Cooperation between Russian and ASEAN businesses began in 1996 and has been rapidly growing since. Source: AFP / East News
A Russia-ASEAN business forum, bringing together some 500 business players, will be held on June 22 on the sidelines of the 17th St. Petersburg International Economic Forum.
The executive director of the Russia-ASEAN Business Council, Viktor Tarusin, explains the forum is not just to attract investment into Russia but also to make Russian companies aware of money-making opportunities in ASEAN countries.
This is a realistic objective given that during the 2008 global economic crisis ASEAN economies remained in far better shape than their European or Russian counterparts.
The evidence is for everyone to see: capital construction projects in Jakarta, Kuala Lumpur and Singapore were not mothballed or even slowed down during the crisis.
Cooperation between Russian and ASEAN businesses began in 1996 and has been rapidly growing since. According to the Russian Foreign Ministry, trade between the two sides amounted to $1 billion in 2000, and $15 billion in 2011.
There are many successful projects between Russia and ASEAN countries. Russian mining companies have begun serious investment in the development of mineral and ore deposits in Vietnam, Indonesia and other countries in the region.
For instance, the White Tiger oilfield on Vietnam's continental shelf has been operating since 1986.
"This cooperation saw its logical continuation in the 2009 launch of a joint Russian-Vietnamese enterprise, Rusvietpetro, 51 percent of which belongs to Russia's Zarubezhneft and 49 percent, to Vietnam's Petrovietnam. This company is developing a cluster of oilfields in the Central Khoreyversky deposit in the Yamal-Nenets Autonomous Area," Tarusin said.
In addition to mining projects, considerable headway has been made in infrastructure projects, with investors coming from both sides, Russia and ASEAN.
"Cooperation with Indonesia on the SuperJet project is developing. This year 12 aircraft will operate on the country's domestic routes. Russian Railways is also building a railroad and two coal terminals on the island of Kalimantan, divided between Indonesia, Malaysia and Brunei," Tarusin continued.
Yet, despite a large number of Russian-Asian projects, there is still room to expand Russia-ASEAN cooperation further. The amount of Russian capital invested in ASEAN countries greatly exceeds the amount of Asian capital coming into Russia.
At the end of 2012, ASEAN countries accounted for 1.5 percent of Russian foreign investment, about $2.2 billion a year. Investors from Southeast Asia on the other hand made up just 0.1 percent of total foreign investment into Russia (which in 2012, according to the Russian Federal Statistics Service, reached $140 billion).
"These figures can be explained by the huge geographic, historical and cultural distance [between Russia and Southeast Asia]. Besides, ASEAN countries prefer to invest in the economy of their closest neighbors: China, Japan, and South Korea. Given the large growth potential of China's domestic demand, it is clear why Russia is not that popular among ASEAN countries," said Anton Soroko, an analyst with the Finam investment holding company.
He said consumer markets may be the most promising area for investment thanks to enormous capacity for growth both in Russia and ASEAN countries. Economic restructuring in all these countries is in full swing, the infrastructure for development is in place but the competition is not yet strong.
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