Comments by Mrs Lim Hwee Hua at the 15th APEC Finance Ministers' Meeting

At the 15th APEC Finance Minister's Meeting held in Trujillo, Peru on 5-6 Nov 08, Mrs Lim Hwee Hua, Senior Minister of State for Finance and Transport, spoke on the issues of Food and Energy Prices, the Global and Regional Economic Developments, as well as Capital Market Reforms.

A. FOOD AND ENERGY PRICES

2. While the spike in food and energy prices has moderated, supply constraints in the medium term remains. In this regard, Mrs Lim emphasised the need to adopt appropriate policy responses. The introduction of export bans or tariffs on food should be avoided as they will exacerbate market tightness and prices volatility. Policies on land conversion and the diversion of foodstuffs into bio-fuels should also be re-assessed. On the demand side, food and fuel price controls or subsidies would create market distortions that will not be sustainable either. Instead, governments should provide targeted monetary assistance to the poor, or boost income through wage incentive schemes.

B. GLOBAL AND REGIONAL ECONOMIC DEVELOPMENTS

3. On the global and regional economic developments, Mrs Lim said that the immediate priority is to stabilise financial markets and ensure sufficient liquidity. While Asia's banking and financial systems are fundamentally sound, quick and decisive action are needed to safeguard real economies and mitigate recession risks. Responses to the crisis should be implemented in a coordinated manner.

4. Mrs Lim welcomed IMF's new Short-term Liquidity Facility (SLF), and the commitment by the World Bank to help governments and the private sector manage the impact of the global financial crisis. Regionally, ASEAN + 3 (China, Japan and Korea) are working towards expediting the implementation of the Chiang Mai Initiative (CMI) Multilateralisation facility. The facility, which aims to provide short term liquidity support to member countries where necessary, will complement the efforts of IMF and World Bank.

C. CAPITAL MARKET REFORMS

5. Given that credit conditions remain tight and investor risk aversion remains heightened, Mrs Lim urged governments and financial authorities to push on with efforts to further enhance the liquidity and efficiency of capital markets. She also welcomed continued efforts made under the APEC finance process on capital market reform initiatives.

6. Mrs Lim pointed out that the current global financial crisis has brought out the stabilising role that long term institutional investors can contribute to the global financial system. One such category of investors is the Sovereign Wealth Funds (SWFs). She welcomed the Generally Accepted Principles and Practices (GAPP) that have been developed by the International Working Group of SWFs (IWG). Singapore also supports the complementary efforts by the OECD in developing a set of principles for inward investment regimes of recipient countries. Taken together, the GAPP and OECD principles will enable SWFs to operate on a level playing field with other investors, and continue to play a constructive role in international finance.

7. A copy of the Joint Ministerial Statement can be found in Annex A (88 KB).

MINISTRY OF FINANCE