Russia Looks To ASEAN To Increase Trade
ASEAN needs energy and food security with Russia able to provide both
The 11th ASEAN-Russia Senior Officials’ Meeting (ARSOM) was held at the end of last week in Siem Reap, Cambodia, during which Ministerial-level delegates discussed Russia-ASEAN ties. The meeting is important on both sides, Russia as it needs to find new markets after having been cut off from the West, and ASEAN as it needs access to Russia’s inexpensive energy supplies to maintain its growth. ASEAN’s total GDP hit US$3.3 trillion in 2021, making up 3.5% of global GDP, with growth expected at 5.2% this year. Its energy needs are growing by an estimated 3.5% per annum.
Russia recognises this, with the bloc being specifically mentioned in its new Foreign Policy Concept. It sees closer ties between the Middle East, Central Asia, China and ASEAN in terms of infrastructure, energy and trade as a key Eurasian issue. Of that, a key aspect is the marrying together of the Eurasian Economic Union (EAEU) with ASEAN. The EAEU includes Armenia, Belarus, Kazakhstan, Kyrgyzstan and Russia, and fills the geographic space between Eastern Europe and Western China. The EAEU has a successful Free Trade Agreement with Vietnam, and is discussing additional agreements with Cambodia, Indonesia and Thailand.
The meeting was attended by all ten ASEAN nations (Brunei, Cambodia, Laos, Indonesia, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam) along with Timor Leste, who are expected to become an ASEAN member in the near future.
A sticking point is Singapore, who have sided with the West as regards the Ukraine conflict and has suspended FTA negotiations with the EAEU as a result. That might change should the energy issue become problematic, while for Russia it is a relatively small market but provides useful financial services. What could have been Singaporean business in terms of offering financial services to Russian businesses in Asia has instead moved to Dubai and Hong Kong.
Thong Mengdavid, of the Asian Vision Institute’s Mekong Centre for Strategic Studies, said increased cooperation between ASEAN and Russia is a joint strategy that will promote economic recovery and regional development.
He said ASEAN is an important area to balance Russia’s power and economy, as it is facing an economic crisis due to the war in Ukraine and sanctions. “For ASEAN, Russia is a potential partner in investment, economic and technological development, and military modernisation. Although some ASEAN countries do not support Russia’s involvement in the Ukraine, the restoration of peace in Europe through negotiations for the common good of all parties would adhere to ASEAN principles. As we are all aware, a continued war would be a loss for all sides,” he said.
Russia and ASEAN already have a Trade and Investment Cooperation Work Program for the 2021-25, with this meeting updating all participants. Apart from energy, ASEAN also has food security concerns, with overall consumption expected to rise – ASEAN’s total population is expected to increase by 500 million from now until 2030. That requires agricultural machinery, with Belarus a key farming machinery manufacturer, and fertilizers, in which Russia dominates global markets.
Dezan Shira & Associates assist foreign investors into ASEAN and maintain operations throughout Cambodia, Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam. Our 2023 Doing Business In ASEAN guide can be downloaded here. For assistance in establishing business and trade with ASEAN please email firstname.lastname@example.org
During these uncertain times, we must stress that our firm does not approve of the Ukraine conflict. We do not entertain business with sanctioned Russian companies or individuals. However, we are well aware of the new emerging supply chains, can advise on strategic analysis and new logistics corridors, and may assist in non-sanctioned areas. We can help, for example, Russian companies develop operations throughout Asia, including banking advisory services, and trade compliance issues, and have done since 1992.
We also provide financial and sanctions compliance services to foreign companies wishing to access Russia. Additionally, we offer market research and advisory services to foreign exporters interested in accessing Russia as the economy looks to replace Western-sourced products. For assistance, please email email@example.com or visit www.dezshira.com