Japan asked to help ASEAN maintain monetary stability
JAKARTA (JP): President Soeharto reiterated his call yesterday to members of the Association of Southeast Asian Nations (ASEAN) to establish a common safety network system in the form of a special fund to cope with a currency turmoil.
The President said Japan's contribution to the proposed special fund would help countries in this region to maintain their monetary stability.
"The Presiden cited the scheme as one of examples on how Japan could help monetary stability in this region," State Minister of National Development Planning Ginandjar Kartasasmita told newsmen after accompanying Soeharto to receive a Japanese senior official.
Chairman of the Board of Overseas Economic Cooperation Fund (OECF) Akira Nishigaki met with Soeharto to discuss the development projects in the country which are financed by the Japanese government.
The Japanese government, the largest donor of the creditors under the World Bank-coordinated Consultative Group on Indonesia (CGI), channels its development aid through OECF.
President Soeharto for the first time brought up the idea on a safety network system for maintaining currency stability in the region when he addressed the opening of the 18th ASEAN Inter- Parliamentary Organization (AIPO) in Bali last week.
He said the recent monetary upheavals that hit this region had made the countries in Southeast Asia more aware of the importance of regional cooperation in maintaining monetary stability.
"Not a single country in the region has been immune to the currency onslaught that has been affecting the region," he told the legislators from the ASEAN countries.
Recent attacks on local currencies in Thailand, the Philippines, Malaysia, Indonesia and even Singapore have sharply damaged their economies.
Thailand for instance, was forced to seek emergency aid from the International Monetary Fund after the baht drastically dropped against the U.S. dollar.
The Philippines had also to devalue its peso, and Indonesia has tightened its monetary policy to stem massive speculative attacks on the rupiah after its floating on Aug. 14.
In his meeting with Nishigaki, Soeharto expressed his gratitude to the Japanese government because it increased its loan to Indonesia this year despite its economic slump.
"The President deeply appreciated the Japanese government's understanding and cooperation but he added Indonesia would not be dependent on Japan forever," Ginandjar noted.
Japan remains the largest single creditor to Indonesia. For 1997/1998 fiscal year, Japan has pledged 213.74 billion yen (US$1.87 billion) in new soft loans through the CGI creditor consortium, despite its plan to slash its Official Development Assistance (ODA) worlwide by 10 percent.
CGI creditors pledged a total of $5.3 billion in fresh aid to Indonesia for 1997/98.
"I am very happy to see myself how our fund is being used efficiently and effectively in this country," Nishigaki told reporters after the meeting. (prb)