Updated April 21-27, 2008

   Economic relations of Russia and Singapore do not have a long history. The young republic has been resisting the communist China; therefore the intercourse with the USSR was not a friendly one. All trade and economic mutual relations have been centering around the Singaporean sea port within decades: soviet ships have been repaired there. In the 70-80th there have been lots of the Russian seamen buying the advanced Singaporean hi-techs with enthusiasm. "Business relations have been establishing gradually, but not as quick, as we have wished", says Singapore’s ambassador in Russia Michael Tay. "The core problem is lack of objective information: Russia is far, and Singaporean businessmen can read about it only in the western press. And many people thought the country was dangerous, as they were sure the shadow business prevails there and one could die having started the business".

   The myth idea of Russia is well illustrated by the question asked by one of the Singaporean businessmen. "Is that true that within one of the press-conferences Putin did not like the topic touched by a journalist, and the president aired his discontent and approached the man who had a heart attack at that point?". And the embassy officials have understood Singapore needs the personal acquaintance with the modern Russian businessmen: young, well-dressed and English-speaking people. Pacific Asia, in its turn, still lacks the business PR in Russia and the CIS.

   "The majority is aware of the cooperation advantage with the fast developing Asian region, and far bigger amount of people considers these broadening markets are threatening the West and its prosperity", comments the situation the dean of Skolkovo Moscow Management School, the expert for fast growing markets Wilfried Vanhonacker who has lived in China for twenty years. "And Asia has giant internal sales markets. One should ponder it over. Maybe, we need them more than they us. The world is changing, and it is necessary to go for the center of events, instead of standing at the roadside. Within the current situation Singapore appears as the developed, clear for the Europeans "bridge" to these "perspective regions".

   The active cooperation has been started in 2006. Then the committee for international trade development of the republic coupled with Troika Dialog has held the first Russian-Singaporean business forum. Oleg Deripaska, Andrey Korkunov, Grigory Karpovsky were among the young and prospective businessmen who came to Singapore. After the local businessmen had made sure of the Russian business positive image, they went "to the North". According to Michael Tay, since this moment minimum two Singaporean companies have been going to Russia looking for a prospective cooperation almost every week. Moreover, the idea to start a forum has also succeeded: since then this activity is held annually. The number of participants has increased from 300 to 500 people within three years.

Packages from the South

   Within 2002-2007 period the trade turnover with Russia has grown more than twice – from $610 million to $1,36 billion. "Now we export electronics, and import oil, gas, metals, but in small volumes", says Michael Tay. "As a comparison, our turnover with China is around $30 billion. However, Singapore is mainly interested in investments into the Russian economy, than in the trade turnover increase". One of the investments path-breakers became the Singaporean Temasek state fund that purchased 2,6% MTS stocks.

   Another scale cooperation project is collaboration of the Singaporean company Changi Airports International with Sheremetevo airport. The established joint venture has the far-reaching plans: an enterprise intends to take under its management around ten Russian airports, Sochi town is among. But the republic is interested more in entering the real estate market: the country has gained much experience in construction and management of hotels, shopping centers, residential estates. Ascott Group, the exlusive housing operator, has already come to Russia, and it has already established the fund with the Russian Amtel Propertiies Development amounted at $100 million to create and maintain the chain of suites in Moscow and St. Petersburg. And the Singaporean company City Developments became the coowner of Iris Congress Hotel in the north of Moscow. Another area of interest is retail and the market of consumer services. Singaporeans expect Russia’s citizens will be interested in their products. "The amount of middle class representatives is growing, the welfare of Russians is improving. And it is obvious the demand for consumer goods and services will increase: high-quality products, restaurants, entertainment. One should ponder over the ways to make the Russian consumer interested before offering our brand products", commented the minister for trade and industry of Singapore Lim Khng Kiang. "However, the Singaporean companies can feel more confident due to path-breakers’ success, like Food Empire Holdings. Just recently the company has successfully increased its stake at the Russian market investing $8,8 million to purchase Naturant Systems company that owns Petrovskaya Sloboda trademark, the popular instant coffee brand.

Russia’s answer

   What benefits can get the Russian companies from cooperation with Singapore? Today this city is one of the leading trade and financial, transport and production centers in Asia, and the local sea port is considered one of the world best. Moreover, in 2007 the republic was recognized as the most comfort country in the world for the business conduct as evaluated by the World bank. After having settled here down the Russian businessmen get access to the freetrade with many countries and can avoid the double taxation. One should take into account the republic is constantly expanding the free trade area. "Singapore has concluded the talks with Gulf States successfully and this strengthens the country positions in this area more", reported Lim Khng Kiang. "Besides, the Russian partners can use our advantages and carry on an off-shore trade of oil and rubber". There are no many large Russian companies that have representative offices in Singapore, and Amtel, Agrosin and Lukoil are among them. Amtel conducts business for purchase and sale of rubber and rubber-containing products. Agrosin has established a base to supply mineral fertilizers from Russia and the CIS to South-East Asia. The Singaporean office lightens Lukoil work at the Asian capital markets. "As the trading company we work 24/7: we should take the relay form London and New York" says Lukoil Asia Pacific managing director Valentin Ivanov. "Singapore is comfort for us: it is located in Central Asia. From the finances viewpoint we can get access to the world capital markets here, and the banks are quite liberal. Moreover, Singapore exactly sets prices for oil and oil products".

Access to stock exchanges

  Russian institutions just study the Singaporean stock market. The local investors are not acquainted with the Russian companies enough, therefore the issuers have to invest large facilities into advertising within stocks placement at the Singaporean stock exchange. But the risk not to gain the expected money is rather high. Experts mark Singaporean business aspires to the investments into the real estate sector, especially into commercial one. "Boom of such investments gathers pace in South-East Asia right now, unlike the West, where the companies related to this sector are treated rather skeptically, especially in terms of the current mortgage loans crisis in the USA", marks Metropol investment consultant Elena Chernoletskaya. "This factor, for example, is going to use Rubin Group of Companies that owns Gorbushkin dvor trading center and realizes the set of developer projects. It is planned in 2009 the company holds IPO in Singapore and within initial offering of 25% stocks it is going to attract up to $500 million".

The Russian investment companies wait when the Russian issuers enter the market of South-East Asia. Troika Dialog has stated that within 2008 it establishes the representative office in Singapore. However, it mentioned neither about the exact date nor about the functions the structural subdivision performs.

By the way, it is rather hard to meet the Russian on the streets of Singapore. According to the statistics, only 1000 Russians falls to 4,5 million of the local population.