Singapore can be a key enabler in Vladivostok-Chennai Maritime Corridor
Singapore can be a key enabler of the Vladivostok-Chennai Maritime Corridor (VCMC). By strengthening relations with India and Russia, it builds strategic autonomy amidst US-China rivalry.
Leveraging its logistics and maritime infrastructure, it can remain a competitive commercial centre amid geopolitical gyrations and international economic competition while augmenting the strategic Indo-Russian partnership.
Establishing itself as a key node on the VCMC builds on trade pacts Singapore has established with India and Russia. It also hedges against the potential for China to undermine Singapore’s own economic security and other interests.
China’s interest in mitigating the “Malacca Strait dilemma” — a strategic maritime vulnerability for East Asian states — and a vital economic lifeline for Singapore is also impacted by China’s Belt & Road Initiative (BRI). Long-term implications will see trade flows altered by the development of overland trade routes as it redirects trade across continental Southeast Asia and Central Asia, bypassing Singapore.
Meanwhile, coastal Chinese cities are challenging aspects of Singapore’s maritime dominance. For instance, Zhoushan is among the busiest container ports globally and is seeking to capture part of Singapore’s marine fueling business through infrastructureMalacca Strait dilemma development projects.
Moreover, Beijing intermittently proposes the development of the Kra Canal, an alternative to the Malacca Straits that shortens transit to Japan and China by 1200 km but causes Singapore to lose 30% of its shipping trade by some estimates.
With Beijing’s ambitions to alter global trade flows through its Belt and Road Initiative (BRI) and its long-term ramifications for Singapore — land-based Eurasian trade networks spanning Central Asia and continental Southeast Asia would reshape regional trade flows — this adversely impacts maritime trade flows.
Yet another challenge is China’s “Made in China 2025” industrial policy. Aimed at building up China’s high-tech manufacturing infrastructure and self-sufficiency, this negatively impacts Singapore’s exports of electronic circuitry.
India’s stake in the Russian Far East
India realized the strategic and economic significance of the Russian Far East (RFE) in 1992, establishing a consulate in Vladivostok. Currently, India and Russia are connected via the Mumbai-St Petersburg shipping route, where shipments can take over 40 days. The VCMC — with Singapore in the middle — cuts this to 24 days, yielding substantial cost savings.
Vladivostok constitutes a new venture that benefits India, opening access to the mineral and hydrocarbon wealth of the Russian Far East (RFE). It also functions as a strategic counterbalance to China’s economic influence in the region, while reinforcing the defence and energy pillars of the Indo-Russian partnership. Access to Russia’s resources enhancing India’s materials security especially with a middle-class forecast to reach 500 million by 2025.
This Indian focus on economic links with the RFE and activation of a Chennai-Vladivostok maritime corridor aligns with Russia’s pivot to Asia and Russia’s desire for greater economic autonomy from China. It also synchronises with their close strategic partnership and mutual interest in counter-balancing the influence of the US and China.
Moreover, it connects Chennai to the Northern Sea Route (NSR), which is opening up to shipping as Arctic ice route, melts due to global warming. Moscow has also announced several initiatives to attract investments to the RFE, which include an agricultural SEZ, the Vladivostok Free Port Project. It also invites participation in the mining of the vast mineral resources and precious metal deposits there.
Besides reducing Indian dependence on Arabian energy resources and enhancing its resource security, it opens new sectors for trade such as agriculture, pharmaceuticals, and infrastructure and with India’s line of credit to the RFE, can bring more investors to the region. While sharing cordiality and common interests with China, Russia seeks to reduce its economic dependence on it. Unlike China, India is set to see its economy grow with strongly youthful demographics.
India maintains robust relationships with the US and Russia, as well as a historical foreign policy disposition that prioritises strategic autonomy. New Delhi is wary of alliance politics, with a preference for more inclusive strategies, as compared to the exclusionary US and mainland Chinese diplomatic narratives. A US$1 billion Line of Credit for the RFE from India has been announced, with a target of US$30 billion in bilateral trade by 2025.
There are compelling geopolitical and strategic reasons for India’s interest in the region, but traditionally the risks have outweighed the profits of doing business in the region for foreign investors.
Despite Moscow’s incentives, Western sanctions imposed a high cost to deter investors. Secondly, extracting natural resources in the RFE — its major selling point — is capital-intensive due to the harsh environment and lack of appropriate infrastructure.
Investments into this region tapping or routed through Singapore could help spur growth into the RFE. The city-state is already a stakeholder in the region and has good reason to be interested in playing a crucial role there. Russian capital already has a footprint in Singapore, with growing trade and investment.
Melting Arctic ice will provide shorter shipping routes between Europe and Asia, as well as permit access to untapped energy and mineral resources in RFE. This grants it new geopolitical and economic importance, and render the development of Siberia and the RFE more feasible and inevitable.
Furthermore, the Dutch Bureau for Economic Policy Analysis projected in 2015 that the Northern Sea Route may be ice-free by 2030, earlier than the Northwest Passage or Transpolar Sea Route, while a 2016 report by the Copenhagen Business School found large-scale trans-Arctic shipping may become economically viable by 2040. These certainly bears an impact on Singapore’s role as a leading maritime centre.
The Singapore factor
Through geo-economic connectivity, Singapore can be a key player multiplying and amplifying the Indo-Russian partnership, as well as gaining inroads into the Russia-India-China (RIC) trilateral. Developing such inroads into the RIC Trilateral can position Singapore as a locus of future Asian flows and networks that ties to the Quad and RIC, as well as hedging against possible pressures from the European Union (EU) or the US.
The city-state must maintain alternatives to Great Powers like China and the US in order to sustain its strategic autonomy, with support of multi-dimensional engagements like the VCMC contributing to this and engaging major powers like Russia and India.
Since 2017, Changi Airports International (CAI) has been an investor alongside Russian Direct Investment Fund (RDIF) in Vladivostok International Airport in the RFE, offering a beachhead for further investment into the region.
The VCMC enables Russian energy, mineral, and food resources to be exported from Vladivostok through the Western Pacific to India and also into Southeast Asia.
Such energy trade will naturally expand to include other economic trade, eventually encompassing economies like Japan, Vietnam and Indonesia along the route as Asia becomes the centre of international economic activity. Given Russia’s marginalization by Europe since the dissolution of the Soviet Union, its connections to a growing India and Southeast Asia enables it to leverage the Asian growth narrative.
As a key Asian commodities trading, shipping, and financial hub that is at risk of being outcompeted, Singapore can impart substantial value to the VCMC and reinforce itself against this vulnerability.
RFEs under-development opens up opportunities for Singapore and Southeast Asian businesses and investment to enter. In Singapore’s case, global warming will see large land banks opened up in the RFE that can be developed to ensure its food security. Such activity also creates inroads for developing maritime infrastructure along the NSR and creating business for its maritime sector.
Singapore’s collaboration also facilitates deeper access for Russian and Indian enterprises to the ASEAN Economic Community (AEC), which in 2019 posted a combined GDP of $2.8 trillion for a population of 650 million. The region sees over $3.4 trillion in global trade transit through the region annually.
This convergence means Singapore can play a vital role in augmenting the Indo-Russian partnership. It adds new dimensions to the city-state’s geo-economic and energy security policy and builds upon its strategic partnership with India.
Singapore can enable Indian strategic interests, given the close ties of the two countries. India is an important economic partner for the city-state, with whom it has durable economic ties. In 2017, Singapore was India’s 5th largest trading partner worldwide; 3rd largest trading partner in ASEAN; and a top source of FDI in the first half of FY2018/19. And critically, Singapore needs India for its own security.
It concurrently reinforces its economic links to the Eurasian Economic Union (EAEU), a bloc that includes Russia, Belarus, Armenia, and the Kyrgyz Republic. This has a combined population of 184 million with $1.9 trillion in total GDP.
Russia maintains strategic partnerships with India and China. However, deep-seated suspicions underlie Moscow’s view of Beijing, with Chinese intrusions into the Russian sphere of influence and an asymmetrical partnership where Russia is the de facto junior partner. This has driven Russian efforts to develop the RFE with partners beyond China, despite Chinese trade acting as a buffer against Western sanctions.
More importantly, for Southeast Asia, Singapore’s involvement in the VCMC can help sustain Indian involvement in ASEAN to counterbalance China. It is convergent with India’s own geo-economic efforts in the RFE and Russian initiatives to promote deeper integration of the post-Soviet space and international space. This secures the strategic space of India, Russia and ASEAN against undue influence from China.
With the new Cold War emerging between as the US-China strategic rivalry escalates and US foreign policy unlikely to change after the November 2020 presidential elections, there is a need to evolve a dynamic that counter-balances China’s influence in ASEAN.
Fundamentally, Singapore’s involvement in the VCMC enhances its overall economic security while building a basis for broader Indo-Russian strategic and economic engagement with Southeast Asia.
With the growing need for multilateralism emphasized by Singapore’s leadership in 2019 — coupled with the long-term opportunities that the city-state can tap — options that can mutually enhance strategic autonomy and economic security for Singapore, Russia, and India are essential to consider.
