Russia-Singapore Trade and Joint Investment on the Up in 2018

Bilateral trade and investment between Russia and Singapore is rapidly improving following Russia’s re-positioning of its trade and investment ties after the impact of sanctions imposed upon it by the West. Bilateral trade increased to about S$5 billion, while Russia’s tourist visitors to Singapore also went up 10 percent, to about 70,000 arrivals in 2017.

The Singapore government recently recognized Russia as a key country for Singaporean investment potential, and has been actively encouraging both Singaporean government funds and the private sector to invest in the country. Singapore is also fast tracking a Free Trade Agreement with the Eurasian Economic Union, a free trade area sitting between China and the EU that includes Kazakhstan, Russia, Kyrgyzstan, Armenia, and Belarus. That deal is expected to be signed off this year and will significantly enhance Singaporean trade with Russia. It will also assist Russian trade with the ASEAN nations, as Singapore remains the region’s de facto financial hub. The Eurasian Economic Union already has a successful FTA with ASEAN member Vietnam.

The Singapore government has already been active in investing in Russia’s regional infrastructure. This includes Changi Airports International, which together with Russia’s Sberbank have been investing in the Airports of the South, which include Russia’s airports in Anapa and Gelendzhik as well as the business center and political capital of the Krasnodar and the popular resort city of Sochi, which hosted the 2014 Winter Olympics.

Surbana Jurong, another Singapore government owned business, has been involved in the development of the Moglino Special Economic Zone (SEZ) in the Pskov region in Russia, and is now actively exploring further opportunities. Pskov is an important trade hub in Western Russia, and traditionally serves the Baltic States, all now part of the EU.

Moglino Special Economic Zone in Pskov. Part-owned by the Singapore Government.

Other tie-ins include Singapore’s Olam International, which through it’s Russian partner Rusmulco is one of the largest suppliers of premium milk in Russia. It is already a major contributor to the agricultural industry in Russia’s Penza region, and is keen to further expand in Russia’s agriculture sector. Singapore and Russia are also expected to start mutual food exports soon, especially in poultry exports from Russia and fish exports from Singapore, following the site inspections and exchange of audit reports by Russia’s Federal Service for Veterinary and Phytosanitary Surveillance (FSVPS) and Singapore’s Agri-Food and Veterinary Authority (AVA). Other areas of mutual G2G and G2B cooperation include financial services, aviation, and the energy sector.

Chris Devonshire-Ellis of Dezan Shira & Associates comments: “Russian businesses and investors have recently found Singapore to be an attractive tax base from which to locate operations reaching out into the primary ASEAN markets of Indonesia, Malaysia, Philippines, Thailand, and Vietnam. Russia and Singapore celebrate 50 years of diplomatic relations in 2018, and a resurgent mutual interest bodes well for Russian businesses looking at expansion into Asia and for Singaporean businesses looking to exploit opportunities left open by the imposition of sanctions by the West. When the Singapore-Eurasian Economic Union Free Trade Agreement is signed, bilateral trade opportunities will massively increase. Companies involved in the Russia-Asia space should be actively looking at Singapore as a base to reach out to ASEAN, China, and India.”

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