two or three years, However, when I was told by a Thai friend to think over the BA market denominated in yen, I felt as if l received a counter punch. It is a good sign for both Japan and Southeast Asia that the number of yen users is increasing in Southeast Asia. However, there are a lot of funds and the interest rates are low, we can think of applying the trade credit and trade related finance which is called a refinance market, almost institutional finance system, to the yen trade finance. We can think of using a market for the refinance of trade financing denominated in yen. This might be a point that we have just looked on. The BA market denominated in yen was born about 10 years ago and died about 4 years ago and it would be necessary to diversify the role of yen as a supplying market. Conversely, there are a host of things to do for the people who regard the yen as an investment market.
We need to solve the problems one by one as soon as possible, including the taxation at the source as one of the taxation system, and guarantee the both in- and out-flow of capital which an international market deserves in order to enhance market convenience. Now that we are expecting the big-bang along with the amendment of Foreign Exchange Law and a consensus has been given to the restructuring plan for financial institutions using the public funds, we have to exert our every effort to improve the market in terms of its convenience.
｡?HARA
At the last part of his speech, we could clearly hear the concrete discussion about what Japan has to do faced with the so-called "big-bang" from April, the amendment of Foreign Exchange Law. I would very much appreciate having a further discussion on this matter from various points of view.
Before that, since our expected guest Mr. Eisuke Sakakibara is not here, I, as his friend, would like to introduce some of his recent words related to today's theme. According to his expression, it is important to tame the global money and the short-term capital flow. He often talks about the importance of taming the globalized short-term capital flow under the advanced information revolution in which a huge amount of money, as much as ten times or hundred times of the global trade, is moving in and out within a minute. As Dr. Pakkasem also said, if we do not carry out this taming, long term investment will not be available for manufacturing as Dr. Yamano stated earlier. I dared to add this point because I think it is now in question from a chairperson's standpoint.
｡?Takashi SHIRAISHI
Professor, Center for Southeast Asian Studies, Kyoto University
I really would like to ask everybody one question related to Dr. Hara's speech. It is very simple.
For example, when President Suharto signed a restructuring plan agreement with the IMF for the second time on January l5, he uttered a short word "hang-chu" in Indonesian and made a wry face, expressing the complex sense of feeling that their every effort over the last 30 years was spoilt in six months. Using Dr. Hara's words, if they have spent the money on long-term investment for manufacturing and human resources and all of these were ruined in six months it is likely that they would feel a deep disappointment and abandon their effort. Therefore we have to spend money for manufacturing as well as developing human resources.
Private companies also need to do so and expand their business world-wide. I personally believe his is correct, however I still doubt that it won't help anyway if it fails in six months. So I want to have a good reason for trying to achieve this at any cost.
｡?PAKKASEM
When we talk about private capital flow, I would classify them into four categories. First direct foreign investment which is the long term. We have no problem about it in manufacturing. Apparently the last five years they play the minor role, mostly among other funds, Second. ODA which is long term, decreasing drastically for the last five years.
The private capital flow was about five times the ODA's increase,, almost $300 billion, and ODA was only $55 billion.
And then two funds, they are the most important things. First, the mutual fund. This is short term and moves in and out on the speculative stock market,' investment, portfolio and so on. Second, the hedge fund. There are 900 hedge funds, amounts to $500 billion. They are moving in and out, the hedge fund. Among the top hedge funds, George Soros, hedge funds are called "Quantum Hedge Fund" and others, which are mostly Americans by the way. Funny, the hedge funds are not operated in America, they are operated outside America. The security exchange of America does not allow them to operate in America. So they are hedging around.
The hedge funds are investing treaties. Some of them are investing capitals in a stock market. Some of them are in bonds, but mostly hedging and heading the currencies. This is the problem. This is what we call, what Mr. Sakakibara calls, "the under-regulated flow of funds". Some of them
