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26 Sep 2018 Updated 26 Mar 2021


Russia: Back to Business

This is the first post of a two-part series on Russia. For the next post, click here.

Singapore companies looking for new markets to enter should be taking a closer look at Russia, Deputy Prime Minister and Coordinating Minister for Economic and Social Policies Tharman Shanmugaratnam said at the Russia Singapore Business Forum 2018.

The country has a large and growing consumer market, a deep pool of talent, and provides access to the larger Eurasian Economic Union, a single market of 183 million people with a GDP of US$4.5 trillion (PPP).

The Russian economy climbed out of a recession in 2017, with the government taking steps to steer the country away from its petro-dependent growth model, and is investing heavily in improving physical connectivity, digitalisation, and self-sufficiency in food. As such, there are significant opportunities for Singapore businesses to explore in Russia.

RSBF Blog Post 01

Areas of opportunity


Improving physical connectivity within Russia, particularly by road and rail, is seen as key to the country’s economic development, given its large size and unequal population distribution.

At the same time, the Belt and Road Initiative is providing the stimulus for the development of Russia’s the Far East region and its links to Asia. There is a strong desire to develop routes and improve connectivity with Central Asia and Europe, which will allow Russia to fulfil its potential as an export market.

Additionally, with the need to develop other economic centres and hubs to distribute foreign investment, there are great opportunities for businesses in the cities that stand to benefit from this growth and for Asian businesses to engage.

Rise of digitalisation

“Digitalisation is everything for us right now”, Russia Deputy Prime Minister Maxim Akimov said about the country’s nationwide program to develop the digital economy, whose agenda includes healthcare, education, logistics, energy, and smart cities, as well as building end-to-end solutions in public administration.

As these are areas in which Singapore companies have the expertise and experience Russia needs as it embarks on a similar phase of development, there are sure to be opportunities for collaboration.

Huge consumer economy

Russia has a vibrant consumer market of 150 million people, with a median population age of below 40, which represents a huge market for Singapore companies that want to internationalise.

While consumers are becoming more rational and less sensitive to brand names, prices are becoming a larger factor in purchasing decisions. They are becoming more demanding and are looking for convenience, and are willing to spend on goods and services that contribute to their quality of life. As such, brands and businesses that are able to grasp the nuances and needs of the country’s complex consumer economy stand to benefit the most.

Making doing business easy

Reforms in the business environment in recent years have tremendously improved the ease of doing business in Russia. At the same time, the government is supportive of investors and open to dialogue.

Since 2012, the country has established a one-stop shop for company registrations, improved its tax system and eliminated delays in granting building permits, which has resulted in it climbing the World Bank’s annual Ease of Doing Business Index. It moved from 120 out of 190 economies in 2011, to 35 at present, just behind Japan and ahead of many Western countries such as Italy and Belgium.

Where to start?

  • Find local partners – The mentality and culture, business practices are different from Singapore, so local insight and connections can be crucial in facilitating transactions. The best way to enter the Russian market is to find the right partner, but also to have a clear idea of a project and identify your competitive advantages, Sportsmaster CEO Leonid Strakhov advised.

  • Explore investment funds such as the Russia Direct Investment Fund (RDIF) – RDIF acts as a catalyst for direct investment into the Russian market. It does not only work with large sovereign funds but also international strategic investors and private equity funds. It currently has US$40 billion under management from its partners, which includes Singapore GIC and Changi Airport Group.

  • Visit Russia personally – The market is big and complex, so potential investors should visit the cities and stores to have a better understanding of the products, brands, and consumer offerings available. “The competition is tough but the opportunity is there. How you will succeed is in identifying the gaps in the market”, Food Empire Holdings CEO Sudeep Nair said.

This is the first post of a two-part series on Russia. For the next post, click here.