Infrastructure, high technologies key areas for Russian investment in Thailand

Ivan Polyakov (right) is the head of the Russia-Thai Business Council. Source: Press photo

Ivan Polyakov (right) is the head of the Russia-Thai Business Council. Source: Press photo

In an exclusive interview with RBTH, Ivan Polyakov, the head of the Russia-Thai Business Council talks about business opportunities and the major challenges to growth in bilateral trade.

What are the key focus areas when it comes to Thailand-Russia bilateral trade?

Thailand is Russia’s major trading partner in Southeast Asia. According to Thai trade statistics, the volume of bilateral trade with Russia in 2014 amounted to $4.9 billion. Russian exports figures are estimated at $3.7 billion, whereas Russian imports are at $1.2 billion. So, Russia’s trade surplus in trade with Thailand is around $2.5 billion.

When it comes to Russian exports to Thailand, a lion’s share of supplies accounts for the following goods: crude oil and other raw energy resources (66.4 percent), metals and metal parts (13.3 percent), fertilizers (8.0 percent), jewelry (3.5 percent), metal ores, scrap, metal waste (2.2 percent), fats and oils (1.5 percent), natural gas (1.3 percent), vegetables (1.2 percent), fresh and frozen seafood (0.7 percent).

The Russian imports consist of auto parts (24.2 percent), precious stones and jewelry (10.8 percent), polymers (6.6 percent), preserved fruit (4.8 percent), rubber (4.3 percent), machinery products and their components (3.8 percent), electrical equipment and parts (3.2 percent), canned fish and seafood (2.9 percent). Since late last year the import of the Thai rice and pork started to grow.

Russia is interested in diversifying its exports with the emphasis on high value products. In terms of imports, taking into consideration the sanctions introduced against Russia we are interested in supplies of microelectronics and agricultural products such as pork, beef, fish and seafood, tropical fruit and rubber.

What are the major challenges to growth in bilateral trade between the countries?

First of all, the lack of awareness of businessmen of both countries about each other’s markets and existing potential of bilateral trade. However, at the moment the situation is changing for the better. The new Board of the Russian-Thai Business Council (RTBC) was elected at the end of September 2015, and its membership was updated too.

RTBC plans to organize a business mission to Thailand in November with a view to strengthen contacts and exchange information between the business associations of Russia and Thailand.

The second obstacle is the deficit of appropriate financial mechanisms that facilitate bilateral trade and investments. To bridge this gap at the 6th session of the Joint Russian-Thai commission on bilateral cooperation held in Moscow on July 15, 2015 the sides reached an agreement to set up a Working Group on banking and financial cooperation.

Russian state agencies and banking structures, including the Central Bank of Russia and a number of private banks, welcome the establishment of correspondent relations between banking institutions of both countries, the opening of branches of Thai banks in Moscow and other Russian cities, transition to a new system of transactions in national currencies, swap arrangements etc.

Another challenge we observe is the absence of Free Trade Agreement (FTA) between Russia and Thailand. I believe that the signing of this agreement will play a constructive role in further enhancement of bilateral trade and economic ties. At the meeting with his Thai counterpart Gen. Prayut Chan-o-cha during the official visit to Thailand last April Russian Prime Minister Dmitry Medvedev underlined that if Thai authorities showcase an interest in concluding an FTA, we are ready to initiate the negotiation process. As a member of the Eurasian Economic Union Russia already has a successful experience of signing an FTA with Vietnam in May 2015. Why cannot we do it with Thailand? It is a definitely “win-win” situation.

How do you think Russian investment can be increased in Thailand in sectors other than real estate?

Nowadays in the field of investment cooperation with “the Land of Smiles” Russia gives priority to infrastructure, energy generation, transport, high technologies (IT, bio- and nanotechnologies), agriculture and real estate.

As Thailand is planning to build new coal-fired power stations and investing in the Sekong-5 hydropower plant in Laos, Russia is looking into a possibility of selling Russia-made energy and power engineering equipment to Thailand.

As far as transport infrastructure is concerned, Russia takes an interest in participating as a co-investor or contractor in large-scale infrastructure projects, which are being carried out in Thailand. Russian authorities render full support to our giant machine-building company UralVagonZavod project, which could supply  tracks, freight rolling stock and track laying equipment to Thailand.

I would also like to draw your attention to bright prospects of mutually beneficial cooperation between Russian and Thai science parks and science cities in such areas, as alternative energy, space research and technology, nanotechnology, metrology, optics, electronics, biotechnology, biochemistry, medicine, infectious diseases control, environmental protection.

Recently the Russian Technopark - Skolkovo has revealed a particular interest in establishing cooperation with the Thailand Science Park. At present these technoparks are at the stage of initiating direct contacts and discussing modalities of potential cooperation.

A great impetus to the development of bilateral cooperation in the field of science and technology will give the forthcoming (October 28, 2015) trip of Pichet Durongkaveroj, Minister of Science and Technology of the Kingdom of Thailand, to Moscow to participate in the Forum and Technology Show - Open Innovations – 2015. As a main point on the agenda he plans to discuss a possibility of establishing joint ventures, joint scientific laboratories in Thai science parks and technological cities.

And tourism should not be forgotten. With 1.6 million Russian tourists visiting Thailand annually our businessmen have already invested big money in the tourism infrastructure and services in Pattaya and Phuket.

By the way, the two governments are supportive of laying a special stress on energy and tourism. These issues will be discussed this coming November at the meetings of new bilateral Working Groups – on energy and on tourism – in Bangkok.

Are there any prospects for cooperation in the peaceful use of nuclear energy between Russia and Thailand?

Yes, certainly. The Thai side demonstrates an interest in cooperation in this field. A Memorandum of Understanding on Cooperation (MoU) between the Rosatom State Corporation and the Thailand Institute of Nuclear Technology was signed on September 23, 2014 on the sidelines of IAEA General Conference in Vienna.

Last April the Joint Russian-Thai Working Group on Cooperation in the Field of Peaceful Use of Nuclear Energy held its first meeting in Bangkok. The Working Group was set up in accordance with the above-mentioned MoU.

Speaking about the plans for the future the sides are elaborating on the possibility of joint research (for instance, isotopes for medicine), joint work related to the modernization and re-launch of the Thai research nuclear reactor and establishment of a Rosatom information center in Bangkok.

We clearly see that Thailand needs to overcome its dependence on the import of energy resources, and nuclear power may be a good solution.

Are there any plans to increase economic engagement and connectivity between Thailand and the Russian Far East?

Of course, there are some. Russian authorities are zealous to expand multifaceted cooperation between Thailand and the Far East and it is proved by the recent developments. On September 3, 2015 in Vladivostok on the sidelines of the Eastern Economic Forum the administration of Khabarovsk Region and the biggest Thai manufacturer of equipment for the sugar industry Sutech Engineering signed a Memorandum of Understanding.

Sutech Engineering plans to invest around $200 million in building a sugar plant with a capacity of one and half thousand tons of sugar per day in the special port economic zone of Sovetskaya Gavan, Khabarovsk Region.

We also invite the Thai state-run oil and gas company PTT Plc to invest into long-term projects on exploration, extraction and liquefaction of natural gas on Sakhalin Island.

The leading Thai agro-industrial holding company Charoen Pokphand Foods, which is currently carrying out investment projects in Moscow, Kaluga and Kaliningrad regions, shows interest in supplying food to the Far East and renting arable lands in Siberia to grow wheat.

Our Far Eastern Territories of Accelerated Development may become comfortable platforms for Thai businessmen to come to Russia with their investments, technology and expertise.

 

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