KL seeks $5b from Miyazawa Plan

KL seeks $5b from Miyazawa Plan

KUALA LUMPUR (AFP): Malaysia is seeking US$5 billion from a 30-billion-dollar fund for Asia proposed by Japan's Finance Minister Kiichi Miyazawa in October, Second Finance Minister Mustapa Mohamed said Monday.

"They (Japan) appear quite serious about it," Mustapa said during a signing ceremony for a Japanese-government guaranteed five-year euronote issue arranged by Nomura Securities Co. Ltd. raising 74 billion yen ($640 million) for Malaysia.

Japan's finance ministry announced last week a $2.1 billion package for Malaysia "under the principle" of the Miyazawa program, which initially targeted Indonesia, the Philippines, Thailand and South Korea as well.

Unveiling the package two days later, Japan's ambassador to Malaysia said it could be considered "separate" from the Miyazawa initiative as negotiations between Tokyo and Kuala Lumpur started before the initiative was announced,

Mustapa said the Malaysia government had been talking to multilateral agencies for financial aid. But "at this point of time, we are not optimistic that the money will come in the near future," he said.

"Negotiations naturally take some time to complete. We have not had much success on that front yet. This is the first big amount for this year."

Asked why Malaysia turned down Singapore's offer of $4 billion if it was not optimistic of alternative financing, Mustapa said the government had sufficient resources to cover budget deficits in 1998 and 1999.

"We have enough money at this point of time to finance our deficit this year of 9.6 billion ringgit ($2.5 billion) and 16.2 billion ringgit next year. We have raised some government securities.

"With this money coming in, there is no urgency at this point of time today or next few weeks to raise another loan."

Malaysia said Thursday that it had dropped plans to seek $4 billion in financial aid from Singapore in exchange for a long- term water supply deal.

Malaysian Prime Minister Mahathir Mohamad told a news conference in Hanoi that Malaysia found it has "no real need for the loan."

Asked if Malaysia was ruling out any financial aid from Singapore, Mustapa said: "We have been talking to the Japanese. We hope the Miyazawa offer will be finalized soon. We are putting quite a bit of hope on Japan."

Nomura said earlier this month that the euronote issue had sold out to institutional investors.

Proceeds of the issue, of which 66.6 billion yen is guaranteed by the Japanese government under its trade insurance program, are being pooled at Sumitomo Bank Ltd. and will be extended as loans to Malaysia,