Malaysia offers to RI a standby fund: Anwar

Malaysia offers to RI a standby fund: Anwar

KUALA LUMPUR (AFP): The US$1 billion which Malaysia has offered to Indonesia is a standby facility to help its neighbor revive its ailing economy, Deputy Premier Anwar Ibrahim said yesterday.

"It is not aid," Anwar told reporters. "It is a facility which Indonesia can draw upon when it needs with the aim of boosting confidence in the Indonesian currency and economy and it will be paid back.

"It is a Malaysian offer. The Indonesians did not ask but we thought the region should practice the spirit of regionalism," he said, adding that Singapore had also made a similar offer.

Anwar paid an unannounced visit to Jakarta on Monday, where he held talks with President Soeharto. Singapore Prime Minister Goh Chok Tong last week also made an unannounced visit to Jakarta before pledging an undisclosed sum to restore confidence in the Indonesian economy.

The Indonesian government has said the Malaysian offer is not part of an expected International Monetary Fund package to mitigate the effects of the rupiah's drastic fall against the US dollar.

Malaysia, whose ringgit has also been hammered by a regional currency crisis that began on July 2 with the baht's flotation, earlier offered a similar facility to Thailand.

Anwar, who is also finance minister, allayed fears that his offer would affect Malaysia's 1998 budget, saying that there would not be any serious impact as "we have the money."

Malaysia is negotiating with the Indonesian authorities on the terms of the standby facility.

Anwar said he was satisfied with the additional measures Indonesia has taken to strengthen its economy. But an opposition leader Tuesday questioned the government's "prudence and judgment" in committing the sum to Indonesia in view of Malaysia's own economic plight.

"Is Malaysia in a position to make the offer to bail out Indonesia when she is herself undergoing an unprecedented financial and economic crisis?" asked MP Lim Kit Siang, secretary-general of the Democratic Action Party.

"What worries Malaysians is that the economic turmoil is not over, that more would come in the coming months and the road ahead is going to be a hard and rocky one," Lim said in a statement.

He pointed out that the one billion dollar commitment to Indonesia would mean some 3.4 billion ringgit now, compared to only about 2.7 billion ringgit when a similar offer was made to Thailand in August.

The ringgit has depreciated by more than 30 percent against the dollar while the local bourse has lost over one-third of its market capitalization since July.