their reason for starting a business. The male entrepreneurial
activity rates (13.45%) are 3.6 times higher than that for females (3.67%). Although there is a
slight increase in the number of women active as early-stage entrepreneurs in 2010, Turkey
has the 4th highest male/female ratio among the GEM (Global Entrepreneurs Monitor)
participating countries. Growth aspirations of early-stage entrepreneurial business (more
than 10 employees and more than 50% expected growth in the next 5 years) are 27% which
remains stable compared with 2008. Turkey still has a high growth aspiration among GEM
countries (ranked 4th in the list of GEM countries).

Entrepreneurial activity & the economic crisis
The GEM outcomes for 2010 are, on the whole in line with the findings for previous years
indicating that entrepreneurial activity in Turkey is increasing slightly. This years results
confirm the tendency observed in previous years regarding an increase in necessity based
entrepreneurs (from 1.79% in 2006 to 1.98% in 2007, to 2.3% in 2008, to 3.19% in 2010), which
also explains part of the increase in the total early-stage entrepreneurship. Two-thirds of
early stage entrepreneurs claimed that the starting a business is more difficult compared to a
year ago, whilst 45% felt it was more difficult to grow a business compared to a year ago.
However, the majority of start-up or existing businesses still see more opportunities for their
business.

All perception variables, shown to be important in an individuals decision to become an
entrepreneur, are more positive for men than for women: more than 68% of men and only
40% of women believe that they have skills, experience and knowledge needed for
entrepreneurship; almost 41% of men and 31% of women believe in good business
opportunities in the next 6 months; 28% of men and 37% of women stated that fear of failure
would prevent them from starting a business and 68% of men and 40% of women know a
person who started a business in the past two years.

TURKEY

COOPERATION

Infrastructure
The Turkish infrastructure sector attracts more and more investors every day, focusing on
long-term business opportunities.The national and local authorities in Turkey have been
implementing numerous infrastructure projects through Public and Private Partnership (PPP)
and they are also keen to realize further infrastructure projects in education, energy,
defense, health, transportation and other public services.
The Information and communication Technologies (ICT)
The Information and communication technologies (ICT) sector has become an essential part
of the economy, in particular social life, since it is directly or indirectly affecting the ever-
changing business world. Turkey is well aware of the fact that this sector will have a much
more influential role in the future than it currently has. Searches for solutions brought about
by this development and growth, which are appropriate for the requirements of today, and
the efforts to enable todays economic and social life to acquire these most up to date and
fast solutions instantly, together form the basis of information and communication
technology, since these solution searches basically require the utmost efficient utilization of
both time and physical resources. In this regard, Turkey has increased its interest in the ICT
sector further, and started the necessary studies so as to have a voice in the sector in the
future. The greatest indicators of these efforts are the new initiatives and R&D Law issued
for the investors.
Environmental Technologies
Investments in environmental technologies are highly supported by government in Turkey.
Attracting environmentally friendly investments is also a key objective of the Investment
Support and Promotion Agency of Turkey (ISPAT). Local municipalities in Turkey also play an
important role in recycling, water purification, waste-sewage treatment, environmental
remediation and solid waste management. Energy efficiency is an essential part of the
environmental policies in Turkey. Turkey has implemented most of the European legislation
on energy efficiency.: Renewable energy is an important segment of environmental
technologies. Turkeys primary energy sources include hydropower, geothermal, wood,
animal and plant waste, solar and wind energy. Turkeys geographical position has several
advantages for extensive use of most of these renewable energy sources. The Renewable
Energy Law was enacted in 2005 in order to encourage renewable energy generation in
competitive market conditions.
Support Centers
The fact that companies have started to give importance to customer relations, that retail
channels in the market have increased, that the personal banking is developing and that new
technologies are being integrated into business processes have, together, led to the
development of the call center sector. Within this framework, the number of personnel
working in call centers has significantly increased, and the customer relations field has
become more professional, with the result that companies are focusing on their primary line
of business by outsourcing their customer relations management activities.
TURKEY
Energy
Turkey has become one of the fastest growing energy markets in the world in parallel to its
economic growth registered in the last eight years and is rapidly gaining a competitive
structure. The Turkish Electricity Transmission Company estimates that Turkeys demand for
electricity will increase at an annual rate of six percent between 2009 and 2023. The growing
energy demand in Turkey is one of the significant factors along with market liberalization and
the countrys potential role as an energy terminal in its region. These three factors play an
important role in shaping the investment opportunities in Turkey.
Financial Services
Turkeys financial sector is still in the development stage, with financial services ready for
further expansion, driven by solid economic growth along with declining interest rates and
inflation. According to the Turkish Banking Regulation and Supervision Agency (BRSA), the
Turkish financial sector increased by approximately 20 percent of CAGR between 2002 and
2010. As regards asset sizes, 77 percent of the assets belong to the banks, meaning that the
sector is dominated by the banks. The Turkish insurance sector is also developing rapidly with
25 percent of CAGR during 2002-2010, and has gained new momentum after the social
security reform that has introduced universal health insurance.
Real Estate
The Turkish real estate sector, offering ever-greater opportunities for investors every year,
has come to prominence especially in the last decade. Although with the recent economic
crisis and the global economic recession the European and US real estate markets have been
negatively affected, the real estate market in Turkey is still promising. While the reduction
in demand and a downward trend in house prices have been observed all over Europe,
according to TurkStat statistics the number of apartment units sold in Turkey in the second
quarter of 2011 increased by 18 percent compared with the same period of 2010, which
shows that the country has huge growth potential in the real estate sector.
Machinery
The machine manufacturing industry holds strategic significance in the development process
of countries creating a multiplier effect in economic development by defining the
manufacturing skills of other sectors through investment, intermediate goods and the
services it offers. A developed machine manufacturing industry provides a critical
competitive power over other countries in the manufacturing industry. The machinery
industry in Turkey has been growing at a rate of nearly 20 percent per year since 1990. The
growth of the Turkish machinery sector is backed by highly competitive and adaptable small
and medium-sized businesses (SMEs), which form the bulk of the industrial production in the
country.
Healthcare
The healthcare system in Turkey has entered a long period of development under the 2003-
2013 Health Transformation Program. The purpose of the program is to increase the quality
and efficiency of the healthcare system and enhance access to healthcare facilities.
Transportation and Logistics
Turkey lies between Europe and Asia serving as a bridge geographically, culturally and
economically. In Turkey, investments in the transportation system are concentrated on land
transportation infrastructure, and the country has developed one of the largest land
TURKEY
transportation fleets in Europe. The network of highways has been developed significantly
and the highway length now stands at 64,865 km, of which 2,080 km are motorways. At
present 95 percent of passengers and 90 percent of goods are conveyed by highway transport.
Turkey has a competitive advantage in maritime transport since it is surrounded by seas on
three sides with the Mediterranean, the Aegean, and the Black Sea, together with the straits
of the Dardanelles and the Bosphorus. The length of Turkeys coastal borders is 8,333 km.
Food and Beverage
Turkeys food industry has registered a steady growth in recent years, with the Turkish
consumers becoming increasingly demanding, driven by the multitude of choices offered by
mass grocery retail outlets. Rising disposable income and changing consumption patterns,
along with the increase in the number of females in full-time employment, have all led to an
increase in interest as regards packaged and processed food, such as ready-to-eat meals and
frozen food. As the sector is getting more sophisticated, Turkey is becoming one of the
largest markets for baked goods with its bread - an important element of the Turkish diet -
leading to some of the highest rates of per capita consumption in the world. On the other
hand, subsector dairy products including milk, yoghurt, cheese, kefir and ayran (a drink made
of yoghurt and water) form an integral part of the traditional Turkish diet. Traditionally,
artesian, unpackaged products have dominated the Turkish dairy market, holding back
widespread growth but also posing a potential to the investors.
Agriculture
With its favorable geographical conditions and climate, Turkey is considered to be one of the
leading countries in the world in the field of agriculture and related industries. This
impressive position is best attested by rising exports in almost every kind of agricultural
products, placing the country amongst the worlds largest producers. The restructuring
efforts that began in the early 1980s, alongside a series of reforms such as privatizations and
the reduction of trade barriers in the agriculture sector, resulted in a domestic market that is
an integral part of the world economy today. Subsequently, agricultural exports, excluding
processed food, increased to USD 5 billion in 2010, up from USD 1.7 billion in 2002.
Tourism
As a country full of traces of various cultures that have influenced their time and geography,
Turkey has a cultural heritage with roots going as deep as the first civilizations ever recorded
in history. Home to a mosaic of people that have built empires, the countrys riches are so
extraordinarily diverse that visitors can experience a modern way of life, while at the same
time catching a glimpse of the distant past.
Data of Import and Export

FOREIGN TRADE BY INTERNATIONAL INDUSTRY STANDARD CLASSIFICATION
Million Dolar
Export
Y E A R
2008 2009 2010 2011
Agriculture and Forestry 3.937 4.347 4.935 5.169
Fishing 240 189 156 186
Mining and Quarrying 2.155 1.683 2.687 2.806
Manufacturing Industry 125.188 95.449 105.467 126.025
Others 507 474 639 786
T O T A L 132.027 102.143 113.883 134.972

TURKEY

Million Dolar
Import
Y E A R
2008 2009 2010 2011
Agriculture and Forestry 6.392 4.594 6.457 8.895
Fishing 41 31 33 49
Mining and Quarrying 35.650 20.625 25.933 37.331
Manufacturing Industry 150.252 111.031 145.367 183.923
Others 9.628 4.648 7.755 10.636
T O T A L 201.964 140.928 185.544 240.834

Source: Ministry of Economy

Tradenet Commercial Atlas is a guideline for
business relations between companies located in
the Black Sea basin - Romania, Bulgaria, Greece,
Armenia and Turkey.
Contact person:
Mrs. Rodica Belteu project coordinator
Tel. +40 241 550960
Fax. +40 241 619454
e-mail: een@ccina.ro

BLACK SEA TRADENET

Chamber of Commerce, Industry, Shipping and
Agriculture, Constanta

January 2012

This publication has been produced with the
assistance of the European Union. The content of
this publication are the sole responsibility of the
Chamber of Commerce, Industry, Shipping and
Agriculture, Constanta and can in no way reflect
the views of the European Union.

BST Atlas Full

Diunggah oleh

Informasi Dokumen

Judul Asli

Hak Cipta

Format Tersedia

Bagikan dokumen Ini

Bagikan atau Tanam Dokumen

Opsi Berbagi

Apakah menurut Anda dokumen ini bermanfaat?

Apakah konten ini tidak pantas?

Hak Cipta:

Format Tersedia

BST Atlas Full

Diunggah oleh

Hak Cipta:

Format Tersedia

Common borders. Common solutions.

TRADENET COMMERCIAL ATLAS

Anda mungkin juga menyukai