AFR - DATE: Friday, February 12, 1999

Japan pushes for Asian version of IMF

By Andrew Cornell, Tokyo

Japan has formally decided to push ahead with plans for an Asian monetary fund as an alternative to the International Monetary Fund and in defiance of Washington, which put the kybosh on an original proposal in 1997.

A newly formed government task force decided at its inaugural meeting on Tuesday to recommend to the Ministry of Foreign Affairs to revive the idea, with the backing of the Ministry of Finance.

The task force will draw up plans for the fund in time for a Group of Eight global powers meeting in Tokyo next year. Initial plans are for a region-by-region fund which will operate on a case-by-case basis.

The Foreign Minister, Mr Masahiko Komura, said Japan should contribute actively to reshaping the global financial order. The task force is headed by the head of the Institute for International Monetary Affairs, Mr Toyoo Gyohten.

Japan originally mooted an AMF in 1997 when the Thai economy was first hit by a currency crisis. That proposal was for a $US100 billion Asian fund.

Plans were abandoned after the US and the IMF opposed it. But since then a critical review of the IMF's handling of the Asian economic crisis has emerged, renewing interest in a non-US lender of last resort.

Last week, the former Thai finance minister and deputy prime minister, Mr Virabongsa Ramangkura, called for leadership from Japan in establishing new funding for Asian countries threatened by crisis.

However, Mr Ramangkura said he did not believe the original plan for an AMF was the right strategy. Instead an Asian equity fund should be set up to support the private sector and corporate debt overhang.

During his visit to Japan in November, Korean Prime Minister Mr Kim Jong-pil endorsed the idea of an AMF.

The remergence of the idea comes in a climate of growing anti-American feeling in the region and fears in Japan of the country and its currency being marginalised.

Japan earlier this week reversed its long-held opposition to trade agreements, beginning a detailed investigation of a free trade agreement with the Republic of Korea in the face of the proliferation of such pacts around the world.

Foreign Ministry sources have been quoted as saying the regional economic crisis gave Japan a chance to become a leader in Asian economic and political affairs.

In January, when Prime Minister Mr Keizo Obuchi and other officials were travelling the world selling the idea of the yen as a third power in a tri-polar currency structure, the revival of some version of an AMF was mentioned.

A $US30 billion Asian aid package, developed by Finance Minister Mr Kiichi Miyazawa, has also been linked to the AMF plan.

"The ultimate goal of the Miyazawa plan, which was not mentioned in the official statement, is the creation of an Asian monetary fund," a Ministry of Finance official said.

"Transparent financial markets and clear corporate governance are the main items that we hope to use as conditions."

While concern about American hegemony is growing in Asia, particularly in the wake of mishandling by the IMF of some aspects of its response to the Asian crisis, Japan will also face suspicions about its motives.

The hangover from Japanese imperialism in the first half of the century aside, some analysts see the AMF as another attempt to bolster the stature of the yen.

The Asahi Shinbum quoted a source from the task force as saying the fund was envisaged as auxiliary to the IMF, yet more receptive to Asian needs.

"The IMF imposed the same prescriptions on Thailand, the Republic of Korea and Indonesia in disregard of each nation's different socio-economic situation," it said.

Reformatted for mugajava website.
For any comments send e-mail to mugajava@geocities.com
Visit   http://geocities.datacellar.net/Eureka/Concourse/8751/
or  http://come.to/diskrisek