Commentary: Sanctions against Russia come at an economic cost to those imposing them

LIMITED IMPACT ON SINGAPORE

Singapore does not do much trade with Russia, so the effects are expected to be more limited than other countries. Singaporean banks, like DBS, have said that they have little or no direct exposure to Russia.

And Russia accounts for only 0.1 per cent of Singapore’s total exports and 0.8 per cent of total imports. That said, some of the top products historically exported from Singapore to Russia may be subject to sanctions, such as navigation equipment and integrated circuits, because they can be used in weapons systems and other high-tech products. 

There are other effects on Singapore aside from the net tally of imports and exports. By virtue of its geographic location and role as an international financial and shipping hub, Singapore is highly interconnected with the Asian and global economies. Singapore stands to feel the effects on global trade much more than any effects of direct trade with Russia.

We should not forget that there is also a transaction cost for Singapore companies to comply with sanctions. Many companies operating in Singapore have been forced to marshal massive internal efforts and hire outside advisors to try to understand if Singapore’s sanctions might affect them, and if so, how.  

For instance, a financial services company in Singapore might find it difficult to determine whether any of its business dealings might help “facilitate fundraising” by any entity owned, controlled by or acting at the direction of the Russian government or Central Bank of the Russian Federation, especially since a lender might not have perfect visibility into the business dealings of all of its customers.