Vice Chairman, Keidanren
Chairman and Representative Director, Toray industries, Inc.
A year and a half has passed since Asia's economic debacle in 1997. Although IMF's financial support helped some Asian countries tide over the financial crisis, caused by outflow of dollars and declining foreign reserves in those countries, they continue to suffer from recession with sharp increase of unemployment and credit crunch.
Needless to say, the economic relationships between Japan and the Asian countries are active and close. At present, Japan's trade with the Asian region, both export and import, accounts for 36 percent of its all trading partners by region, exceeding 30 percent of that with North America. And the outstanding value of Japan's direct investment in Asia is around U.S. $80 billion, which accounts for 31 percent of Japan's overall direct investment in foreign countries.
Thus, overcoming the current severe conditions and helping Asia to revitalize its economy will also be an essential element to realize Japan's economic recovery.
To pursue Asia's economic revitalization, I believe that following steps must be taken.
Firstly, Japan has to promote its economic recovery through steady implementation of a series of economic measures, which have been hammered out since last year, and through expansion of its domestic demand.
Secondly, the Japanese companies located in the region should contribute to the regional economic revitalization and development by continuing their business operations, keeping their employees and increasing their investment in those countries. In addition, it is strongly desired that a financial support scheme, announced earlier by Finance Minister Kiichi Miyazawa, to spur economic and business activities in the Asian region, be implemented expeditiously.
Thirdly, a new international framework to stabilize the currency markets must be created. It has been considered that the inflow and outflow of international speculative money in huge amount, mainly driven by hedge funds, had caused fluctuation and plunge of Asian currencies and stock prices. These factors are also believed to be the main cause of the economic crisis.
Such excessive movement of speculative funds, which appears to be far from the economic fundamentals of respective countries, has been adversely affecting the regional economy as well as the world economy. So, now is the time to establish an international scheme to closely monitor the flow of capital and to regulate loans to speculative investors.
It is also necessary for Japan to contribute to steady growth of Asia's regional economy by promoting the Japanese yen to be used more widely as an international key currency.
Finally, what is also required is the efforts by respective Asian countries themselves to jump-start their economy. In addition to their current measures for economic recovery and restructuring, it is very significant that they should attach great importance to labor-oriented industries, which create more jobs, and to reinforce these industries based on accumulated industrial assets in those countries.
Through those efforts, it would be Japan's international responsibility to respond to the expectation of the other countries in the region by exercising its leadership both politically and economically, for Asia's further development and prosperity.