Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Russia looks East for new markets

A large delegation of trade officials and businessmen from Southeast Asia is touring Siberia and the Russian Far East this week in a mission designed to give an economic emphasis to Russian proposals for improved relations with the Asian countries.

Some Russian economic policy-makers view Southeast Asia as a market with faster growth potential for Russian exports than European or American markets. These experts also regard the combination of command methods of economic control, trade protection and market incentives characteristic of the "Asian tiger" economies as a more appropriate model for Russian economic policy to follow than the U. S. free-market approach.

Groups of government and business representatives from Singapore, Thailand, Malaysia, Indonesia, the Philippines, Australia, and New Zealand are participating in the tour; the Japanese and Korean embassies are also sending representatives.

The Singapore delegation includes representatives of the Trade Development Board, the conglomerate Intraco, the Singapore branch of the Moscow Narodny Bank, Chuan Guan Pte. Ltd. , a large Singapore trader in oil and petroleum products and the Singapore branch of American International Industries.

In a meeting Friday at the Russian Central Bank, the bank's deputy chairman, Vladimir Rasskazov, invited the Monetary Authority of Singapore -- the republic's central bank -- to negotiate approval for the establishment of new Russian commercial banks in Singapore and a Singapore bank in the Russian Far East.

At present only two foreign banks have been granted Central Bank licenses to operate in Russia, and both are from Western Europe -- Credit Lyonnais in St. Petersburg, and the Bank of Austria in Moscow.

The Russian commercial banks have lobbied the Supreme Soviet to try to prevent the licensing of further foreign banks this year although, according to Rasskazov, the Central Bank and the government favor this. The Central Bank invitation represents a potential breakthrough for the regional banking corporations of Singapore, ahead of the much larger but politically hamstrung banks of Japan.

The Thai government sent senior officials from the prime minister's office and the Thai Foreign Ministry to head its group in the Asian mission. The most powerful of Thailand's conglomerates, the C. P. Group -- one of the world's largest feed producers -- is looking to expand its agro-industrial business, using Russian raw materials, notably fishmeal. The C. P. Group is also interested in developing heavy industrial investments in Russia.

Large Thai shipments of rice, which are being supplied to Russia on two-year credits worth up to $200 million, have begun arriving in Odessa and Vladivostok. The Thai-Russia rice agreement, which was signed on February 25 in Bangkok, attracted little publicity in the Russian or Western media, but drew special gratitude from Yegor Gaidar, President Boris Yeltsin's economic chief.

A senior official of the Russian Foreign Economic Relations Ministry, Georgy Gabounia, told a luncheon of the Singapore delegation that since most Western restrictions on electronics and high technology exports to Russia have now been lifted, the government wants to encourage Singapore Telecom and other Asian telecommunications companies to develop projects in Russia. Gabounia said that the government has postponed for the time being a formal application to join the Asia Development Bank (ADB).

Russian officials have previously said they would file to join the ADB once membership of the International Monetary Fund and World Bank had been secured. The main reason for postponing that now, Gabounia said, is the shortage of hard currency which would be required to buy ADB shares to fulfil the likely Russian quota.