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a burden for the Soviet Union they had gained a military presence and because of this balance of advantage were probably not thinking seriously of putting more pressure on the Vietnamese. Dr Wilson said that the UK gave no aid to Vietnam because of the bad debts to the IMF but also for the political reason of Cambodia's occupation. He had, however, heard that Japanese banks were providing loans? Mr Yanai thought not Japan's yen 10 billion loan and yen 4 billion grant commitment was frozen for political reasons. There was a negligible amount of humanitarian hospital aid - some yen 20 million and private Japanese banks might well be giving export finance to the small dummy trading companies exporting eg drilling equipment, but the Exim Bank was not involved. Japan had a limited dialogue with Vietnam. In July one of Mr Yanai's colleagues had gone to Hanoi but found the Vietnamese position unchanged and six hours of painful discussion had given him only diarrhoea.
Indonesia
6.
Dr Wilson asked how the Japanese saw the Indonesian economy. Mr Yanai said that Indonesia was one of Japan's largest ODA recipients. But times were difficult. They had bilateral talks on energy regularly and in the last round, the Indonesian Energy Minister had said that the Government budget for this year had been based on an oil price of $25. Sixty per cent of the country's revenue was from oil. Slackening demand in Japan provided an increase in imports of oil from Indonesia, which were now running at 11-12% of the Japanese market (having been 15% in the past). Indonesian LPG for power generation was, however, replacing oil up to a point. Many yen loan projects could not be implemented because of the shortage of local currency. In his ASEAN speech, Mr Abe had announced the decision to increase the local currency
this had been welcomed portion, up to 26% of the total; by the Indonesians and had had a significant effect, although still not enough. As for the political scene, unlike the Philippines, Indonesia had a strong army. succession problem would probably emerge during the President's next term. The opposition from Muslims was generally divided and weak. Dr Wilson agreed that Islamic fundamentalism was not yet a problem, although it could be in the long-term.
Malaysia
7.
Mr Yanai said that the problem for Japan of the look-East policy was that it lead to unduly high expectations. He understood that the UK was not happy
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