ISLAMABAD, Dec 29: Japan has agreed to resume its $500 million annual assistance to Pakistan from 2005, said Prime Minister's Adviser on Finance Dr Salman Shah.

Talking to Dawn here on Wednesday, he said the resumption of yen package loan by Japan was now expected to be over $500 million with a view to help strengthen Pakistan's overall economy.

Japan will be resuming its financial assistance under the 32nd Yen Package Loan. Most of the funding under the 31st Yen Package Loan had been offered to Pakistan before Tokyo suspended its assistance following nuclear tests conducted by the Nawaz government in 1998.

The Japanese government had extended one time 7.2 billion yen to Pakistan for Kohat Tunnel despite the suspension of the official development assistance (ODA). Japan has reportedly decided to resume Pakistan's assistance having received a number of formal requests from Islamabad recently.

The adviser on finance said Japan had also agreed to ask its investors to increase their investment in Pakistan. Unlike the United States and the western countries, Japan has not been warning its citizens against visiting Pakistan.

Officials have admitted on various occasions that negative travel advisories and cautions have been discouraging investors and tourists from the US, West and Japan to visit Pakistan.