(AFP) Malaysia is seen as the new centre for Islamic terrorism and the international community is concerned about rising militant activities in the country, Deputy Prime Minister Abdullah Ahmad Badawi has warned.

"Foreign visitors who called on me recently had brought up the issue. They are not interested to know about the economy or the country's growth rate," Abdullah told the Sunday Star newspaper.

"What they want to find out is how serious are militant activities here as they fear it would affect their investments and interests," he said.

On Friday, police said that local groups were collecting firearms from the southern Philippines for Islamic fighters waging a "holy war" in Indonesia's Ambon island.

Two Malaysians and 13 Indonesians were arrested on July 26 off the coast of Tawau in Sabah with a cache of weapons including two M16 rifles, six pistols and ammunition, Inspector-General of Police Norian Mai said.

The Malaysians were detained under the Internal Security Act (ISA) which allows indefinite detention without trial.

Holy war

Abdullah's acknowledgment of the problem comes amid revelations that four Malaysians are suspected of involvement in a series of bombings in Indonesia.

Newspapers have said that police have launched an investigation to establish whether the four had links to the so-called Malaysian Mujahidin Group (KMM).

The group is accused of waging a "holy war" and is blamed for a spate of crimes including robbery, murder and bombing a church and an Indian temple.

Abdullah, who is also the home affairs minister, said the government had to act to stop militant activities to allay investor fears.

"That is why we need to put a stop to the activities by the militant groups as it would ultimately affect the country's political and economic stability," he said.

"It would also have an impact on individuals who would lose their jobs when investors pull out of the country."

Ten alleged members of the KMMM, including seven members of PAS, were detained last month under the ISA.

Malays, who are mostly Muslim, make up more than half of Malaysia's 23 million population, while ethnic Chinese account for 25 percent and Indians about seven percent.