Japan to help Malaysia, Thailand escape crisis

Japan to help Malaysia, Thailand escape crisis

TOKYO (Agencies): Malaysia and Thailand, each rushing in
opposite directions to escape Asia's financial storm, both
secured promises Tuesday for Japanese support.

Malaysian Prime Minister Mahathir Mohamad has spent five days
in Japan decrying free markets and the International Monetary
Fund, while seeking some of the US$30 billion Tokyo has promised
Asia.

Meanwhile, Thai Finance Minister Tarrin Nimmanahaeminda, who
also won a promise for some of the Japanese funds, has won praise
from the IMF for pursuing the same reforms Mahathir rejects.

Japanese Finance Minister Kiichi Miyazawa expressed his "firm
commitment" to support Thailand, noting its progress in
implementing reform, said a joint statement issued by the two
ministers.

An IMF report last month praised Thailand, recipient of a
$17.2 billion IMF-led bailout, for its reforms but said it
required "steadfast implementation" of the program to consolidate
gains.

Mahathir, meanwhile, could hardly be taking a more divergent
stance for Malaysia's recovery.

Rather than opening markets and embracing tough reform, the
Malaysian leader says he has turned his back on the free market
to clamp down on speculators he blames for ruining Asia's
economies.

Mahathir defended his clampdown on currency trading as a last-
ditch defense against greedy speculators.

"When Malaysia decided to cut itself off from the new
religious creed as represented by the free market, we knew that
we would be regarded as heretics and we will have to face the
possibility of being burnt at the stake," Mahathir told a
seminar.

"But we really have no choice," he said.

"Being a heretic is better than being colonized by people who
believe in greed as the sole motivation for their actions," the
premier said. "Such people have no compassion."

Malaysia introduced on October 1 sweeping foreign exchange
controls, including a fixed exchange rate and an end to external
convertibility of the Malaysian currency.

Japan's vice finance minister Eisuke Sakakibara told the same
seminar that the world was facing an economic downturn and
Malaysia's currency controls no longer seemed a bad idea.

Sakakibara said the opposition of economists to currency
controls was beginning to shift.

"The trend of world opinion is changing," he said.

He said Malaysia now needed to make it clear to the market
that the fixed exchange rate would continue.

Both Malaysia and Thailand claim their own remedies are
beginning to prove successful.

While Thailand and Malaysia follow different paths to
recovery, however, both have been lured by the promise of
Japanese money.

Japan's finance minister unveiled the $30 billion package at a
meeting of the Group of Seven industrialized nations in
Washington on October 3.

Sakakibara said it was necessary to raise the amount to lessen
the impact of a credit crunch being suffered by Asia nations.

"Lessening the impact of the credit crunch on Asia is of
critical importance," Sakakibara said. He said that while Japan
has offered $30 billion to Asia so far, "it is necessary to
increase that amount."

As the first part of Japan's package, the Export-Import Bank
of Japan earlier this month signed a memorandum of understanding
with South Korea's Ministry of Finance and Economy on $3 billion
in loans to South Korea.

Of the offered $30 billion in financial aid, $15 billion will
be targeted at medium- to long-term financial needs to promote
Asian nation's economic recovery, with the rest set aside for
potential short-term capital requirements.

The aid package includes extension of loans and purchases of
bonds issued by Asian nations, as well as providing interest
subsidies to back up their fund raising.