(Recasts with Malaysian statement, MILF, Manila reaction) KUALA LUMPUR, Nov 27 (Reuters) - Malaysia is withdrawing its remaining 12 peacekeepers from the southern Philippines but may return if there is progress in the peace process in the troubled region, the government said on Thursday. The move comes despite the Philippine government formally asking Malaysia to keep its troops there another three months. "Malaysia is suspending its participation in the international monitoring team (IMT) upon the expiry of its mandate ... on Nov. 30," the foreign ministry said. Muslim Malaysia, which brokers peace talks between Manila and the Philippines' biggest Muslim rebel group, has expressed frustration at the slow pace of talks to end four decades of Muslim conflict that has killed more than 120,000 people. The conflict has also displaced a total of 2 million and stunted growth in one of the country's most resource-rich regions, believed to be sitting on large untapped deposits of minerals, oil and natural gas. Most of the Malaysian monitors had been moved out of sensitive areas after fighting broke out between soldiers and rogue rebels in mid-August. Almost 300 people have been killed in about three months of fighting between security forces and rogue members of the Moro Islamic Liberation Front (MILF). The conflict has displaced more than 650,000 people, prompting calls for the two sides to return to peace negotiations. Mohaqher Iqbal, MILF's chief peace negotiator, said the MILF was worried violence could further escalate and spread in the south following the departure of the monitors. "Some people here might see the withdrawal as a signal to step up military operations against the MILF," he told Reuters. Manila hoped Malaysia would reconsider its decision. "We're still in talks with the rebel leaders to come into an agreement to ask Malaysia and other states contributing to the monitoring team for another extension," said Camilo Montesa, an official at the president's peace process office. Peace talks have been in limbo since July, and the peace process was dealt a blow when Manila dissolved the peace panel in September. But the talks have not been formally called off. Last May, Malaysia pulled out 31 soldiers from the four-nation team which includes Brunei, Libya and Japan. In August, the Philippines' top court stopped the government from signing a deal expanding an existing autonomous region, sparking a rampage by rogue MILF members. (Reporting by Jalil Hamid in Kuala Lumpur and Manny Mogato in Manila; Editing by Jerry Norton)
Jose Miguel Tuason Arroyo, husband of Philippine's President Gloria Macapagal-Arroyo, takes off his glasses during the 12th Association of Southeast Asian Nations (ASEAN) summit in Cebu, central Philippines, in this January ...
