The ASEAN Post-Ministerial Conference was launched 20 years ago in 1978 when the Japan-ASEAN foreign Ministerial meeting was held. Since 20 years ago under the initiatives of ASEAN, the number of participating dialogue partners to the Conference has increased and more wide-ranging and important items have been discussed in the Conference. The inauguration of the ASEAN Regional Forum in 1994 and the Asia-Europe Meeting in 1996 are good examples of the achievements of the initiatives of ASEAN. Japan highly appreciates such ASEAN initiatives to address a variety of international issues, and expects further progress would be seen for the regional stability and prosperity through various dialogue processes of which core members are the ASEAN member countries.
2. Economic Turmoil in Asia
It is needless to say that the most important issue we must address now is the economic turmoil hitting Asian countries. The economic turmoil has continued for almost one year and the countries hit are doing their utmost to overcome the difficulties with international assistance, but are still mired in a severe situation because of a sharp fall of currencies, recession and so on.
In a medium and long term perspective however the ASEAN countries are in a period of adjustment to correct the strains caused by high economic growth in the past. Taking account of the good basic conditions of the ASEAN countries such as diligence of people, high quality labour high saving rates, and rich natural resources, we are convinced that the ASEAN countries will regain economic growth if they carry out with firm determination necessary reforms suitable for the different situations of each country.
To overcome the current economic turmoil, it is imperative to regain the market’s confidence through steady implementation of a sound macro-economic policy and financial and economic structural reforms. No matter how painful it may be, we must have the courage to accomplish these reforms. In this regard, Japan highly appreciates ASEAN’s earnest efforts in accordance with the agreements with IMF or by their own initiatives.
In order to support those self-help-efforts of the Asian countries, Japan has pledged its assistance worth more than $42 billion by far largest in the world, despite its severe domestic economic situation, and is determined to continue its assistance as much as possible.
Japan has the view that the following five points are particularly important when the international society extends assistance to the countries, doing their utmost for overcoming the turmoil, and is actively cooperating based on these points.
The first is Prompt and effective financial assistance under the IMF centered international assistance framework engineered by IMF. In order to react promptly and appropriately to the financial gap in Asian countries, Japan in coordination with IMF, World Bank, Asian Development Bank, etc, is providing its financial cooperation such as assistance worth $19 billion to Thailand, Indonesia and Republic of Korea in the framework of international assistance.
The second is assistance for securing the domestic liquidity or smooth trade finance in view of maintaining and promoting the activities of the private sector. Japan is implementing the assistance through financing by Japan Export – Import Bank and flexibly applying trade insurance.
The third is support to the socially vulnerable segment of the population on witch the recession and structural reforms have the heaviest impact. Japan is actively cooperating to create a “Social Safety Net” through supporting the anti-unemployment program and a grant of emergency goods including food and medical supplies. As one of these efforts, Japan provided about six hundred thousand tons of rice to Indonesia. Japan also attaches importance to cooperating to minimize the interruption of development projects caused by financial difficulties derived from economic turmoil.
The forth is implementation of a prudent industrial policy to consolidate the economic structure and to build competitive industries. In particular, development of small and medium-sized enterprises and supporting industries is important in terms of the promotion of exports and the increase of employment. In this regard, Japan has offered its cooperation through Japan Export-Import Bank financing, yen loans, and technical cooperation.
Lastly, it is important to develop competent human resources which play a key role in overcoming the current economic turmoil. Japan is steadily implementing various training programs under the framework of the “Japan- ASEAN Program for Comprehensive Human Resources Development” announced at the Japan- ASEAN summit meeting held last December, in which twenty thousand persons from wide-ranging sectors including administrators and experts in the private sector will be accepted over a five-year period. Japan expects to contribute not only to the overcoming of the current economic difficulties but also to nation building of each country in the medium and long term perspective through such assistance in this field.
In addition, Japan is determined to do her utmost for overcoming economic turmoil with a strong sense of solidarity with ASEAN. The $20 million contribution to the ASEAN Foundation in the form of a “Solidarity Fund” was announced by Foreign Minister Keizo Obuchi May this year will be utilized for alleviation of poverty, supporting ASEAN’s development strategy, strengthening higher education, etc. This “Solidarity Fund” is a symbol of Japan’s solidarity with and support to ASEAN.
Asian economic turmoil revealed the potential weakness and vulnerability of the global financial system. Japan seriously addressed this issue and took the initiative to establish the Manila Framework last November. Japan also took initiatives actively in the G7 summit meeting in Birmingham in emphasizing the importance of the strengthens the global financial system through such measures as increasing of transparency, helping countries throughout the world prepare for global capital flows, strengthening national financial systems and pursuit of the responsibility of the private sector. The result of these initiatives was reflected in the chairman’s statement. On these matters, firm proposals will be put for-ward for decision in later this year.
The way to the overcoming the economic turmoil is not flat. In addition to self-help-efforts of the ASEAN member countries, the assistance of the international society is indispensable. Japan is determined to continue to do her utmost to assist the ASEAN countries, and appeals at this occasion to the international society including United States, European countries, and international institutions for the strengthening of their assistance in order to help ASEAN to recover its economy.
3. Japan’s Efforts Toward Economic Recovery
Relating to the Asian economic turmoil, the situation of the Japanese economy is one of the focal points of attention attracted by the international society.
The Government of Japan at this occasion explains its efforts and determination to bring about the recovery of the Japanese economy. The Government of Japan recognizes that the urgent alleviation of uncertainty in the domestic financial system and the hastening of economic recovery are extremely important for the stability and development of not only its own economy but also the Asian and the world economies.
Concretely, the Government of Japan considers it necessary to implement the following policies without any delay.
The first is fiscal policy. The Government of Japan decided in April to implement a package of Comprehensive Economic Measures the total of which scale is more than Y16 trillion (approximately $120 billion) including new governmental expense worth about Y12 trillion, the largest ever package. The relevant budget and tax reduction bills to this package have already been passed in the Diet and the package is now being implemented.
The second is financial policy. The Government of Japan formulated a “Total Plan for Financial Revitalization” as a setup for comprehensive and detailed efforts toward aggressive dispose of non-performing loans and the stability and revitalization of the financial system. In concrete, standard with sanction equivalent to the SEC’s will be introduced concerning the disclosure of the non-performing lows in view of enhancing disclosure by the financial institutions themselves. The Financial Supervision Agency is now inspecting the major 19 banks, and necessary measures will be strictly taken according to the result of the inspection. Furthermore, the “Bridge Bank” will be introduced in view of protecting the sound borrowers and depositors in case of failure of insolvent financial institutions. The Government of Japan will make every effort so that the necessary bills can be passed in the extraordinary Diet session this summer.
The third is the fundamental reform of tax systems. The working groups on this matter from the Liberal Democratic Party and the Government of Japan have already taken up a study. The reform will include a reduction of the effective rate of corporation tax to the international standard. The personal income tax will be also reduced from next year as a result of the permanent reform of the system after studying all the points at the issue.
In order to keep the Japanese economy truly active, it is necessary to implement economic and other structural reforms in many fields other than above- mentioned fields. The Government of Japan will do its utmost for removal or alleviation of the unnecessary burdensome outdated regulations and enhancing the environments for venture business.
I hope that the next administration of Japan will strengthen the efforts in the above-mentioned fields towards the recovery of the Japanese economy and that the Japanese economy will again move onto a track of powerful growth.
4. The Role of ASEAN
ASEAN deserves much praise for the consistent contribution that it has made to regional peace and stability since its foundation in 1967 through confidence-building and the deepening of cooperative relations among the countries of the region. ASEAN, which was established at a time of turmoil in Indo-china has since then continued a track of expansion and development and today it has grown to embrace nine countries, including countries in Indo-china. We hope that the general elections in Cambodia will lead to formation of a democratic government and that the elections would be an important step toward realization of the big dream of ASEAN 10, embracing the whole of Southeast Asia.
Concerning the situation in Myanmar, the Government of Japan has a considerable concern about democratization and improvement of human rights situation. In this connection, the Government of Japan has been paying attention to the development that ASEAN is recently considering a policy of flexible engagement in the issues of countries in the region.
On the economic front, ASEAN has achieved a spectacular deepening of Cooperative relations in recent years. The Government of Japan has a view that it is extremely important for ASEAN, in overcoming the Asian economic difficulties and continuing development it, the medium and long term, to further strengthen its efforts toward integration of the region into a single consumer market and a single production center through the liberalization of trade and investment by such frameworks as AFTA, AICO, and the AIA and to build a regional economy open to the world through Playing an active role to promote multilateral trade and investment liberalization under the WTO.
Also, even though it is in the midst of an economic turmoil, we hope that ASEAN will continue its efforts to tackle global issues, such as terrorism, drugs, and the environment.
The Government of Japan welcomes that the relationship between Japan and ASEAN has been developing toward more profound and wide-ranging one, especially since the Japan-ASEAN summit meeting held last December and is determined to strengthen the partnership in every field.
Japan believes in ASEAN’s bright future and intends to further strengthen its cooperative relations with ASEAN, along with other dialogue countries. We are convinced that our joint task will bear a fruit toward the twenty-first century to ensure the political stability of the Asia-Pacific region and to maintain and expand the dynamism of its economic growth.