Furniture Giant’s Plans Still On

KIEV, Ukraine -- The billion-dollar plans of a multinational furniture retailer intent on expanding its presence in Ukraine continue to be delayed – ostensibly over the fate of some of the capital’s trees.

Giant IKEA, a Dutch-registered conglomerate with Swedish roots, has been trying for over two years to acquire land on Kyiv’s left bank, where it wants to put up to $400 million into the construction of a shopping mall. However, the city administration says it’s under pressure from environmentalists committed to protecting a wooded site on the edge of the city.

Senior advisor for IKEA investments in Ukraine Swen Holm met with members of the Kyiv city administration on June 21 to discuss a way out of the deadlock.

During the meeting Eduard Leshchenko, deputy head of the Kyiv city administration architecture, construction and city environment design department, said that by granting land to IKEA, the city would invoke renewed condemnation from concerned citizens.

In 2005, the Ukrainian Green Party protested the furniture giant’s left bank project in a statement released to the media, calling the patch of wood in question the “lungs” of that part of the city.

Kyiv has offered IKEA an alternative plot of land in another part of the city, according to a statement published on the city administration’s website, but IKEA is intent on developing the left-bank site.

“We researched Kyiv very thoroughly and came to the conclusion that this land plot is the most suitable in terms of local infrastructure, transportation and environmental concerns,” Natalia Altynova, IKEA’s human resources manager for Russia and Ukraine.

“During the [June 21] meeting, IKEA’s representative confirmed our intentions concerning implementation of our investment program in Ukraine once more. Now we are just waiting for the green light from the Ukrainian government and the Kyiv city administration,” She added.

In the meantime, the city will set up a separate commission to study the issue, announced Denis Bass, deputy head of the Kyiv city administration, adding that a final decision wouldn’t be taken until public hearings are held.

A deadline for the holding of the hearings or a decision by the commission has yet to be set.

Altynova thinks that the problem lies with Ukraine’s continually changing authorities. IKEA has appealed to two different Ukrainian presidents, premiers and mayors over the last two years.

IKEA’s Holm said the multinational won’t consider an alternative land plot, but that he is confident the city allocate the left-bank site because of the obvious advantages to the local economy.

"I am pretty sure they will allocate this land ... It is not about chopping down the whole forest. And it is a substantial investment into the Ukrainian economy of a total of $1.7 billion, and providing about 25,000 jobs only in Kyiv," he said.

IKEA has operated a saw mill and furniture plant in western Ukraine’s Transcarpathia region for more than a decade, but is better known for its furniture outlets and the shopping centers it builds around them.

In July 2004, IKEA founder Ingvar Kamprad first met with now former President Leonid Kuchma to discuss the company’s investment plans.

In March 2005, Kamprad returned to Ukraine to meet with newly elected President Viktor Yushchenko.

It was during the 2005 visit, according to Natalia Altynova, IKEA’s human resources manager for Russia and Ukraine, that Kamprad received “verbal approval” for the company’s $1.2 billion investment plans in Ukraine.

Five years earlier, in March 2000, the furniture giant had opened its first store in Moscow, where it has pumped hundreds of millions of euros into building retail outlets surrounded by modern shopping malls replete with restaurants and recreational facilities.

The IKEA network consists of more than 200 stores in more than 30 countries.

According to Altynova, the plans for Kyiv’s left bank include a family shopping center with up to 150 different retail and entertainment facilities.

The multinational wants to eventually open another six such malls in Kyiv, Kharkiv, Dnipropetrovsk, Donetsk, Lviv and Odessa. The company said that the delay of its Kyiv project is holding up the launch of construction in the regions.

"Our strategy is to start in the capital," said Holm.

Source: Kyiv Post


Richard said…
It is crazy how much money companies make on furniture. I mean I just spent a ton of money on a new beautyrest mattress recently.
Otep said…
@Richard, furniture's like mattress is a good investment to all individuals :)