To help U.S. opinion-leaders understand the steps Japan is taking to promote an economic recovery in Asia, the Japan External Trade Organization's (JETRO) New York Office has released a presentation delivered by Mr. Hisamitsu Arai, Vice Minister for International Affairs of the Japanese Ministry of International Trade and Industry (MITI). It was presented before the Thai-Japanese Association in Bangkok, Thailand, on Aug. 21, 1998, and is entitled, "A Scenario for Dynamic Recovery from the Asian Economic Crisis."

Reaffirming Japan's commitment to ASEAN (Association of South East Asian Nations) and other Asian economies, Vice Minister Arai outlined steps that need to be taken to promote an economic recovery in the region. Special attention was paid to the actions now being taken by the Japanese government and MITI to rectify this critical situation.

Noting the tremendous growth that Asian economies have exhibited over the past thirty years (from 9% of the world's GDP in 1965 to over 25% in 1995), Vice Minister Arai emphasized common characteristics that helped engineer the "Asian Miracle." He highlighted East Asia's high economic interdependence and identified three common challenges: 1) economic structural reform, 2) a stronger Asian partnership and 3) international policy coordination.

Vice Minister Arai then summarized Japan's current role in Asia's economic structural reform. It includes steps to support Thailand and the ASEAN countries, as well as $43 billion in financial and capital support to promote liquidity and structural reform throughout the region. These measures are critical to relieve the short-term negative impacts imposed by the growing supply-demand gap and credit crunch that has been effecting economies throughout Asia.

Highlighting the fundamental commitment of the new-appointed cabinet of Japanese Prime Minster Keizo Obuchi to initiating a region-wide economic recovery, Vice Minster Arai stressed the underlying need to "contribute to the economic recovery and structural reform of Asia through the structural reform of Japan itself."

In addition to the broad measures included within the "Action Plan for Economic Structure Reform" and the $128 billion stimulus package that was announced on April 24, 1998, Vice Minister Arai called attention to a range of new Japanese cabinet initiatives. These include new tax reform initiatives and other measures designed to revitalize Japan's financial system and facilitate the settlement of bad loans, particularly in the real estate sector.

Commenting on the need for a stronger partnership among Asian economies, Vice Minister Arai outlined Japanese efforts to support the development of ASEAN-wide infrastructure. In addition, he stressed the importance of developing international policy coordination mechanisms to overcome the Asian economic crisis. These include the need to continue Japan's cooperation with the IMF and other multilateral institutions as well as initiating a closer policy dialogue between Japan and the U.S.

Vice Minister Arai also stressed the importance of Japan's relations with China, noting its support for reforms advocated by Premier Zhu Rongji and stated that "Japan is prepared to provide what it can to support relevant Chinese initiatives." He also urged that more consideration be given to the "internationalization" of the yen, in order to "contribute to the stability of Asian currencies and economies and by helping to diversify...from an overdependence on a single reserve currency."

In conclusion, Vice Minister Arai noted that "Asia still possesses the same basic conditions that underpinned the Asian Miracle" and expressed his confidence that "(Asia has)...more than enough capacity to bear...(needed) reforms and eventually emerge stronger than ever before."

His closing words emphasized that "Japan, as an Asian country, is determined to make every effort to work with its Asian neighbors to overcome the pessimism and skepticism that is currently being directed toward the region." Additionally, highlighting Japan's close interdependent relationship with other Asian economies, he concluded by emphasizing its intention to "throw (Japan's) full weight behind Asia's return to strong economic growth and a prosperous future."

The Japan External Trade Organization (JETRO) provides this information to create broader awareness of Japan's role in the Asian financial crisis and to highlight the emerging business opportunities that are being created as a result of the Japanese Government's ongoing economic reform program. JETRO is a nonprofit, Japanese government-supported organization dedicated to promoting mutually beneficial trade and economic relationships between Japan and other nations.

For additional information and a copy of Vice Minister Arai's remarks, please contact JETRO's New York office or KWR International as indicated below.

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CONTACT: JETRO New York
Noriyasu Yamada
Phone: 212/997-0409
Fax 212/997-0464
E-mail: yamadan@newyork.jetro.org
or
KWR International Inc.
Keith W. Rabin
Phone: 212/799-4294
Fax: 212/799-0517
E-mail: kwrintl@kwrintl.com