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.