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SCMP Reporter

Senior finance ministry officials from the region are to meet at an International Monetary Fund (IMF) sponsored gathering in Tokyo on Monday, when they will be asked to contribute to a rescue package for the ailing Thai economy.

 The Japanese Government, which has already put a US$5 billion Export-Import Bank loan on the table, is hoping to force other Asian governments to provide funds to keep the beleaguered nation afloat.

 A top bureaucrat at Japan's Finance Ministry, Takeshi Komura, said: 'We want as many Asian countries as possible to participate and, as host country, we promise our full support.'  Japanese newspapers reported that Hong Kong, Malaysia and China had already signalled their intention to provide support but said other countries were reluctant to participate.

 Representatives from Singapore, Indonesia, the World Bank and the Asian Development Bank were due to attend the meeting, Japanese government sources said.

 It is understood that Japan is willing to increase its participation to $7 billion.

 The IMF has already committed $4 billion.

 A group of private banks is also putting together a large syndicated loan for Thailand, according to an official at the Bank of Tokyo Mitsubishi.

 Negotiations between the Thai authorities and the IMF earlier this week revealed that the country needs about about $15 billion to keep itself afloat, indicating that regional governments could be asked to contribute about $4 billion between them, depending on the size of the syndicated loan.

 Japan is leading rescue efforts for Thailand, partly because Japanese banks bear much of the responsibility for the crisis in the first place, sources said.

 More than two-thirds of the $79 billion in Thailand's private sector debt at the end of 1996 was owed to Japanese banks.

 The banks have been aggressively flooding not only Thailand but other countries in the region with money as they have been unable to find borrowers at home.

 The excess money created the speculative property and financial bubble that lies at the root of Thailand's crisis, analysts said.

 Members of the Japanese syndicate preparing the private sector loan for the Thai Government include the Bank of Tokyo Mitsubishi, Sakura and the Industrial Bank of Japan.

 Another reason Japan is eager to come to the rescue is that many small and medium-sized Japanese companies have been forced by a strong yen to move to Thailand in the past decade.

 Many of these companies are relatively unsophisticated and have a weak capital base, according to the Ministry of International Trade and Industry.

 In addition to lending money to the Thai Government, Japan's banks are likely to be forced to forgive some of the loans made to these companies, which account for the bulk of foreign direct investment in Thailand.

PERSUASION Pressure on region's governments to contribute funds to economy bail-out Japanese banks may forgive loans to ease squeeze on firms Tokyo pressure reflecting role behind property bubble 



Arm-twisting for Thai rescue loan