TOKYO - Prime Minister Dr Mahathir Mohamad warned Japan today not to pursue rapid reforms if it wanted to avoid excessive disruption, instead urging it to lead the world with its economic might.

"Today's world is in shambles," Mahathir said, addressing a crowd assembled for the 20th anniversary of his "Look East" policy, launched to promote Japanese and South Korean work ethics among Malaysians. The policy is considered a pillar of Malaysia-Japan ties.

"The abuses of the free trading system, the unlimited greed of a considerable number of speculators, the fumbling and incompetence in the handling of problems have resulted in the world losing its way," he said.

The long-time Malaysian leader was also critical of on-going Western-inspired structural reforms in Japan and corporate job cuts amid an economic slump that has dragged on for more than a decade, saying "Japanese corporations should go back to life-time employment."

"We understand the desire of the Japanese to Westernise its system. But when systems are suddenly changed, even if it is for the better, there will be severe disruptions. It is far better to stick to the system which worked."