Japan to offer Thailand $500 million bond loan

Japan to offer Thailand $500 million bond loan

BANGKOK (AFP): Japan is to grant Thailand a US$500 million yen-denominated loan to help rescue the country's crisis-hit state sector, Thai Finance Minister Tarrin Nimmahaeminda said Monday.

The loan will be backed by a bond issue in Japan, Tarrin said after meetings here with Japanese Minister of International Trade and Industry (MITI) Kaoru Yosano.

"The details about which state enterprises will benefit from this money will be discussed later," said Tarrin.

"The bond issue in Japan will be guaranteed by agencies in MITI," he added.

The initiative is not linked to Japan's proposed $30 billion aid package for crisis-hit Asian nations announced by Japanese Finance Minister Kiichi Miyazawa at the Group of Seven industrialized nations meeting in Washington in early October.

Thailand, and other Asian countries including Indonesia, South Korea, Malaysia and the Philippines and Thailand are currently in talks with Japan to decide their share of funds from the Miyazawa package.

In common with the rest of Thailand's economy, state industries have been hit hard by the economic crisis triggered by the de-facto devaluation of the Thai baht last July.

To comply with the $17.2 billion International Monetary Fund bailout, Thailand's cabinet has approved a master plan for a mass sell off of state assets to cut spending and settle the government's foreign debt.

The plan covers privatization of the telecommunications, energy, water and other sectors. In all, 51 state enterprises are covered by the plan.

Hopes that Thailand many be over the worst of its economic crisis were boosted Friday by IMF Asia-Pacific department's deputy director Anoop Singh who said the country was poised to reap the rewards of its painful reforms, with growth likely to return in the second quarter next year.

"I think we can be confident that in 1999 Thailand will start growing again. We are at a very happy stage," he said.

Thailand must speed up debt restructuring to clean out the massive non-performing loans which are strangling economic growth and turning off potential investors, Singh said.

But he said the government had done well to stabilize the currency, rebuild investor confidence, reduce interest rates and stimulate the financial markets.

Before his meeting with Tarrin, Yosano held a meeting with Thai Prime Minister Chuan Leekpai.

"We discussed bilateral trade which this year is down by 17 percent," Chuan said after the talks.

"We told Japan that if it can restore its economy, Thai trade will improve with Japan."

Yosano was due hold further meetings with Thai officials in Bangkok later in the day.

He will also attend the first meeting of the Japan-ASEAN industrial cooperation committee here which will include representatives from all nine members of the Association of Southeast Asian Nations, Cambodia and Japan.

Talks will focus on ways to revive regional economies and increase the international competitiveness of member countries, Japanese officials said.

The committee meeting will be chaired by Yosano and Thai deputy prime minister Supachai Panitchpakdi.

ASEAN groups Brunei, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam.