(Petaling Jaya, Friday): When Malaysian Prime Minister, Datuk Seri Dr. Mahathir Mohamad meet President Suharto in Jakarta tomorrow, Mahathir should inform Suharto of Malaysia's inability to contribute US$1 billion as part of IMF-led US$40 billion bail-out of Indonesia as Malaysia is herself now facing a financial crisis and is in no position to help other countries.
Malaysia should also withdraw the US$1 billion aid as part of the IMF-led US$17.2 billion bail-out of Thailand.
Malaysia is in no position to extend US$2 billion aid to Indonesia and Thailand, which comes to RM8.4 billion at yesterday's close of trading of RM4.2 against the US dollar.
Malaysia's international reserves have already fallen very low to be of comfort, falling by RM11.5 billion from RM70.6 billion on 30th January 1997 to RM59.1 billion as on 31st December 1997.
The present international reserves of the country would now be much lower by a few billion ringgit as Bank Negara had intervened at least three times in the currency market last week to prop up the ringgit, which broke the psychological barrier of RM4 ringgit against the US dollar on 5th January and threatened to break another psychological barrier of RM5 ringgit against the US dollar on 7th January when it fell to RM4.882 against the greenback.
If Malaysia is to contribute US$2 billion or RM8.4 billion to the IMF bail-out of Indonesia and Thailand, Malaysia's international reserves could fall to around RM40 billion or some US$10 billion - which is definitely not prudent or wise.
I am sure Suharto and the Thai leaders would understand why Malaysia has no choice but to withdraw from the earlier commitment of US$1 billion each for Indonesia and Thailand in the IMF bail-outs.
Malaysia should in fact be seriously considering a new policy of increasing its external reserves to at least US$50 billion, which would be a prudent financial policy and a good defence against currency speculators.
It is worth noting the external reserves of other countries: