South-East Asian countries open to Russian business

23 september 2016

"The markets of Vietnam and Indonesia are very promising, and both countries have seen some solid economic growth in recent years. In order for this growth to continue in the future, the infrastructure in place must meet contemporary requirements both in quality and in quantity," said Denis Yershov, Head of the Department for International Cooperation of the Analytical Center, opening the Workshop on Assessing the Potential of Russian Companies’ Participation in Infrastructure Projects in South-East Asia.

At the workshop, the experts discussed the current infrastructure projects in South-East Asia taking Vietnam and Indonesia as a case study, as well as the formats that Russian companies can use to participate in such projects and possible restrictions they may face in those markets.

Andrey Arkhipov, Director for International Projects at Russian Export Center JSC, believes that Vietnam and Indonesia have a lot of promise as far as infrastructure projects are concerned. "Both countries are implementing large scale national programs to develop their industrial, transport, energy, and other infrastructure. At the same time, they are both open to Russian business and want to see Russian companies operating in their countries," the expert said.

Kiki T. Kusprabowo, Minister Counselor of the Embassy of Indonesia, talked about infrastructure projects under way in Indonesia. "We are actively developing economic relations with Russia and paying close attention to our cultural and social contacts," the diplomat said, adding that Indonesia is currently actively developing its infrastructure especially in terms of transport. "In order to link together all the regions in the country, we are building new motorways and airports and modernizing our railroad network. In this, we are closely cooperating with Russian Railways OJSC," Mr. Kusprabowo said. However, the Government cannot implement all infrastructure projects on its own, so it is actively pursuing cooperation with foreign private investors, the councilor explained.

Mikhail Kuritsyn, Commercial Director of the Business Council for Cooperation with Indonesia, talked about cooperation projects between the two countries. "Today, Russia is the only large country that is a priority for Indonesia in terms of cooperation," the expert said. According to Mr. Kuritsyn, the state-owned sector makes up the bulk of Indonesia’s economy and it is also responsible for the majority of infrastructure projects, while a large portion of the country’s economy is financed with foreign investments.

"The need to build ports, airports, and auxiliary infrastructure opens up plenty of opportunities for Russian companies. Russian companies can bring all kinds of industrial technology and materials to Indonesian market, including metal, because the country is experiencing a significant shortage of steelworks."

Mikhail Kuritsyn

Commercial Director of the Business Council for Cooperation with Indonesia

Mr. Kuritsyn identified two factors holding back economic growth in the country: logistics difficulties and an underdeveloped energy sector. "The country cannot grow without a good energy sector. This problem can be resolved with the help of a public-private partnership, specifically by giving entry to Russian energy companies and building new power plants in Indonesia," the expert believes. As for logistics, one feature of Indonesia is that a lot of shipments go by sea or air and the country has practically no railroads, and that has a major impact on the nature of the country’s infrastructure development, the analyst believes. "The need to build ports, airports, and auxiliary infrastructure opens up plenty of opportunities for Russian companies. Russian companies can bring all kinds of industrial technology and materials to Indonesian market, including metal, because the country is experiencing a significant shortage of steelworks," Mr. Kuritsyn summed up.

Another problem that Indonesia faces today is the looting of its maritime resources, and one way to tackle this issue would be by using imported technology. "We could supply special equipment like helicopters and fishing boats, we could share experience and know-how in building this equipment, and further down the road, we could run joint projects to build refrigeration and processing facilities that could eventually sell sea foods directly to Russia," the expert believes.

During the discussion, experts talked about the projects to build the Long Foo 1 and Long Foo 3 thermal power plants in Vietnam, and the experience with major coal and nickel mining projects in Indonesia, as well as banking support for export projects in the two countries.

The event was organized by the Analytical Center in conjunction with the Ministry of Economic Development of Russia and the Russian Export Center.