RI, Malaysia agree on dollar-less trade

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)