The Case for a Foreign Aid Agency – Speech by Jamus Lim on the International Development Association (IDA)

Mr Speaker, I understand that this motion—like similar ones I had spoken on in 2021 on contributions to the International Monetary Fund (IMF)—are largely routine and technical, and reflect our nation’s ongoing commitment as a responsible citizen in the international system. Funding rounds for the International Development Association (IDA) are similar, and occur every three years; the motion before us today is to provide said funding to IDA.

In my earlier contribution to the IMF motion, I had made the case for why contributing to international development efforts can benefit us by enhancing our hard and soft power, and why doing so—even when it does not—remains a moral imperative. I also made the case for why we should systematize official development assistance. Today, I will elaborate on both of these themes, and in particular, make a more pointed case for a specialized Singaporean foreign aid agency.

As I had also previously shared, I have previously worked for 7 years at the World Bank Group, of which IDA is a part, and during my tenure at the Bank, I had contributed to the work of IDA. I also have a small balance in my self-funded group retirement account and a staff account at the credit union, but do not currently receive, nor maintain, any direct financial interest in the Bank.

Contributing to IDA enhances our hard and soft interests

The need for us to act on the international dimension is even greater today than 2 years ago, given the challenges faced by developing countries around the world. While the pandemic is largely a matter of the past for us—and we have more-or-less successfully transitioned to treating COVID-19 as an endemic disease—the ravages of COVID remain very real in certain parts of the world, especially in the poorest economies in Africa[1] and Asia.[2] In Southeast Asia alone, the Asian Development Bank estimates that the region’s economic growth was dampened by close to 1 percentage point, and 4.7 million more people were pushed into poverty.[3]

This anemic growth in our neighbors will affect us, too, because while Singapore’s growth rebounded strongly in 2021 and remained solid last year, it is expected to falter this year,[4] in part because of tighter monetary conditions worldwide. If our assistance to our neighbors and major trade partners helps spark better economic conditions there, we could enjoy the spillover effects from their belated recoveries, which could offer a neat counterbalance to weakening conditions in advanced economies.[5]

Singapore has also enhanced its post-pandemic soft power. While Members in this House—including those of the Workers’ Party—have flagged certain refinements to our approach, assessments of our overall pandemic response[6]—and subsequent reopening[7]—have, on net, been positive.

That said, according to an index developed by the University of Southern California, the weakest aspect of Singapore’s soft power remains our international engagement.[8] Enhancing our foreign aid profile can further bolster our outreach to our neighbors, and improve our foreign relations accordingly.

IDA is a sound vehicle, all else equal

To be clear, IDA and the World Bank remain among the most effective, transparent, and development-focused institutions.[9] If we were to decide that it is a good idea to channel financial support to multilateral development agencies, we can do far worse than doing so through IDA.

But even multilateral agencies that have a sound reputation for largely unbiased foreign aid practices may end up inadvertently being subject to quid pro quo exchanges between large players.[10]

Furthermore, while there is solid reason to support development in the poorest nations globally, the nature of multilateral development agencies is that their support is not solely targeted at countries in Southeast Asia. If we wish to have more directed support in a manner that more directly spills over onto our shores, a different tool is required.

We can do more by hiving off such functions to a dedicated foreign aid agency

This is why I wish to go a step further and explain why it is in our interest to form a small but dedicated foreign aid agency.

Much like how we already appropriate development funds for various longer-term financial commitments, one approach that can help seed the initial formation of a foreign aid agency is to set aside IMF and IDA subscriptions—along with a modest budget for official development assistance—into a development fund. This fund can then be managed directly by a foreign aid agency; call it the Singapore Assistance for International Development, or SingAid.

The agency need not be large; indeed, to the extent that we already have civil servants ensconced within the Ministry of Finance whose work is mainly focused on external financing and relations, we can hive them off into this new agency. We can supplement this professional team with a stream of rotational staff and interns, especially those who have interest or experience with international economics. For example, we can second Ministry of Foreign Affairs staffers who deal with international economic relations to the body,[11] and it can also absorb a small number of university interns annually. Over time, the agency may even be the oversight body that allows us to launch an international volunteer corps, another initiative that I had previously advocated for.

One concern that some may have about bilateral development agencies of this nature is how they may become tools of foreign policy and, consequently, the aid offered becomes ineffective at best, or could even end up doing harm to the very countries it purports to assist, at worst.[12] We can preempt such concerns in a few ways.

First, as I have already alluded to, we can keep the agency’s mandate narrow and its budget tight. This will keep the body focused on its core principles and discourage adventurism. Indeed, if we believe more in our ability to insulate such an agency from political interference than we do others—especially multilateral institutions—a home-grown institution may be an even more efficient way to deliver official development assistance.

Second, our bureaucracy is famously effective and efficient; I see little reason why we would not run SingAid with the same technocratic vigor. Aid tends to be best delivered when conditional on good policy.[13] And we have an abundance of technical knowledge in this area, having gone through our own development journey in an exceedingly rapid fashion.

Third—and perhaps most importantly—our foreign policy interests are, by and large, remarkably neutral. While neutrality is not formally enshrined as a foreign policy doctrine, we have pursued a pro-neutral approach since our independence, and our emphasis on fundamental bedrock principles such as respect for sovereignty and the rule of law, along with the pursuit of mutual interest.[14] This is an ethos for the entire public service, and I see no reason why we cannot infuse such principles into a nascent aid agency that is likewise imbued with the selfsame principles, and avoid the risk that the body descends into becoming geopolitical tool. If anything, what I am suggesting is that the proposed SingAid focus on providing foreign assistance with an eye on win-win economic outcomes.

All that said, it should come as no surprise that I am in thorough support of the motion, and wish that it goes even further.

Delivered in Parliament on 10 January 2023

[1] IDA (2022), “African Heads of State Reaffirm Commitment to Recovering from Crises and Achieving Economic Transformation,” Press Release 2023/01/DFi, Washington, DC: The World Bank.

[2] ADB (2022), “Pandemic Sets Back Fight Against Poverty in Asia by At Least 2 Years, Has Likely Hurt Social Mobility,” Press Release, Manila: Asian Development Bank.

[3] ADB (2022), Southeast Asia Rising from the Pandemic, Manila: Asian Development Bank.

[4] Full-year growth was 7.6 in 2021, before slowing to 3.8 percent in 2022 (the latter is an advance estimate). See Subhani, O, (2023), “Singapore’s Economic Growth Slows to 3.8% in 2022; Outlook Darkens for 2023,” Straits Times, Jan 3.

[5] On spillover effects on growth, see Gallup, K., J. Sach & A. Mellinger (1999), “Geography and Economic Development,” International Regional Science Review 22(2): 179–232. The international business cycle literature is also summarized in Lee, H-H., C-Y. Park & J.H. Pyun (2022), “International Business Cycle Synchronization: A Synthetic Assessment,” ADB Working Paper 668, Manila: Asian Development Bank.

[6] Jumblatt, W. & S. Kim (2020), “Singapore’s Responses to the COVID-19 Outbreak: A Critical Assessment,” American Review of Public Administration 50(6–7): 770–6.

[7] Tan, C. (2022), “It Feels Like Singapore Has Turned a Corner on COVID-19 for Good,” CNA, Apr 28.

[8] The “Engagement” subindex measures a country’s foreign policy resources, global diplomatic footprint, and overall contribution to the international community, as proxied by the number of embassies or high commissions abroad, membership in international organizations, and overseas development assistance contributions. See McClory, J. (2019), Soft Power 30: A Global Ranking of Soft Power 2019, University Park: University of Southern California and Portland Communications.

[9] Mitchell, I. & C. McKee (2018), “How Do You Measure Aid Quality and Who Ranks Highest?”, Washington, DC: Center for Global Development

[10] Dreher, A., V. Lang, B.P. Rosendorff & J.R. Vreeland (2022), “Bilateral or Multilateral? International Financial Flows and the Dirty-Work Hypothesis,” Journal of Politics 84(4): 1932–46.

[11] MFA staffers have reportedly organized training courses for foreign civil servants for some time now, and such functions can be officially enfolded into the agency. Some might even characterize efforts such as these—as well as voluntary efforts by organizations such as the Singapore International Foundation or Temasek Foundation—as constituting foreign aid, but that would strike me as a stretch.

[12] Easterly, W. & T. Pfutze (2008), “Where Does the Money Go? Best and Worst Practices in Foreign Aid,” Journal of Economic Perspectives, 22 (2): 29-52

[13] Burnside, A.C. & D. Dollar (2000), “Aid, Policies, and Growth,” American Economic Review 90: 847–68.

[14] PSD (2022), Establishing Our Place in the World, Singapore: Public Service Division.