Singapore businesses should look to Russia for opportunities, especially in areas like technology and innovation, Deputy Prime Minister Tharman Shanmugaratnam said yesterday.
Mr Tharman, who is also Coordinating Minister for Economic and Social Policies, was speaking at a dialogue with Russian Deputy Prime Minister Maxim Akimov at the 13th Russia-Singapore Business Forum, held at Ritz-Carlton, Millenia Singapore.
More than 300 business leaders from the two countries attended the forum, organised by Enterprise Singapore to bring Russian and Singapore businesses together to foster investment and trade and the exchange of ideas.
Encouraging Singapore firms to explore business opportunities in Russia, Mr Tharman said: "Seven or eight years ago, the image of Russia was that it was a very difficult place to do business. That was the perception of Russia and it was also a good part of the reality.
"Today… Russia has improved dramatically, from being around 130 in the World Bank index of 'the ease of doing business' to 35. That must be one of the largest improvements among countries over the period."
He added: "Business is never perfectly smooth in Russia or anywhere in the world, but it is a much more welcoming environment now, an environment where government officials are a lot more responsive to businesses."
Enterprise Singapore said there are about 20 Singapore companies in Russia, in sectors such as technology, consumer goods and services, infrastructure and trade.
Economic relations between the two countries have been growing, with bilateral trade in goods rising at a compounded annual growth rate of 15 per cent, from less than $2 billion in 2007 to $7.4 billion last year, it added.
Russia has improved dramatically, from being around 130 in the World Bank index of 'the ease of doing business' to 35. That must be one of the largest improvements among countries over the period. Business is never perfectly smooth in Russia or anywhere in the world, but it is a much more welcoming environment now, an environment where government officials are a lot more responsive to businesses.
DEPUTY PRIME MINISTER THARMAN SHANMUGARATNAM
Singapore's stock of direct investment abroad (DIA) in Russia reached $420 million as at the end of 2015. DIA refers to an investment where a Singapore direct investor owns 10 per cent or more of the ordinary shares or voting power in an overseas enterprise.
Mr Tharman said smaller companies and younger ones are looking to Russia for opportunities, mostly in the information and communications technology (ICT) sector.
"As DPM Akimov says, ICT is everything... but the use of ICT and the use of innovative solutions and applications opens up a whole new phase of growth even for the so-called old economy sectors in Singapore... The scope for transformation through digitisation is still very significant. And Russia has embarked on the same phase of development, so I think that offers promise."
Enterprise Singapore said that Russia's e-commerce market is also rising rapidly. It grew at a rate of about 20 per cent annually over the past five years and is expected to be worth US$21 billion (S$28.7 billion) by 2020.
ViSenze, a Singapore artificial intelligence solution provider helping e-commerce firms, started operating in Russia early this year.
Its chief executive officer and co-founder Oliver Tan said: "Russia is an exciting size market for innovation-driven technology solutions. While most Russians are 'occasional online buyers', I tend to see this presenting long-term opportunities for the introduction of new exciting shopping experiences to convert the 'occasional shopper' into a more engaged shopper."
However, he also noted there are challenges, such as the language and cultural barriers and the fact that the market is large and diverse.
"You need to appreciate the nuanced differences between regions and tune your strategies accordingly," he said.