Reuters International

Soldiers gesture aboard a military truck as they are deployed to remote villages in Jolo, Sulu southern Philippines October 17, 2014. REUTERS/Stringer

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MANILA (Reuters) - The Philippines discouraged ransom payments on Wednesday for captives held by Islamist militants in a bid to stop a kidnap "industry" emerging after a series of rebel seizures of Indonesian and Malaysian crew.

A Philippine military spokesman was responding to media reports on Tuesday that quoted an Indonesian minister as saying a Taiwan firm would pay to free 10 Indonesians held by Abu Sayyaf rebels.

A combined 18 crew from Indonesia and Malaysia have been taken captive in three separate attacks on tugboats in Philippine waters close to maritime borders with the two countries.

"The armed forces continues to encourage everyone to observe the government's no ransom policy," Philippine military spokesman Brigadier-General Restituto Padilla told reporters.

He said the military wanted to "discourage this kind of growing 'industry'" and cut off funds that would ultimately strengthen the rebels.

Indonesia's coordination minister for political, legal and security affairs, Luhut Pandjaitan, was quoted as saying a Taiwan firm was prepared to pay 50 million pesos (£751,054) to free a crew held since late March.

The Philippines rarely publicises ransom payments and officials sometimes refer to them euphemistically as "board and lodgings".

Padilla said there were ongoing military operations to rescue the captives. "The safety of the kidnap victims is our primordial concern," he added.

Five other foreign nationals, including two Canadians, are also held on the remote southern island of Jolo, a stronghold of the small but violent al Qaeda-linked group, known for beheading, bombings and extortion.

Neil Reeder, Canada's ambassador to the Philippines, expressed serious concern over an Abu Sayyaf threat to behead two of its citizens on April 25 if their families and government failed to pay 300 million pesos for each of them.

"We are very, very concerned about the situation of our nationals," Reeder told reporters in Manila.

"We are doing our best for their safety and security and we hope that they'll be safe and sound and released very soon."

Security is precarious in the south of the largely Christian Philippines, despite a 2014 peace pact between the government and the largest Muslim rebel group that ended 45 years of conflict.

(Reporting By Manuel Mogato; Editing by Martin Petty)

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