(AFP) Philippine President Gloria Arroyo has described Prime Minister Mahathir Mohamad as her "model of a leader" ahead of a visit here, a report said today.

Arroyo, who will arrive tomorrow on her first overseas foray since taking office in January, praised Mahathir's stand against currency speculators and Malaysia's efforts to forge peace in southern Philippines, the New Straits Times said.

"He is my model of a leader... my main reason to visit Kuala Lumpur is to convey my government's gratitude to (Mahathir) for Malaysia's efforts in promoting peace and development in Mindanao," she was quoted as telling the newspaper in an interview.

The Philippines would invite Malaysian businessmen to invest in oil palm cultivation in Mindanao, she added.

Predominantly-Muslim Malaysia is hosting talks between Manila and the largest Philippine separatist Muslim group, the Moro Islamic Liberation Front (MILF).

There are expectations that a peace pact could be clinched during Arroyo's trip.

She said Manila supported Mahathir's efforts to regulate unfettered currency trading, which the Malaysian leader blamed for sparking the region's financial crisis in 1997/98.

"We will continue our efforts to curb such activities," she said.

"Fundamentals show that the value of the peso against the dollar is undervalued."

The newspaper said Arroyo did not rule out the possibility of taking drastic steps to curb excessive speculation, including imposing exchange controls as Malaysia did in 1998.

"We have an inventory of policies, I shouldn't be talking about it. We are determined to tackle currency speculation," she added.

Malaysia has eased all the curbs, except for a ringgit peg at 3.80 to the dollar.

Arroyo said she would discuss with Mahathir efforts to revive the so-called East Asian Growth Area covering the southern Philippines, eastern Malaysia, Brunei and northern Indonesia.

She backed Malaysia's proposal for border patrols and dedicated sea lanes for vessel movement to boost security cooperation, and hoped Malaysia Airlines (MAS) could begin direct flights from Kuala Lumpur to Davao.

Memoranda of understanding in information technology, tourism and health will be signed during Arroyo's state visit, the first by a Philippine leader since 1993.

Trade between the Philippines and Malaysia last year was more than 9.2 billion ringgit (2.4 billion dollars). Malaysia is the Philippines' eighth largest trading partner.