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24 Jun, 2009 12:53

IKEA halts Russian investment because of bureaucracy

The world's largest furniture retail group, IKEA, has put the brakes further Russian development due to what it describes as “the unpredictable character of administrative procedures in some regions."

Ikea says it will finish off projects that are already under construction, but will not commence new ones. The news comes after issues ranging from power bills through safety issues to road construction have clouded the relationship between the Swedish-Dutch company and Russia.

The company has invested about $4 billion into Russia, including a store in Samara which was supposed to open in November 2007, which has had its debut delayed 8 times. Russian officials said they were unaware of any problems and would investigate.

Per Kaufmann, IKEA’s global director for Russia and CIS, told RT that uncertainty about the Russian business environment and regulatory framework is a bigger disincentive than the economic downturn.

“We have problems in Samara where we have shopping central IKEA stores which we believe are ready but we are not getting the promise. So, from that point of view you can say that, well, I think, the investment climate has gone down, but I don’t believe that has got anything to do with the crisis. Has there been any big investments into one of these big centres in IKEA, it’s clear that if they are unable to open it up, then the board will also ask the question: do we dare to invest in other new centres, because if the same thing is happening there, then you are putting in money but you can’t sort of, say, sell”