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Round-Up Speech by Mrs Josephine Teo, Senior Minister of State for Finance and Transport, for the Asian Infrastructure Investment Bank Act 2015

17 Aug 2015

Madam Speaker,

1. Let me first thank Mrs Lina Chiam, Mr Thomas Chua and Mr Ong Teng Koon for their support of the bill.

2. They have made some very good points, which I agree with.

3. As a small open economy, Singapore’s economic prospects are tied closely to those of the region and the world. In particular, infrastructure development plays a critical role in unlocking Asia’s economic potential, by strengthening the region’s facilities and improving regional connectivity. All of which will benefit Singapore as a hub for trade and businesses.

4. International financial institutions like the World Bank, the Asian Development Bank, and the AIIB, complement the financial and knowledge resources of governments and the private sector. In particular, they bring a high level of expertise in project design and structuring, which individual governments may not have, particularly those that are still dealing with developing economies. By working with governments, these international institutions also help to reduce risks in large scale infrastructure projects, make them bankable, and draw in private sector financing. The AIIB will better position Asia to meet its infrastructure and connectivity needs, thereby promoting greater regional integration.

5. As Mr Thomas Chua and Mr Ong Teng Koon have pointed out, Singapore-based companies and financial institutions stand to benefit from partnerships with the AIIB and its member countries, especially given Singapore’s expertise in infrastructure development, as well as urban governance and planning.

6. Mr Thomas Chua also made a good point that Singapore companies, both Temasek Linked Companies and SMEs, should work together to bid for projects at the AIIB and other international financial institutions. The Government supports such partnerships. For example, we introduced the Partnerships for Capability Transformation initiative, which promotes collaborative projects between large organisations and local SMEs, to facilitate knowledge transfer, capability building, and the co-creation of innovative solutions.

7. More importantly, we will continue to support our SMEs’ internationalisation efforts to expand their reach and build scale. To this end, in Budget 2015, the Government made several enhancements to the internationalisation programmes available to Singapore companies. For example, we raised the support level for SMEs under IE Singapore’s grant schemes, from 50% to 70% for three years. Clifford Capital was also set up to provide financing and catalyse more business opportunities for Singapore-based companies venturing into cross-border infrastructure projects. SMEs can tap on these initiatives as they look for project opportunities in the region and beyond.

8. Related to this, Mr Thomas Chua also highlighted the need to improve communication between the Government and the business community on opportunities in the region. We agree with that. The Government currently works with the World Bank and Asian Development Bank to establish platforms that connect stakeholders involved in Asian infrastructure projects, to share experiences and business opportunities in this sector. We will do the same with the AIIB. For example, IE Singapore organises the Asia-Singapore Infrastructure Roundtable for government officials and businesses to discuss the development and financing of specific infrastructure projects. Since its inauguration in 2013, the Roundtable has attracted more than 600 industry practitioners, with over US$6 billion worth of projects discussed.

9. Let me now move on to the point highlighted by Mr Ong Teng Koon that, despite our relatively small shareholding in the AIIB, Singapore should play a constructive role in shaping the AIIB to be an open, inclusive and modern institution.

10. I agree with Mr Ong’s views and indeed that is the stance that Singapore has been taking. From the onset, the Government has taken a proactive approach in shaping the development of the AIIB by contributing our ideas and experiences. We have participated actively in the negotiations, and worked with other prospective founding members to establish a strong governance structure and high operating standards for the AIIB. Discussions on the Bank’s operational and financial policies are still underway, and we will continue our efforts to ensure that the AIIB is established as a well-respected institution of high standards, that complements existing multilateral development banks. I think this is also a concern which Mrs Lina Chiam voiced. In fact, the AIIB has the advantage of building on the experiences of the Asian Development Bank and the World Bank to establish itself as a strong institution.

11. Let me wrap up by addressing some of the concerns raised by Mrs Lina Chiam regarding immunities and privileges. On this point, I should remind members and emphasize that while Singapore was one of the first countries to give its support as a founding member, there are by now 57 countries that have come on board the AIIB. 50 of these have already signed the Articles of Agreement. These countries include Australia and the United Kingdom. So we are in good company and in fact in Singapore, we set a rather high bar for international organisations operating here. Also, it is not every day that a new international organisation like the AIIB is being set up. Take for example, the World Bank was set up in 1944 and the Asian Development Bank was set up in 1966. We are now in 2015. The concern where we will suddenly be flooded with all these international organisations in Singapore, all enjoying privileges and immunities is not a major concern at all. In any case, I should point out that whatever privileges and immunities that we would grant to the AIIB would not be more than what other international organisations like the World Bank or ADB currently enjoy in Singapore. So I would like to reassure Mrs Chiam on that point.

12. Madam Speaker, let me now conclude.

13. The AIIB is an important addition to the international financial architecture, and it is going to be a key international financial institution in our region. Joining the AIIB is both a natural step as well as a critical move for Singapore as an international financial centre and a business hub for the region. The AIIB Bill provides for Singapore to ratify the AIIB Articles of Agreement and to become a member of the Bank.

14. Madam Speaker, I beg to move.