Japan announces plan for $2.36b in new loans for Asia

Japan announces plan for $2.36b in new loans for Asia

TOKYO (Reuters): Eager to ward off criticism that it is not
doing enough to help Asia, Japan announced yesterday 300 billion
yen (US$2.36 billion) in new loans destined mostly for Indonesia,
as well as other steps for the troubled country.

Trade Minister Mitsuo Horiuchi also said further Japanese
measures for Asia were possible.

"Further steps for Asia are always possible. This is not the
end of it," he told a news conference.

Other steps for Indonesia included a $1 billion two-year
insurance credit line that would include coverage for company
bankruptcies and 50 billion yen in official development
assistance for the 1998/99 fiscal year beginning on April 1.

Japan would also work to ensure short-term trade insurance was
provided for Japanese exporters to Indonesian importers even if
importers were unable to obtain letters of credit from their
local banks.

The steps come as Indonesia's Finance Minister Mar'ie Muhammad
said he had sent letters asking for assistance to members of the
Group of Seven nations, whose finance ministers meet this
weekend.

"I have drafted letters to friends in the G-7 who are coming
together asking whether they could do something to help," Ma'rie
told a parliamentary committee meeting.

Japan's Ministry of Finance responded by saying it would call
on G-7 nations to cooperate in helping Indonesia.

Tokyo hopes its last minute flurry of action ahead of the G7
meeting will save it as much face as possible following recent
harsh criticism that as the world's second-largest economy it has
not done enough to help its Asian neighbors.

In particular, increasing calls from U.S. officials, including
U.S. Treasury Secretary Robert Rubin, for Japan to implement
strong fiscal measures to kick-start its economy are expected to
be repeated at the meeting.

Horiuchi said the 300 billion yen in new loans would be made
through Japan's Export-Import bank this fiscal year, with more
likely in the next fiscal year.

They include loans to be directed to domestic companies in
Asian countries through local public bodies, loans to Japanese
overseas units and loans to promote Japanese imports. Most if not
all will go to Indonesia.

"I can't be specific to about actual amounts...but around 200
to 300 billion yen will go to Indonesia before the end of March,"
said Haruhiko Kuroda, a senior Finance Ministry official.

Japan had also agreed to take in 1,000 workers from Asian
countries, mainly those working in the car industry, for
technical training. This move was aimed at helping prevent
possible social unrest caused by high unemployment levels,
Horiuchi said.

He added that he hoped G-7 countries would agree to form a $15
billion trade insurance fund, something that would be discussed
by export credit agencies in London on Friday.

"We hope (the proposal) will be viewed positively and we are
hoping to get a consensus on the issue. All in all, I think it
will be about $15 billion," he said.

Japanese Trade Ministry sources have said that while Japan and
the United States are firmly behind the idea, Europe and Canada
are less keen.

In a further proposal on Friday to help Asian countries,
Japan's ruling Liberal Democratic Party suggested giving the yen
a greater role in Asia to help countries diversify currency
risks.

LDP officials said this was not an idea to create a new Asian
currency like the European single currency to be launched in
January 1999, but rather to make the yen easier to use as a key
global currency.

"We are trying to figure out how we can help Asia avoid being
flung around by currency fluctuations," an LDP official said.