MALAYSIA said today it would go ahead with plans to buy its first submarines in a move diplomats said could unsettle its southeast Asian neighbours and lead to an arms race in the region.

Defence Minister Najib Razak said the submarines, first proposed a decade ago, were necessary to help boost the country's defence capabilities, the national Bernama news agency said.

Without the submarines, we will not be fully equipped, it said, indirectly quoting Najib.

He did not elaborate but said the armed forces would be modernised in the next five years.

The armed forces would acquire high technology and sophisticated weaponry to deter threats from external elements, Bernama said. It was not clear from which country the submarines were to be bought.

Diplomats say the Malaysian move could lead to an arms race in the region.

An Asian diplomat said the move seemed to be in direct response to neighbouring Singapore's purchase of four submarines.

Singapore has four Sjoormen-class submarines bought second-hand from Sweden.

Malaysia along with Brunei, China, the Philippines, Taiwan and Vietnam are locked in territorial disputes over the Spratlys, a cluster of potentially oil-rich isles, reefs and shoals in South China Sea.

Malaysia is also building a new naval base in Sabah on Malaysia's side of Borneo island.

This is viewed as vital if the Royal Malaysian Navy is to exercise better control over the waters off East Malaysia's coast, Jane's Defence Weekly said in a recent report.