On-the-Record Briefing 17 November 1998

Speaker : Mr. Sadaaki Numata
Title : Spokesperson for Prime Minister Keizo Obuchi
Status : ON THE RECORD
Date : 17 November 1998
Time : 19:48 to 20:27
Location : Cinta Alam #11/12, Level 3M, Mines IMC Kuala Lumpur, Malaysia
Attendants : Approximately 30
  1. Introduction of the Spokesperson
  2. Response of the United States of America to the announcement of the Emergency Economic Package
  3. Response of Japan to the speech of Vice President Al Gore of the United States of America
  4. Size of Emergency Economic Package
  5. Relation between the Japan-U.S. Joint Initiative and the Miyazawa Initiative
  6. Discussions concerning Early Voluntary Sectoral Liberalization (EVSL)
  7. Size of the Japan-U.S. Joint Initiative
  8. Content of the Economic Leaders Declaration
  9. Function of the Miyazawa Initiative

  1. Introduction of the Spokesperson

    Mr. Sadaaki Numata, Spokesperson for Prime Minister Keizo Obuchi: Good evening, ladies and gentlemen. Sorry to have kept you waiting. This is an on-the-record briefing and my name is Sadaaki Numata, Spokesman for the Japanese Delegation. This is an on-the-record briefing on the series of meetings that Prime Minister Keizo Obuchi has had in the course of the day. The meetings are quite numerous. He met the Prime Ministers of the Kingdom of Thailand, Malaysia, Australia and Canada in the course of the morning In the afternoon, he met President Alberto Fujimori of the Republic of Peru, President Joseph Estrada of the Republic of the Philippines and President Baharuddin Jusuf Habibie of the Republic of the Indonesia. Now if I am to give you a sort of a blow-by-blow account of all these meetings, I may be sitting here all night, which is obviously a pain that I am quite loath to inflict on you. So I will try to summarize the main points of these bilaterals with respect to the main issues discussed. Prime Minister Obuchi did make a presentation in the meeting with the APEC Business Advisory Committee (ABAC). I will dwell at some length on that because in his presentation he outlined some of the basic positions of Japan with respect to some of the main issues which this APEC Meeting is taking up.

    Firstly, a sort of summary rendition of the main points of the bilaterals. With all these leaders of seven countries, roughly speaking, there were four or five topics that were discussed through these meetings. One is the Emergency Economic Package that the Government of Japan announced yesterday. The second is the whole question of Japan's support or assistance to Asian countries which have been suffering from the economic and financial turmoil over the past year. And the third which relates to the Miyazawa Initiative, is the Joint Japan-U.S. Initiative which was announced yesterday. Those are the three main issues which run through the bilaterals and in some of the meetings, the question of liberalization and also the question of capital flows, especially short-term capital flows, was discussed. About the Emergency Economic Package, Prime Minister Obuchi explained to his counterparts the Emergency Economic Package which was announced yesterday, and I believe you have the main points of the package in the handouts, so I will spare you the details. However, it is an unprecedentedly substantial package in the sense that it amounts to 23.9 trillion yen if you add up the public spending part of it and the tax reduction part of it. This is designed to place the Japanese economy solidly back on the track to recovery and as you can see in the handout, we see the next year, FY1999, as a year for achieving positive growth and solidifying the foundation for recovery. We hope to place the Japanese economy firmly on the track to recovery within about two years, that is by FY2000. This, Prime Minister Obuchi explained to his counterparts, follows in the wake of the legislation or rather pieces of legislation, that were passed by the Diet concerning the revitalization of the financial system and also the strengthening of the financial system. That is a set of laws to make sure that the cloud that has been hanging over our economy, that is the question of non-performing debts or bad debts, will be resolved. And that is with respect to that legislation with respect to both the banks that have failed and also with respect to the banks that are weak, but still viable. This package we have decided on and announced with the recognition that it is not only in Japan's own interest for the Japanese economy to recover, but it would also be in the interest of our Asian partners.

    Now, to this there were positive responses from the Leaders that Prime Minister Obuchi met today. For example, Prime Minister Chuan Leekpai of Thailand expressed his respect for the leadership taken by Prime Minister Obuchi with respect to this Emergency Economic Package. Prime Minister John Howard of Australia expressed his high appreciation for this package. Prime Minister Jean Chretien of Canada, while expressing his appreciation, voiced his hope for the Japanese economy to go back to positive growth as quickly as possible. In his conversation with President Habibie, Prime Minister Obuchi said that it is his, Prime Minister Obuchi's, firm intention to revitalize the Japanese economy or to revive Japan, and in so saying, he also expressed the hope the Indonesia on its part will be able to achieve its own economic recovery and will be able to achieve further economic development.

    The Miyazawa Initiative of US$30 billion has been talked about in Kuala Lumpur in the past couple of days. This comes on top of the US$44 billion of support that Japan has provided in various ways to the countries that have been effected by the Asian economic and financial turmoil, including the support provided within the framework of agreements with the International Monetary Fund (IMF) by the Asian countries concerned. So there was US$44 billion worth of support to countries like Thailand, Indonesia and the Republic of Korea. Then we have this Miyazawa Initiative of some US$30 billion, comprising US$15 billion for short-term financing and another US$15 billion for medium- to long-term financing. The idea is to help these Asian economies' performance in terms of their real economies on the basis of the recognition that the foreign exchange and currency situation has somewhat stabilized but they are still having quite a lot of problems in terms of their real economies. There is a need to help facilitate the flow of funds to these countries.

    We are in the process of working out the details of how this Miyazawa Initiative is to be implemented, and in so doing we are sending fact finding missions to the countries concerned to identify the needs on the part of each country and thereby to determine how best these funds can be used. Our missions have been sent to Thailand and Indonesia. Prime Minister Chuan Leekpai expressed his appreciation for Japan's help in this regard, both with respect to the US$44 billion package and also with respect to the Miyazawa Initiative. The same sort of appreciation was voiced by President Estrada, and he was referring to both the Miyazawa Initiative and the Japan-U.S. Joint Initiative. A part of the motivation for the Japan-U.S. Joint Initiative, I think, has its roots in the Miyazawa Initiative in the sense that it is based on similar ideas as those contained in the Miyazawa Initiative.

    President Habibie also expressed his appreciation for the help that has been extended by Japan and in the case of Indonesia, given the very serious difficulties which they have been faced with, and especially earlier in the year, we have provided substantial support in terms of 400,000 tons of additional rice aid as well as sector program loans to help the plight of the socially disadvantaged and socially weak in that country. President Habibie expressed his appreciation for the heart-warming support extended by Japan to Indonesia and he said that he felt that Japan was really like a member of the same family. I think in Bahasa Indonesia it would come out as keluarga besar, if my use of that language is correct. President Habibie also expressed his appreciation for the Miyazawa Initiative as well as the Japan-U.S. Joint Initiative announced yesterday. Those are the main points.

    I would also add that Prime Minister Howard expressed Australia's interest in the liberalization aspect of APEC and in the question of short-term capital flows. The same topic, that is, the concern about short-term capital flows, was also addressed by Prime Minister Mahathir Mohamed of Malaysia. He was expressing concern about these capital movements sometimes giving rise to social and political instability in those emerging markets. Prime Minister Obuchi on his part said that he did share this concern about this particular problem and he talked about the desirability of greater transparency and disclosure with respect to short-term capital movements. Now there were of course other bilateral issues discussed with each of these leaders, but I think I will leave those to questions. If you are interested in the purely bilateral aspects of the discussions, please feel free to ask.

    To move on to the multilateral part of Prime Minister Obuchi's activity today, he did speak at the meeting with the Business Advisory Committee. When the group discussed the recommendations put forward by the APEC Business Advisory Council (ABAC), Prime Minister Obuchi addressed such questions as the role of the private sector or businesses in general and the question of the monetary and financial crisis in Asia. In that context, he also talked about Japan's economic policies.

    Let me give you the salient points of his presentation. Prime Minister Obuchi pointed out that the positive involvement of the private sector is indispensable for the growth and prosperity of the Asia-Pacific region and in the effort to put the Asian economies back on the track to growth and recovery, the role of private business is becoming even more important. And it is that context that Prime Minister Obuchi felt that we need to thoroughly examine and consider the recommendations put forward by ABAC and to translate them into concrete policies as much as possible. With respect to the monetary and financial crisis, Prime Minister Obuchi referred to the need to look at the whole system of the IMF and World Bank and to strengthen or improve our responses to very large-scale and rapid capital movements and thereby to strengthen the international financial system as a whole. This he described as a matter of urgency. Prime Minister Obuchi also referred to that portion of the ABAC recommendations where they talked about the emphasis on the IMF to broaden its approaches to include the social implications of its program. This is a point which Japan has been advocating for quite some time, that is the need to consider the social implications of IMF arrangements and Prime Minister Obuchi said that this point needs to be followed up fully. The ABAC recommendations also talk about enhancing domestic capital market infrastructure, the need for restructuring and so forth. Prime Minister Obuchi said those are the points that Japan itself and the Prime Minister himself has been considering. The recommendations that ABAC made with respect to these issues are quite appropriate and timely. It is with these considerations in mind, that he came to this Joint Initiative with the United States which he announced, together with President William Jefferson Clinton of the United States of America, yesterday.

    The ABAC recommendations also talk about the need to create mechanisms for further provision of credit. That is an idea reflected in the Miyazawa Initiative of US$30 billion. He said that it is Japan's intention to identify the needs of each of the countries concerned so as to put this Initiative into implementation as quickly as possible.

    He also mentioned that in the Emergency Economic Package that was announced yesterday, for which we are seeking budgetary appropriation, there is a provision of one trillion yen specifically designed to help the Asian countries tide over their current difficulties. Then Prime Minister Obuchi addressed the question of the need to strengthen the domestic economic basis of each country amidst this tide of globalization and to that end, it is important to go forward with the restructuring of the financial and business sectors of each country and to promote a stable flow of funds in the private sector. Prime Minister Obuchi further stated that Japan is fully aware that Japan's economic recovery is important for the economic recovery of the APEC region as a whole and it is from that viewpoint that in April this year we decided on a comprehensive package of economic measures amounting in terms of the value of projects, to 16 trillion yen. And then we have been tackling this task of revitalizing the financial system in our country and I have talked about the legislations concerned earlier.

    Then follows the package announced yesterday which in terms of value of projects in terms of public spending would exceed 17 trillion yen and if you add tax cuts on a permanent basis of more than 6 trillion yen, the Prime Minister said it would far exceed 20 trillion yen. Perhaps he was being modest because my calculation shows that it comes out to 23.9 trillion yen. This is the first step along the path to putting the Japanese economy solidly back on the track to recovery within about two years and we are making every endeavor in the first instance to achieve positive growth next year. In that process, we will continue to provide our support to our Asian neighbors.

    In concluding, Prime Minister Obuchi stated that he looked forward to hosting the ABAC Plenary Meeting in Tokyo in May next year and he also said that APEC has been able to evolve and develop as it has done over the past ten years (this is the tenth year since its inception) because it has strengthened the spirit of community and has engaged in a series of concerted voluntary actions. As we are faced with the current difficulties, Prime Minister Obuchi said it is important for us to reaffirm this spirit of community which has guided APEC.

    Perhaps I should not spend too much time giving my initial presentation. So I will stop here and I will be happy to respond to any questions. Please state your name and affiliation before you ask your question.

  2. Response of the United States of America to the announcement of the Emergency Economic Package

    Q: Your package and your promise to get back on track within two years do not seem to have satisfied Vice President Gore. Would you like to comment on what he said?

    Mr. Sadaaki Numata, Spokesperson for Prime Minister Keizo Obuchi: I have not really heard his expression of dissatisfaction or lack of satisfaction. I think there has been this expectation on the part of the United States for the Japanese economy to be put back on the track to recovery and that has been the case for quite some time. The set of measures that we have been taking, not simply the package announced yesterday, but also the real and pending issue of the revitalization of our financial system, that we have been tackling in all earnestness. I do feel that even from the American point of view, these are steps in the needed and right direction. I expect that we will have further opportunity to talk about this with President Clinton who is scheduled to be in Tokyo later this week

  3. Response of Japan to the speech of Vice President Al Gore of the United States of America

    Q: What was Prime Minister Obuchi's reaction to Vice President Al Gore's speech last night? He made remarks in support of the reformasi movement in Malaysia.

    Mr. Sadaaki Numata, Spokesperson for Prime Minister Keizo Obuchi: Our response to that is that we do hope that there will not be a sort of excessive heightening of the exchanges of rhetoric to the detriment of the relationship between the countries concerned and perhaps in this particular context of the APEC Meeting, to the detriment of the APEC Meeting itself in the sense that we would not really like to see attention being distracted because there is this real and urgent task for APEC to address, the very serious economic and financial difficulties that we have been talking about. Having said that, each country chooses its own way of making its interests or concern about the situation in another country known to the country concerned. We on our part have not taken the approach of expressing our concern very loudly through megaphones, but we do have an interest in the situation in Malaysia and we take the opportunities available in terms of bilateral exchanges to convey our interest or concern. That has been the case with Prime Minister Obuchi and Prime Minister Mahathir as well.

  4. Size of Emergency Economic Package

    Q: I noticed that one trillion out of the 17 trillion is earmarked for international revitalization or revitalization by international measures. As worthy as this is, is this figure, less that 10%, is it sufficient in your view --

    Mr. Sadaaki Numata, Spokesperson for Prime Minister Keizo Obuchi: Less than 10% of what?

    Q: Of the overall package. One trillion out of 17 trillion is -- Is there anything in this package that will allow greater participation in the Japanese economy by foreign companies and foreign interests? Is it opening up the economy internationally as well as stimulating domestic -

    Mr. Sadaaki Numata, Spokesperson for Prime Minister Keizo Obuchi: It is a question of at which pace we are trying to implement our priorities. Of course, the restructuring of our economy, deregulation and so forth is one of our important priorities but at the same time, the most urgent task for us is to stimulate domestic demand to put our economy back on the track to recovery. That is the main purpose of this Economic Emergency Package, so in that sense the money that is going to be spent is going to be primarily directed to our domestic economy. Given that background, I respectfully may disagree with the implication of your question that 1 out of 17 is too little.

    Q: Is Japan going to come out with a qualitatively different economy at the end of this stimulation or is it simply a stimulation and not a deregulation or an opening --

    Mr. Sadaaki Numata, Spokesperson for Prime Minister Keizo Obuchi: Budgetary measures are not necessarily the best means for pushing forward deregulation but this Emergency Economic Package also has some long-term elements about enriching the life of the Japanese people and encouraging housing and so forth. One of the very important points of this package is the creation of about 1 million jobs. There is also a great deal of emphasis on the social infrastructure, not just in traditional areas but in new areas like telecommunications, science and technology, environment-related industries, welfare, medical care, education and the more efficient transport services, the strengthening of industrial competitiveness and so forth. So in a way the sort of points that you mentioned are reflected in the package as well.

    Q: You call the Emergency Package an unprecedented and substantial package. Is it Japan's last word, so to speak? Are you confident that it is going to be enough?

    Mr. Sadaaki Numata, Spokesperson for Prime Minister Keizo Obuchi: We certainly would like to think so, yes. We have to make a maximum effort to stimulate our economy and to that end, we have put on hold the legislation that we have had, that is the reform of the fiscal system legislation which would have prevented us from engaging in such a large-scale public spending. Although the reform of the fiscal system, that is, the need to reduce deficit financing, is a very important objective, we have decided that we have to put it on hold for us to be able to further stimulate the domestic economy. So the combination of the measures, that is the clearing the bad debts in the banking sector and the stimulation of the domestic economy, we certainly hope will put us back on the track to recovery.

  5. Relation between the Japan-U.S. Joint Initiative and the Miyazawa Initiative

    Q: Do the Japan-U.S. Joint Initiative and the Miyazawa Initiative overlap each other?

    Mr. Sadaaki Numata, Spokesperson for Prime Minister Keizo Obuchi: The Miyazawa Initiative preceded the Japan-U.S. Joint Initiative but the ideas contained in these two initiatives are very similar. In a sense, the Japan-U.S. Joint Initiative is a natural extension of the sort of ideas contained in the Miyazawa Initiative. However, the difference is that the Miyazawa Initiative was conceived of as a bilateral set of measures between Japan and the countries concerned, whereas the Japan-U.S. Joint Initiative, although based on a similar idea, is designed to multilateralize a similar process.

  6. Discussions concerning Early Voluntary Sectoral Liberalization (EVSL)

    Q: In the course of discussions today, was the question of EVSL raised and Japan's role in EVSL?

    Mr. Sadaaki Numata, Spokesperson for Prime Minister Keizo Obuchi: It was raised but not very much. I think Prime Minister Mahathir said that an accommodation had been reached on the question of the Early Voluntary Sectoral Liberalization (EVSL.) Prime Minister Howard, when he talked about the importance of liberalization as one of the priority items of APEC, I am not quite sure whether he referred to EVSL as such, he may have had something like that on his mind. I have the impression that EVSL, on which the Ministers agreed on a formulation at the end of the Ministerial Meeting, was not a sort of hot, burning issue today any longer.

  7. Size of the Japan-U.S. Joint Initiative

    Q: There has been criticism that the Japan-U.S. Joint Initiative of US$10 billion is not very large in comparison to the amount of debt that these countries have.

    Mr. Sadaaki Numata, Spokesperson for Prime Minister Keizo Obuchi: I think it is in the eyes of the beholder and this particular beholder, that is me, does not think that it is insufficient, because from our point of view we see it in the context of the US$44 billion of support that we have provided to our Asian partners and the Miyazawa Initiative of US$30 billion, and this Japan-U.S. Joint Initiative comes on top of that. For us to be still accused of not doing enough I think may be somewhat lacking in balance. Sorry if I sound emotional, but I think I would be justified in saying that. As far as what people may think about the American contribution to that, well that may be a different question, but the important thing is that the U.S. is on board on this Initiative.

    Q: Could America offer more?

    Mr. Sadaaki Numata, Spokesperson for Prime Minister Keizo Obuchi: The initiative is a multilateral one. So any interested country is invited to join. It would be, I think we could say, the more the merrier.

    Q: Since you announced this initiative, since you say it is multilateral, have you had any expressions of interest by countries in joining in and there are some countries in Asia which have big reserves which could contribute. Any of the players here?

    Mr. Sadaaki Numata, Spokesperson for Prime Minister Keizo Obuchi: I think the people concerned may be busy running around the corridors, but I do not think I am in a position to be able to report what has transpired in the course of the last 22 hours.

    Q: Can I assume the players have been communicated with about participating?

    Mr. Sadaaki Numata, Spokesperson for Prime Minister Keizo Obuchi: We have extended the invitation for those countries that are interested, to participate. Our plan is to convene this meeting of senior officials of the countries concerned and interested sometime in the course of December. The details are to be worked out.

  8. Content of the Economic Leaders Declaration

    Q: What does Japan expect to achieve in the Leaders Declaration tomorrow?

    Mr. Sadaaki Numata, Spokesperson for Prime Minister Keizo Obuchi: I think what I said with respect to Prime Minister Obuchi's presentation to ABAC does highlight some of the points to which we attach importance. That is conveying a positive message out of this APEC Meeting about extricating the affected Asian economies out of the current difficulties, and the expression of the intention on the part of those who are able to do so, to help these countries. Also, APEC is not simply about trade liberalization. It has other aspects. It has facilitation among other things. It also has economic and technical cooperation. That is something to which we attach importance, especially in the areas of human resources development and so forth. I think there is a shared concern about strengthening the global financial system. So those may be the points that we may be interested in. However, I do have to abide very strictly by the APEC rule, which is like the Group of Seven (G7) Summit rule, which is that the briefe of each delegation is not free to talk about the state of the negotiations on the Declaration.

  9. Function of the Miyazawa Initiative

    Q: There are so many initiatives that I am confused. The one trillion yen as earmarked in the Emergency Package, is that separate from the Miyazawa and the Japan-U.S. Joint Initiative?

    Mr. Sadaaki Numata, Spokesperson for Prime Minister Keizo Obuchi: A substantial part of the 1 trillion yen will be related to the Miyazawa Initiative.

    Q: Right. Is the assistance for the subsidiaries of Japanese corporations in Asia part of that 1 trillion yen?

    Mr. Sadaaki Numata, Spokesperson for Prime Minister Keizo Obuchi: That idea is contained as well. Yes.

    Q: And how will that one work? For example, will Toyota, Honda seek loans from Japan?

    Mr. Sadaaki Numata, Spokesperson for Prime Minister Keizo Obuchi: I think all that has to be worked out.

    Q: So you have no idea yet how that is going to --

    Mr. Sadaaki Numata, Spokesperson for Prime Minister Keizo Obuchi: Well, the planners may have some ideas. Perhaps they have not briefed me yet. Have I exhausted your curiosity? It is getting late. Thank you very much.


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