Japan strives to protect its investments in RI<\/p>\n
TOKYO (AFP): As the crisis in Indonesia deepens, Japan is
\nmoving to protect its firms struggling to do business in one of
\nits most important investment targets in Asia.<\/p>\n
Indonesia, recoiling from a wave of riots and soaring prices
\nsparked by the collapse of the rupiah, has imported many Japanese
\ngoods and Japanese banks have bet heavily on the country.<\/p>\n
The country is the second largest target of Japanese direct
\ninvestment in Asia after China, receiving US$30 billion in 1996,
\naccording to the Japan External Trade Organization.<\/p>\n
It is also the Asian country most dependent on yen loans.<\/p>\n
Tokyo said Friday it would extend $1 billion in trade
\ninsurance to Jakarta. It has already promised 70 billion yen
\n($560 million) in loans to Indonesia and has pledged $5 billion
\nas part of a rescue package under the International Monetary
\nFund.<\/p>\n
\"I understand there are risks involved with trade insurance.
\nHowever, what is necessary for us is to move ahead and do
\nsomething,\" said Katsuhiro Nakagawa, vice minister for
\ninternational affairs, at Japan's Ministry of International Trade
\nand Industry<\/p>\n
The insurance will run for two years and will be used to
\nprotect Japanese exporters trying to keep their businesses
\nafloat. In addition Japan is to consider extending 300 billion
\nyen ($2.4 billion) in loans through the Export-Import Bank of
\nJapan to struggling Asian nations by the end of March.<\/p>\n
\"Japan is trying to deflect the criticism that has been thrown
\nat it,\" said Russell Jones, chief economist at Lehman Brothers
\nJapan.<\/p>\n
Japan's ruling Liberal Democratic Party released an economic
\npackage Friday, in a move to spur its sluggish economy. Although
\nthere was little of surprise for its own economy and a marked
\nlack of spending promises, the party did suggest moves towards
\nstabilizing currencies in the region.<\/p>\n
Tokyo's idea of an Asian monetary fund, a regional equivalent
\nof the International Monetary Fund which has led crucial bailouts
\nfor many of the crippled Asian economies, was quickly shot down
\nby Washington last year.<\/p>\n
\"The Liberal Democratic Party will study the establishment of
\na common currency system for the Asian region or more active use
\nof the yen currency,\" it said.<\/p>\n
Although the party gave no details of how the system might
\nwork, one senior official said: \"It would be nice to make the yen
\nlike the euro although it will be very difficult.\"<\/p>\n
Any kind of stabilization was likely to be some form of
\nstandby credits, channeled to Japanese corporates in Asia in an
\neffort to limit damage, Jones said.<\/p>\n
Indonesia in particular \"could be a trigger for another
\ndownward spiral in the region\" if the crisis is allowed to
\ncontinue unchecked, he said.<\/p>\n
The proposal may also involve attempting to peg the rupiah or
\nother weak currencies to a basket of currencies, including the
\nyen, said Brian Rose, economist at SBC Warburg.<\/p>\n
\"The idea is that these Asian countries pegged their
\ncurrencies to the dollar even though they are more and more
\ndependent on Japan for trade in the region.<\/p>\n
\"That probably doesn't make as much sense as it used to,\" he
\nadded.<\/p>\n
Japan has joined Europe and the United States in recent days
\nin dismissing Indonesia's plan to peg the rupiah to the dollar
\nthrough a currency board system.<\/p>\n
\"Japan has a lot of exposure in the region, it has lent a lot
\nof money in Asia. Even the private sector is interested in making
\nsure that it doesn't go down the tube,\" Rose said.<\/p>\n
\"In the longer term it is hard to see Japan stopping its
\ninvestments anywhere in southeast Asia.\"<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/japan-strives-to-protect-its-investments-in-ri-1447893297",
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