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Bulgaria pockets Greek jeans maker

Tuesday, May 29, 2012 - 02:43

May 29 - Hundreds of small Greek entrepreneurs, pushed to the wall by rising taxes, fees and uncertainty at home are looking north to Bulgaria to transfer their companies and benefit from its favorable tax rates, cheap rent and labor. Ethan Bilby reports.

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300 miles north of Athens they're making high fashion jeans for Greek shoppers. But this isn't Greece - it's Rakovski in southern Bulgaria. Greek businesses are flourishing in the former Soviet state - thanks to it's low taxes and relative economic stability. Iosif Komninakidis moved Staff Jeans and Co from Greece to reduce costs. (SOUNDBITE) (Bulgarian) MANAGER OF "STAFF JEANS & CO", IOSIF KOMNINAKIDIS, SAYING: "Our firm came here before the crisis in Greece. During the crisis sales in Greece went down 35 - 40 percent and the situation is getting worse." Staff Jeans employs 800 people in Rakovski - Komninakidis is now planning to move more of his operations to Bulgaria. (SOUNDBITE) (Bulgarian) MANAGER OF "STAFF JEANS & CO", IOSIF KOMNINAKIDIS, SAYING: "Business in Bulgaria is better due to a stable ten percent tax. When a businessman comes here from Greece, he knows he will have to pay ten percent of the profit, not nine, not eleven, just ten. In Greece they change the law two or three times a year and businessmen never know how much tax they will have to pay." Bulgaria joined the EU in 2007. Along with Cyprus it boasts the lowest corporation tax rate in the EU - less than half Greece's 20 - 25 percent Starting a new business is also cheap and easy. And the average monthly wage is just 350 euros - almost 40 percent less than in Greece. Greek businessman Meletios Melentis runs a electronics firm in Sofia - he moved to the Bulgarian capital because he says the Greek market is dead. (SOUNDBITE) (English) GREEK BUSINESSMAN, MELETIOS MELENTIS, SAYING: "The reason that I decided to leave Greece apart from the market is that we do not have a stable taxing system. Every day we have another tax coming which we have to pay in cash and the government and the rest of the people involved and responsible for that they do not consider the businesses dying." The prospect of Greece exiting the euro could bring more firms to Bulgaria but one local analyst says he hopes they don't. (SOUNDBITE) (Bulgarian) ANALYST WITH CENTRE FOR LIBERAL STRATEGIES IN SOFIA, GEORGI GANEV, SAYING: "If Greece leaves the euro zone, the impact for Bulgaria will be negative too, because if your neighbour goes through a tragedy you are likely to suffer as well." Greek firms have a history of taking advantage of cheap labour and low tax in post-communist economies. In the 1990s Greek snack maker Chipita and Coca-Cola Hellenic moved to the Balkans. In recent years firms from a variety of industries - including telecoms, construction and steelmaking - have crossed the border. But it's the recent exodus of entrepreneurs which is worrying many in Greece. More than a quarter of the 2,800 Greek-owned firms operating in Bulgaria were registered last year. Ethan Bilby, Reuters