Remarks by Minister for Foreign Affairs Dr Vivian Balakrishnan at the CHOGM UK-Hosted Side Event "Finance and Investment for Resilient Growth: A Commonwealth Plan of Action", Thursday, 24 October 2024

      I believe I'm the last speaker and since we're running out of time, I'm going to try to be as brief as possible. We're looking at finance and foreign direct investment (FDI) in 2020, where all our economies face the severe impact of COVID19, both in terms of trade and flow of FDI.

      2021 was a year of rebound and I think most of us benefitted from it. But what is worrying are the trends since then. For 2022 and 2023, there has been a progressive decrease in global FDI flows. I suspect these global trends will be reflected in the Commonwealth as well.

      The question is, why? Why is it that the rebound that appeared after the COVID19 pandemic has not been sustained? I think the answer lies in geopolitics, the volatility of the global environment, the potential bifurcation, or in fact, maybe even trifurcation due to global trading blocs, and the fact that we continue to be beset by climate crisis and hot wars in Europe, in the Middle East, and even tensions in the Pacific. So, these are stormy clouds over the horizon. The question is what should we do as individual governments. First, I think for all of us individually, we need to focus on trying to direct FDI into areas including green technologies, partly because of the need for the green transition, but also because we need to create a strong foundation for good jobs. That's a political imperative.

      Second, we need to focus on infrastructure development, including flood defences, smart energy grids, and sustainable transport systems, in order to ensure there are communities that can withstand natural disasters and the changing climate.

      Third, we need to invest in healthcare systems, medical research and development to help us avoid the next pandemic, if and when it arises. Now in economics, everything involves trade-offs. There's no free lunch and there are no easy choices.

      Amidst the global volatility and the global competition for FDI, all of us need to be open to new methods of working together in order to embrace innovative financing solutions.

      The world's largest recipient of foreign direct investment for the past 12 years, and by increasing margins, in fact, is the United States of America. The top ten recipients of FDI, in fact, are developed countries.

      The point I'm illustrating is the challenges Commonwealth members face in this kind of competition. What can we do about it?

      One, is that we should be thinking about how we can leverage the efficiency of the private sector to mobilise capital. I'm talking about blended finance platforms, in order to de-risk projects and to improve the viability of commercial capital to come in at scale. I'll give you an example - in Singapore, we launched a blended finance platform called Financing Asia's Transition Partnership, or FAST-P. This platform is designed to accelerate finance for green transition infrastructure in Asia, particularly in three key areas - energy transition, decarbonisation and industrial transformation. We aim to mobilise up to USD$5 billion with our international partners, using a base of concessional capital for public funds. This USD$5 billion is in fact, a small drop in the ocean because at the global level, we think USD$1.1 trillion is needed annually just to meet climate mitigation and adaptation needs in Asia, and even more so at a global level.

      Second, given the competition and limited funds available, we need to find ways to focus on what we call impact financing. This means investing in initiatives which will generate social and environmental benefits alongside financial returns. For instance, in Kenya, the Starlight Cooperative Society, has come together to promote climate-smart agriculture, such as adopting solar powered cold chain storage. This has allowed farmers to reduce their losses and stabilise their incomes.

      The third point I want to make is on microfinancing, and I think we will all be familiar with Grameen Bank started by Chief Advisor of Bangladesh Muhammad Yunus more than two decades ago. They pioneered microfinance by providing small collateral-free loans, and especially to women. Another example is from Fiji, where they had they launched an EmpowHER AgriLoan programme for women-owned businesses in the fruit, vegetable and grain sectors, to help them purchase equipment for their businesses.

      So let me round back. I think all of us need to share our experiences, our best practices, our challenges and our perspectives. Singapore partners organisations like WTO and UNCTAD to deliver training and technical assistance on international trade issues, trade negotiations and the digital economy. And through our Singapore Cooperation Programme (SCP), we'll be making this available to all members of the common law system and invite you to spend some time with us. As I said yesterday, we'll run an open-book exercise. There are no real secrets in trade methods in development, finance and investment.

      Coming back to the real elephant in the room - what is the role of the Commonwealth, given the global challenges, the global breakdown in trade and investment, and the challenges from climate change? In the Commonwealth, we do have some other advantages - the use of English language, the rule of law, and interoperability.

      If we are to find a real, cogent and essential role for the Commonwealth going forward, we need to look at how this group of more than 50 countries can commit to lowering tariff barriers and non-tariff barriers, enhancing interoperability, enhancing the flow of investments and training, and mobilising finance from the private sector. I think if we can do that, then we can compete with the other giant blocs or developed countries in the world.

      Thank you.

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