Trade between the UAE and Russia could double in the next five years as the two countries identify sectors for further economic co-operation from space exploration to food processing.
UAE-Russia trade is expected to hit more than $10 billion this year and could double by 2030 as a “relatively conservative” target, Alexander Vinokurov, chairman of the Russia-UAE Business Council said on Wednesday at the first UAE-Russia Business Forum in Dubai.
“With all the great energy we had today from both sides, on both the corporate and regulators' side, we hope it will happen faster,” Mr Vinokurov told reporters on the sidelines of the event.
“Then of course we will look to double it again.”
While the imposition of western sanctions on Russia may slow down the potential growth in trade and investment, the country will seek to achieve its targets within the framework of UAE regulations, he told The National.
“Russian companies and regulators have learnt to work around it [sanctions]. In many ways it made the Russian economy and Russian sanctions stronger.
“Now we have complete understanding and respect of the framework within which UAE companies and banks operate, so we will work to realise our potential within this framework.
“Perhaps it could happen faster if those limitations were not around, but it is what it is. We believe we can still achieve great success regardless.”
Next phase of co-operation
More than 13,500 Russian companies are currently registered in the UAE, with about 2,000 new licenses issued this year alone, UAE Economy Minister Abdulla bin Touq said in a speech at the forum. These companies operate in logistics, tech, hospitality, retail, manufacturing and services.
UAE companies are also investing in critical sectors in Russia mainly transport, energy, real estate and food processing, bolstered by strong air connectivity of more than 200 weekly flights linking UAE cities with destinations across Russia, he said.
“This connectivity will remain a strong foundation for the next phase of co-operation. There is significant room to build on this foundation,” Mr Bin Touq added.
Russia is a major industrial economy with “competitive strengths” in mineralogy, chemicals, agri-food processing, engineering and cyber security, which align closely with the UAE's industrial agenda to expand industrial manufacturing and develop high-value supply chains.
“Russia's industrial capacity, scientific expertise and large market can complement the UAE's position as a global hub for capital, logistics and entrepreneurship,” he said. The UAE offers “clear advantages” for Russian companies seeking to expand in the Middle East, Africa and Asia.
The minister identified five key sectors with “great potential” for co-operation between the two countries. These include food and food processing, tourism, financial services and FinTech, data and data analysis and space exploration.
Following meetings in the past two days, the UAE sees potential for co-operation beyond these sectors in the next couple of years.
“As both our countries navigate a complex global landscape, there is a clear opportunity to strengthen our co-operation,” Mr Bin Touq said. “We remain committed to supporting deeper ties between out between our private sectors.”
Joint efforts in trade, industry and innovation can lay the foundation for sustainable growth.
“The UAE remains committed to a partnership that is constructed, future-oriented and focused on real economic outcomes.”
This comes as the UAE seeks to grow the contribution of non-oil sectors to its gross domestic product. It set a target for 80 per cent of its GDP to come from the non-oil sector in the next two years, up from 77.8 per cent currently.
For example, the UAE imports 90 per cent of its food and wants to reduce this to 60 per cent, Mr Bin Touq said.
In tourism, the UAE wants to introduce flights to more destinations in Russia, such as Kazan, the capital city of Tatarstan, he said. Last week, Etihad Airways said it launched its inaugural flight to Kazan from Abu Dhabi. The seasonal winter service operates until April next year, with plans to resume next winter season.
Russian growth amid 'external pressures'
The trade turnover between Russia and the UAE amounted to about $8.9 last year and this figure will be passed by the end of this year, Anton Alikhanov, Russia's Minister of Industry and Trade, said at the forum.
“We are now entering a new stage of our bilateral relations,” Mr Alikhanov said pointing to UAE signing an economic partnership in June with the Eurasian Economic Union (EAEU), which comprises Russia and other member states.
Russia is mitigating “external risks” to its economy by focusing on achieving “technological sovereignty” and reinforcing its leadership in key sectors, he said.
“Despite external pressure, industrial production in Russia continues to grow,” he said. In the first ten months of this year, it rose three per cent, led by the radio-electronics and pharmaceutical industries.
“I am confident that co-ordinated efforts will allow us not only to reach a new level of bilateral economic co-operation but also to create opportunities for jointly promoting our projects in third-country markets,” he said.
Companies' perspective
Companies from various sectors in UAE and Russia highlighted the opportunities to do business.
DP World's chairman Sultan bin Sulayem said global trade remains resilient, despite disruptions.
“No matter what restrictions or what sanctions, trade will continue,” he told the UAE-Russia forum.
“Russia today is the closest and fastest connection between the Far East and Europe by the North Sea, by road and by rail. Nobody can avoid that.”
Russia is a “big bridge” and “active participant” in global trade, with developed infrastructure and improvements in it services, he added.
Mansour AlMulla, the Deputy Group Chief Executive of Abu Dhabi's ADQ, said that a strong “financial architecture” is needed to drive more economic growth between UAE and Russia.
Mohamed Al Musharrakh, chief executive of Invest in Sharjah, said that 700 Russian companies operate in the emirate.
The emirate is focused on sectors such as AI, health-tech and longevity, tech research and development and agri-tech, he said.
He invited Russian companies to open branches or set up subsidiaries in the UAE to benefit from initiatives such as Make it in the Emirates and Operation 300bn that are focused on advanced manufacturing.
Alexander Zharov, chief executive of Gazprom Media Holding, the largest media company in Russia, said there are opportunities for collaboration with the creative industry in the UAE in terms of content distribution such as film distribution, TV series and library sharing.
“We have proposed the creation of a dedicated Russian-Emirati centre for creative industries to address the ongoing development efforts,” Mr Zharov said.
“It is intended to become a platform for pooling the expertise of specialists from our two countries, jointly producing content, training new specialists, and creating accelerators for strategy development.”
This is currently being discussed in consultation with regulators, specifically the Ministry of Economy and Tourism and the Ministry of Culture, he said.
“We hope for their support and believe this centre could become a significant growth hub for collective action.”
The forum in Dubai on Wednesday comes after President Sheikh Mohamed's official visit to Moscow in August marked significant progress in strengthening the strategic partnership between the UAE and Russia.
