Maritime authorities said a Singapore-registered mini tanker had capsized off the country's southern coast while transferring fuel to another vessel.

Zulkifli Abu Bakar, head of the Maritime Enforcement Agency for the southern region of the country, said the agency was alerted to the sinking off the tip of Pengerang in Johor state early Sunday morning.

Fuel is often transferred between ships at sea off Malaysia, in part as heavy government subsidies tend to encourage smuggling of fuel out of the country.

"Our initial investigations showed that the Singapore-registered ship, MT Po Lai, along with five of its crew, were planning to transfer fuel with another vessel, Kam Fong," Zulkifli said in a statement.

"Unfortunately, the Po Lai faced problems stabilising itself, causing it to capsize, but all the ship's crew managed to escape to the Kam Fong and are not injured," he added.

"We are now working with Johor environmental authorities to monitor the ship as there is a likelihood of an oil spill from the vessel and we need to ensure the safety of ships travelling in the area."

Maritime authorities could not be reached for further comment.