INDONESIA: MALAYSIAN PM MAHATHIR VISIT

(9 Mar 2000) English/Nat

Malaysian Prime Minister Mahathir Mohamad arrived in Jakarta on Thursday at the head of a large government and business delegation for a two-day visit designed to strengthen political and economic ties with Indonesia.

He was greeted at Jakarta's main air force base by President Abdurrahman Wahid and Foreign Minister Alwi Shihab.

Following a meeting with Wahid, the Malaysian prime minister gave his support to Indonesia's policy toward the unrest in the Aceh province.

It was Mahathir's first visit to Indonesia since Wahid became president last October, after the country's first free election in 44 years.

The visit is expected to focus on ways to overcome the effects of the Asian financial crisis, which devastated the Indonesian economy.

Mahathir was accompanied by Foreign Minister Syed Hamid Albar, Finance Minister Daim Zainuddin and the ministers of international trade and primary industry.

The business delegation is headed by Malaysian Airlines System chairman Tajudin Ramli and includes a number of prominent businessmen.

Malaysia is the 11th largest investor in Indonesia, with total investments amounting to about 7.6 (b) billion U-S dollars.

Other issues were on the agenda for the meeting including the ongoing unrest in the Aceh province of Indonesia.

Mahathir offered his support to the Indonesian government.

SOUNDBITE: (English)
"Malaysia at the moment is quite willing to be of some help if we are asked to and in fact we have met some of the religious leaders of Aceh - I have personally met them - and have explained to them that our stand is that Aceh should be, remain as a part of Indonesia. They may want to have more autonomy, that is up to them to negotiate."
SUPER CAPTION: Mahathir Mohammed, Malaysian Prime Minister

A joint concern for both countries is the haze rising from bush fires on Sumatra.

There are worries that the unrelenting heat and smoke from the fires will produce a thick haze that will drift across to neighbouring Singapore and Malaysia.

Indonesia says that forest fires blazing in Sumatra, and West Kalimantan in Borneo, have reached "emergency level."

Wahid welcomed Malaysia's input into the process of fighting the fires.

SOUNDBITE: (English)
"I gave instructions at the cabinet meeting for us to take necessary actions to combat this thing. In that sense I am very glad to know also that Malaysia has taken the step of monitoring the preparation for combatting the fires."
SUPER CAPTION: Abdurrahman Wahid, President of Indonesia

But it's the economy which is set to dominate the discussions.

Indonesia's new president is said to have been impressed by Mahathir's determination to devise his own recovery policies and reject International Monetary Fund's involvement in the process.

Indonesia's attempts to revive its economy, which nose-dived by 17 per cent at the height of the crisis in 1998, are heavily dependent on a multi (b) billion U-S dollar I-M-F-led rescue package.

In contrast, Mahathir rejected I-M-F aid and advice in dealing with the crisis.

Instead, he imposed strict capital controls that were criticized by the I-M-F, U-S officials and Western economists.

Malaysia has declared that the controls, which temporarily restricted foreigners from repatriating their investments, succeeded in stabilising the country's economy.

In a report released in January, the I-M-F conceded that the controls gave Malaysian authorities some "breathing space" to address economic problems and implement reforms.


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