Japan flexes muscle in Asian financial crisis

Japan flexes muscle in Asian financial crisis

TOKYO (AFP): Japan flexed its economic might in the Asian
crisis yesterday, announcing an emergency meeting to deal with
the turmoil and dispatching a top official to Indonesia to
discuss financial aid.

Finance Minister Hiroshi Mitsuzuka told a news conference that
vice finance ministers from Asia-Pacific countries would hold an
emergency meeting in mid-November to discuss stabilizing the
rocky financial markets.

"We plan to hold a vice-ministerial level meeting and discuss
various issues" including the establishment of a so-called Asian
fund, Mitsuzuka said, without giving an exact time or place for
the talks.

Participants at the talks will include vice ministers from the
Association of Southeast Asian Nations (ASEAN) as well as high-
ranking representatives from Japan, Hong Kong and the United
States.

Analysts said Japan's initiative was inevitable. Asia's
financial crisis was triggered by the collapse of Thailand's
baht, whose value has been slashed following its July 2 float.

"As the United States did for Mexico three years ago, Japan is
expected to play a major role in any regional financial scheme,"
said Taiki Saito, a senior analyst at Yamaichi Research
Institute.

"Without Japan, any financial framework is unlikely," Saito
added.

Japan has a critical stake in such aid since its economy is
deeply involved in Asia through trade and finance, the analyst
said. "Once the region falls, Tokyo cannot avoid tumbling."
Japanese exports to Asia jumped 10 percent to 1.804 trillion yen
(15 billion dollars) in September, accounting for 41 percent of
its overall shipments.

Imports from Asian countries to Japan meanwhile rose 6.8
percent to 1.274 trillion yen, equivalent to 38 percent of the
country's imports.

Analysts said Japan was being urged to speed up discussions on
the framework of the planned Asian monetary fund to deal with
future regional financial turmoil.

Japan and Southeast Asian countries proposed establishing the
fund during September's conference of the International Monetary
Fund (IMF) and the World Bank in Hong Kong.

But the IMF has warned against the proposed Asian bailout
fund, saying it could undercut conditions attached to its
economic assistance.

Mitsuzuka's announcement coincided with the departure of vice
finance minister Eisuke Sakakibara for Indonesia on Friday to
hold talks with his Indonesian counterpart over Japanese
financial help for the country.

Sakakibara, dubbed Mr. Yen for his influence over foreign
exchange markets, may also talk in Jakarta to officials of the
IMF which is drawing up a rescue package for Indonesia following
a sharp fall in the rupiah, the official said.

Japanese Prime Minister Ryutaro Hashimoto offered financial
aid to Indonesia as part of an IMF rescue package when he
telephoned Indonesian President Soeharto on Wednesday.

Australian Prime Minister John Howard also said this week his
country would provide aid to Indonesia within the IMF program.
Japan pledged four billion dollars to an IMF-brokered US$17.2
billion rescue package for Thailand after the baht collapsed in
July, but with strict conditions on economic reform.

Furthering its role in the region, Tokyo plans to call on
Asian partners to set up their own version of the Group of Seven
(G-7) meetings to defend their currencies, news reports said.
Talks involving finance ministers and central bankers would be
held between Japan, South Korea, China, Australia, New Zealand
and ASEAN members -- Brunei, Indonesia, Laos, Malaysia, Myanmar,
the Philippines, Singapore, Thailand and Vietnam.

News reports said the Asian finance leaders would hold their
first formal meeting next year and planned three to four meetings
annually, but may face opposition from the United States.