[Title] Statement by Foreign Minister Keizo Obuchi on Japan and East Asia, "Outlook for the New Millennium"

His Excellency Minister for Foreign Affairs and Minister for Law, Professor Jayakumar,

Excellencies,

Distinguished Guests,

Ladies and gentlemen:

It is my great pleasure and honor to share my views with such a distinguished audience. I thank His Excellency Professor Jayakumar for the kind introduction, and the Institute of Policy Studies for giving me this opportunity. It is certainly a challenge for anyone to make a policy speech in Singapore, an intellectual capital of Asia. In winding up a three-nation tour to Thailand, Malaysia, and Singapore, I stand here filled with deep appreciation for the gracious hospitality accorded me in each country.

Geography and history have linked Japan and the rest of East Asia closely. We have developed increasingly interdependent relations in the recent years. I decided to make this trip in the hope that we can all join hands to deal successfully with the currency and financial turmoil and the difficulties that beset this region. In so doing, we will bring each other even closer, sharing aspirations for the new millennium.

During this trip, I have seen how the leaders in the region are moving boldly to deal with their difficulties. I have also witnessed the energy and vitality of the young people. As a result, I have come away with renewed hope and confidence in the region's future.

I first visited Asian countries thirty-five years ago. I was then an ambitious youth in my twenties. In January 1963, I embarked on a world tour that started in Thailand and the next ten months took me to much of the rest of Asia, the Middle East, Africa, Europe, and the Americas. Having lots of energy and not money, I washed dishes, helped at an aikido dojo, and did whatever other odd jobs that would keep me on the road and let me see the world.

In my travels, I was most impressed at the way people were courageously pursuing their dreams despite suffering from war, poverty and illness, and I was made very much aware of the need for peoples to join hands across borders to create a more secure and more comfortable world. Taking inspiration from this experience, I returned to Japan and ventured into politics. For more than three decades, I have done what I can to build a better future for the people of Japan, Asia, and all the world.

Today, I would like to outline how Japan, an Asian country, is addressing the current East Asian economic difficulties and to explain how I see relations between Japan and other East Asian nations developing toward the new century.

Ladies and gentlemen:

In recent years, East Asia has achieved remarkable economic development as a center of global growth. Yet, starting in the latter half of last year, many East Asian economies plunged into serious difficulties, triggered by currency turmoil. In the age of global interdependence, this has overshadowed not only this region but also the world economy. With the help from the international community, the efforts are under way to effect a fundamental structural reform of the economies in difficulty. There still remain, however, numerous issues that need to be addressed in restoring these economies to health. There are concerns that the vulnerable segments of the population could be hit severely by the economic difficulties.

Japan is no exception in having economic difficulty and is in need of reform. The Japanese economy has still not been able to overcome the aftereffects of the collapse of the bubble economy and is in a state of severe stagnation. Thus in addition to the Comprehensive Economic Measures adopted recently to break out of this stagnation, we have renewed our resolve to move forward the structural reform in all areas of our social and economic systems. It will not be easy, but we must never forget that East Asia can regain its position as a center for global growth only by thorough self-reform, enduring the pain together.

In overcoming the current economic difficulties, there are five key elements. I like to call them Obuchi's version of the essential Five C's.

The first of these is "courage" in pursuing reform. We must have the courage to carry through the necessary reforms to regain market's confidence no matter how painful they may be.

The second element is "creativity." Each of our situations is different and each of these situations demands a different remedy. Such remedy needs to be prescribed through creativity with a view to achieving the transparency and accountability that meet the international requirements.

The third is "compassion." It is essential that in formulating our policy we take into consideration its implications on the lives of the poor, the elderly, and other vulnerable segments of population.

The fourth is "cooperation." In view of the nature of the current crisis, we should cooperate closely both at regional and global levels.

The fifth is "confidence" in the future. This crisis may well be a blessing in disguise. If the East Asian economies can radically rectify the distortions that have crept in with rapid growth, we can launch a new round of dramatic development, reflective of our basically strong fundamentals.

Let us look not at the dark clouds but rather at the silver linings, and let us boldly go forward together.

Ladies and gentlemen:

As the largest economy in Asia, Japan feels a responsibility, despite its own very difficult situation, to do everything it can to help its East Asian friends through this time of economic trial. To date, we have contributed, both in international efforts led by IMF and in bilateral programs, a total of about 37 billion dollars -a sum that far exceeds the assistance from any extra-regional country. We will continue to exercise the leadership to support the East Asian countries in cooperation with the international community. We also intend to tailor our efforts to address the needs of the region's less developed countries hit by the economic difficulties.

Of course, Japan fully recognizes how important its own economic recovery is to restoring stability to the East Asian economies. The Comprehensive Economic Measures announced on April 24 are worth an unprecedented 16 trillion yen or about 120 billion dollars. Massive tax cuts and social infrastructure investment are expected to put the Japanese economy back on the path of self-sustained and domestic-demand-led growth.

These economic measures also include an additional 700 billion yen or about 5.4 billion dollars in support for the Asian economies. Among them are Export-Import Bank financing to facilitate trade financing, ODA loans to support economic reform, technical assistance for human resources development, and assistance in food and medical supplies to Indonesia and elsewhere. Furthermore, we are also studying a fresh contribution of about 20 million dollars to the ASEAN Foundation, which was established last December in commemoration of ASEAN's 30th anniversary. This contribution, which I would like to call the "Solidarity Fund" with ASEAN, is intended to promote its development strategy for developing human resources and alleviating poverty, as well as identifying regional projects.

Ladies and gentlemen:

As I indicated before, economic crisis has its heaviest impact on the poor, the aged, the disabled, women and children, and other socially vulnerable segments of the population. Health and employment being basic "human security" concerns, Japan has long made social development a major priority in its Official Development Assistance, and we intend to further enhance our cooperation in this area.

In fact, we hosted the symposium entitled "Health Initiative in Asian Economic Crisis: A Human-centered Approach," held in Tokyo on April 27 as part of this effort. It produced a number of valuable policy guidelines, including -the need to implement integrated policies, -an emphasis on the system of managing the pertinent health data, and -the need for donor countries, international organizations, and NGOs to cooperate.

Likewise, the ESCAP annual session held last month in Bangkok adopted a Japan-proposed resolution to further promote "the Asian Pacific Decade of Disabled Persons" in its second half starting this year. Determined to step up its economic cooperation in support of the disabled, Japan intends to dispatch a project-finding team to Asian countries this year.

The forest fires and the haze problem that are raging in this region aggravated by El Nino, are another cause of concern, as they have an adverse impact on the health and lives of a vast number of people and the ecological system in the region. In order to establish new systems of fire risk management and anti-smoke measures, I am proposing a seminar of experts from the countries concerned as well as the relevant international organizations so that we can better draw on abundant experience and knowledge. Also in this vein, I would like to encourage the International Tropical Timber Organization to dispatch missions on fire-management.

Ladies and gentlemen:

Even as we work to deal with the immediate economic difficulties, we should not lose sight of the long-term outlook. I believe we have a responsibility to look into the past and learn from history, working together to make the twenty-first century a "century of peace and prosperity." Let me elaborate on how we might achieve this through forging new partnerships among countries of East Asia.

First, to achieve "peace." Even after the Cold War, several factors of instability persist in this region. For the regional peace and stability it is important to ensure continued U.S. presence in this region through Japan-U.S. security arrangements, as well as to promote confidence-building through such process as the ASEAN Regional Forum (ARF). It is also important that cooperative relations and mutual trust be enhanced between China and other countries of the region. We do appreciate the positive role that ASEAN is playing for regional stability. Japan intends to continue to play an active role, in cooperation with the Asia-Pacific countries including Australia and New Zealand, to lay the foundations for peace through promoting democracy and development. In Cambodia for example, we will continue to assist in the holding of a free and fair election. Emphasis we place on humanitarian demining in Cambodia and elsewhere is closely associated with such thinking. Also, we are working closely with the Republic of Korea and the United States for the peace and stability on the Korean Peninsula.

Second, to secure "prosperity." If this region is to overcome its current difficulties and to achieve dynamic economic growth in the new century, it is essential that we continue to work together for multilateral trade and investment liberalization. Japan has decided to support comprehensive liberalization negotiations under the World Trade Organization to be initiated in the year 2000. We would like to work closely with East Asian economies in this regard.

It is also important that we strengthen such open regional cooperation as APEC and ASEM and seek to complement and strengthen multilateral free-trade arrangements. ASEAN has an especially important role to play as it has been increasingly active in promoting regional economic integration such as the ASEAN Free Trade Area (AFTA).

Third, to promote "intellectual interaction." This is to mobilize diverse intellectual assets and resourcefulness of the region to respond to the challenges threatening peace and prosperity of the region. Fusion of creative ideas, facilitated by region-wide cooperation, should produce new policy initiatives for the new century.

I would like to suggest as a guiding concept an "Intellectual Dialogue on Building Asia's Tomorrow," and further propose to hold a meeting later this year in Japan to kick off this Dialogue. Singapore can play a prominent role in this endeavor.

It is also important that there be greater interaction and exchanges among our young people. I believe that the seeds sown in youth exchanges today will bear fruit in the next century. That is why Japan is putting a special priority on student exchanges and continuing to encourage Japanese students and researchers to study elsewhere in Asia. At the same time, we are providing one-time allowances for Asian students who, adversely affected by currency fluctuation, find it difficult to continue their studies in Japan. We are also providing concessional yen loans in support of each government's programs to send exchange students to Japan.

As you may recall, Prime Minister Hashimoto proposed the dispatch of the ASEAN-Japan Multinational Cultural Mission in his Singapore speech January last year. Just recently its final report was presented and it suggests that we work together to preserve our cultural traditions and define cultural exchanges for the future.

Ladies and gentlemen:

We are nearly at the dawning of a new millennium. And we share a grave responsibility to pass on to our children a century of peace and prosperity. While we engage in the difficult task of domestic reforms we should remind ourselves of our accomplishments in past decades. Courage, creativity, compassion, cooperation and confidence are what have made East Asia what it is today; and they will continue to lead us through the current difficulties and beyond. A born optimist, I am confident that better times are just around the corner.

Thank you very much for your kind attention.