and will take time for the demand - supply equilibrium to be established. on the asia pacific front, the asian development bank has recently announced us $ 500 million of immediate budgetary support to help countries that have been worst hit by rising food prices. with increasing food prices and high oil prices, mitigating the impact of strong inflationary pressures will remain a key priority for many asian governments. in such an environment, companies too will have to carefully manage the higher input and other costs and how much of that to pass on to consumers, to preserve your margins without losing either competitiveness or affordability. subprime crisis and asia ’ s continued push to deepen capital markets the second issue is the turmoil in global financial markets. the transmission of the crisis is a good illustration of how inter - connected financial markets are today. the problem started with us subprime mortgages, in fact a relatively small part of the us mortgage market, but it rapidly escalated into other securitized markets, to more generic debt capital instruments and eventually into the wholesale or libor money markets. from there, as central bank surveys have shown, there is now a general tightening of lending conditions to end - borrowers, which are exerting a drag on the us and western european economies. asia has felt some of the tremors of this crisis, but as yet we have been relatively unscathed. in the banking sector, a number of banks in the region wrote off losses on their us sub - prime mortgage related assets. compared to their peers in the us and europe, the impact on their balance sheets and profitability has been less severe. this can be attributed to a combination of factors. following the asian financial crisis, banks here had taken active steps to improve their credit standing by enhancing their capital base. we are also aided by the fact that we are more reliant on traditional banking rather than the capital markets for our debt financing. beyond the direct impact on banks, the general reduction in risk capital and financial deleveraging will be felt in asia, through higher costs of capital. this is the downside that many companies and investors will have to confront. on the upside, this should further spur the efforts of asian countries to make their own financial intermediation process more efficient. this can be done through a lowering of barriers to global capital and the building of channels to facilitate the growth of this capital. global investors will increasingly look to asia for investments as asia remains an attractive area for growth

without taking into account the environmental cost presents a classic case of the tragedy of the commons. problems caused by climate change and global warming affect all of us. as a country lacking in natural resources, singapore sees a critical need to promote sustainable development. singapore ’ s national research foundation has dedicated significant resources to facilitate research efforts and encourage commercial spin - offs. r & d initiatives have been complemented by both domestic and foreign investment in the areas of sustainable water and solar energy projects. some of you would have read about renewable energy corp from norway, which is building a euro 3 billion plant in singapore for the manufacturing of solar modules. by 2010, newater, our very own water recycling industry, will be able to meet 30 % of singapore ’ s water demand. singapore has also adopted a model to promote sustainable urban design for housing development, environmental management and transportation. for example, singapore is working with china on a project to help develop environmentally friendly townships via the singapore - tianjin eco - city project. access to funding for such projects is the key to the success of developing a sustainable model of urbanization and production of renewable energy. in this respect, i am pleased to note that singapore capital markets has already facilitated the funding of projects such as hyflux water treatment plants in china via a sgx listed business trust ipo completed last year. underlying all the initiatives i have just mentioned is the potential demand for environmentally sustainable solutions. the promise of such solutions, besides in offering economic opportunities, lie in their potential to address the rising challenges of urbanization, increasing energy prices and shortage of clean water. asian businesses should position themselves for the gradual shift towards greener living as such technologies are not only socially acceptable, but also socially demanded. corporate governance before i conclude, let me share one final thought. asian smes, in their bid to become top asian and global companies, should devote attention to corporate governance. a sound corporate governance structure will help to ensure proper management practices, robust internal processes, and prudent controls. in the long term, these practices will help foster a strong reputation and increase the franchise value of the company, paving the way for asian smes to expand into global markets. indeed, global competition will require companies to be held to such high standards, especially those demanded by institutional shareholders. closing to sum up, asia and asian businesses are poised for exciting times in an era of rising prosperity and growth. there will be both challenges and opportunities. one need not be daunted