Russia and Myanmar: The Trade and Investment Dynamics
Trade up from US$15.7 million in 2021 to US$400 million in 2023
By Emil Avdaliani
Amid the re-orientation of trade from the West to Asian markets, Russia has been expanding its trade and, to some degree, investments ties with South Asian countries. Among them Myanmar stands out as a promising market for Russian companies which are willing fill in the niche created by the fleeing of major Western companies also from Myanmar.
The Western sanctions imposed on Russia pushed the latter to re-assess its approach to Southeast Asia. With limited trade and investments relations in pre-2022, Moscow has since then re-invigorated bilateral political and economic ties with Naypyidaw. This expansion fits into the overall Russian thinking toward foreign trade but also serves as preparation for further growth of commercial ties with South and Southeast Asia especially given the fact that Myanmar is a significant member of ASEAN. Myanmar also enjoys direct access to China, India and ASEAN countries through ports in the Bay of Bengal and the Andaman Sea.
Russia – Myanmar Bilateral Trade
In the period of 2018-2021 imports from Myanmar to Russia were increasing. Similar dynamics were observed in exports from Russia – with the exception of 2020, a relative decline caused by the pandemic. In 2022 exports from Russia to Myanmar amounted to US$284.3 million, and Russian imports from Myanmar amounted to US$147.3 million.
The progress in bilateral trade between the two countries has been impressive. In 2020-21 it stood at US$15.7 million, by late 2022, it has increased to more than US$335 million. In the first half of 2023, trade turnover between Russia and Myanmar amounted to about US$200 million. Myanmar’s Ministry of Commerce projects that the trade between the two countries has a potential to increase to US$1 billion. As a sign of growing trade potential in November 2022 Russia announced it plans to open its trade representation in Myanmar.
Russia’s exports to Myanmar mainly consist of hard coal, three-component fertilizers, diammonium phosphate, refined sunflower oil, ammonium sulfate, anthracite, bulk semi-finished products and products made of unvulcanized rubber, except tread blanks. The top Russian imports from Myanmar include men and women outerwear made from chemical threads, Shoes with textile uppers, except sports shoes, Sports shoes, Cotton sewn women’s trousers and shorts, Sweaters, vests and similar products, T-shirts and T-shirts, and non-cotton knitted fabrics.
However, Myanmar’s trade with Russia is only a small fraction of the Asia country’s overall trade. For instance, in 2022 Russia was 44th biggest exporting partner to Myanmar and 34th biggest partner in imports. In 2021, Myanmar ranked only 85th in the list of Russia’s trade partners. The figures are dwarfed by other countries trading with Myanmar, but the upward trajectory of Russia-Myanmar trade might soon change the statistics.
In December 2022 Russia and Myanmar agreed to develop cooperation in a number of key sectors such as facilitation in the customs sphere and bilateral trade. The agreement is built on earlier economic cooperation strategy signed in August 2022. Myanmar expressed interest in exporting liquefied natural gas and other energy resources from Russia.
In June 2023 a memorandum of cooperation was signed between the Eurasian Economic Commission (EEC), the directive body of the Eurasian Economic Union (EAEU) and Myanmar which
aims at increasing cooperation in such areas as regional economic integration, customs regulation, energy and transport. Related to this, in September this year, direct air traffic between Russia and Myanmar has resumed after a 30-year break and the two countries also signed a memorandum of understanding on tourism development the same month.
Myanmar has also announced plans to join the Russian equivalent of SWIFT (SPFS) and in June the country’s officials proposed using the Chinese RMB Yuan and Ruble in settlements between the two EAEU and ASEAN countries.
Russia – Myanmar Bilateral Investments
Myanmar’s government have made efforts to attract Russian investments into agriculture, production of electric vehicles, the production of oilseeds, fertilizers, cement, food, iron and steel, as well as pharmaceutical and medical products. In November 2022, the country’s Ministry of Investment and Foreign Economic Relations signed a Memorandum of Understanding with the Russian RK-Investment Foundation aiming at developing investments cooperation in major areas of mutual interest.
Myanmar is also interested in expanding the presence of Russian oil and gas companies. Myanmar has significant reserves of unexplored oil, natural gas, minerals and forest resources. This sector has traditionally attracted a significant portion of FDI into the country and has also made a significant contribution to GDP and growth of exports.
The Southeast Asian country is keen in developing logistics and transport and trade corridors. This is especially important in the context of the ongoing expansion of the International North-South Transport Corridor (INSTC) between Russian and Iran/India. Given a high pace of trade between India and Myanmar the latter hopes it will help establish strong logistic connections and trade routes between South Asia, the Middle East and Russia.
Another promising area of potential Russia investments in Myanmar is nuclear energy. The two countries plan to expand their cooperation in this area Myanmar intends to reach significant agreements with Rosatom this year on the construction of nuclear power plants of various capacities.
At the latest St. Petersburg International Economic Forum, Rosatom signed a memorandum with Myanmar on the development of non-energy nuclear technologies in the country. Generally, Russia is interested in the projects abandoned by large Western investors. For example, the Shweli-3 hydropower project of the Swedish-Finnish engineering company AFRY and the French EDF.
Another area where Russian companies could invest is Myanmar’s expanding textile industry, which receives significant foreign investment and orders to produce clothing for global brands as H&M, Adidas, KIABI, Next, Mango, New Yorker and many others. Given the flight of major Western companies from Russia, the investments in textile industry would make sense.
No less interesting is a proposed project related to agriculture – an innovative technology for the use of biological fertilizers in Myanmar – discussed at the St. Petersburg International Economic Forum between Russian and Myanmar officials.
Emil Avdaliani is a professor at European University and the Director of Middle East Studies at the Georgian think-tank, Geocase.
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