Business News

Govt to Help Builders, Flat Purchasing Still Open

Ljubljana, 06 January (STA) - The government decided Thursday to adopt a series of measures to help the struggling construction sector, but the most controversial measure, setting up a fund to buy unsold flats, has been put on the backburner for now.

The Environment and Spatial Planning Ministry has been given 15 days to analyse whether establishing a fund to buy up excess apartments makes sense, Economy Minister Darja Radic said after the cabinet session.

The measure is being mulled in order to improve demand, but Radic said some signs were showing demand was already picking up. "If the market is reviving, it does not make sense to intervene."

The central bank estimates that builders have about 16,000 unsold new flats, which comes on top of thousands of second-hand flats that are empty.

An analysis by the Institute of Macroeconomic Analysis and Development (IMAD), the government think-tank, showed, however, that the measure would not help builders.

It said buying excess flats would be in vain as the money would be absorbed by banks eager to make margin calls to cut their exposure to the construction sector.

The main measure planned by the government is the early launch of major infrastructure projects, including the building of power plants and works on the Slovenian rail network.

Radic said the main problem in this field had not been money but delays in planning documentation; this will now be changed.

While infrastructure works will help mainly big firms, smaller builders stand to benefit from EUR 20m that will be allocated for insulation of elderly homes and schools.

Builders have been hit hard by payment defaults, which in some cases triggered chain bankruptcies. The government plans to tackle this problem with a law introducing payment terms of a maximum of 60 days and mandatory offsets.

Companies will also be assisted in finding business abroad, which will be promoted with an action plan that the ministry is already working on.

Moreover, private individuals will no longer be allowed to project manage houses larger than 250 m2 and inspection services will crack down on illegal work and employment to prevent unfair competition.

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