Keynote Address By Deputy Prime Minister and Minister for Finance Tharman Shanmugaratnam At The 8th Russia-Singapore Business Forum

Excellencies
Distinguished Guests
Ladies and Gentlemen

1. It is my pleasure to be here at the 8th Russia-Singapore Business Forum (RSBF). Last year, I was here at the 7th RSBF with my counterpart, 1st Deputy Prime Minister Igor Shuvalov. I am pleased to see many familiar faces in the audience this year.

2. The RSBF has come to play an important role, providing opportunities for businesses from both countries to meet, network and collaborate. As we mark the opening of the 8th instalment of the forum today, I would like to share some observations on our bilateral links with Russia and on how we could enhance our partnership.

Significant progress in economic ties

3. Our two countries enjoy excellent relations. Our economic ties in particular have come a long way. Bilateral trade in goods alone has more than tripled over the last five years. We are seeing increased investment activity as well, with growing interest among Russian companies in Singapore and vice versa. There are now more than 400 Russian companies in Singapore, up from just over a hundred five years ago.

4. Government-level exchanges on economic cooperation have also grown significantly, both at the federal and regional levels. In recent months, Singapore has welcomed working visits by a number of federal ministers, including Deputy Minister of Economic Development Alexey Likhachev and Deputy Minister of Telecom and Mass Communications Mark Shmulevich. We also welcomed delegations from the Moscow City Government, the Primorsky Investment Agency and the Russian Ministry of Agriculture, and are looking forward to a visit led by the St Petersburg Government at the end of this year.

5. There is scope for further growth in our economic relationships. Despite recent volatility and challenges, the emerging market economies will remain the main contributor to global economic growth over the next 5-10 years, and likely beyond. There are also significant opportunities arising from the rise of the middle class in the emerging world. Russia’s market of more than 140 million people is increasingly affluent, and offers business potential in areas like urban solutions and lifestyle products. The government is also actively reaching out to foreign investors to support efforts to diversify the economy and develop new sectors of growth.

Greater breadth and depth in bilateral relations

6. Second, and not as well known is the fact that our overall relations with Russia have become much broader and deeper in scope.

7. In recent years, our agencies and businesses have explored opportunities in a broader range of business sectors and regions in Russia. These efforts have begun to bear fruit.

8. Singapore companies are now active in a wider array of business sectors in Russia, including a whole range of activities to do with urban development such as master planning, township development, transport and infrastructure, as well as agribusiness, IT and education.

9. We are also engaging Russia at the regional level. Many of these projects and investments go well beyond the federal cities of Moscow and St Petersburg, and are located in some of Russia’s fast-growing and dynamic regions, such as Pskov, Krasnodar, Tatarstan and Tomsk, and also in the Russian Far East such as Primorsky.

10. We are indeed pleased to see delegations from regions such as Tatarstan, Bashkortostan and Sverdlovsk are actively participating in this year’s business forum. Tatarstan, already a familiar region for many of us, is one of Russia’s most developed. Bashkortostan is the largest republic in Russia by population and known for its energy reserves, while Sverdlovsk is famous for its metals and minerals, and its capital Ekaterinburg is the fourth largest city in Russia. I encourage Singapore companies to use this opportunity to find out more about these regions and the business and investment potential they have to offer.

Going beyond economics

11. Our areas of collaboration have progressed beyond economics. Earlier, you heard about the 4th Singapore-Russia High Level Inter-Governmental Commission in St Petersburg which took place in June this year, which I co-chaired with 1st Deputy Prime Minister Igor Shuvalov. We had a very fruitful meeting where several MOUs were signed. Also striking were the good discussions we had on areas such as education, healthcare, tourism and culture.

12. A new area with much potential for bilateral collaboration involves the arts, culture and tourism. Just last year, we saw the opening of two Russian galleries, bringing the works of Russian artists to Singaporeans. And in this coming November, our Esplanade Theatre will welcome the world-renowned Bolshoi Ballet. If you are hearing this for the first time, I’m sorry to say that tickets have already sold out. There are also plans to open a Russian Cultural Centre in Singapore, which would add a new dimension to our relations and cultural ties.

13. People-to-people ties are also moving up. We are seeing more Singaporeans heading to Russia for business and leisure. Likewise, last year, we had a record number of Russian visitors to Singapore – about 70,000 in total, a significant increase from only 12,000 visitors 10 years ago. We are also home to an estimated 5,000-strong Russian-speaking expatriate community in Singapore.

14. Collaborations among our universities and research institutes on academic programmes, staff and student exchanges as well as joint research have also grown, giving our students and scientists greater exposure opportunities. Our universities alone have established linkages with more than 30 education and research institutions in Russia, which are well-known for their strengths in Mathematics, Engineering and the Sciences.

15. There is much room for further growth in our people-to-people ties as well as cooperation in areas such as culture and tourism. The Russian Language Centre in Boat Quay has indeed become quite popular among Singaporeans hoping to pick up a new language. Visa requirements for holders of diplomatic and official passports of our two countries will also be lifted very soon, which will help to pave the way towards greater connectivity and ease of travel between our two countries.

Singapore, a home for Russian businesses in Asia

16. To Russian companies looking to expand into Asia, Singapore can be your strategic base and hub. Our central location in the heart of Asia and excellent connections with fast-growing Southeast Asia as well as the large markets of China and India makes Singapore an ideal location – a Global-Asia hub – for many multinational and regional companies. Our familiarity with Southeast Asia also means that we are well-placed to serve as an entry point into ASEAN and its combined market of 600 million people. And we are home to more than 7,000 multinational companies that have chosen to set up a home base in Singapore to cover the Asian region, and establish critical functions in Singapore such as R&D, management and marketing. I believe that Russian companies will also find similar value in engaging the region through Singapore.

17. Russia’s largest sports retailer Sportmaster Group recently established its trading hub as well as its Asian headquarters in Singapore to undertake activities such as supply chain management, intellectual property management, and branding and marketing. Today, they will be signing a partnership agreement with Singapore’s Institute for Sports Research (ISR) to establish the first Sportmaster Group Innovation Centre, which will be housed within the ISR at the Nanyang Technological University (NTU).

18. Companies in the resource industries can also look forward to an increasingly vibrant trading scene in Singapore. Many have found it useful to establish a trading office here, given our efficient and transparent clearing system. Today, more than 350 global trading companies have a presence here, including some of the world’s top integrated energy and agri-commodity companies. Besides Gazprom and Lukoil which have already set up their Asian bases here, I’m pleased that other Russian companies are following suit to grow their presence in Singapore such as PhosAgro, a leading chemical fertiliser company in Russia. Like Sportmaster, PhosAgro has chosen Singapore to establish its first international trading office outside of Russia.

19. Trading activities in Singapore are also set to become more diverse with the expansion of a cluster of metals and minerals trading companies here. The top 5 global integrated mining companies are already performing global functions out of Singapore. Some of you may be aware that, as of October 2012, Singapore has exempted the Goods-and-Services Tax on the importation and supply of all Investment Precious Metals (IPM). We are also the first country in Asia to operate an LNG terminal capable of importing and re-exporting LNG from multiple suppliers.

20. As for companies and entrepreneurs looking for investors and capital, Singapore provides a well-regulated and efficient marketplace. We are a thriving international financial centre^[1], and have developed a diverse and comprehensive ecosystem of financial services including trade, project and corporate finance, treasury and insurance services, foreign exchange and derivatives trading, as well as asset and wealth management.

Conclusion

21. I am not speaking on these opportunities at length, but I want to emphasise that our bilateral relations have not only progressed, but have considerable opportunity for further progress, in economic and business collaboration and also in the softer areas such as education, the arts and culture.

22. I am heartened to see many businesspersons from different sectors and companies represented here today. Before concluding, I would like to thank the Singapore Business Federation and the supporting agencies for organising this significant event, and encourage all of us here to focus on building long-term, sustainable partnerships.

23. I wish everyone fruitful discussions over the next few days. Thank you.

^[1] The Global Financial Centre Index (“GFCI”) has consistently ranked Singapore among the top four most competitive financial centres in the world, together with London, New York and Hong Kong, and many of the world’s leading banks and financial institutions have a significant presence in Singapore.