Views Expressed at Meetings of Special Task Force
on Asian Currency and Financial Crisis

(Reference for Keidanren Position Paper
"Towards Economic Recovery in Asia")

July 21, 1998

(Japan Federation of Economic Organizations)

In response to the Asian economic crisis, the Special Task Force on the Asian Currency and Financial Crisis was established under Keidanren's Committee on Asia and Oceania on February 25 this year. The Special Task Force has since conducted a series of intensive discussion, including hearings with foreign leaders and representatives of Japanese corporations. In the process, the participants presented a multitude of opinions and requests directed to major players on Asia's economic scene. This report is an attempt to sort out these views and suggestions on the basis of respective parties to which they are addressed. Not all of the many issues covered here were received with a consensus of opinion among Keidanren member corporations as a whole. This report, nevertheless, is meant to serve as references for the Keidanren position paper "Towards Economic Recovery in Asia."

I. Common Proposals across the Asian Countries

  1. Proposals to Japanese government

    1. Expand domestic demand through economic recovery.
    2. Expand trade insurance coverage, and apply it more flexibly.
    3. Encourage overseas Japanese affiliates to take advantage of investment financing and two-step loans from Export-Import Bank of Japan.
    4. Improve market access in Japan (through deregulation, streamlining of quarantine procedures, improvement of the tax system, etc.).
    5. Assist development of supporting industries.
    6. Support development of human resources
    7. Share financial expertise.
    8. Coordinate ODA and economic cooperation by private sector.
    9. Support the less advantaged members of society.
    10. Strengthen public relations to exercise more leadership.
    11. Establish an information gathering system.
    12. Internationalize the yen.
    13. Cooperate in resolving private-sector debt.
    14. Restructure and improve government.

  2. Proposals to governments of Asian nations

    1. Push firmly ahead with economic reforms.
    2. Liberalize and facilitate trade and investment.
    3. Establish risk management system.
    4. Reform must be accompanied by strict enforcement of new rules and institutions.
    5. Avoid frequent changes in laws and regulations.
    6. Carry on with infrastructure development.
    7. Cooperate in resolving private-sector debt.
    8. Prepare better economic statistics.
    9. Strengthen the network among the members of ASEAN.
    10. Human resource development
    11. Plan legislation to restore market confidence and to prevent capital flight.
    12. Pass bankruptcy legislation.
    13. Develop a securities market.
    14. Take serious measures to resolve private-sector debt problem.
    15. Pass legislation requiring full financial disclosure by private companies.

  3. Respond by Japanese corporations

    1. Increase imports of raw and semi-finished materials, foodstuffs, and parts.
    2. Maintain operations well integrated in host countries.
    3. Rollover private-sector debt.
    4. Cooperate in of supporting industry development.
    5. Promote use of the yen in international transactions
    6. Assistance for human resource development
    7. Increase local procurement rate
    8. Research on Asian industrial structure
    9. Effort by Japanese affiliates to expand exports
    10. Maintain and increase investments from a long-term perspective
    11. Promote assistance for technology transfer
    12. Maintain and increase local employment
    13. Contribute to local community

  4. Proposals to private-sector firms in Asian countries

    1. Take good-faith measures to restore confidence.
    2. Build a system of corporate governance.
    3. Establish sound labor-management relations.
    4. Disclosure
    5. Inculcate a spirit of obedience to the law.

  5. Proposals to international organizations

    1. Examine the way the IMF provides assistance.
    2. The World Bank and other institutions should work to create demand.
    3. Build system to study preventive measures against recurrence of currency crisis and reform of financial sector.
    4. Discuss rules for international capital flows.

  6. Proposals to the governments of developed nations

    1. Act in coordination with Asian currency authorities to intervene in Asian financial markets.
    2. Adjust pace of liberalization of financial and capital systems.
    3. Support the creation of a system for financial and capital transactions.

  7. Proposals regarding multilateral cooperation between governments of Asia and those of developed nations

    1. Support establishment of a stable international currency system.
    2. Investigate a system of international cooperation for the stabilization of capital flows.

II. Proposals regarding Indonesia

  1. Proposals to Japanese government

    1. Provide financial aid to stabilize currencies as soon as possible.
    2. Help to relieve social unrest.
    3. Maintain and increase food supplies.

  2. Proposals to Indonesian governments

    1. Implement economic reforms.
    2. Take measures to establish a stable currency system.
    3. Relax and/or eliminate restrictions preventing foreign firms from acting as importers.
    4. Relax and/or lift restrictions against foreign participation in the distribution and retail sectors.
    5. Formulate foreign exchange control laws.
    6. Simplify and streamline tariff exemption procedures.
    7. Relax regulations that restrict Japan's ability to dispatch technical specialists to Indonesia.
    8. Avoid tariff hikes.

III. Proposals regarding Thailand

  1. Proposals to Japanese government

    1. Improve market access.

  2. Proposals to Thai governments

    1. Relax restrictions under Alien Business Law NEC281 (Thailand)
    2. Train certified public accountants and lawyers.
    3. Study adoption of international standards.
    4. Avoid tariff hikes.
    5. Improve the performance of rating agencies.
    6. Strengthen the enforcement of new systems and laws, and enhance the authority of the financial regulatory agencies upon which this implementation depends.
    7. Relax and/or eliminate restrictions on land ownership.

  3. Proposals to international organizations

    1. Change the type of support provided by the World Bank to Thai financial institutions.

IV. Proposals regarding Republic of Korea

  1. Proposals to Japanese government

    1. Support development of small- and medium-sized enterprises
    2. Strengthen cooperation between financial authorities of the two countries.

  2. Proposals to Korean government

    1. Change the policy of import diversification.
    2. Firmly enforce amended Labor Standards Law(which include Mass Layoff Act).

V. Proposals regarding Malaysia

  1. Proposals to Malaysian government

    1. Relax foreign exchange restrictions.
    2. Relax restrictions on entry of foreign laborers.
    3. Bumiputra policies (which accord special privileges to ethnic Malays) should be relaxed or eliminated

VI. Proposals regarding China

  1. Proposals to Chinese government

    1. Avoid devaluation of the Renminbi(RMB).

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