Source: Valor Econômico - SP, 13/07/2009

The website of Moscow's Mega-Samara shopping center shows a banner that reads “Opening soon!”. The problem is that no one knows how “brief” the public will be able to appreciate the skating rink, restaurants and 200 stores of the 1,4 million square foot development. The owner, Swedish furniture giant Ikea, says the mall has been ready for over a year. But local government officials say the building violates numerous security laws and rules.

The delay seems to have been the last straw for Ikea. The retail group said 16 days ago that it would suspend all new investment in Russia. Ikea's representative in Russia Per Kaufmann said in a statement that the decision "was due to the unpredictability of administrative processes in some regions", especially Samara. Kaufmann says Ikea intends to complete a handful of projects in progress, but plans for about 30 additional stores have been suspended.

It's an extraordinary turnaround for Ikea. The company - one of the largest foreign investors in Russia - has already poured about $ 4 billion into the country since the opening of the first store in 2000. Samara is its 12th, each anchoring a shopping mall with hundreds of other tenants. Ikea was so important in the Russian economic boom that today's yuppies are called the "Ikea generation".

Although Ikea did not say so directly, company officials have been letting on the fact that they are tired of corruption in Russia. Samara regional authorities, they say, create artificial obstacles, such as the requirement that the mall be able to withstand the force of winds close to a hurricane, even though there are no records of this type of occurrence in the region. In an interview with the German newspaper "Handelsblatt", Kaufmann said that a public official in Samara suggested that a particular local construction company could "help quickly" to resolve the alleged deficiencies.

Samara officials reject claims that the delays are linked to corruption. "To say that the government creates artificial barriers is an invention," says Gigibulla Khasaev, minister of economic development for the region. He says Ikea refused to correct defects and went public to "divert attention from the bad work it did".

This is not the first time that Ikea has problems in Russia. In 2004, executives were insulted when civil servants forced a last-minute postponement in a Moscow shopping center for alleged security concerns. The problem was resolved after Ikea appealed to President Vladimir Putin. Its founder, Ingvar Kamprad, told a Swedish radio on June 20 that Ikea has been “cheated” by $ 190 million in recent years because Russian state-owned companies have not provided the promised electricity. Despite the complaints, many believe that Ikea's disappointment will be short-lived.

In 2008, complaints from the company attracted the attention of the Russian government, concerned about the country's image in the world, which intervened to solve the problems. But for other investors, the Ikea case may well serve as a warning that the Russian bureaucracy remains a formidable barrier. (Translation by Mario Zamarian)