Malaysia leaders have demanded an apology from Singapore's founding father Lee Kuan Yew over remarks he made about ethnic minority Chinese in Malaysia being mistreated.

Agriculture minister Muhyiddin Yassin was quoted in the New Sunday Times newspaper as saying that Lee should apologise to Malaysia.

"We view with concern those comments. Lee should apologise and clarify his statements immediately," he was quoted as saying.

Lee, Singapore's first prime minister until he stepped down in 1990, told a forum in the city-state last week that Malaysia's minority Chinese community was being systematically marginalised .

According to reports, Lee said it was vital that predominantly ethnic Chinese Singapore stand up to its majority Muslim neighbours Malaysia and Indonesia.

An instigation

Malaysian foreign minister Syed Hamid Albar was also critical of Lee's remarks, the newspaper said.

"Not only it is not true, it amounts to an instigation. Why must they want to instigate our citizens to be dissatisfied with the government,?" he said.

"I will write to him. I want him to explain his statement," Syed Hamid said.

He said Lee's remarks could cause racial tensions, adding: "It is also a statement which can incite Malaysian citizens of Chinese descent."

While Malaysia's population of 26.6 million people consists of some 60 percent Malay Muslims, the economy is largely controlled by the 26 percent ethnic Chinese population.

Malaysia and Singapore have strong economic ties but the two nations have squabbled periodically since Singapore was ejected from the new Malaysian federation in 1965 due to race politics.