Asian nations welcome Japan's new aid plan
Asian nations welcome Japan's new aid plan
LANGKAWI, Malaysia (AP): Asian nations on Sunday welcomed Japan's ambitious new initiative to help regional economies recover by guaranteeing Asian sovereign bonds.
At a weekend meeting of Pacific-Rim finance ministers, Japan's Finance Minister Kiichi Miyazawa announced that Tokyo would guarantee bonds issued by Asian governments to help attract up to 2 trillion yen (US$17 billion) of domestic and foreign private- sector funds.
The so-called "second stage" of Japan's aid would go beyond the US$30 billion earlier promised to help the five countries hardest hit by Asia's financial crisis: Thailand, Malaysia, the Philippines, Indonesia and South Korea.
Miyazawa, who was scheduled to leave Sunday for a meeting in Hanoi with Prime Minister Phan Van Khai, said Vietnam would now benefit.
Philippine Secretary of Finance Edgardo Espiritu was the first to opt into the new plan. He said the nation planned to sign an agreement next month for $500 million in guaranteed bonds.
"I was very appreciative," Espiritu told reporters Sunday on the sidelines of the meeting on this northern Malaysian resort island.
Indonesia's Finance Minister Bambang Subianto said the plan would be analyzed for possible use in his country, which has been ravaged by economic and social turmoil since the crisis hit in July 1997.
"Of course this will be a source of financing for the recovery of the economy, for economic activities of Indonesian corporations," he told reporters.
The original Miyazawa initiative, which helped many Asian countries steady their wobbling economies, was announced last October.
Now, the aim of the plan's expansion was to help struggling nations raise their own money. Japan claims its guarantees will still make it much cheaper for governments to issue bonds. Funds could then be channeled into the private sector to help write off bad debt and recapitalize ailing companies, Miyazawa said.
Japan has created a $3 billion guarantee fund at the Asian Development Bank, which is providing 27.5 billion yen to subsidize interest payments.
Miyazawa also said Japan passed legislation that would allow the Export-Import Bank of Japan to guarantee sovereign bonds issued by emerging economies or to purchase those bonds directly.
Several nations still struggling to revive their economies were quick to praise the aid plan.
"It's very helpful for the recovery of the region," said South Korea's Minister of Finance and Economy Kyu Sung-lee.
His Thai counterpart, Tarrin Nimmanahaeminda, told reporters: "We're expressing general interest."
Ministers of the 21-member Asia Pacific Economic Cooperation forum praised the new aid plan in their final communique as "a potentially effective tool to accelerate the pace of restructuring."