Tokyo wants private money to flow into Asia

Tokyo wants private money to flow into Asia

TOKYO (Reuters): The Japanese government aims to encourage Japanese private investors to sink money into Asian securities, as its public aid has helped these nations to weather the crisis and begin heading towards recovery, officials said.

"It is of paramount importance to encourage Japanese private money, including pension funds, to flow into Asian nations after a round of the public aid and now that growth in the region is in sight," Japan's top financial diplomat Eisuke Sakakibara said on a TV program on Sunday.

Japan last October introduced the Miyazawa Plan, official financial assistance worth US$30 billion over two years for cash- strapped Asian nations. About two-thirds of that has already been committed, Sakakibara said.

In order to spur Asian economic recovery, Sakakibara said, Japan would add Vietnam to countries receiving help under the Miyazawa Plan and push ahead with a debt-guarantee mechanism included in the plan to help Asian nations raise funds from the capital markets.

Shuhei Kishimoto, a senior official at the Ministry of Finance's International Bureau, said in a ministry publication that besides loans and debt guarantees, securities investment in Asian nations was another potential Japanese contribution.

"With 1,200 trillion yen ($9.92 trillion) worth of individual assets in Japan having trouble finding attractive places for investment, it is worth considering investing Japan's postal savings and pension fund money in Asian stocks so the funds could be used for infrastructure purposes in Asia," Kishimoto said.

Such long-term investments would also benefit Japan, which will be increasingly burdened with rising pension payments because of the expanding proportion of ageing people in its society, he said.

Yasuyoshi Masuda, a senior economist at Fuji Research Institute Corp, said: "The Miyazawa Plan is priming the pump for private investment in Asia." He said the government apparently now wants the private sector -- following in the government's footsteps -- to resume investment in Asian nations.

Banking sources said the Finance Ministry was informally asking major Japanese banks if they could increase lending in Asia.

Masuda said many banks had maintained an interest in Asian nations but were cautious about making aggressive loans and investments there because of recent disposals of bad loans that were made both overseas and at home.

But there was a chance the Finance Ministry might come up with specific steps to encourage Japanese securities investment in Asia, he said.

Masuda said helping Asian nations establish their own government bond markets would also encourage Japanese private money to flow there.