SPEECH BY MR GOH CHOK TONG, SENIOR MINISTER, AT THE 4TH RUSSIA-SINGAPORE BUSINESS FORUM
Growing Russia-Singapore Relations in the Post-Crisis World
1. First, let me extend a warm welcome to all our Russian and other friends from abroad. We are happy to have you with us today at the 4th Russia-Singapore Business Forum (RSBF). The RSBF has indeed grown since it first started in 2006. Some 200 businessmen and officials, mostly from Russia and Singapore, attended that inaugural meeting. This year, we welcome a record number of over 450 participants. They came not only from Russia and Singapore but also from the Commonwealth of Independent States (CIS) and Asia. This is testimony of the usefulness of the Business Forum for networking and exchanging views.
Impact of the Financial Crisis
2. In June last year, I spoke at the Skolkovo Business Forum in Moscow. Since then, the world has been through a grinding financial crisis, the most severe since the Great Depression. The epicentre of the financial earthquake was in the United States. Given the size of the US economy and the global footprint of the large US financial institutions which failed, the financial earthquake probably measured more than 9 on the equivalent of the Richter scale. The tremors triggered a financial tsunami and a global recession, from which we are only now beginning to emerge.
3. Nobody escaped unscathed. Not Russia, not Singapore. In fact, Singapore, being an open and globally connected economy, was the first Asian economy to slip into a recession in the third quarter of 2008.
4. Fortunately, unlike in the 1930s, where policy responses were slow and inadequate, this time round, governments worldwide undertook swift and coordinated action to stabilise the global economy. Central banks pumped huge amounts of liquidity into the financial system to ease the credit crunch. Stimulus packages were put in place to save economies from crashing and to prevent widespread unemployment. This strong and unprecedented international policy response has proved broadly effective in avoiding a total collapse of the global financial system.
5. One year after the fateful bankruptcy of Lehman Brothers, the global economy is no longer in free fall. We are seeing signs of stabilisation, and possibly even recovery. Growth in China has remained robust, and China should be able to achieve its target of 8 per cent growth for this year. Housing construction in the US rose in August to the highest level in 9 months. The EU bloc is on track to exit the recession in the third quarter. Singapore, too, has seen its economy turning upwards in the second quarter, growing 20% compared to the first quarter.
6. However, while the clouds may be parting, sunny days will be slow in coming. The outlook of job creation in the US and other key markets remains grim and the pace of global recovery is expected to remain modest for some time to come. Difficult challenges still lie ahead, and governments have yet to put in place exit strategies to phase out their stimulus packages without upsetting markets. We should, therefore, proceed with cautious optimism.
Post-Crisis Prospects – Rise of New Economic Powers
7. How should we interpret the extraordinary events of the past year, and what are the new opportunities in a post-crisis world? While few anticipated the intensity of the financial crisis, many expect its repercussions to be deep. The crisis will accelerate the shift of the global economic centre of gravity to the East.
8. For instance, while most of the developed West struggled to keep their economies from shrinking in the past year, China and India were among the few economies in the world that continued to expand. With oil prices having recovered to about US$70 per barrel, Russia and the hydrocarbon-rich countries in the Middle East would also stage a rebound. While the traditional heavyweight economies will not be displaced any time soon, the emergence of the G20 to replace the G8 as the key economic forum is a clear acknowledgement of the growing importance and influence of emerging economies on the global stage.
The New Russia
9. Where does Russia sit in this new emerging landscape? Some analysts have suggested that the recent sustained economic growth of China, India and Brazil compared with Russia’s sluggishness means that the BRIC economic grouping no longer makes sense. I disagree.
10. The fact is that Russia has come a long way in the last two decades. I first visited Moscow in 1990, one year before the Soviet Union collapsed in 1991. The Soviet-era centrally planned economy was then trying to adjust to the perestroika policies of Gorbachev. I saw a Russia in transition, whose future and prospects were uncertain. When I visited Moscow again last year, I was greeted by a very different Russia. I met a new breed of politicians, businessmen, and thought leaders – Russians who were well-travelled, confident and enterprising. There was vibrancy and optimism everywhere – in the streets, in the malls, in the theatres. I saw a new Russia poised to achieve more.
11. Although Russia too has been shaken by the global financial crisis, its growth potential remains intact. Russia has strong fundamentals. It is blessed with vast natural resources in oil, gas, gold and other metals and agriculture. It has the 3rd largest foreign reserves in the world. It has high levels of research and development, scientific talent and a well-educated populace. If Russia continues to maintain a long term vision of its development, I am confident that it will emerge from the crisis renewed, stronger and more competitive.
Growing Russia-Singapore Relations
12. Whatever else may change, what will remain unchanged in the post-crisis landscape is the growing relationship between Singapore and Russia. It is only in recent years that Singapore and Russia have stepped up our engagement, but we have since made quick progress. Our linkages now span a wide spectrum, including trade, business, R&D and tourism. Since year 2000, bilateral trade has increased more than three-fold, and continued to grow healthily through the financial crisis.
Singapore as a Springboard to Asia
13. But we can do more together. To diversify its economy and reduce its dependence on oil and gas, Russia will be looking to internationalise its economy, especially to tap into opportunities in emerging Asia. With our strong connections to the region, Russia can make use of Singapore as its springboard to reach out to this dynamic market. In the spirit of sharing ideas at this Forum, I see three areas where Russia and Singapore could partner each other to realise this objective.
Innovation and R&D
14. The first is innovation and R&D. Like Russia, Singapore is investing heavily in R&D, and our target is for R&D spending to comprise at least 3% of our GDP by 2010. Singapore’s advantage is not just our sound R&D infrastructure, but also our strong Intellectual Property (IP) protection regime. Many international researchers have taken advantage of Singapore’s clear and consistent rules on the ownership, management and protection of IP rights to create and commercialise their technologies here. Besides academic research, companies can also tap our geographical access to Asia to test-bed new technologies and solutions for the region.
15. Indeed, some 25 Russian scientists are already engaged in research collaboration at our Agency for Science, Technology and Research (or A*STAR). One of them, Dr Dmitry Bulavin, recently discovered how the ageing process could potentially be delayed through the suppression of a certain protein. We welcome more Russian researchers and companies to explore such R&D collaborations in Singapore.
16. The next area is international trading. Despite the global economic downturn, Asia is still enjoying rapid growth, and will become even more important in the international trading arena. Singapore’s capabilities as a logistics and services hub, coupled with our geographical location, mean that we are in a unique position to exploit Asia’s trade growth.
17. For example, besides being Asia’s leading oil trading hub, Singapore is also the world’s top bunkering port, with close to 35 million tonnes of bunker fuel delivered in Singapore in 2008. For these reasons, Lukoil has chosen Singapore as its regional headquarters to capitalise on Singapore’s strategic position. We hope that more Russian trading companies will follow Lukoil’s footsteps, and hub their regional business functions in Singapore.
Joint opportunities in third countries
18. The third area is to jointly explore opportunities in third countries as we gain familiarity with each other. For example, Russia is strong in innovation and technology, while Singapore has good networks and experience in Asia. Russian technology companies can partner Singapore companies to penetrate markets in Southeast Asia, China and India. These partnerships will enable both parties to take on business opportunities and better manage commercial risks in international markets. With the global economy beginning to bottom out, this is a good time for Russian businesses to position themselves for Asia’s recovery.
19. For example, TMK, Russia’s largest manufacturer and exporter of steel pipes, which is ranked one of the global top three pipe producers, has chosen Singapore as a base to market its products to South East Asia. In similar vein, Russian Standard, a global leader in authentic Russian premium vodka, signed a marketing agreement with Singapore-based Beam Global Asia, to market and distribute its brands in South East Asia. I am confident that the Avoidance of Double Taxation Agreement which our governments ratified in January this year will further boost our economic links, and I hope to see more Russian companies following the examples of TMK and Russian Standard.
20. Ladies and gentlemen, more than a thousand Russians now live and work in Singapore. Some individuals bring with them their passion to build bridges, like Evgeny Tugolukov, President of the Russia-Singapore Friendship Society, and Alexander Blinov, President of the Russian Club. Their organisations help the Russian community in Singapore feel at home here and contribute to people-to-people relationships. Others like Ms Julia Sherstyuk use their social entrepreneurial skills to achieve the same objective. She founded Singapore’s first magazine dedicated to raising awareness of Russia in Singapore and vice versa. And Singapore benefits from the musical talent of Alexander Souptel, Leader of the Singapore Symphony Orchestra, and Guennadi Mouzyka, its Principal Double Bass. Both of them have helped to bring our orchestra to a higher level.
21. These are just a few of the many Russians who live in Singapore today as students, professionals, scientists, businessmen, professors and entrepreneurs. We welcome more Russians to do the same. Likewise, I urge Singaporeans to go and learn more about Russia, a vast country with rich history, culture and business opportunities.
22. The Russia-Singapore Business Forum is an excellent opportunity for both sides to establish new contacts and renew acquaintances. I hope that the momentum generated by this Forum will translate into a steady flow of exchanges at all levels between Singapore and Russia. I wish everyone a good forum ahead.
23. Thank you.