Transcript of Press Conference by Minister for Foreign Affairs George Yeo and President of the World Bank Robert Zoellick after the signing ceremony of the Singapore-World Bank MoU, 18 December 2008

Minister George Yeo: It is a special pleasure for me this afternoon to sign this memorandum of understanding with my old friend Bob Zoellick whom I have known for close to 20 years. Just a few years ago we negotiated the US-Singapore Free Trade Agreement which both sides, I believe, are very satisfied with, and which indeed set a template of very high standards for free trade agreements in the world.

Singapore and the World Bank have a long history of cooperation going back to 1996. I believe in 1999, the World Bank established an office here in Singapore. Just slightly more than two years ago, we hosted the World Bank-IMF meetings in Singapore. We are absolutely delighted that under Bob Zoellick's leadership, our bilateral cooperation would be taken to a new level and we would be establishing an urban hub. This is something which meets the needs of the times. Asia is urbanising on a scale and at a speed unseen before in human history, and it is not just cities growing by accretion. It is the only way by which sustainable development can be achieved in the 21st Century. In all aspects, in terms of the salubriousness of human habitats; the efficiency of energy used; protecting the global environment; controlling emissions and so on. Many of you will be aware that in China, they are thinking in terms of megacities. Each may be in populations of tens of millions, connected by high-speed intercity rail. Almost a system like what we see in Japan, but on a continental scale. Then, within the cities, instead of each just growing haphazardly causing traffic jams and bottlenecks, cities are planned for such a scale of human habitation so that they are comfortable, efficient in energy use and producers of goods and knowledge.

Over the years, we in Singapore have had to manage an urban environment very dense on a very small land area because we have no choice. And necessity, as always, is the mother of invention, because we have no choice. So therefore we have to plan very intensively. Bob knows that when the British were here, we were a garrison town for the RAF, the Royal Navy and the British Army. Every five to seven kilometres, there are runways, which mean not only constraints on two dimensions, but constraints in three dimensions. When I was head of Air Force plans, at that time the defence ministry was here, and I occupied the wooden shack on this side of the building. Every tall building in Singapore had to be approved by the Air Force to make sure it did not intrude into the approach path of an airport or an air force base. When we embarked on all this, we were not thinking about larger lessons, we were just being practical, having to squeeze a lot onto a small space, feeling our way to the future by practice, by responding to the pressures of necessity. But the last few years, we found to our surprise, that all over the world, there has been a great interest in what Singapore has done. A view held by many people is that what we have done here might be of larger application. Now we know that what we have done here is what we could do for a city-state and that for sure, what we do here cannot be applicable to larger nations, as larger countries. But for municipal management, urban planning design, traffic control, pollution control, greenery, there are some things which we do here which we are happy to share with others.

And the Singapore Foreign Ministry has a cooperation programme, which up to last year, has trained some 50,000 officials from over a hundred countries, but there is a limit to what we can do by ourselves. So when this proposal for a partnership with the World Bank was mooted by Bob, we were very happy to latch onto it because it was a way by which we could leverage on the strength and the resources of the World Bank to, as it were, enable us to do what we wanted to do in a more systematic way on a larger scale. And this is really what the MOU which is signed today, is intended to do, and why we in Singapore are so happy to have this new relationship with the World Bank. Thank you Bob for your leadership and may I now hand over the microphone to you.

World Bank President Robert Zoellick: It is always a pleasure for me to be back in Singapore, where I have many friends and many fond memories. But of all those, I cannot think of whom I would have enjoyed the warmth, the friendship of signing this agreement with, more than Minister Yeo. We first met in 1989 when Singapore and the United States were supporting Australia's efforts to launch APEC and working through some of the sensitive issues for the countries of ASEAN and I then had the chance to visit Singapore in 1990, when it hosted the 2nd APEC meeting and also as I recall, celebrated its 25th anniversary.

Since then, I have had the chance to return many times. But through the generosity of the people of Singapore, in 1993, I returned as an international visitor and that enabled me to see many parts of Singapore that you do not see when you are here on official business. So I saw a number of housing projects, I went to Bukit Timah, I saw some of the places of history, I saw some of the aspects of Singapore's development strategy. In the years since, I have always appreciated the opportunity to see the ongoing progress that the leadership, the people of Singapore have achieved. And obviously to work with them on issues at the international level, because Singapore has established something quite significant while it is a small country, it has been able to play a role on the international stage, in ASEAN, APEC, WTO, and many walks of life. And so, when I received the appointment as President of the World Bank, I wanted to approach my friends in Singapore to see how we could develop a closer partnership, and try to draw on some of that experience. As all of you probably know, the leadership of Singapore is very proud of what they have achieved and justifiably so, for the people and as a model. But they also went their own course, they sometimes did not follow the traditional development advice, they did not see it so much as a question of development, they saw it as a sound policy and growth. One of the lessons that we have learnt at the World Bank is that we need to keep our eyes open and our ears open to the diverse experience to see what has worked and to learn some lessons from some of our own mistakes in the past. And so this gave us a wonderful opportunity to try to create a stronger partnership between Singapore and the World Bank on this critical issue of urban life and its role within the larger global and regional structures.

This year, the World Development Report produced by the World Bank focussed on the issue of economic geography, a topic that was not important in the past, sometimes slipped through various other theoretical formulations but as this signing ceremony demonstrates, will be increasingly important in the years to come. The work that study draws on points to some of the changes to communication and transportation, but also some of the basic frameworks that are important to any country large or small to create opportunities for people. Minister Yeo just mentioned China, I just returned from four or five days in China, Sichuan and Beijing and many of the issues that we hope we can draw from Singapore's experience are directly applicable to the challenges of China or India or others in the region, around the world in Africa where you are having cities with larger regional development aspects in the surrounding neighbourhood. So I'm very pleased that this will give us a chance to expand the concept of learning, we are trying at the World Bank to develop a global development network that draws on experiences of developed and developing countries. We are trying to increase the opportunities for self learning, and so whether the issue be it public administration, or whether be it water policies or transportation or green areas and the ecological dimensions, there is a tremendous amount that we can draw from in the Singapore experience. This Memorandum is predictably helpful because we'll not only learn from the past, but we hope we can leverage some of the talent in Singapore to be of help to others around the world. So while this is just an opening chapter, it is one that I hope would lead to a very full and interesting story to follow and I want to thank all of our partners from Singapore who helped us reach this point and my colleagues at the World Bank group who not only laid the foundation for this but will have to carry it out. Thank you.

Moderator: Ladies and gentlemen of the media, both his Excellencies Mr Zoellick and Minister George Yeo will both take a few questions but I would ask you to be brief because they both are running late. Thank you.

Moderator: Yes, Alex.

Question: Alex from Associated Press. Mr Zoellick, I was wondering if you might share with us on how you see the economic situation here in Asia. Do you think the fourth quarter that we are in right now, that we have seen the worst of the impact of the global slowdown here in Asia? And also, what do you think were the biggest economic challenges that this region faces right now?

Zoellick: I'm afraid that the first 6 months of 2009 are going to be a problem worldwide, including in Asia and including in Southeast Asia. I mentioned that I was just in China and I think while the leadership expected to see the decline in their growth because of the slowdown in the world economy, even they were struck by the sharpness and the depth of the fall offs and exports. This is the region that has gained enormously from international trade and it will feel some of the dangers from the slowdown and actual decline that we are now forecasting in the international trade for next year. I think in the discussions that I had with the people around the world; no one has a very good prediction for the length and depth of this crisis.

I think Prime Minister Rudd of Australia used the phrase that I thought captured the next phase very well which he said we have gone from a financial crisis to an economic crisis and early 2009, we will see an unemployment crisis. So I think that the policy actions that the governments take in monetary policy, in fiscal policy, maintaining open trade system would be the determinant of whether the first half of 2009 continues, or whether there is an upturn later in 2009. There is positive news and that you have actions by countries in a cooperative fashion, recognising that this is a global crisis and it will take global solutions.

At the World Bank we are focussed on those that are most vulnerable and so we have announced that we will increase the lending of our International Bank for Reconstruction and Development (IBRD) for the upper-lower income and the middle income countries to about $100 billion dollars over the next three years. We are trying to expand the more rapid use of the International Development Association (IDA) which is for the 70 poorest countries, that's about $42 billion dollars. And our colleagues that International Finance Corporation (IFC) have come up with innovative facilities to deal with support for trade finance, viable infrastructure projects that have lost their financing and to help recapitalise some of the private banks in poor countries that otherwise could not afford it. And in doing so, we are trying to mobilise resources of others.

In a way, just like this Memorandum, we are trying to learn from recent experience, including the experience of '97, '98 and that has suggested to us the criticality of supporting safety net programmes so that the contraction doesn't further weaken those that are most vulnerable but also keeping an eye on fiscal programmes that can lay the basis for future growth. And here, people look at the experience of China in '98 where there was an active infrastructure programme; that was able to move quickly but also set the foundation for future growth. So one of the reasons I want to come to Singapore because I always gain good value from talking to people here to get their perspective. It is obviously a very international city and one that has very good perspective of what is going on in the international economy. But just to give you an example of something that I'm pleased we are able to do that is in direct interest to Singapore, our colleagues in Indonesia have had pretty good fiscal policy but because of the amount of government guaranteed debt from developed countries, the Indonesians were finding it difficult to be able access international markets to finance a rather modest budget deficit of say two percent of GDP. So we have been working with Australia, Japan and the Asian Development Bank to assure financing for a modestly expansionary budget of Indonesia and we look like we are well on our way to be able to put that package together.

So these are some of the challenges that we are trying to respond to but the biggest concern that I have at this point is that some of the second order ripple effects from various policy actions could lead to other actions by governments that might pull away from cooperation. And here particularly I'm concerned about the rising danger of protectionism. Minister Yeo and I, in addition to working on the Singapore-US Free Trade Agreement, we are very committed to the WTO process and the Doha round and I think the difficulty that round has run into is particularly unfortunate because international system needs to stay on the offence in trade because protection forces will raise their head.

Moderator: Suryana.

Question: I'm Suryanarayana from The Hindu from India based in Singapore. This is a question addressed to the World Bank President. Sir, you have often credited with the idea that China should take up a state code of the international system. And right now, China, Japan and South Korea have come together in the present financial crisis and formed a new partnership and of economic dimensions with potential political dimensions. Do you see this as a purely localised phenomenon or do you think this will act as a prelude to reorganising of the world economic power? And if so, where does India stand and do you think once again India is missing the bus? And if Minister George Yeo wishes to give an ASEAN perspective on this, you are welcome Sir.

Zoellick: I think it represents a deepening network of ties that you see at the regional but also I hope; global level. A number of those countries have also been part of swap lines as in Singapore with US Federal Reserves which is an innovation designed to try to stay ahead of some of the risk of trouble in the international currency markets. Those countries are also members of APEC. And I think I wouldn't see this as a negative for India or other countries. And indeed, I think India has itself been very active in deepening its ties throughout the Southeast Asia region.

One of the strengths of Singapore as a hub is that it is a point of interconnection with India as well as China. You see that in the programme at the Lee Kuan Yew School where I will be participating a little bit later this afternoon, and you see it in the population of Singapore and so it emphasizes its role as a node in the network. I think each country faces different challenges in this economic crisis. China has the advantage of a particularly strong reserves and budgetary position. India has come an awful long way in the past 17or 18 years in terms of growth but it also has challenges that we at the bank, are trying to help address so we expanding our lending, considerably to India. We are trying to support not only those most vulnerable, in need but continue the effort to build the infrastructure, which will be important for India's growth so I would not see the steps as zero sum or competitive, I would see them as of deepening a network of ties and we, at the World Bank, are also part of that network.

Minister: I associate myself completely with the views just expressed by Bob. In the past, the leaders of the Plus 3, China, Korea and Japan, did not have their own meetings. They met on the sidelines of ASEAN Summits. Usually, they would have their own breakfast and for the first time they decided that they should meet separately before the ASEAN Summit. Unfortunately, the ASEAN Summit was cancelled; the one scheduled to be held now in Chiangmai; but they carried on with their pre-Summit Summit, nonetheless, and that is the meeting we are talking about. It is very important for ASEAN to reconvene the ASEAN Summit, the ASEAN + 3 Summit and the East Asia Summit as early as possible and I am glad that the new Thai Prime Minister Abhisit made this a point of special mention in his inaugural speech.

We are not big enough to lift the whole world but if East Asian countries were to work together, keep doors open to trade, stimulate their own domestic economies according to the means they have available to them in a sensible way, then just by us not slowing down too much, it will help the global economy and that is what we should strive to do within China, within India, within ASEAN and then the wider region of ASEAN + 3 and ASEAN + 6. If we can, in the middle of this crisis, show renewed political determination to keep trade lines open, to help each other, to increase swap lines under the Chiangmai Initiative then we would have done our bit to improve the global economy.

Moderator: Siew Ying.

Question: Siew Ying from Channel News Asia. Two questions. The first one is for Mr Zoellick. Is there a budget or funding set aside for programmes under MOU and are the programmes likely to be targeted in the ASEAN region or do they have a more global reach? In the light of this financial downturn, do you expect financing for some of these projects or lending to increase by how far are they going to reach? And some questions for Minister Yeo. How does Singapore going to play up this role and what are some of the challenges ahead given the tough times?

Zoellick: For your first set of questions, we have a few million dollars allocated to start it. There will also be some secondments of people and then based on some joint efforts, we hope to be able to expand it over time. I would see a range of activities more in the dimension of knowledge and sharing experience that I would, as part of a direct learning programme. We, at the World Bank, have very large volumes of that we invest in countries from the private sector side by IFC to the IBRD which is for the countries in the middle to the lowest income and we can adapt those programmes; the knowledge and learning is part of that based on some of this experience. When I tried to explain what the World Bank does, I often point out that in some ways, people were misled because we are call "Bank" and so they think our major role is putting money out the door. In reality, we work most effectively when we combine knowledge, learning and experience and constantly upgrade and improve it. With projects that have value beyond the individual investments, so it might be to help develop micro finance markets, carbon trading markets or local currency bond markets or lessons in terms of additional cash transfer programmes for most vulnerable people. But then, we do have capital to be able to deploy. So this is an element of improving the knowledge and learning and the capacity building experience. Your second part was the location. I think it would be natural that we would probably start some of this applied experience most in an Asian region. I think there are some possibilities in Southeast Asia, maybe some possibilities as well in China but I hope we could extend it beyond. The issues of urban development and question of urban development within a larger national plan is something as I mentioned that was at the heart of our world development report and it applies to all of Africa. Many people are unaware that you have a very large percentage of the population of Africa in the urban areas and so we hope that these lessons and experiences can be applied more broadly. Then I think the third element to answer your first question was about driving their lending programmes. Just to give you some context, the World Bank group has a private sector side of IFC, the IBRD and MIGA, the Multilateral Investment Guarantee. We will be expanding all of these activities to try and fill some of the needs of countries in the developing world because of this crisis. Just to give you one range, last year the IBRD side did about $13.5 billion of lending, we expect this year would be in the mid 30s. As I mentioned, the IDA amount is $42 billion over three years, we hope to do more on the front end, and the IFC - we are always trying to figure how we can try to use our private capital investments. Last year, we had about $11b as I recall, with another $3 billion or $4 billion mobilised from outside sources. We are trying to be innovative and mobilising other resources so for example, this fund that we created to recapitalise banks in poorer countries, IFC has committed $1 billion and Japan has very generously agreed to commit $2 billion to that. So given the nature of the uncertainties in this crisis, what we are trying to do is see ourselves as the catalyst whether the problem be for food, mobility or energy or infrastructure and safety net programmes, and what this project relates to is the critical role that whether today or tomorrow we know that the challenges of having safe liveable healthy cities are going to be with us.

Minister: Over the years, the World Bank has built up enormous knowledge about development experiences in different parts of the world and all continents. In fact, no other organisation in the world has as much knowledge about development as the World Bank and it therefore behoves all developing countries to draw from the knowledge and the expertise that is in the organisation. And I am very happy that under Bob's leadership, there is a very deliberate outreach effort to make this knowledge available to countries that need it.

In the middle of a crisis like this, all countries are under pressure to spend money. All governments are under pressure to spend money. If that money is not well spent, we will store up more problems for the future. Every day when we flip through the newspapers we read of a new stimulus package - tens of billions, hundreds of billions, enormous numbers being bandied around. As if just by spending money, we will save ourselves and we will save the world. But all of us know that development is hard work. It is not so simple. It is not just interest rates, money supply and fiscal stimulation. It is infrastructure. It is education. It is organisation. It is governance. It is discipline. It is savings. It is all the things we learn in basic economics. And there might have been a time when we thought that there were short-cuts to making money. Now we have all been brought back to the reality that "Look, there is no substitute for hard work, thrift, planning, foresight and positioning." So precisely at a time like this, the knowledge that is available in the World Bank is invaluable to countries which have now decided to spend money. That money should be wisely spent. Yes, some of it has got to ameliorate the hardships that are bound to increase at a time of economic downturn.

I will always remember what a physician once told me that every sickness is a progression. You can treat symptoms but always have an eye towards the long-term health of the patient. Do no harm. If you can, do good. And if you must spend money, spend in such a way that when the crisis is over, our people are more productive and our economies will be in a much stronger state. And one obvious area, I think for all of us, is investing in better urban infrastructure. Both hard infrastructure like trains and roads and power stations, but also soft infrastructure like systems, education, healthcare, pollution control and so on.

Moderator: Ladies and gentlemen, I am sorry there is no time. Both Their Excellencies are running very late so I would like to thank all of you for coming. Your Excellencies thank you very much.

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