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.