Innovative practices in Bulgaria
Sharing innovations for improving local self-government
Promotion of Foreign Investment
Municipality of Sevlievo
Background
The American Standard Corporation has some 100 enterprises world-wide. In 1992, it made a major investment in the Bulgarian bathroom fittings manufacturer Vidima-Ideal of Sevlievo. In December 1996, Sevlievo became the location of what was meant to become the biggest bathroom ware manufacturing facility in Europe. In little less than two years, in October 1998, the factory, known as Ideal Standard of Bulgaria, became operational, and 99 per cent of its current output is for export. The same year also saw the extension of the old Vidima-Ideal factory, now corporatized as Vidima AD. The total investment had reached US $40 million, with $15 million spent by American Standard in the space of the last two years to double the capacity of the old facility.
The American Standard Corporation has some 100 enterprises world-wide. In 1992, it made a major investment in the Bulgarian bathroom fittings manufacturer Vidima-Ideal of Sevlievo. In December 1996, Sevlievo became the location of what was meant to become the biggest bathroom ware manufacturing facility in Europe. In little less than two years, in October 1998, the factory, known as Ideal Standard of Bulgaria, became operational, and 99 per cent of its current output is for export. The same year also saw the extension of the old Vidima-Ideal factory, now corporatized as Vidima AD. The total investment had reached US $40 million, with $15 million spent by American Standard in the space of the last two years to double the capacity of the old facility.
Practice
Before deciding to invest in Bulgaria, American Standard considered other places like Ukraine, Romania, Morocco to host its major investment plans. Sevlievo, Bulgaria, was chosen because of the existing facility, Vidima-Ideal. The company s good management and working relations with the local government also came into play.
Of course, any new venture of such magnitude would provoke questions and concerns among the local public. A broad range of experts looked into every possible pro and con. The administration launched several rounds of public consultation until the Local Council made its first decisive step, allotting a site for the new plant. Later on, the administration offered full assistance with planning and infrastructure support. In return, the Mayor got his way by having the Bulgarian-American joint venture registered locally so that it could contribute to local revenue and provide further benefits to the community, such as:
A clean and cheap source of energy: the construction of a gas pipeline to reach Sevlievo, which was completed in November 1997. By the end of 1998, the gas distribution network in the town had reached more than half of the end users (including the City Hospital and four industries), measuring a total of 6.5 km. The entire investment to the tune of US $2.5 million was funded by American Standard.
Improved training facilities: the demand for skilled labor for the bathroom ware manufacturing lines resulted in upgrading the local vocational school. American Standard invested some US $100,000 in the remodeling and equipment of the school building.
Improved tourist facilities: the rehabilitation of the local hotel started at the beginning of 1999. Amstan Hotels, 70 per cent of which is owned by American Standard, proposes to invest US $1.6 million and have the project completed by October 1999. The City and the company are already planning for the renovation of the town center.
Before deciding to invest in Bulgaria, American Standard considered other places like Ukraine, Romania, Morocco to host its major investment plans. Sevlievo, Bulgaria, was chosen because of the existing facility, Vidima-Ideal. The company s good management and working relations with the local government also came into play.
Of course, any new venture of such magnitude would provoke questions and concerns among the local public. A broad range of experts looked into every possible pro and con. The administration launched several rounds of public consultation until the Local Council made its first decisive step, allotting a site for the new plant. Later on, the administration offered full assistance with planning and infrastructure support. In return, the Mayor got his way by having the Bulgarian-American joint venture registered locally so that it could contribute to local revenue and provide further benefits to the community, such as:
A clean and cheap source of energy: the construction of a gas pipeline to reach Sevlievo, which was completed in November 1997. By the end of 1998, the gas distribution network in the town had reached more than half of the end users (including the City Hospital and four industries), measuring a total of 6.5 km. The entire investment to the tune of US $2.5 million was funded by American Standard.
Improved training facilities: the demand for skilled labor for the bathroom ware manufacturing lines resulted in upgrading the local vocational school. American Standard invested some US $100,000 in the remodeling and equipment of the school building.
Improved tourist facilities: the rehabilitation of the local hotel started at the beginning of 1999. Amstan Hotels, 70 per cent of which is owned by American Standard, proposes to invest US $1.6 million and have the project completed by October 1999. The City and the company are already planning for the renovation of the town center.
Results
Over the 1996 1999 period, Sevlievo attracted foreign investment for the following projects:
the construction of the Ideal Standard bathroom ware manufacturing plant
the extension of the Vidima bathroom fittings manufacturing plant, which doubled its capacity
the construction of a gas pipeline and distribution network
the upgrading of the local ceramics industry vocational school
the rehabilitation of the local hotel
the creation of 1,500 new jobs
American Standard became a major fiscal revenue source for the City. For its contribution to the Sevlievo economy, the Foreign Investment Agency awarded the company the Investor of the Year Award in two consecutive years, 1996 and 1997.
In the meantime, the City has accumulated experience in investment promotion and has been able to secure EC/PHARE funding for the construction of a modern livestock market. In addition the ABB Concern of Switzerland has committed 4 million Deutsche marks for the rehabilitation and re-equipment of the ABB-Avangard electrical engineering plant.
Sevlievo s experience demonstrates that one of the most important conditions for a successful investment promotion program is full transparency and fair relations between the local authorities and their investment partners.
Over the 1996 1999 period, Sevlievo attracted foreign investment for the following projects:
the construction of the Ideal Standard bathroom ware manufacturing plant
the extension of the Vidima bathroom fittings manufacturing plant, which doubled its capacity
the construction of a gas pipeline and distribution network
the upgrading of the local ceramics industry vocational school
the rehabilitation of the local hotel
the creation of 1,500 new jobs
American Standard became a major fiscal revenue source for the City. For its contribution to the Sevlievo economy, the Foreign Investment Agency awarded the company the Investor of the Year Award in two consecutive years, 1996 and 1997.
In the meantime, the City has accumulated experience in investment promotion and has been able to secure EC/PHARE funding for the construction of a modern livestock market. In addition the ABB Concern of Switzerland has committed 4 million Deutsche marks for the rehabilitation and re-equipment of the ABB-Avangard electrical engineering plant.
Sevlievo s experience demonstrates that one of the most important conditions for a successful investment promotion program is full transparency and fair relations between the local authorities and their investment partners.
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