May 19, 1999
Web posted at: 11:16 p.m. EDT (0316 GMT)

In this story: Repairing ties Economic crisis create strains RELATED STORIES, SITES

BATAM, Indonesia (CNN) - Malaysian Prime Minister Mahathir Mohamad said he would discuss a surge in illegal immigrants from neighboring Indonesia in talks on Thursday with Indonesian President B.J. Habibie.

"The number (of illegal immigrants) has increased, so that in the first three months of this year the number is about the same as the whole of last year," he said.

About two million people from other countries work in Malaysia, which despite a recession suffers from a labor shortage in some sectors including plantations. About half of the workers are registered.

Last year, Malaysia deported tens of thousands of illegal Indonesian immigrants.

Security is tight for the talks, which Jakarta requested. It will be the second between the two leaders since Habibie assumed power last year. The leaders spoke at the APEC summit in Malaysia in November.

Mahathir, speaking to reporters in Kuala Lumpur after announcing a minor Cabinet reshuffle, also said he would discuss other bilateral matters at the meeting, which will be held on Indonesia's Batam Island.

Trade and foreign ministers from the respective delegations were also set to meet.

But the talks could also be a way for the leaders to repair ties that were strained when Habibie publicly expressed concern over the sacking and arrest of Mahathir's former deputy, Anwar Ibrahim, on sodomy and corruption charges.

Anwar has been sentenced to jail for six years on a corruption conviction, and faces another trial on the sodomy charges. His treatment sparked anti-government riots and a political reform movement.

Indonesia-Malaysia relations also were dented when Habibie reportedly met with Anwar's 18-year-old daughter on Batam last year.

The nearly two-year-old Asian economic crisis has created strains between countries in the whole region by showing how quickly one nation's internal policies can adversely affect its neighbors.

Both Malaysia and Indonesia are predominantly Muslim. Both have suffered through the Asian financial crisis, and struggled through political difficulties.

Habibie's party also faces parliamentary elections in June. He took power about a year ago when President Suharto, Indonesia's authoritarian leader, stepped down during deadly pro-democracy protests.

Habibie and Mahathir have taken completely opposite approaches to the regional economic crisis.

Habibie embraced the International Monetary Fund's stern reform measures in return for billions of dollars in aid, while Mahathir rejected the IMF route and imposed radical controls on the country's currency and stock markets.

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