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  • Russia turns towards Asia for new trade flows

    Prior to 2014, China’s economic growth attracted the attention of Russian companies across broad sectors, mostly in resource and energy sectors. At the beginning of 2014, Russia’s total trade with Asia reached US$144.4 billion, catching up to second place behind Russia’s trade with Europe and the UK which stood at US$318.2 billion. However, over 75% (or US$110.8 billion) of Russia’s Asian trade is concentrated in the North Asian markets of China, Japan and Korea, while only 11% (or US$15.8 billion) of trade is conducted with Southeast Asia. As such, Russia’s trade flow with Southeast Asia is still nascent which spells a high potential for growth.


    Bilateral trade agreements serve to promote cross-border trade and investment between countries. Russia and Singapore’s Double Taxation Agreement was ratified in 2009, resulting in lower withholding tax rates imposed on dividends, interest and royalties. Tax credit is also available for residents earning foreign sourced income. This contributed to the healthy growth of bilateral trade in the past 6 years. Between 2008 and 2014, trade between Russia and Singapore grew at a compound annual growth rate of 19.0%, from S$3.8 billion to S$10.8 billion. Today, Russia is our 21st largest trading partner worldwide.


    In 2H2014, Russian Federal Statistics Service recorded a jump of 152.2% in Singapore and Russia’s trade turnover, ranking Singapore as Russia’s fastest growing foreign trade partner overall for that period. Singapore’s main exports to Russia were in electrical circuits, machinery parts, and cocoa butter fat and cocoa oil, while imports from Russia are dominated by crude oil, nickel and copper.


    Since 2014, Russian conglomerates that want to tap markets outside Russia, have found Singapore’s competitive and efficient financial ecosystem to be a vibrant business hub. For example, Russia’s largest gas company, Gazprom, and second largest oil company, Lukoil, have operations in Singapore while notable IT and retail companies Acronis and Sportmaster have chosen to situate their regional office here. This presents an opportunity for Singapore companies to partner Russian conglomerates to create new business and trade flows in the Asia Pacific region.

    Source: IE Singapore

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