E/N (Exchange of Notes) basis

Note: In 1988, additional loans worth ¥70 billion were given through flow-back of funds

As East Timor was a country established a short time ago, it still has many problems in terms of economic and social development. In order to support the stability of East Timor and its self-efforts to become a self-sustainable country, Japan announced at the Donors' Meeting in May 2002 its intention to provide assistance of 60 million dollars over a period of three years. In fiscal year 2003, Japan provided UNICEF with assistance of 161 million yen to improve health and medical services for infants and pregnant women in East Timor under the "Project for Improving Maternal and Child Health Care in the Democratic Republic of Timor-Leste" and other projects.

Regarding Mongolia, Japan has actively assisted the country to make the transition to democracy and market economy. Japan also provided the country with support for human resources development. In order to minimize damage caused by summer drought and winter snow, Japan gave the country assistance to upgrade very old equipment at local weather stations and to enhance telecommunications networks under the "project for Improvement of Meteorological Information Network." New equipment along with an information network are expected to enable Mongolians to take proper measures against natural disasters in advance, contributing to the reduction of damage caused by natural disasters in Mongolia.

Another project that Japan has engaged in for the development of East Asia is IDEA (Initiative for Development in East Asia). As a follow-up to the ministerial meeting held by Japan in Tokyo in August 2002, Japan held the IDEA Fukuoka Symposium in August 2003 in cooperation with Fukuoka Prefecture and Fukuoka City in collaboration with The Japan Institute of International Affairs. In the Symposium, academic discussions were made concerning such subjects as the diversity of the development models for East Asia, necessity to promote the reforms of domestic economy and society and also to increase assistance to the East Asia region, and the utilization of experiences gained in Asia for the development of Africa.

## ☑ ODA to China

China has been showing rapid economic growth in recent years especially in coastal areas, while still facing many serious problems such as poverty, pollution, and infectious diseases. It is in Japan's interest to have China solve these problems and become a more open and stable country that is more willing to carry out its duties as a member of the international community. From this perspective, ODA to China continues to play an important role. Economic assistance should not be given to China without taking into consideration the changes in the demands of China for assistance due to the economic growth of China and also Japanese people's skepticism about the necessity of ODA to China.

Against this backdrop, the Japanese government has greatly revised ODA to China based on the Economic Cooperation Program for China that it prepared in October 2001. The principles of the revision are as follows:

(1) Japan used to consider the construction of economic infrastructures in coastal areas to be one of the most important projects to give assistance to. Japan, however, decided to leave this task of infrastructure building to China and, instead, provide more assistance to environmental