The Minister’s meetings
Foreign Minister Sergey Lavrov’s remarks at a meeting with business representatives, Kuala Lumpur, August 5, 2015
Ladies and gentlemen, friends,
I would like, first of all, to thank the Russian Business Council for Cooperation with Malaysia for organising our meeting today and for the opportunity to exchange views with you on the current situation in the global and regional economies, their impact on Russia’s trade and investment cooperation with Malaysia and ASEAN as a whole, and the business community’s role in promoting it.
The map of the world’s economic development is changing before our eyes. This is clear as we see the Asia Pacific Region (APR) confidently asserting itself as the driver of global growth. The APR today accounts for 60 per cent of global GDP and almost 45 per cent of direct trans-border investment. Despite the crisis in certain parts of the world, this region is growing steadily, with a 5.8 per cent growth forecast for this year. I am confident that it is these markets that will be the main source of increase in global demand in the next decade or perhaps longer.
Currently, economic difficulties can be felt everywhere. In our case, there is the influence of illegitimate, unilateral sanctions directed at Russia by a number of Western countries, the influence of which is superimposed upon global economic problems.
But our country is confidently coping with the hard times. Late last year, some predicted that the Russian economy would be in ruins. This didn’t happen. On the contrary, we’ve stabilised the situation, quenched the negative oscillations of economic indicators, and stabilised the currency rate. We’ve kept our reserves intact and are controlling inflation. Unemployment is at a rather low level, 5.8 per cent. Russia has a positive trade balance, the physical volume of its non-primary sector is growing, and high-technology exports are on the rise. The budget is being used as planned. On the whole, our financial and banking system has adapted successfully to the new environment. We are active in developing production at home. We’ve considerably stepped up our import substitution effort and pay much more attention to enhancing the quality and competitiveness of domestic products. In so doing, we are not closing our economy. On the contrary, we are expanding freedoms, encouraging greater openness, and are broadening our involvement in integration associations.
We are taking steps to improve the business climate by creating open, predictable and favourable conditions and opportunities for investors and greater cooperation in all areas. We continue to support major investment and infrastructure projects. We’ve introduced a system of tax “vacations” for small and medium-sized businesses. It has been decided to freeze tax rates for the next four years. Our invariable intention is to do our utmost and even more to make investment in Russia profitable.
These measures enable our country to strengthen its position as a promising market. Last year alone, over 60 joint ventures started operations in Russia. We are always open to mutually beneficial cooperation with our traditional and new partners.
The future of Russia as the biggest Eurasian power, two-thirds of whose territory lies in Asia, is inseparably linked with the APR. It’s logical that we, like the other Eurasian Economic Union member-states, are seeking to increase ties with the countries in this region and remove barriers to trade and investment. The EAEU has signed its first free trade area agreement with Vietnam. We regard this as a pilot project that will promote trade liberalisation with other ASEAN countries.
We’ve discussed this idea and it was approved at the Russia-ASEAN Dialogue Partnership ministerial meeting. Russia and the ASEAN Ten are pursuing largely similar objectives in a bid to modernise their economies, boost competitiveness and ensure stable growth for the benefit of their populations. We intend to take full advantage of the available investment and technological potential of this for the socio-economic development of Russia’s regions, which is part of our 21st-century national project to develop Siberia and the Russian Far East. We are creating open and supportive conditions for investment and production there. We are launching mechanisms for zones of priority development with favourable tax and administrative business conditions. We are modernising the Trans-Siberian Railway and the Baikal-Amur Railway, the Northern Sea Route, seaports and motorways, which will promote cost-efficient cargo transiting on APR-Europe routes. The new Power of Siberia gas pipeline project to increase gas distribution in Asia is now underway. Thanks to these efforts, investors will have unique opportunities to work in the Russian market, and importantly, a profitable jumping-off point for direct access to the vast and growing APR market.
We know that similar large-scale projects are being implemented under the ASEAN Interconnection Master Plan. Russia is ready to participate in these as well. This will help create the infrastructure necessary for our cooperation in such important areas as oil and gas, aircraft manufacturing, the iron-and-steel industry, and nuclear power. These possibilities are being studied by Russian-Malaysian business organisations. Some additional opportunities for this will emerge in August, when participants in the Russia-ASEAN Economic Ministers Meeting sign an agreement on a joint Russian-Malaysian commission for economic, scientific, technological and cultural cooperation.
Today Russia is ASEAN’s eighth largest trade partner. Our trade reached $21 billion in 2014. Of course, this is less than the indicators for ASEAN trade with the US, China or Japan. But a few years ago, this figure was only $10 billion. This indicates that we are on the right track.
The Association, for its part, is one of ten largest trade partners for Russia. Last year, bilateral trade with Malaysia was worth $3.3 billion, growing by almost a quarter during the year. But we have a lot of potential to be tapped as we work to implement the Russia-ASEAN trade and investment roadmap, specifically to approve a list of several dozen major joint projects as a supplement. The business community as the main driver of economic development will play the key role in the implementation of these projects.
Russia is sending comprehensive business missions to Southeast Asia on a regular basis. Last year, Russian entrepreneurial delegations visited a number of countries in the APR, including Malaysia. Our plans for the near future include yet another mission to your country in August and the Russia-ASEAN Business Summit in November in the wake of the Kuala Lumpur ASEAN Summit. I hope that the Business Council for Cooperation with Russia, which Malaysia established earlier this year, will join the effort to organise these.
We hope that the Malaysian business community will exhibit growing interest in its cooperation with Russia. The first Eastern Economic Forum scheduled for Vladivostok on September 3-5 is the earliest opportunity to learn about the prospects for cooperation. A separate Russia-ASEAN session has been planned as part of the agenda. We invite you all to attend the forum, during which we intend to provide the details on all the opportunities opening up in the Russian Far East.
In closing, let me stress that building cooperation with all of the ASEAN countries is invariably a key priority of Russian foreign policy. We support ASEAN’s central role in promoting reliable security and sustainable development in the APR. The Russia-ASEAN Dialogue Partnership will be 20 years old in 2016. An understanding has been reached on holding a related summit.
Thank you for your time and attention.