10 Oct 2011
STATEMENT BY MR LIU FENG-YUAN, DELEGATE TO THE 66th SESSION OF THE UNITED NATIONS GENERAL ASSEMBLY ON AGENDA ITEM 17b and 17c ON INTERNATIONAL FINANCIAL SYSTEM AND DEVELOPMENT AND EXTERNAL DEBT AND DEVELOPMENT 2ND COMMITTEE, 10 OCT 2011
1. Mr Chairman, I would like to begin by aligning myself with the statements by Argentina, on behalf of the G77 and China, and Indonesia, on behalf of ASEAN, on this agenda item.
Risk of economic slowdown
2. Mr Chairman, the risk of global economic slowdown is more acute today than anytime since the global financial crisis of 2008*. With the transfer of risk from the pri-vate to public sector in the aftermath of the 2008 crisis, public balance sheets in many advanced economies are now more vulnerable. Political impasse has also limited the pace of necessary reform and accentuated anxiety about the global economy.
3. Risks are not limited to the advanced economies. Emerging markets face con-cerns over asset bubbles vulnerable to sudden outflows that could weaken domestic bank-ing systems. With a globalised and interconnected economy, any sharp pullback in consumer demand in developed countries will also have the potential to reverberate rap-idly and manifest into production cuts and job losses in developing countries.
4. We in the Second Committee must take note of these sobering realities in our deliberations. We must ensure that our proposals support sustained, inclusive and equita-ble growth which is essential to providing jobs for citizens and alleviating poverty. We must persevere on the complex and difficult issues of sustainability and development, which are inter-generational and should not be derailed by the vagaries of short-term economic cycles. But while earlier global commitments must be honoured, our approach to implementation must be pragmatic and cognisant of immediate constraints. Neither should we take it for granted that resources will be as plentiful, nor that economic pros-perity will revert to its pre-crisis trajectory in the medium and even long term.
* International Monetary Fund Global Financial Stability Report, September 2011.
Globalisation presents risks, but also opportunities
5. Mr Chairman, as a result of our unique position as a small nation and state, Singapore had no alternative but to confront international financial markets and openness to trade early in our development. Our economy is open and integrated with the world, with trade volumes three and a half times the size of our GDP. Volatility is a way of life for Singapore's economy: when the financial crisis hit in 2008, Singapore was one of the first countries in the world to lurch into recession; conversely, when the global economy recovered, we were able to ride on the momentum to enjoy double-digit growth rates in 2010.
6. The world today is more global, more inter-connected, and more rapidly mov-ing than ever before. None of this is new, but as advances in Information Technology and transportation draw the countries of the world ever closer, it seems clear that the march of globalisation will be relentless and its implications are reaching further into individual economies, and with greater impact.
7. Singapore's approach to manage globalisation is only one response amongst many. We have tried to balance openness to capital, talent, trade and markets with judi-cious regulation that protects the interests of businesses and citizens, without stifling the dynamism that the market brings. International financial flows and investment have in part helped to fund the development of ports, factories, telecommunications and human capital that we sorely lacked in the 1970s and 1980s. We have tempered the impact of openness with a social safety net focused on sound basic education, skills training and "workfare"** - a policy grounded in the underlying philosophy of supporting a decent job and wage for all citizens, especially low-wage workers.
8. We should also not forget the opportunity that global financial and trading markets have brought to regions and countries much larger than Singapore. Despite the Asian Financial Crisis and the 2008 global depression, the last 25 years have seen signifi-cant progress in economic and development outcomes. There has been a halving in the percentage of the world's population living in poverty, accompanied by improvements in infant survival, life expectancy and education***. Those regions with the greatest socio-economic progress, in particular South and East Asia, have also been the sites of the greatest shift towards market economies and integration with global markets. Many mil-lions of people continue to live in poverty and we must continue to work towards achiev-ing the Millennium Development Goals. However, we should not forget that access to global markets can be supportive of development - conversely, closing the poor off from markets denies them opportunities from the outside world.
**Workfare (www.workfare.sg) provides income and pension supplements for low-wage and older workers, in tandem with incentives for the adoption of worker training. This enhances the income of low-wage workers and their employability in the long run.
***Andrei Shleifer. The Age of Milton Friedman. Journal of Economic Literature 2009, 47:1, 123-135.
Regulatory co-ordination needs legitimacy
9. Mr Chairman, Singapore's approach to development is one of many and each country chooses the best path for itself. But convergence is urgently needed in global governance and harmonisation in the supervision of financial institutions. Many financial institutions are truly global and cross jurisdictional in their reach, yet in contrast, supervi-sory frameworks remain predominantly national in their approach. As highlighted in the Report of the Secretary General****, we need to ensure a level playing field and to prevent a situation where countries compete through "regulatory arbitrage" - by resisting necessary legislation to enhance the relative competitiveness of their own domestic institutions.
10. Harmonisation and consistency of regulatory frameworks will require co-ordination across all countries, and in some cases, will require difficult domestic meas-ures to be taken. The UN, with its universal representation and legitimacy should con-tinue to play a central role in this process. While there is indeed scope for the work of ad-hoc informal groups, such as the G20, that can efficiently respond during crisis situations, legitimacy and trust are necessary pre-conditions to effect the difficult task of interna-tional regulatory harmonisation.
11. Mr Chairman, as a staunch supporter of the United Nations, Singapore stands ready to engage actively in the work of the Second Committee. Thank you.
****A/66/167.