Malaysia will flood a forest reserve that is home to many protected animals and plants with medicinal value in order to create a new dam, a report said today.

"There is no doubt that the flora and fauna in the forest reserve will be affected but there is no other way and besides, it is for a good cause," said Natural Resources and Environment Minister Azmi Khalid, according to The Star daily.

Azmi said the RM3.8 billion Kelau Dam project will supply water to Selangor state which surrounds the capital Kuala Lumpur by diverting it from neighbouring Pahang.

The project, funded by the Japan Bank for International Cooperation, will obliterate the 1,000-hectare Lakum Forest Reserve and involve relocating 1,300 villagers.

The affected area is slightly bigger than Pangkor Island.

The daily also reported that after two months of catastrophic flooding in the country's south, Malaysia now faces the prospect of a drought due to hot and dry weather in the central regions.

Drainage and Irrigation Department chief Keizrul Abdullah said water conservation measures would be put in place, although the nation's dams have enough water to last three months if there is no rain at all.