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Room for Thai-Russian investment growth

Nov 20. 2012
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By Achara Pongvutitham

The Nat

Since joining the World Trade Organisation (WTO) in August, Russia has attracted more foreign investors who foresee opportunities in one of the world's major economies. Big Thai companies such as Siam Cement Group, Charoen Pokphand Foods and Boonrawd Bre

Boonrawd, brewer of Thailand’s well-known Singha beer, has reportedly been exploring business opportunities in Russia since last year, seeking locations suitable for setting up plants in the future. However, no details of its investment plans have been made available. An informed source at Boon-rawd Brewery said last Friday that the company was seriously interested in accessing more markets overseas and had studied investment opportunities in a number of countries. However, it has not decided where to set up plants. Singha beer is exported to 50 countries worldwide.

Vladimir Romanov, acting trade representative of the Russian Federation in Thailand, said this country was Russia’s biggest trading partner among Asean countries last year, followed by Vietnam. The value of trade between Thailand and Russia jumped by 42 per cent to US$5.7 billion (Bt175 billion) in 2011. Export to Russia surged by 49 per cent while Russia’s export to Thailand rose above 40 per cent.

For the first nine months of this year, turnover exceeded $4.22 billion. Of this, Russia exports to Thailand totalled nearly $3.34 billion and imports $876 million.

Basic products exported by Russia to Thailand are crude oil, rolled steel and scrap metal, fertilisers, gems, wood, pulp and paper. Russia imports from Thailand automotive parts, electronic products, rice, sugar, seafood, rubber and many other goods.

Thai rice export to Russia dropped dramatically from Bt724.8 million last year to Bt112.3 million in the first nine months of this year.

Romanov said Russian investors were looking for partners not only in Thailand but also in other Asean countries. As for his own country, there remain interesting economic areas outside Moscow and St Petersburg largely untapped by foreign investors, such as Siberia and the Far East. Thai investors currently focus on the large centres of Moscow and St Petersburg.

Russian investment in Thailand remains relatively low. The Board of Investment said only five Russian companies had applied for investment privileges. However, that figure does not reflect the fact that many guesthouses, apartments and restaurants in Phuket, Pattaya and Chon Buri have been invested in by Russians.

Romanov said Russia had relaxed its laws to facilitate foreign investment, with privileges also provided, including tax breaks, import-tariff reductions and soft loans, since joining the WTO.

Such businesses as cars and car parts, high-technology manufacturing, nanotechnology, food processing and farming offer big opportunities for foreign investors. "Money also is easy to take out," said Romanov.

Romanov suggested that Thai companies participate in trade fairs and exhibitions in Russia. There are also good opportunities for both countries to join efforts in the implementation of large-scale regional projects in the fields of transport, energy and developing natural resources within the frameworks of Asean, the UN Economic and Social Commission for Asia and the Pacific, and Asia-Pacific Economic Cooperation.

So far, Charoen Pokphand Foods is the largest Thai investor in Russia, putting in more than $200 million since 2009 in the development of livestock, particularly swine. The company has set up Charoen Pokphand Foods (Overseas) to operate a feed mill and six swine-raising farms in Moscow and the Kaluga region southwest of the capital. Other leading Thai conglomerates such as Siam Cement Group, Siam Steel and Loxley are also expanding into Moscow.

There is potential for business cooperation between the two countries in fields such as autos and parts, oil and gas, shipbuilding, environmental protection, information and space technology, air and rail transport, nanotechnology, solar energy, biotechnology and others.

Many global carmakers from Japan, France and Germany have set up assembly plants in Russia. In addition, Russia’s own Lada passenger cars and Kamaz trucks are well known.

Automobile manufacture in Russia was 1.7 million units in 2011.

"We have not only attracted foreign investors to establish [themselves] in our country but we also increased our interest in Asia," said Romanov.

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