ASEAN countries look to deepen ties with the BRICS bloc

ASEAN countries look to deepen ties with the BRICS bloc
ASEAN countries have been improving ties with Russia as they look to access its markets and source cheap energy and commodities. / Photo source: RizkyJogja, CC BY-SA 4.0
By Ben Aris in Berlin May 4, 2023

The nineteenth ASEAN-Russia Senior Officials’ Meeting (ARSOM) took place in Siem Reap, Cambodia on April 29, where foreign ministers of member countries looked to deepen ties with the emerging BRICS bloc.

The delegates discussed ways to strengthen Russia-ASEAN ties. Russia needs new markets since it has been cut off from the West by extreme sanctions following its invasion of Ukraine over a year ago and ASEAN countries (Thailand, Singapore, Indonesia, The Philippines, Myanmar, Bangladesh) want access to Russia’s inexpensive energy and commodities to sustain their explosive growth.

ASEAN’s total GDP reached $3.3 trillion in 2021, making up 3.5% of global GDP, with growth predicted to be 5.2% this year. Its energy needs are growing by an estimated 3.5% per annum; developing closer co-operation with the ASEAN grouping is specifically mentioned in Russia new foreign policy concept.

Energy demand in Southeast Asia could triple by 2050 and the region could be a net importer of natural gas and coal if it does not obtain alternative energy sources.

Russia and ASEAN will enhance agriculture and fisheries cooperation to develop sustainable agriculture management, expand markets for agriculture and fishery products, and promote regional food safety and security, the delegates agreed.

Trade between ASEAN and Russia reached around $20bn in 2021, with ASEAN exports to Russia dominating trade, reaching $12.6bn.

ASEAN exports were dominated by electrical machinery and equipment ($3.4bn), animal and vegetable oils and fats ($1.4bn), machinery and mechanical appliances ($1.3bn) and rubber ($676mn), Dezan Shira reports.

Russia’s concept calls for more co-operation in infrastructure, energy and trade ties between the Middle East, Central Asia, China and ASEAN as a key Eurasian issue, particularly the linking of the Eurasian Economic Union (EAEU) with ASEAN. The EEU comprises Armenia, Belarus, Kazakhstan, Kyrgyzstan and Russia, and fills the geographic space between Eastern Europe and Western China. It has a successful free trade agreement (FTA) with Vietnam, and is discussing additional agreements with Cambodia, Indonesia and Thailand.

All ten ASEAN nations attended the meeting, along with Timor Leste, who is expected to become an ASEAN member soon. However, Singapore is a sticking point, as it has suspended FTA negotiations with the EAEU due to the Ukraine conflict, with which it has sided with the West. If the energy issue becomes problematic, this may change.

ASEAN is an important area to balance Russia’s power and economy, given the economic crisis it faces due to the war in Ukraine and sanctions.

Apart from energy, ASEAN has food security concerns, with Belarus a key farming machinery manufacturer, and fertilisers, in which Russia dominates global markets. Russia and ASEAN already have a Trade and Investment Cooperation Work Programme for 2021-25, with this meeting updating all participants.

Economic ties flourishing

Russia's trade with Southeast Asian countries has been steadily increasing over the years. In 2021, Russia imported some $2.6bn worth of goods from Indonesia. The majority came from palm oil ($1.4bn), for which Indonesia is the world’s largest exporter. Other major products include electrical machinery and equipment ($173mn), rubber ($150mn), footwear ($140mn), and cocoa and cocoa preparations ($112mn).

Russia’s main exports to Indonesia in 2021 were fertilisers ($239mn), mineral fuels ($156mn), iron and steel ($113mn) and aluminium ($44mn).

Indonesia and the EAEU recently held their first round of free trade negotiations on April 3, 2023, with Indonesia eager to export its products to Central Asia and Eastern Europe. In 2022, trade between Indonesia and the EAEU countries increased by 58% compared to the previous year.

Malaysia's exports to Russia in 2021 were mostly comprised of electrical machinery and equipment ($718mn), rubber ($308mn), machinery ($219mn) and medical equipment ($118mn).

Russian exports to Malaysia comprised mostly mineral fuels ($1.1bn), fertilisers ($113mn), and aluminum ($24mn).

Vietnam signed an FTA with the EAEU in 2015 and it took effect in 2016. Trade between Vietnam and the EAEU reached $10.4bn in 2019 – an increase from $3.6bn in 2015.

Bilateral trade between Vietnam and Russia reached over $6bn in 2021, up 20% year on year, with Vietnam exporting some $4.5bn worth of goods to Russia during this period.

Among the key exports to Russia are electrical machinery and equipment ($2.5bn), footwear ($387mn), mechanical appliances ($342mn), and textiles and garments ($296mn). There were also significant exports of coffee ($217mn), fish ($151mn) and fruits and nuts ($83mn).

Russian exports to Vietnam were dominated by iron and steel ($556mn) and mineral fuels ($382mn).

Total trade between Thailand and Russia reached an estimated $2.2bn.

 In 2021 and Thailand enjoyed a trade surplus worth an estimated $1.7bn in 2021.

The country exported over $500mn in machinery and mechanical appliances to Russia, which was followed by vehicles ($331mn), electrical machinery ($244mn) and rubber products ($165mn).

Russia, meanwhile, exported an estimated $500mn of goods to Thailand during the same period, which was dominated by mineral fuels ($82mn) and fertilisers ($68mn).

Cambodia's bilateral trade with Russia is small, with textile and garment exports dominating Cambodia's exports to Russia and commodities being Russia's major export to Cambodia.

The Philippines recorded bilateral trade worth over $1bn in 2021. The Philippines’ exports to Russia are mostly electrical machinery and equipment ($276mn), mechanical appliances ($131mn) and agricultural products, mainly fruits and nuts ($25mn).

Major Russian exports to the Philippines are iron and steel ($313mn), pharmaceutical products ($99mn) and articles of paper pulp ($27mn).

The Philippines currently enjoys preferential tariff status when exporting its products to EAEU members through the Generalised System of Preferences (GSP). The products covered by the EAEU GSP include food, furniture, industrial goods, coffee, coconut products, sauces and condiments, Dezan Shira reports.