ASEAN countries could potentially become one of Russia’s main trading partners

4 September 2024

ASEAN countries could potentially become one of Russia’s main trading partners

The importance of Russia’s cooperation with the Association of Southeast Asian Nations (ASEAN) has only grown following the reorientation of Russia’s economy towards the east. However, the realization of the full potential of this collaboration is currently constrained by logistical and settlement issues. Moreover, many companies, due to a lack of information, underestimate the prospects of this partnership. These conclusions were made by participants in the session entitled Russia – ASEAN, which was held during the Eastern Economic Forum (EEF).

KEY CONCLUSIONS

The volume of foreign trade between Russia and ASEAN is growing, but the potential remains unrealized

“ASEAN has always been a significant partner for Russia, but today it is becoming increasingly important because... we face limitations in our interactions with the West, and now our foreign trade vector has turned towards the east, south, and ASEAN. Of course, this is one of our most important partners. It is a vast market. In aggregate, ASEAN constitutes the fifth-largest economy in the world and the third-largest investment partner globally,” Sergey Katyrin, President, Chamber of Commerce and Industry of the Russian Federation.

“The volume of mutual trade between the member states of the [Eurasian Economic Union. – Ed.] and ASEAN countries exceeded USD 27 billion in 2023 and has significant growth potential,” Gohar Barseghyan, Member of the Board (Minister) for Industry and Agro-Industrial Complex, Eurasian Economic Commission.

“Russia and Vietnam have the longest history of cooperation compared to other ASEAN countries, spanning over 70 years. <...> We are currently negotiating with several Russian companies. These discussions focus on potential development projects, and we hope this will contribute to strengthening relations between our countries. I have no doubt that Vietnam can serve as a reliable bridge between Russia and other ASEAN countries,” Le Viet Hai, Founder, Chairman of the Board of Directors, Hoa Binh Construction.

PROBLEMS

Settlements with ASEAN are limited due to US pressure

“Foremost among the challenges are issues related to settlements, due to pressure from the United States and other Western partners to restrict the Russian Federation’s opportunities in every way possible. This naturally affects our partners,” Sergey Katyrin, President, Chamber of Commerce and Industry of the Russian Federation.

“There are questions concerning financing and payments, but most companies we know of are successfully addressing these issues, including with the help of Russian and Vietnamese banks, as well as other banks in Southeast Asian countries,” German Maslov, Vice President of Liner and Logistic Division, FESCO.

The need for simplified trade procedures

“A key challenge is the creation and harmonization of relevant regulatory frameworks and the simplification of trade procedures between our countries. Currently, there are numerous issues and differences that significantly complicate cross-border trade. It is vital for us to strive to harmonize our standards,” Thet Thet Khine, Union Minister of Hotels and Tourism of the Republic of the Union of Myanmar.

Lack of information about potential partners

“Our partners in ASEAN countries are not all equally well-informed; the information reaches entrepreneurs differently. Overall, we believe that there is insufficient information available, both to our partners and to our entrepreneurs, about the opportunities in ASEAN countries. I am referring not only to ASEAN as a whole but to each of the individual member countries,” Sergey Katyrin, President, Chamber of Commerce and Industry of the Russian Federation.

“A major issue is that our companies often lack awareness of each other’s market potential and opportunities. The Russian Export Center opened its representative office in Vietnam back in 2018, and in 2024, we plan to open offices in Thailand and Indonesia, as we see considerable prospects for our companies entering this region, thereby helping to overcome communication barriers,” Dmitry Prokhorenko, Director Development Overseas Network, Russian Export Center.

SOLUTIONS

Development of hydropower in ASEAN countries

“There is a need for a multifactor audit of existing energy systems in these countries, as many of the solutions implemented in ASEAN countries, as well as in the Russian Federation, are already

50–60 years old in terms of technology. <...> After a comprehensive audit, the development and implementation of a programme to improve the reliability of energy systems will be required. <...> We must consider growth rates, consumption rates, the changing landscape of energy and water resource consumption, and, of course, apply technologies that minimize environmental impact,” Sergey Machekhin, Deputy General Director for Project Engineering, Sustainable Development and International Cooperation, RusHydro.

“We would like to offer the joint implementation of the transfer and localization of cutting-edge innovative solutions, which we already have in the Russian Federation. These solutions need to be localized in ASEAN countries so that the local engineering schools can develop independently and sustainably,” Sergey Machekhin, Deputy General Director for Project Engineering, Sustainable Development and International Cooperation, RusHydro.

Development of logistics between the EAEU and the Far East

“I would like to highlight several key strategic priorities for the development of Russia’s Far East and its interaction with Southeast Asia. First and foremost, this involves investment in transport and logistics. This includes the construction and modernization of railway lines to improve connectivity with the region as a whole. It is necessary to enhance infrastructure, thereby facilitating the development of tourism and trade so that people and goods can cross borders seamlessly, efficiently, and quickly,” Thet Thet Khine, Union Minister of Hotels and Tourism of the Republic of the Union of Myanmar.

“We have established a direct line between Vietnam and the port of Vladivostok. There is tremendous interest from shippers in this service because such a direct service did not previously exist. We consolidate cargo from various Southeast Asian countries, and we have our own offices in nearly all ASEAN countries. This allows us to ship goods from virtually any country to Russia and from Russia to these countries via Vietnam, which now functions as a logistics hub,” German Maslov, Vice President of Liner and Logistic Division, FESCO.

Establishing free trade zones

“We are engaging in very active dialogue with certain ASEAN countries. Vietnam was the first country with which the union signed a free trade zone (FTZ) agreement. The positive experience with Vietnam provided the necessary momentum, and in 2022, the Eurasian Commission began negotiations with another ASEAN member, Indonesia. Our delegation recently returned from Indonesia, and we are very hopeful that we will soon sign a free trade zone agreement with this country. We have also established relations with the governments of ASEAN member states: Cambodia, Indonesia, Myanmar, Thailand, and Singapore. We have signed memorandums and are actively developing a dialogue, including business participation,” Gohar Barseghyan, Member of the Board (Minister) for Industry and Agro-Industrial Complex, Eurasian Economic Commission.

For more information, visit the Roscongress Foundation’s Information and Analytical System at roscongress.org/en

ASEAN countries could potentially become one of Russia’s main trading partners

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