From Singapore to the world: an urban strategy that sells

New programme with World Bank to take urbanisation expertise and investments to growing cities
Oh Boon Ping, Business Times 12 Nov 09;

(SINGAPORE) The base is Singapore. The first projects are cities in Mongolia, China and Vietnam. And there's money to be made for investors and a whole new world of amenities in store for the developing world.

A new global urban strategy has been officially launched in Singapore, with three projects in the pipeline.

A joint initiative with the World Bank, the strategy builds on Singapore's extensive city management and public-private partnership (PPP) experience to help developing countries as they take advantage of the economic opportunities associated with rapid urbanisation.

Under the programme, participants will receive help with planning, preparation and management of cities that are environmentally sustainable.

The World Bank will also pursue 'wholesaling' strategies to target an expanding number of cities by working with financial intermediaries and municipal funds for assistance to local governments.

'Urbanisation is a vital phase of development and, if managed well, it can be a key driver of long-term economic growth in a country,' said World Bank chief Robert Zoellick.

'That's why it is so important for the global community to help developing countries address the urbanisation challenge. It is fitting to launch our Urban Strategy in Singapore, a world-recognised leader in urban planning.'

Private sector investment in Asia has been on the decline since the 1997 Asian crisis and new engines need to be found, Finance Minister Tharman Shanmugaratnam said at a summit yesterday.

Except for China, investment as a share of GDP in emerging Asia fell about 10 percentage points following the 1997 crisis and has remained essentially unchanged over the past five years.

'Asian investments have not kept pace with the growth of exports and corporate profits,' said Mr Tharman.

'Investing in Asian infrastructure is not a silver bullet for curing current account imbalances, but it comes close.

'Current estimates of the gaps in infrastructural investment vary, but they are all large. In a recent study, the Asian Development Bank (ADB) estimated that Asia needs to spend about US$8 trillion over the next 10 years - to build and maintain new power, transport, water and sanitation and telecommunications infrastructure.'

Based on some estimates, cities are projected to expand by another two billion people in the next two decades, while 90 per cent of urban population growth is expected to occur in the developing world.

The programme's maiden projects will be undertaken by the Singapore Cooperation Enterprise (SCE), the World Bank, the governments of Mongolia and Vietnam, and the municipal government of Chongqing to assist in developing a regulatory and financing framework to prepare public-private partnership (PPP) projects for private sector investment.

The cooperation will focus on developing commercially viable infrastructure projects in water and environmental management, power, expressways and roads.

The World Bank and SCE will also jointly organise workshops to share Singapore's public and private sector expertise, experiences and best practices in structuring PPP infrastructure projects.

It is expected that these projects will lead to collaboration on other projects with the respective countries, which in turn open up opportunities for Singapore's private sector players to assist the countries as investors and advisers.

'As a city-state, Singapore has learned many lessons in urban management, often after years of experimentation,' Mr Tharman said.

'This is an exciting partnership with the World Bank, which will allow us to share what we have learned with others at a time of massive urbanisation in Asia.'

Separately, the Government of Singapore Investment Corp (GIC), manager of more than US$100 billion of the city-state's foreign reserves, will make more direct investments in infrastructure assets, Teh Kok Peng, president of GIC Special Investments, said yesterday.

He said direct investment in infrastructure is more attractive than through funds because it offers higher returns.

World Bank launches new Urban and Local Government Strategy
Yasmine Yahya, Channel NewsAsia 11 Nov 09;

SINGAPORE: The World Bank on Wednesday launched a new Urban and Local Government Strategy in Singapore to help developing countries manage their urban growth.

The strategy offers a number of tools to do this, such as an Urbanization Review that allows countries to examine demographic trends, impacts on land and housing affordability and other key urban planning criteria.

There is also an ECO Cities Programme, which can help countries audit the status of their urbanisation progress, and analyse what steps to take next.

The World Bank also announced that its Urban Hub has taken on its first three projects, where it will provide advisory services and capacity-building training to China, Southern Mongolia and Vietnam.

The Urban Hub, based in Singapore, is a research centre for urban solutions. The hub aims to leverage on Singapore's expertise in urban development and the World Bank's own global development knowledge and operational experience to benefit developing countries worldwide.

Among the projects that were taken on, the Urban Hub will provide advisory services to China's Congqing Expressway Group to help them structure a transaction to sell toll-roads to international investors.

It will be involved in capacity-building in Southern Mongolia to develop mining infrastructure, and it will also advise Vietnam on the development of a financing framework for public-private partnership.

- CNA/yb

Roads and rail as engines of growth
Asia has to invest much more in such projects, says Tharman
Fiona Chan, Straits Times 12 Nov 09;

ASIA needs to invest much more heavily in infrastructure projects such as roads and rail, and the private sector in particular should chip in, Finance Minister Tharman Shanmugaratnam said yesterday.

By doing so, Asian economies can spur growth and reduce global savings and investment imbalances, he said at the inaugural World Bank-Singapore Infrastructure Finance Summit here.

Developed countries like the United States have been overspending, while developing ones in Asia have not been spending or investing enough - a situation that was a major contributor to the recent financial crisis.

Now that US consumers are cutting back on spending, Asia will have to drive its own growth by ramping up consumption and investment, especially in infrastructure, he said in his opening address.

Infrastructure refers to the building blocks of economic development. It includes basic utilities like water supply, power grids and telecommunications, as well as transport links like roads and railways, which enable a city to do business.

'Investing in Asian infrastructure is not a silver bullet for curing current account imbalances, but it comes close,' he said.

In fact, this is where Asia's under-investment is most pronounced despite the promise that new investments in this sector will bring the highest social and economic returns, said Mr Tharman.

Investing to remove infrastructure bottlenecks will improve connectivity, reduce the cost of transactions, grow markets and enhance foreign trade, he noted.

It will also contribute directly to improving the lives of Asia's citizens by making health care, modern sanitation and electricity available to them.

A recent Asian Development Bank study found that Asia needs to spend an estimated US$8 trillion (S$11.1 trillion) over the next 10 years to build and maintain projects such as power, water, transport, telecommunications and sanitation, said Mr Tharman.

But governments in the region cannot do it on their own, he added. This is where the private sector comes in. It now accounts for just 20 per cent of infrastructural investments in Asia.

Asian governments have been trying to develop Public-Private Partnerships (PPP), in which private companies can finance, develop and operate infrastructure projects for the public sector in exchange for fees, he said.

But following the financial crisis, many projects have been delayed or withdrawn as funding costs have risen.

Efforts were advanced at yesterday's summit, with the Singapore Cooperation Enterprise and World Bank signing Memorandums of Understanding with Mongolia, Vietnam and China's Chongqing city to embark on PPP infrastructure projects.

These involve giving advisory services to the Chongqing Expressway Group Company on how to sell toll roads to world investors, helping South Mongolia to develop mining infrastructure and advising Vietnam on a financing framework for PPPs.

These memorandums mark a milestone in the World Bank-Singapore Urban Hub initiative, launched in June to help developing countries with urban development solutions.

Yesterday's summit was held under the auspices of the Urban Hub, and is planned as an annual event hosted by Singapore and the World Bank.

The summit aims to bring together policymakers, industry leaders and businesses to discuss infrastructure financing and urban development solutions.

Innovative financing for urban strategy: Zoellick
World Bank chief tells BT about a vision that will change cities
Vikram Khanna, Business Times 12 Nov 09;

(SINGAPORE) The accelerating pace of urbanisation, its special challenges and the huge appetite for urban projects was what prompted the World Bank to launch an urban strategy, according to Bank president Robert Zoellick.

The World Bank officially launched the strategy yesterday at the inaugural Infrastructure Finance Summit, which was organised by the World Bank Group, Singapore's Ministry of Finance and the Monetary Authority of Singapore (MAS), in association with Financial Times (FT).

Mr Zoellick, who served as US trade representative from 2001 to 2005, was later vice-chairman of Goldman Sachs before taking over the helm of the World Bank in July 2007.

In a wide-ranging interview with BT, he spelt out the key elements of the Bank's urban strategy and how it hopes to leverage the expertise of Singapore, as well as innovative financing mechanisms. He also discussed the challenges of protectionism and the World Bank's approach to climate change issues.

'For the first time in history, more than half of all people live in urban areas,' said Mr Zoellick. 'And two billion more people will move into urban areas over the next 20 years.'

He added that about 90 per cent of urbanisation is taking place in the developing world - and the pace is scorching: 'Today, we're seeing urbanisation taking just a decade when it might have taken 100 years in Europe or North America.'

Mr Zoellick pointed out that urbanisation poses special challenges. Cities have to develop appropriate infrastructure that takes into account energy, environmental as well as spatial concerns.

He said that the Bank is seeking to tap the expertise of Singapore - for example, in areas such as water systems, zoning regulation and user charges for infrastructure, and share it with other countries.

'There's a huge appetite for this,' he said. 'Whether it's China, India, Indonesia, all around the world. And the question is not only how to manage urbanisation to avoid some of its costs, but also how to make it a tool of growth. Because there is no developed country that hasn't gone through an urbanisation process.'

Financing also poses special challenges, said Mr Zoellick. He noted that while most Asian countries now have the fiscal space to spend on infrastructure, they are finding it hard to raise financing. Moreover, infrastructure is usually driven by engineers in public works departments, who don't focus on financing issues.

'One challenge is how to interconnect government money, private money and multilateral development bank funds,' he said, adding that the Bank will also focus on linking infrastructure development with capital markets. 'The region's finance and capital markets are underdeveloped, especially in local currencies. So there's a need to develop bond markets, equity markets and, eventually, the ability to sell infrastructure assets to a broad investor class.'

Mr Zoellick revealed that the World Bank Group will soon establish an asset management company managed by its private sector arm, the International Finance Corporation (IFC), which will launch a US$500 million-US$1 billion fund.

'It looks like we're going to get some funding from sovereign wealth funds and pension funds to make long-term investments, mainly in Africa and Latin America,' he said. 'This changes the Bank's financing model from just issuing debt or making loans or investments, to being a financial intermediary of new sources of capital.'

On trade issues - a key focus of Apec - Mr Zoellick said that protectionism 'is always a worry' at times of high unemployment, such as now, when it is running at around 10 per cent in the US. But he added that, so far, protectionist actions, while large in number, have been relatively minor. 'So I would call it a low- grade fever, not influenza. But we shouldn't take anything for granted.'

Mr Zoellick pointed out that in dealing with protectionism, the World Bank's first line of defence is to work with the World Trade Organization (WTO) to identify the actions countries are taking - 'to name and shame, as appropriate'.

But he also called for an 'offensive agenda' to take trade liberalisation forward. 'The starting point for that would be to complete the Doha Round,' he said, referring to the multilateral trade negotiations under the auspices of the WTO. 'I was a trade minister for four years. I believe that there's a deal on the table,' he added. 'It would make some significant openings in agriculture and manufactured goods.'

But the reasons for completing the Doha Round go well beyond market opening and raising confidence, according to Mr Zoellick.

'The Doha Round reflects the trade agenda as at the late 1990s - it's been 10 years,' he said. 'We're going to have to deal with some other issues, like how to improve the services trade, which has become extremely important for a lot of economies.

' We also have to ensure that environmental and trade issues are not in conflict . . . So the world needs to keep the trade agenda current, and relevant to the challenges of the world economy.'

Mr Zoellick said that the World Bank is active in climate change-related issues, including providing financing to enable countries to switch to more efficient forms of energy. Here too, it is exploring innovative financing methods, such as carbon credits. However, funding for clean technologies and development go together in project funding, he said. 'You can't look at climate change financing as a separate box.'

He acknowledged, however, that some developing countries, such as India, were concerned that funding for climate change should not come at the expense of funding for development. 'We need to show how we can make the whole greater than the sum of its parts,' he said.

Finally, on his vision for the World Bank, Mr Zoellick said the ultimate goal is 'the modernisation of multilateralism'. He wants the Bank to be 'a true multilateral global institution, that draws countries together in a partnership'.

For example, it wants to work as a partner with countries like Brazil, China and India 'not only to help them, but to use their knowledge to help some of the poorest countries'.

'And we want the donors, the developed countries, to feel that there is a system that doesn't just take from them, but from which they will also benefit - for example, by countries creating multiple poles of growth and assuming responsibilities.'

Internally at the Bank, Mr Zoellick said: 'We have to see ourselves as problem solvers, not just analysts of problems. We have to emphasise the role of the private sector more and we have to constantly challenge ourselves to improve results and effectiveness.'

The Bank must constantly interconnect three things, he added. 'One is cutting-edge knowledge and learning. Second is to make sure that our investments promote markets, institutions and capacities. So even if we're doing US$60-70 billion in activity a year, that's a drop in the bucket in international finance. But if we can in the process help develop carbon markets, microfinance markets, local currency bond markets, the effect will be much greater. And third, we want to be more innovative with financial tools.

'We, as an institution, have to maintain a spirit of dynamism, alertness and anticipation of what's happening in the marketplace.'

9 Singapore govt agencies tapped for Urban Hub
Bigger role seen for S'pore in growth of developing countries
Arthur Sim, Business Times 13 Nov 09;

SINGAPORE is expected to play a bigger role in the growth of developing countries in Asia through the new World Bank-Singapore Urban Hub.

Speaking on the sidelines of the global launch of the World Bank Urban Strategy yesterday, Kamran Khan, head of the World Bank Office Singapore (East Asia Infrastructure Finance Practice Group) said: 'We are working with at least nine Singapore government agencies. The idea is that we get Singapore involved in World Bank operations so Singapore's expertise can be exported to developing countries.'

While the World Bank's team here will grow, it is not expected to be big, Mr Khan said: 'It's not about moving World Bank operations to Singapore - because that would defeat the purpose of taking advantage of what Singapore has to offer.'

Mr Khan, who also moderated a panel discussion on the financing of regional government infrastructure initiatives, said many such projects face roadblocks, bogged down by inefficient public-private partnerships.

Speaking to The Business Times, he said Singapore offers 'a very strong and effective model' on how to make the public sector efficient.

'The public entities in Singapore are one of the most efficient in the world,' he said. 'They are professional and act almost like the private sector, but they protect the interest of the public sector, which is a very unique thing.'

He also singled out Singapore's capabilities in strategic planning and sequencing of investments, adding: 'These are incredibly difficult things for governments to do.'

Mr Khan emphasised Singapore's role in the Urban Hub project by saying: 'The hub is about doing projects in developing countries with Singapore's assistance. It is not about building Singapore. It is about expanding Singapore's influence and knowledge across the region.'

John Roome, director of sustainable development (East Asia and Pacific Region) at the World Bank, cited public housing, water management and public administration as areas the World Bank is keen to adopt in its urban strategies.

'In the analysis of how to create an economically and environmentally sustainable city, there are quite a lot of lessons that are taken from Singapore,' he said.

Mr Roome, who also spoke at the global launch of the World Bank Urban Strategy yesterday, said: 'When we think of our financial intervention, we will think about how it can be leveraged.' And it intends to 'think more holistically'.

The new Urban Strategy will focus on the core elements of the city system - management, finance and governance.

It also aims to help cities and national governments address urban poverty by expanding policy-based intervention and scaling up services for the poor.

The Urban Strategy supports city economies as engines of growth and outlines a range of strategies to drive this growth. In addition, it aims to encourage progressive urban land and housing markets, and promote a safe and sustainable urban environment.