Tokyo and Bangkok are cooperating to create a program that will provide mutual support to small and medium-size firms that suffered severe damage during Thailand's recent flooding, bilateral sources said Friday.

Under the Otagai Business Continuity project, companies in Japan and Thailand will dispatch technical experts to the affected firms or offer to undertake production for them, the sources said. "Otagai" means "mutual" in Japanese.

Tokyo and Bangkok hope the cooperation also will prompt more Japanese firms to launch businesses in Thailand, they said.

The system is modeled on a framework devised by Niigata Prefecture after the March 11 earthquake and tsunami, and which called on local corporations to support devastated businesses in the northeast.

The Japan International Cooperation Agency and Thai economic authorities will facilitate ties between corporate donors and the companies that receive aid.

Local governments and business groups in Japan will solicit applications for the program, according to the sources.

The program is also aimed at encouraging smaller Japanese firms to expand their businesses overseas at a time when such a move would counter the strong yen's impact on their profits.

"It would be a good opportunity (for smaller companies) to consider overseas expansion by joining the business partnership to tackle the disaster," a Japanese government official said,

About 450 Japanese firms operating in Thailand have been affected by the flooding, the Japan External Trade Organization said.