INSIGHTS
Assoc. Prof. Milena Angelova has been Secretary General of the Association of Industrial Capital in Bulgaria (AICB) since 2002 and Vice-President of the European social partner representing service providers of general interest, SGI Europe, since 2011. Since 2007, she has been a member of the European Economic and Social Committee. She has been a member of the Economic and Social Council of the Republic of Bulgaria since 2006 and is an active participant in the processes of improving the socio-economic environment in the country. Since June 2022, Dr. Angelova has been the Ambassador for Small and Medium-sized Enterprises of the Republic of Bulgaria.
She has twenty-five years of successful experience in representing and defending the interests of the business community at European and national level, including on topics such as sustainable development and corporate social responsibility, promoting the development of small and medium-sized enterprises, innovation, knowledge and skills transfer, the future of jobs, etc. Associate Professor of Marketing and Sustainable Development at the Institute for Economic Research at the Bulgarian Academy of Sciences.
Assoc. Prof. Milena Angelova will participate in the international conference iN Sofia 2025 as a moderator and participant in “Panel 2: Regulations and Competitiveness.” The panel will focus on how businesses can adapt to the green transition and new European regulations while maintaining their economic sustainability and secure access to raw materials, with the support of European financial instruments.
Assoc. Prof. Angelova, you have repeatedly emphasized that “the green transition must be economically viable, not just imposed by regulations.” What are the most urgent regulatory burdens that need to be removed or simplified so that Bulgarian and European industry can make this transition without losing economic sustainability?
The savings for European companies if the stated intentions to simplify European legislation are realized are estimated at €37 billion. Such a significant resource could restore Europe’s lost competitive position. The Competitiveness Compass initiatives and the series of Omnibus-type simplification proposals offer hope for this. However, the concrete benefits for business are yet to be seen, possibly after the proposals are adopted.
For too long, Europe has been held hostage by excessive legal and regulatory obligations. The EU adopts one piece of legislation for every working hour – over 2,500 per year. Of course, simplification is a step in the right direction, but it is not enough on its own. The disproportionate administrative burden and excessive costs of complying with legal requirements must be eliminated.
To be effective, the process of simplification and reduction of requirements must extend beyond the CSRD-CSDDD-Taxonomy triad to the Regulation on deforestation and forest degradation, the Directive on industrial emissions, the Packaging and Packaging Waste Regulation, the Right to Repair Directive, and the Emissions Trading Directive, as a start.
The list could also include acts regulating the digital economy and cybersecurity (NIS2, CER Directive, CRA, GDPR), the Artificial Intelligence Act, and the Radio Equipment Directive. Some of the most burdensome regulations relate to employment and social policy, which also need to be reviewed with a view to easier and clearer implementation, such as the Works Councils Directive, the Directives on platform work, on pay transparency, and on traineeships. This is extremely important, as the savings made in complying with legislation not only have the potential to significantly improve competitiveness, but also to increase productivity, business sustainability, and long-term economic stability.
As a long-standing secretary general of the AICB, you argue that “a stable industry is the backbone of any successful economy.” Access to raw materials is a critical factor for this stability. What are the three biggest challenges facing Bulgarian industry at the moment and what is your vision for Bulgaria’s industrial policy to ensure a secure supply of raw materials in the new European industrial era?
Bulgarian industry faces many challenges. The reorientation of supply chains – both in terms of the supply of raw materials and the sale of finished products – is exerting serious pressure: geo-economic changes are leading to a significant increase in the cost of raw materials, and necessitate their delivery from more distant sources, while the prevailing average location in the supply chains for the sale of finished products severely limits the possibilities for increasing the prices of finished products and reduces the opportunities for making a profit or even covering costs. Excessively high electricity prices are also a limiting factor, the effect of which is exacerbated by the pressure exerted by the minimum wage, calculated as 50% of the average minimum wage, which is rising in an upward spiral, already outpacing labour productivity growth by more than 10 times.
At the same time, Bulgaria has serious potential in the real manufacturing sector, but in order to realize it, a clear and ambitious policy for reindustrialization is needed in the following areas:
- An education policy closely linked to the needs of industry, implemented through an admission plan, the promotion of protected specialties, and the encouragement of flexible professional qualification and retraining;
- A policy to fill the approximately 200,000 vacancies in the labor market by simplifying and facilitating procedures for third-country nationals to access it;
- Stimulating investment – through the intelligent use of opportunities provided by EU funds and by defending the position of Bulgarian industry in the negotiations on the Multiannual Financial Framework 2028–2034;
- Simplifying and easing administrative and legal barriers;
- Restoring the image of Bulgarian industry as an attractive place for career development through broad information campaigns.
During the Sofia 2025 event, the Carbon Border Adjustment Mechanism (CBAM) will also be discussed, which will inevitably increase costs for many companies. What measures can be taken at European and national level to ensure that Bulgarian industry does not lose its competitiveness when this mechanism is implemented?
The reduced competitiveness of European manufacturers compared to importers of goods produced outside the European Union (EU) is a real and serious economic problem. In recent years, the EU economy has lagged behind that of the US and China. The EU’s share of the global economy has fallen from 25.8% in 2004 to 17.6% in 2024. Over the same period, the EU’s share of global exports has fallen from 18.9% to 14%. The decline is most pronounced in heavy industries such as metallurgy, cement production, and the chemical industry. Emissions in the EU in these sectors have fallen by around 50% since 2005, but a significant part of this decline is due to lower production rather than technological improvements.
The EU’s ambitious climate policies, which lead to higher production costs, have had a significant impact on this process. While the EU reports absolute reductions in carbon emissions, production in China and India, for example, is based on carbon intensity. Their total CO₂ emissions are increasing due to the introduction of new coal-fired power plants. This creates overcapacity, leading to crises and the closure of key power plants in Europe. This trend leads to the risk of production being shifted outside Europe, with the associated loss of jobs. One of the main risks associated with the rising cost of production in the Union is so-called climate dumping. This occurs when third countries, either by choice or due to a lack of capacity, lag behind in the implementation of environmental standards and thus maintain lower production costs and more competitive prices.
In this context, it is important for the Bulgarian state to closely monitor the implementation of CBAM and to develop mechanisms for assessing its impact on the national economy, with a view to providing informed feedback to the EC. Given the start of the operational phase of the CBAM in 2026, the timely development of regulatory infrastructure and secondary national legislation is particularly important for the smooth and reliable functioning of the mechanism. In Bulgaria, there is currently no clear distribution of responsibilities regarding the application of the CBAM. According to the Climate Change Mitigation Act, the competent authority is the Executive Environment Agency (EEA), but physical imports and border controls are carried out by the Customs Agency (CA). It is imperative to formally define and distinguish the responsibilities of the CA from those of the EEA.
The transition period (2023–2025) is intended for training all stakeholders—importers, manufacturers, and control authorities. Comprehensible and systematic training in Bulgarian is required, as well as support for importers falling within the scope of CBAM. Currently, the CBAM Declarant’s Guide is only available in English and is 106 pages long. The “Frequently Asked Questions” section on the topic, to which the IAOS website refers, is also in English and is 57 pages long. National authorities must provide understandable information materials, webinars, checklists, and technical assistance to help businesses adapt to the new requirements.
It is imperative to adopt a process for verifying the accuracy of the content of declarations, including sampling and testing in laboratories of imported goods falling within the scope of CBAM. National customs authorities must adapt their procedures to integrate CBAM requirements, possibly through changes to customs declarations. Customs officials must be trained on CBAM provisions and procedures in order to effectively process CBAM-related import declarations.
Above all, it is necessary to ensure traceability of the economic impact of the Mechanism’s implementation, including its impact on the final market prices of the goods concerned, by ensuring effective and timely feedback at EU level.
In its preliminary draft opinion on the European Competitiveness Fund (ECF) Regulation, you recommend that it be renamed the “Competitiveness and Security Fund” and note that opening it up to third countries requires “particular caution.” Do you think that the Fund can successfully balance competitiveness and security, and what specific safeguards should be put in place to ensure that funding does not lead to the leakage of critical technologies?
The proposed renaming of the Fund is intended to clearly reflect the fact that, in fact, support is provided in greater proportion to security, in addition to competitiveness. However, these two priorities are neither contradictory nor mutually exclusive. Investing in technologies applicable in the field of security would also have a clear positive effect on competitiveness, especially with regard to dual-use technologies.
As for opening up funding to third countries, this is an existing technique brought in from the Horizon program. However, the condition is that these countries must be involved through partnership agreements and with the financing of the Fund – my recommendation is that this should be more clearly stated as a requirement in the Regulation.
The success of the EIF depends on attracting private capital, and in your report you talk about the need to support physical infrastructure, especially outside the major centers. How can the state encourage businesses to invest their own capital and use the Fund’s resources to develop infrastructure and logistics in order to attract more investment outside Sofia?
The Fund’s resources will be invested in projects that have a proven positive effect on improving European competitiveness. Of course, the question arises as to how such an effect, which will manifest itself in the future, will be assessed and measured. From this point of view, successful projects would be more international than national or regional in nature. This, of course, does not exclude the possibility of such international projects being implemented in the regions of Bulgaria. Similar opportunities are also provided by the increased attention to the Black Sea region, as highlighted in the EC’s communication published earlier this year, “A Strategic Approach to the Black Sea Region: Secure, Prosperous and Sustainable.”
In your opinion on the EFC, you insist that social partners be included in the management, and the principle of the Fund is to promote cooperation between small and large companies. What specific role should the social partners play in the management of the EFC and how can we actually build a working network for cooperation between SMEs, large businesses and research centres in Bulgaria?
Indeed, the management and decision-making mechanisms under the new EIF proposal are innovative in nature, in that they are not only intended to be established at European level, but also to work on the periodic preparation of work programs that will specify the priorities for investing EIF funds, in line with the development of external challenges. This raises the reasonable question of how the views and interests of Member States, regions, social partners, and potential beneficiaries at national, regional, and sectoral level will be taken into account. There is no easy answer. The main options under discussion relate to the use of existing structures within the EU, such as the European Network of SME Envoys, and the involvement of the European Investment Bank.
The main options under discussion are related to the use of existing EU structures, such as the European Network of SME Envoys, as well as the inclusion of special coordination and consultation mechanisms within the European Semester. The relevant ministries in Bulgaria should also play an active role here, actively stating these needs and defending them in the intensive negotiations that are currently underway.
We expect greater clarity on the subject in the second half of November, when the EC is expected to present a “Coordination Instrument for Competitiveness,” which should propose precisely the mechanisms for coordination, decision-making, and corrective action when necessary.
With regard to informing businesses, and SMEs in particular, there are plans to set up a “Europe for Business” support network, the idea being to build on the existing European Enterprise Network.
You point out that the Fund is based on old, not fully implemented policies and that “the Single Market is still not functioning effectively.” At the same time, the EFC brings together 14 programs under a single framework. How will the inefficient functioning of the Single Market affect the success of the EFC, and how can we ensure that bringing together so many programs will actually facilitate business rather than burden it with new administrative rules?
The inefficient functioning of the single market is an obstacle to the active inclusion of Bulgarian SMEs in supply chains. In the EU, there are still too many differences between Member States in terms of rules for doing business, access to national markets, and specific requirements related to this.
In your report, you warn of the risk of “picking winners” and suggest that the evaluation process should be “more flexible, interactive, and open” to ensure a level playing field. What do you think should be the three most important indicators for evaluating projects in order to avoid “picking winners” and ensure that funds also reach small businesses and more remote regions?
Firstly, it is good to have an indicator that ensures the inclusion of projects from all Member States. Furthermore, in order to encourage the inclusion of enterprises from Member States that are further away from the chain leader in value chains, it is important to have a positive incentive proportional to the scope of the chain in order to also encourage the reorientation of value chains within the EU. Furthermore, SME support schemes should be administered at national level in order to facilitate and simplify the process.
At the iN Sofia 2025 event, you will moderate a key panel on regulation and competitiveness, together with MEPs and deputy ministers. What is the most important message you would like to send to Bulgarian businesses striving to be competitive in the new European industrial era?
Be active, connected, open to new opportunities and proposals, seek information and ask questions. Bulgaria has a well-established network for providing information and advice—through employer organizations at the national, regional, and sectoral levels and through the information and advisory services set up by the institutions. In Europe, alliances of interested parties are already forming to establish future partnerships and collaborations that will apply for access to EFC funds. Examples include:
- The Clean Battle Consortium, together with the EBRD, which aims to support the development, construction, and financing of electricity storage technologies and projects to accelerate the transition to clean energy;
- The Commvault Storage Accelerator, which focuses on technical software to improve data replication and storage in cloud libraries;
- The European Battery Alliance
Translated with DeepL
