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[ 2015-04-10 ]

Free trade accord will rejuvenate Thai-Russian relations: Medvedev

Visiting Russian prime minister Dmitry Medvedev discusses new economic directions in a wide-ranging interview with Nation Multimedia Group chairman Suthichai Yoon

SY: YOURS IS THE FIRST OFFICIAL VISIT BY A RUSSIAN PRIME MINISTER TO THAILAND IN 25 YEARS. AND YOU HAVE BROUGHT HEAVY RAIN, WHICH THAIS CONSIDER A GOOD-LUCK SIGN. WHAT IS THE MAIN GOAL OF YOUR VISIT? HOW CAN IT CHANGE RUSSIAN-THAI RELATIONS?

DM : This rain, this heavy rain that poured down this morning is also a sign of luck in Russia. So our people's beliefs are very similar here. It is a symbol of rejuvenation, of a new harvest. That is a really good sign. Last time it was the chairman of the Soviet Union's government who visited Thailand. But President Vladimir Putin also paid a visit to Thailand in 2003. Our connection has never been interrupted. Also in 2007, HM Queen Sirikit made an official visit to Russia. It was very successful. At that time, I was working as first deputy prime minister. I was ordered to chair the Russian-Thai intergovernmental commission. However, due to domestic politics in Thailand and the fact that I later became president, I no longer chair the intergovernmental commission. Finally, we've managed to do it and this visit has been successful.

I first met with Prime Minister General Prayut Chan-o-cha at the East Asia Summit in Myanmar. Back then, I reminded him that our countries established friendly relations 118 years ago. He even mentioned this fact in a recent interview. Now we must create a platform that will pave the way to another 118 years of friendship. It is for this reason that we organised this visit, during which over 10 important agreements were signed. This is not just about signing documents. Business-to-business and people-to-people contacts are also vitally important.

I have just met with representatives of the Thai business community. They are quite positive and are looking forward to exporting to Russia. They are ready to undertake investment projects, and Russian businesses are also ready to invest in Thailand. And this doesn't even include important areas of cooperation like tourism. This is why I'm optimistic about the future.

SY : COULD THIS BE A NEW CHAPTER IN THE |RELATIONS BETWEEN RUSSIA AND THAILAND?

DM : Yes, you can say so, at least symbolically. But I think that this is not so much about a new chapter as it is about not losing any of our recent achievements. To be honest with you, Thailand is Russia's biggest Asean partner. Trade between our countries has already reached $4 billion, according to our estimates, and $5 billion, according to Thailand. The $5 billion [Bt162.7 billion] figure is also correct, since it includes trade via third countries. It seems like a lot, but at the same time it's not, once you compare it with our trade with countries like China. Russia's trade with China is almost $100 billion. So there is definitely room to grow.

Second, we have reached important results in various areas. There are great opportunities in agriculture and agricultural exports to Russia. As you know, our market is currently closed for a number of European countries, while remaining open to our partners in the Asia-Pacific. Moreover, some of your exports to Russia cannot be produced in our country, including some types of seafood, etc. This means that we will always welcome imports. There are some ideas regarding joint projects. I have just discussed this with the head of CP Group, with regard to investment in Russia's livestock breeding.

There are a number of ideas regarding transport, railways, high technology and medicine. So I think that in this respect everything is going well. But we must move forward.

Finally, today [Wednesday] I made a proposal to my counterpart on the creation of a free-trade zone with the Eurasian Economic Union along the same lines as we are about to do with Vietnam. Let me remind you that by May the Eurasian Economic Union will have five member countries with a total of 180 million people. Consequently, gaining a foothold in one country means entering all five markets. This is a great opportunity. Our colleagues should give it some thought, given Thailand's advanced relations within Asean. You may be interested in such an opportunity, and we are ready to discuss it.

SY : AS FAR AS I UNDERSTAND, THE FREE TRADE AREA AGREEMENT WILL BE THE NEXT BIG STEP IN RELATIONS BETWEEN THE TWO COUNTRIES?

DM : It all depends on Thailand.

SY : RIGHT, I THINK THAT THAILAND IS ALSO INTERESTED IN THIS. HOW QUICKLY CAN IT BE DONE?

DM : It's a process, of course. For example, the negotiations with Vietnam lasted for quite a long time, but we were still able to agree almost everything. And we faced perhaps even more challenges with Vietnam than Thailand. Of course, it will require some time. If you are interested, we are ready to consider this possibility.

There is another interesting possibility. As you may be aware, we are developing our Far Eastern regions with their vast territories and scarce population. We have come up with a legal construct which we refer to as "priority development area". In fact, these are preferential zones with special taxation arrangements, simplified customs regulations and expedited land transfer procedures. Our Thai partners might be interested in this, and they are welcome to participate.

SY : WHAT ABOUT THE RUSSIAN ECONOMY? I SEE THAT THE ROUBLE HAS STABILISED A LITTLE IN THE FIRST QUARTER. IS THE ECONOMY AS BAD AS PEOPLE PERCEIVE IT TO BE FROM OUTSIDE?

DM : We've had better times in Russia. The going got really tough last year. There are two contributing factors: the dramatic decline of oil prices, which our economy greatly depends on, and the hostile stance adopted by several countries which have imposed financial and other sanctions on Russia. Of course, that hasn't helped us, either. However, nothing really major is happening. True, there have been some changes on the currency market: the rouble weakened and devalued, but the trend was halted, and now the rouble is gaining strength. The entire financial sphere has somewhat stabilised as well.

Thailand also faced a similar situation in 1997, if memory serves, when you adopted a floating exchange rate for the baht. This may not always be a pleasant thing to do, because people usually feel the pinch. On the other hand, in that case pricing becomes truly market-based, and currency speculators or foreign influences don't affect the national currency as much. We did the same thing. So, now we don't have any currency bands for the rouble, which is now traded freely.

SY : SO IT'S A MANAGED FLOAT? YOU DIDN'T LET IT FLOAT COMPLETELY FREE?

DM : If that's the decision the central bank makes, but it hasn't done so lately… The central bank can indeed sell a certain amount of hard currency on the market, but there's no reason to, even though we still have substantial international reserves. We need the rouble to reach a balanced state. I am confident that it is going to strengthen as the economy recovers. On the other hand, as you know, it's not good for a currency to grow too strong, because it weakens exports. There is always a choice to be made between stabilising the domestic market and supporting exports. Overall, I think the situation is normal, stable and under control. The difficulties that emerged last year will probably linger into 2015, at least to some extent, but we expect economic growth to resume and the currency to stabilise soon enough, possibly next year. On the other hand, there are other important indicators that we always take into account - such as the debt to GDP ratio. It is extremely low in Russia, no more than 10 per cent of GDP. Unemployment remains low as well; this is something we value, and we'll make further efforts to keep it down.

SY : IS THERE ANYTHING THAILAND COULD DO TO HELP? WE COULD SUPPLY FOODSTUFFS. MAYBE ECONOMIC COOPERATION COULD HELP YOU RECOVER FASTER. WE ARE A SMALL COUNTRY, I KNOW, BUT AS A FRIENDLY NATION, WE HAVE TO ASK.

DM : Don't be modest - Thailand is not such a small country. It is actually quite big by European standards, with 69 million people. That's the first thing. Second, the best way to grow is through joint investment. I think this would be the best way forward for our bilateral relations - Thai investment in Russia and Russian investment in Thailand. This is what will help us overcome the kinds of problems that every economy faces eventually.

SY : DOES THIS MEAN THAT WE CAN HELP YOU WITH THIS? THE DEPRECIATION OF THE ROUBLE HAS HAD A DIRECT EFFECT ON THAILAND, BECAUSE THE NUMBER OF RUSSIAN TOURISTS HAS DECREASED. CAN WE REVERSE THIS TREND?

DM : It's not that dramatic, although the number of tourists has indeed decreased from 2014. We put the decline at somewhere in the range of 25 to 30 per cent. But first of all, this is not the end of the story, and some parameters may improve before the year is over as the rouble appreciates; and second, last year you had an unprecedented number of Russian tourists. The situation can change from year to year. But, even though we are promoting domestic tourism - you know, Russia is a very large and interesting country - Thailand will not lose its appeal for our people. Russians love Thailand, they love to vacation here, and often come back.

On the other hand, there are things we can do to more quickly overcome the current problems. As I told our business partners today: "Colleagues, you could look for cheaper products you can offer at |this moment. And later the situation will improve; I have no doubt about that."

SY : THE NEXT TIME YOU COME TO THAILAND, GO TO PATTAYA. IT HAS REALLY BECOME QUITE RUSSIAN. THERE'S A JOKE YOU MIGHT WANT TO TAKE BACK TO RUSSIA WITH YOU: IF A REFERENDUM WERE HELD IN PATTAYA, IT MIGHT VOTE TO BECOME A RUSSIAN CITY.

DM : No, we'd like Pattaya to remain a Thai city, as long as our people can keep going there on vacation. We will certainly continue to promote domestic tourism, because there are interesting destinations in Russia, but there are also warm countries, and you can't escape that fact. Many people want a bit of warmth in winter, and so they come here. This is normal and will continue.

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