Lukan Lukanov, Chairman of the Made in Bulgaria Union: A 10% increase in the consumption of domestic products will keep some BGN 1.5 bn in the country

- Mr. Lukanov, has the State overlooked small and medium-sized enterprises? What changes are needed in order for at least part of the companies’ problems to be addressed?
- Boosting small and medium-sized enterprises is the main problem which the State faces, according to our Made in Bulgaria Union. The difficulties of the country, at present, in terms of public finances, unemployment, low wages and low consumption are not a function of the global financial crisis but are due to the poor state of the local industry. In the Union of Producers in Bulgaria, we tried to achieve political consensus on a single issue in this country: that small and medium -sized businesses must be supported in order to create wealth and ensure economic prosperity. Goods have to be produced in Bulgaria. Therefore, the entire political energy should be directed towards guaranteeing conditions for the development of the local industry.

Such political consensus will enable us to look beyond the mandate of the ruling party and pursue a reasonable economic policy instead of party programmes. If this does not happen, very soon politicians will have nothing to spend.

- What is the right way to recover from the crisis? Is the great wave of bankruptcies of small and medium-sized companies and manufacturers over? How can the Government help?
- Businesses are in a poor condition, their decapitalisation continues in full swing. Apart from the global financial crisis, the domestic industry is constantly being stricken by blows of purely local origin. For example: retail chains continue to exert unchecked and rough pressure on Bulgarian producers, depriving them from their last chance for survival. Moreover, banks do not lend. They compensate their losses from operating activities with an increase in bank charges and commissions. The State, in its efforts to collect budget revenues, presses further the enterprises, subjecting them to massive tax inspections and other types of control. Money is being collected at a high price which we will have to pay, as a nation, a little bit later with widespread bankruptcies.

- What can be done in this situation?
- In addition to the primary role of the State, which must stand firmly and unconditionally behind all those enterprises which produce goods in Bulgaria, the civil society must realise what our national interest is. In Bulgaria, we need a bit of economic "nationalism." Bulgarians must become more rational in terms of their market choices. When choosing Bulgarian products, they make sure that a lot of money remains in the national economy and in the social security system. One example: if commercial turnover amounts to BGN 15 bn per year and the share of foreign goods in it is about 60%, this means that at least BGN 9 bn are being exported to various countries. A 10% increase in the consumption of Bulgarian products will keep some BGN 1.5 bn in our country.

- Competitiveness is a huge problem. How can Bulgarian goods become more competitive on international markets?
- I will point out how purely non-market instruments can be used to reduce the competitiveness of Bulgarian enterprises. First, our businesses pay up to two or three times higher distribution costs to retail chains than  multinational companies do. Second, Bulgarian enterprises have invested huge amounts of money for the implementation of standards and certification in line with EU requirements. As a result of this, the number of producers has declined and the prices of Bulgarian products have increased. Moreover, agricultural subsidies in the EU are several times higher,  which makes the imports of food to the relatively poor Bulgarian market possible. The interest rates on loans for domestic enterprises are many times higher than those in Europe. These interest rates are included in the prices of our products. We should not forget that Schengen and border control increase our logistics costs.

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