dollar-linked currencies in Asia, especially the baht, won, ringgit, rupiah, and peso. The misalignment has generated a dependency on dollar borrowings by private companies in Asia. The Asian banks have been also very eager to participate in intentional lending of the dollar even though they lack a dollar base. Dominance of the dollar in regional trade and investment transactions in Asia adds to demand for dollars at a time when investment dollars were flowing back to the U.S. Finally, the Asian currency links to the dollar have been destroyed by currency collapses today.
To sum up, what Asia needs today is not a restoration of the old order. Asian countries will have to seek stability against baskets rather than against a single currency of the dollar, or the so-called all-mighty dollar. Asian currencies must diversify their baskets and broaden the bases of their own reserve assets in the future. Asian companies must learn how to use other major currencies, besides the dollar, namely the yen and the new EURO, in their future trade settlements.
Equally important, Japan and the European Union must respond to their new responsibility or obligations, as their currency roles increase in the future. They must help to prevent global liquidity floods and droughts and eventually promote stable economic growth in Asia.
｡?HARA
I wish to add one point to Dr. Pakkasem's speech. Actually, I am now having a little discussion at the Foreign Exchange Council and there were strong reactions that the IMF's prescription for Asia was wrong after all. Going right to the point the Asian crisis was not caused by the budget deficit.
Latin America suffered a budget deficit. We are wondering that somehow, it seems that the wrong prescription was made.
I hope we can get to discuss this matter afterwards.
Now, I would like to introduce our second speaker, Dr. Yamano. As Dr. Pakkasem has given us a speech focused on currency, I think that Dr. Yamano will be giving us his remarks as from the viewpoint of the production-site.
｡?Masaru YAMANO
Former Executive Director of Kansai Association of Corporate Executives, Vice Chairman and Executive Officer of Sanyo Electric Co., Ltd.
Yesterday, Prof. Yamazaki gave us an extremely clear statement. First, he pointed out the two flows, the financial economy and the manufacturing economy. As Prof. Hara just said, I would like to explain the present and future of the Asian economy from the view point of the manufacturing site, or may I say manufacturing company. The Japanese title for today's topic used the word ,"East Asia" and I find that the presence of especially China and India will become very important in the future. It is a pity that we have no representative of China today.
I hope you will permit my explaining a little about the overseas situation of Sanyo Electric as I have mentioned previously. This is because Sanyo Electric is one of the typical Japanese companies which has actively set up plants overseas and would be a good example. Others in the manufacturing industry such as the auto industry has also made a very eager approach overseas, but as our position is slightly different I will refrain from speaking of this at he moment. Dr. Pakkasem has spoken to us about globalization focusing on financial matters. I also hope to talk about it, but when I do, please understand that it is the financial flow from a point of view of the manufacturing industry.
I have brought along a few overhead sheets. With your permission, I would like to darken the lights of the hall. In order to know how a Japanese company makes an overseas development, it is very important to understand the historical background. I would like to take my company as an example.
First, as shown in the company name, we have positively advanced overseas and we do have our reasons. First in 1961, we started producing transistor radios in Hong Kong. Now, we have 77 manufacturing bases and 37 selling bases overseas. We have established manufacturing plants and selling bases in almost every country in the world of which 72% are in Asia, and we presently have 30,900 employees. I would like to mention just for reference, that our consolidated sales of the end of March 1997, a rate of 120 yen against the dollar, reached 14.45971 billion dollars, of which the proportion of overseas sales was approximately 44%. What is more, approximately 44% of this overseas sales was from mainly Asia. I think there would be no problem to take our case as an example of a typical Japanese electronics industry firm. In the beginning. I would like to consider as a short-term issue, globalization and an alliance of regional economies into blocs from a position of the manufacturing industry,
As I have mentioned, the electronics industry made an extremely early advance into foreign markets after the war.
Standing next to the textile industry, I believe we have laid a foundation for the Japanese trade development. After a short
