March 9, 2016 / 9:49 AM / a year ago

IKEA to start building first store in Serbia after long delay

KOPAONIK, Serbia, March 9 (Reuters) - - IKEA, the world's biggest furniture retailer, expects to start building its first store in Serbia in the coming weeks, following seven years of delays due to bureaucratic procedures, the company's director for Southeast Europe said.

Serbia, a European Union candidate country, has amended a number of laws over the past few years to improve its business climate and introduced subsidies for investors to boost growth and combat unemployment which is running at 17.3 percent.

But IKEA, which wants to provide 300 jobs and invest 70 million euros ($76.8 million) in Serbia, had to negotiate a number of bureaucratic obstacles before receiving its construction permit last year.

Vladislav Lalic, the Swedish company's Southeast Europe director, said IKEA had encountered numerous problems related to the "huge inefficiency" of administrative procedures.

"We have recently, together with the government, formed a work group which supported this (project) ... even in that working group where there was one speaking partner, we had 17 relevant institutions which also took part," Lalic told a business forum at the Kopaonik mountain resort late on Tuesday.

Lalic said the IKEA store in the Belgrade suburb of Bubanj Potok would be completed by early 2017.

Serbia's economy grew 0.8 percent last year and the government forecasts it will grow by 1.8 percent in 2016, but unless the country continues reforms and attracts investment, it will be condemned to slow growth and high deficits, a top fiscal advisory body has warned.

Lalic said despite improvements, there was still a lack of coordination between the general legal framework and by-laws. He also warned about a lack of infrastructure and proper plans, including for the location where the IKEA store will be built.

"It took us 35 months to produce the zoning plan ... If a company like IKEA, which is a 32 billion euro business, can face those problems, then ... you can imagine what kind of problems will be faced by other smaller investors."

In its 2015 financial year which ended on Aug. 31, IKEA increased revenue by 11.5 percent to 32.7 billion euros, while its net profit was 3.5 billion euros.

$1 = 0.9114 euros Editing by Adrian Croft and David Clarke

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