Aid for hostage deal on the cards in Philippines

Philippine President Joseph Estrada has government would be willing to consider economic aid to a region where rebels are holding 21 mostly foreigners hostage.

Abu Sayyaf rebels are holding the hostages on Jolo island in the southern Philippines where Estrada's administration faces one of its toughest tests since he took office nearly two years ago.

Estrada told reporters that "as a policy, the Republic of the Philippine government does not pay ransom to kidnappers".

"However, since the hostages are mainly foreign nationals, they would also have to take into account their concerns." he said without elaborating. Malaysia said on Monday it has not ruled out any option, including ransom, to free its nine nationals held hostage.

Other governments have urged Manila to avoid a rescue raid that could endanger the hostages' lives. "We're of course prepared to consider community development projects in the area." Estrada said.