Mr Lim Hng Kiang at the Russia-Singapore Business Forum 2008

OPENING ADDRESS BY MR LIM HNG KIANG, MINISTER FOR TRADE & INDUSTRY, AT THE RUSSIA-SINGAPORE BUSINESS FORUM 2008 -CONNECTING CIS AND ASIA THROUGH SINGAPORE 1 APRIL 2008, 9.15AM, RAFFLESCITY CONVENTION CENTRE

His Excellency Sergei Naryshkin, DeputyPrime Minister, Russia

Mr Herman Gref, CEO, Sberbank,

To all our guests and participants, I am delighted to see you here today and trust that this will be a very enriching session for you.

Introduction

Welcome to the 3rd annual Russia-Singapore Business Forum. Since 2006, this Forum has proven to be a leading platform to communicate with Russian companies. It is also an excellent vehicle for Singapore companies to gain a solid understanding of the Russian market, and for Russian companies to connect to Singapore and discover opportunities in Asia. I am particularly happy to welcome the presence of our honored guests:

Singapore’s relations with CIS

Singapore’s relations with the Commonwealth of Independent States (CIS), especially Russia, has grown significantly over the years. Our total trade with Russia was S$1.88 billion in 2007, more than double the amount of S$0.88 billion in 2002. We have developed good business and government relations. This Forum itself is testimony to our growing relations. Now into its third year, the number of participants has also increased from 300 in 2006 to about 500 this year; coming from not just Russia and Singapore but also other countries in the CIS and Asia.

International Enterprise (IE) Singapore, co-organizer of today’s forum with the Troika Dialog, has been actively promoting the overseas growth of Singapore-based companies and international trade. In 2006, IE established its Moscow office in response to growing interest from Singapore companies in the Russian and CIS markets. The Singapore Tourism Board (STB) is also looking to open an office in Moscow in the first half of this year, to actively promote Singapore to Russia and the CIS

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Planned activities for CIS

Many initiatives are in the pipeline to further strengthen bilateral collaboration. Several business delegations from Singapore in sectors including infrastructure, food, education, healthcare, lifestyle and automotive, will head to Russia and Ukraine this year to better understand the market and where their products and services may be needed.

I am also excited that about 100 Singapore companies will be making their way to Moscow in June this year to promote understanding, dialogue and collaboration between the business and arts communities of Singapore and Russia. This is part of an international exchange programme called `Spotlight Singapore’, organized by The Art House which serves as an economic and cultural gateway to new and emerging markets around the world for Singapore. Singapore companies can succeed in the CIS only if they have the necessary manpower and market know-how to support their operations. The International Business Fellowship, run by IE Singapore, helps to equip executives with in-depth knowledge and business opportunities through in-market courses and immersion programmes in these countries. We are glad to announce that IE Singapore is collaborating with the Moscow School of Management SKOLKOVO in Russia and the Kazakhstan Institute of Management, Economics and Strategic Research (KIMEP) on the Executive Programme in Central Asia. Twenty five senior executives are expected to take part in each of the two programmes to be launched in May and June this year.STB has also been stepping up engagement with its travel industry partners in Russia, developing and helping them promote themselves as Singapore specialists through advertising and PR campaigns. The number of trade shows they hold in Russia has also grown. These include the Otdykh Leisure Show, International Meetings Industry and Business Travel Exhibition & Conference (MIBEX) and Moscow International Travel & Tourism (MITT).

On the private sector front, Singapore businesses are actively capitalizing on the opportunities available in Russia. Companies such as Shiro Corporation, Ascott Group and City Developments, have successfully entered the Russia market in response to growing demand for their products and services.

Forming partnerships with the CIS region

As the CIS economies continue to grow and open up to foreign participation, there will be a need for know-how and soft skills. Singapore companies are well-equipped to meet such demands. We encourage both Singapore and CIS companies to explore and find in each other suitable partners to further take their business to the next level.

One potential area for partnership is in infrastructure development. I understand that some US$1 trillion will be dedicated to infrastructure projects under the Public-Private-Partnership (PPP) project structure. In addition, Russia is now embarking on new initiatives such as tourism and port SEZs. In view of the magnitude of the projects involved, strong partnerships will be crucial. Singapore boasts a solid cluster of companies, such as Keppel Land, CapitaLand, City Developments and Ascendas in the real estate/property development sector, who are well-placed to partner with Russian or foreign companies to bring their experience and skills to the projects. Singapore companies such as Keppel Offshore & Marine have also partnered with Kazakhstan companies to build oil-drilling equipment, in order to tap on the opportunities available there. Apart from their traditional strengths in management and operations, there are opportunities to inject private funding into these partnerships as well.

 Another area of interest is the retail or lifestyle sector. The middle-income class in Russia is growing – estimated 30 million Russians, they make up 20 per cent of the total population. This figure is set to grow further in the near future, leading to growing demand for consumer services such as good restaurants and entertainment facilities. However, we will need to work on raising the awareness of what Singapore can offer in terms of our cuisine and retail brands among Russians. One of the ways where IE Singapore hopes to showcase Asian food in Russia is through its partnership with renowned Russian chefs. Singapore companies can also be encouraged by successful first movers, such as Food Empire Holdings, which acquired Naturant Systems Inc. – the owner of the Petrovskava Slobada brand of popular instant coffee mixes, for US$8.8 million in a move to increase its market reach in Russia and Ukraine

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.Another example is Super Coffee mix Manufacturing, which ventured into the instant coffee market back in 1993 and has since entered into an agreement with Zao MBI Barista, a Russian 3-in-1 coffee company, to form a joint venture for investments into Russia to market and distribute its food and instant beverages. Other companies from Singapore such as Amtel Properties, Flextronics, Wilmar International and Delta Exports have also been pioneers in entering the Ukrainian market by setting up their footprints there.

 Since Singapore signed an MOU with Russia on Economic Cooperation in Special Economic Zones (SEZs) in August 2006, I am pleased to note an increase in institutional linkages and dialogue between our countries. The Russia Singapore Joint Steering Committee, co-chaired by Economic Ministers from both countries, will certainly continue to serve as a useful platform to discuss a broader range of economic issues.

 Singapore – Linking up CIS Countries to Asia

Apart from encouraging Singapore companies to expand into CIS, I would also like to highlight the strategic role Singapore can play in helping CIS companies extend their presence into other parts of Asia.
Russia’s growing integration with Asia is visible by its participation in several key events such as the ASEAN-Russia Dialogue, the ASEAN Post Ministerial Conferences, and in APEC. In recent years, trade between Russia and Asia Pacific countries has been growing at an average of 20 per cent yearly. As a region, Asia Pacific ranked as Russia’s second largest trade partner after the EU in 2006

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We are also aware that companies from CIS are looking to Asia to fuel their growth, and many are actively pursuing interests in the region. In Singapore alone, there are about 120 companies with Russians as major shareholders today. Recently in the news, Gazprom, one of the world's biggest gas companies, with a market capitalization of approximately US$300 billion, was said to be considering a listing in Asia.

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Troika Dialog, a leading Russian private investment bank, and our co-organizer today, is also planning to open a new representative office in Singapore, in order to capitalize on the emerging opportunities in Asia. Singapore Airlines has also recently started a non-stop service to Moscow. To cater to the increased demand, SIA has also changed its thrice-weekly flights to a daily one.

To these companies interested in Asia, we warmly welcome them to set up their base in Singapore to act as a springboard to expand into the surrounding region. Singapore holds several advantages for such companies. First, Singapore is a leading financial, trading, logistics and manufacturing hub in Asia. We also have excellent telecommunications and transportation connectivity to the world, coupled with a stable and pro-business government. Indeed, Singapore was ranked the most business-friendly economy in the world by the World Bank in 2007.Furthermore, Singapore companies have established good networks in the region, with strong experience of working in different markets and cultures. We welcome CIS companies to partner with Singapore companies in their ventures into Asia.

Second, Singapore’s wide portfolio of Free Trade Agreements and Double Taxation Agreements, which covers the US, ASEAN, China and India, will also help CIS companies based in Singapore to gain greater market access through the reduction of import tariffs. We have recently completed free trade negotiations with the Gulf Cooperation Council (GCC) as well, further enhancing our position as a free trade hub.

Third, CIS companies can take advantage of Singapore’s position as Asia’s top offshore trading hub for oil and rubber to conduct offshore trading in Singapore. We are also a key player in the trading of agri-commodities as well as metals and minerals. Current major Russian international trading companies in Singapore include Lukoil, Agrosin and Amtel. Lukoil uses Singapore as a regional trading hub, conducting its regional strategic functions related to finance, treasury and shipping from here. Amtel conducts international sourcing and trading of rubber and rubber-related chemicals out of Singapore. We welcome more global trading companies from the CIS to come to Singapore.

 Conclusion

Today’s Forum has brought together peoples from two regions which are physically distant from each other, presenting us with the rare, yet good opportunity to foster closer ties. I encourage everyone here to make full use of the panel and networking discussions to understand the rich business opportunities that can be gained in both the CIS and Asian markets, and to find potential business partners. Thank you.

[1] Source: STB
[2]Source: Business Times, 22 Mar 07
[3](Source: Russian News & Information Agency. http://en.rian.ru/analysis/20070122/59481854.html).
[4](Source: Interfax Feb 19, 2008- from newspaper article)