RI, Malaysia agree on dollar-less trade

JAKARTA (JP): Malaysian Prime Minister Mahathir Mohamad and President Soeharto agreed yesterday to boost bilateral trade but without using hard currencies so as to preserve their foreign exchange reserves.

Mahathir said after visiting Soeharto yesterday that their agreement was an implementation of a decision to boost regional trade, made by the Association of Southeast Asian Nations (ASEAN) at its informal summit in Kuala Lumpur, in December last year.

Soeharto was absent from the summit due to health reasons but was represented by Indonesian Minister of Foreign Affairs Ali Alatas.

"We think there is a need to increase trade between our two countries and we need to work (out a) mechanism of trade since we do not have enough dollars or other hard currencies to be used for exports and imports," Mahathir said in a joint media conference with Soeharto on the porch of the President's residence on Jl. Cendana, Central Jakarta.

Soeharto did not speak at the joint media conference, nor was he asked a question by reporters.

Mahathir said Malaysia and Indonesia would use their own currencies, the ringgit and rupiah respectively, in their commercial transactions.

Indonesia's exports to Malaysia totaled US$880 million in the last 10 months of 1997, while its imports were about $605 million in the same period.

Mahathir flew in from Kuala Lumpur yesterday morning, on a special flight, for a 90-minute meeting with Soeharto. He flew home in the afternoon.

"Since President Soeharto was not able to attend the ASEAN heads of government meeting in Kuala Lumpur, and the ASEAN heads of government meeting made several decisions. It is my duty to inform President Soeharto, but I could not come earlier," Mahathir said on the reason for his visit.

Soeharto briefed Mahathir on the state of Indonesia's economic crisis and the economic reform package he agreed to with the International Monetary Fund (IMF) on Thursday.

Mahathir said it was important as a neighbor to help Indonesia because the situation here might affect other countries in the region, including Malaysia.

"We always feel that neighbors would do better if they were better off... We should talk because when neighbors are having problems there'll always be some spill-over effects," Mahathir said.

Despite its own economic downturn, Malaysia provided a US$1 billion bilateral loan to Indonesia in October to supplement the $40 billion IMF rescue package to Indonesia.

When asked about Malaysia's recent decision to expel foreign workers, the prime minister said: "We are not really going to expel them, but we have to warn people that we have no more jobs. But we are doing our best now to transfer them (to other sectors)".

About 600,000 Indonesians are legally working in Malaysia, mostly in construction or on oil palm plantations. There are also hundreds of thousands of Indonesians illegally living in the peninsula state.

Mahathir did not say whether the two leaders also discussed Malaysian investment in the palm oil sector in Indonesia.

Jakarta froze last year foreign investment (dominated by Malaysian investors) in oil palm plantations, to protect the industry.

However, in his letter of intent to the IMF on Thursday, Soeharto pledged, among other things, to remove restrictions on foreign investment in the palm oil industry early next month.

When asked about the economic reform package agreement between the IMF and Indonesia, Mahathir said: "It is Indonesia's decision, I do not have any views on it. It depends on Indonesia's own policies".

Mahathir has repeatedly defended his country's decision not to knock on IMF's door for financial help, saying it would only expose Malaysia to foreign economic colonization. (prb)