Japan Offers $22 Billion Trade Aid, Warns Against Protectionism

Bloomberg, Toko Sekiguchi

April 1 (Bloomberg) -- Japan’s Prime Minister Taro Aso pledged $22 billion in trade assistance before tomorrow’s summit of leaders from the Group of 20 nations.

In a meeting with Indonesian President Bambang Yudhoyono, Aso in addition said the government in Tokyo will also give $20 billion in overseas aid to developing countries in Asia.

U.K. Prime Minister Gordon Brown, who is hosting the talks in London, wants world leaders to agree a $100 billion package to make up for credit lines lost during the turmoil in financial markets. Trade loans finance 90 percent of deliveries worldwide.

“We must send a strong message against protectionism,” Aso said, according to a Japanese government official who was at the meeting. “A recovery in Asian economies is key.”

Southeast Asian exports, which grew 14.7 percent last year, may shrink 10.3 this year, according to a report by the Asian Development Bank. Indonesia has the largest Southeast Asian economy. It’s the only G-20 nation in the 10-member Association of Southeast Asian Nations.

Japan in February pledged to guarantee $1.5 billion of Indonesian yen-dominated bonds, called samurai bonds. Yesterday, the government announced that it will provide a 71 billion-yen ($718 million) loan for Indonesia’s infrastructure projects. Indonesia is the largest recipient of Japan’s overseas aid.

Earlier today, Aso met with South Korean President Lee Myung-bak and won support for Japan’s plans to deploy a system capable of shooting down missiles launched from North Korea. Japan may test the system in early April.

“Japan may take any necessary measures to protect its people,” the Japanese government official quoted Lee as saying at the meeting.

Aso will speak with Brown and Italian President Silvio Berlusconi and before the G-20 meeting tomorrow.

To contact the reporter on this story: Toko Sekiguchi in Tokyo at Tsekiguchi3@bloomberg.net.