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Japan aims to expand, revive Asean swap deals at weekend summit: sources

Japan's Prime Minister Shinzo Abe speaks during a news conference at his official residence in Tokyo December 9, 2013. REUTERS/Toru Hanai

By Shinji Kitamura

TOKYO (Reuters) - Japan aims to expand or restart bilateral currency swap agreements with five Southeast Asian nations and may announce the deals at a regional summit this weekend in Tokyo, government sources said on Monday.

Liquidity arrangements with members of the Association of Southeast Asian Nations were a core element of the global response to the late-1990s Asia financial crisis.

When Prime Minister Shinzo Abe hosts his Asean counterparts at the summit starting on Friday, he will aim to greatly increase the bilateral arrangements with Indonesia and the Philippines, while reviving lapsed agreements with Malaysia, Singapore and Thailand, the sources told Reuters on condition of anonymity.

Under the deals, countries pledge bilateral liquidity support in case of a financial crunch. The aim is to reassure investors before a crisis erupts and thus prevent or minimize balance-of-payments panics that can cause destabilizing outflows of capital.

The bilateral arrangements build on the $240 billion "Chiang Mai Initiative", a web of swap deals spanning Asean, Japan, China and South Korea.

Abe is using the Japan-Asean summit - which does not include China or Korea - to promote closer ties with Southeast Asia. In less than a year in office, Abe has visited all 10 Asean leaders but has yet to meet with his counterparts from China or South Korea, both of which have territorial disputes with Tokyo.

Japan is in final negotiations to increase the Indonesian arrangement to about $20 billion from $12 billion and the Philippine deal to some $12 billion from $6 billion, the sources said.

The Japanese government wants to revive the arrangements with Malaysia, Singapore and Thailand.

Tokyo is negotiating a swap line worth around $3 billion with Singapore, but may not be able to work out specific figures with Malaysia at the three-day summit, they said.

A bilateral deal with Thailand may not be possible at the summit as Prime Minister Yingluck Shinawatra, engulfed in domestic turmoil, will not make the Tokyo trip.

The other Asean members are Vietnam, Cambodia, Myanmar, Brunei and Laos.

(Writing by William Mallard; Editing by Edmund Klamann)