FOLLOWING his five visits to Russia in the past four years, Minister Mentor Lee Kuan Yew has become increasingly convinced of its potential.

This optimism was evident yesterday as he addressed about 600 participants of the three-day Russia-Singapore Business Forum (RSBF).

During the dialogue, Russian banker Ruben Vardanian asked Mr Lee why Singapore was so committed to his country.

MM Lee's response: Singapore was always looking to expand its hinterland, and he saw in Russia a promising partner.

He was impressed, he said, not just by the developments he had seen first hand, but also by the confidence that large multinationals such as carmaker Daimler- Benz and bank JPMorgan Chase had in the country.

Both companies, at one point, held the annual meeting of their international advisers in the Russian capital.

Recalled MM Lee of his visits there when he was on the two companies' advisory panels: 'I said this is most unusual, both consider Moscow important. So I engaged the German workers who stayed in Moscow and the American workers who stayed in Moscow to find out their views. And I engaged the Russians who work for them and I concluded they were not far wrong in their belief the Russian economy will grow.'

But that growth, he said, will depend heavily on how Russia uses its oil wealth.

The Russians will need to ensure the money is channelled to the real working economy like infrastructure and education, and not on 'superficial activities'.

It could, for instance, spend on building up the rail network across the continent-sized country, said MM Lee.

As for education, he felt Russia could do more to ensure the less academically inclined are not forgotten.

He said: 'You have top engineers, you have top scientists, you have top researchers, grand chess masters but your middle layer and your bottom layer are not so well maximised.'

It was a point MM Lee had made last week when he visited Moscow.

On the trip, he had also lauded Russia's more open approach to learning from the world.

So, his remarks yesterday were filled with examples from across the globe that both Russia and Singapore could learn from.

He held up Japan's education system as a good example of a well-rounded approach. 'By Primary 3, the Japanese know which students are good for what: mathematics, science, art, drawing, sports, music, and then they develop those talents.

'So you don't all go through the same sausage machine,' he said.

Later, when asked during a dialogue what more Russia could do to support small and medium enterprises, MM Lee cited the IT boom in the United States.

'During the IT boom, many individuals have bright ideas... So they have experts who study it and decide, is this practical, is it possible?

'If it is, they invest in it and provide the management because the man with the ideas cannot bring it to market unless he has management, marketing and organisation of the office.'

Russia, he said, could do the same but it needs to make sure the system is properly run. Otherwise, the decision on which business to support might end up being based on friendships.

Throughout MM Lee's answers, Russia's First Deputy Prime Minister Igor Shuvalov smiled and nodded. And when it came to his turn to speak, he thanked Mr Lee for his support.

He also spoke proudly of his country's growth in the past two decades since the fall of communism.

'What we managed to create in this country over the last 20 years, considering the sheer scale of our territory and our population, was extraordinary. It was extraordinarily hard but we made it and I think the reason MM Lee is so much interested in Russia is that he sees this amazing progress, he sees that we have done something that other nations have failed to achieve,' he said.

But not everything said at the dialogue was music to Mr Shuvalov's ears.

In his closing remarks, MM Lee gave a frank assessment of how hard it still is to do business there. Because of the bureaucracy's size, he said Singapore businesses often needed a trusted local partner to pilot them through it, similar to the way it is in India and China.

'In Singapore you don't need a partner. Everything is simple. You just go to the Internet, register your company and you can do business,' he said.

MM Lee and Mr Shuvalov then had an exchange on the status of a Singapore-linked airport project in the Russian resort city of Sochi.

MM Lee said the project had been put off because Singapore's partner, Russian billionaire Oleg Deripaska, had been badly affected by the financial crisis.

Mr Shuvalov disagreed: 'The project is on. Oleg is out.'

MM Lee responded: 'Oleg is out, so we are out.'

Changi Airports International is reportedly vying to run several airports in Russia, including the one in Sochi.

The exchange left the audience unsure about the project's status, a fact that reaffirmed MM Lee's bottom line: 'When you go in, you must understand situations can change, therefore the risk premium is high.

'But if you choose the right partner, no changes during the operation, then you're doing okay.'

-end of ST article