Japan to set up aid and trade plan for ASEAN amid China rift: report

Japan to set up aid and trade plan for ASEAN amid China rift: report

Japan will set up a fund for Southeast Asia to seal trade agreements and provide aid to lesser developed parts in a bid to secure Tokyo's regional clout amid China's growing influence, a newspaper said on Monday.

Prime Minister Junichiro Koizumi will unveil the tentatively named Asia Partnership Fund at the inaugural East Asian summit to be held in December in Malaysia, the Yomiuri Shimbun reported, quoting foreign ministry sources.

The top-selling Japanese daily said the fund was in part "designed to increase Japan's presence and leadership in Asia to counter China's growing influence."

The fund will assist small and medium sized businesses and back the training of professionals from members of the Association of South East Asian Nations (ASEAN) with which Japan is pursuing free-trade agreements, the report said.

The program would also focus aid to Cambodia, Laos, Myanmar and Vietnam to help them catch up economically with other members of the 10-nation Southeast Asian bloc.

But the report said the aid to Myanmar could be held up by human rights concerns in the military-ruled state.

The newspaper did not say how much money the fund would disburse or whether it would be part of the current foreign aid budget. Officials did not immediately comment on the report.

Japan last week sealed a free-trade agreement with Malaysia, two years after forging its first such pact with Singapore.

Tokyo is also pursuing free-trade negotiations with the Philippines, Thailand and Indonesia, whose President Susilo Bambang Yudhoyono will visit Japan this week.

Japan has seen its relations steadily decline with China amid rifts over how the two nations look at their history, their territory and over energy disputes.

Officially pacifist Japan has long used aid as a major tool of its foreign policy. It disbursed US$500 million in aid after the Indian Ocean tsunamis and more recently pledged $100 million each to Sudan and the Palestinians.