Malaysia has bought the rights from a Japanese firm to the world's smallest microchip that can be embedded in everything from currencies to human bodies and will boost the global anti-terror war, said Prime Minister Dr Mahathir Mohamad.

Mahathir said the revolutionary miniature chip, developed by Japan's FEC Inc, could be combined with current technology to "greatly prevent the possibilities of terrorist acts" as well as banknote and document counterfeiting.

"With the need for greater security at airports and other transport terminals the current security level provided by available systems is insufficient," Mahathir said.

"The application is almost unlimited," he told a news conference after annual talks with global hi-tech chiefs at this town in Malaysia's Multimedia Super Corridor MSC), an enclave south of the capital Kuala Lumpur modeled after California's Silicon Valley.

"We think this is a great breakthrough for Malaysia. It is the first in the world. No other people have come up with such a tiny microchip, particularly as it also has a built-in antenna."

Reasonably priced

The veteran premier declined to reveal the cost for the project, dubbed MM or Malaysian Microchip.

"I think it is reasonably priced," he said, adding in jest that the acronym MM did not stand for Mahathir Mohamad.

Mahathir said the project, in which Malaysia would establish the chip applications and network, would spur new economic initatives and accelerate the country's goal of becoming a developed nation by 2020.

Measuring 0.5 of a square milimeter and produced at less than 38 sen each, the chip -- the size of a dot -- uses the radio frequency identification (RFID) chip technoloy.

Mahathir said the chip would initially be manufactured in Japan early next year but production would eventually be shifted to a factory in Kedah belonging to state-owned wafer fabrication firm Silterra (M) Sdn. Bhd.

He said Japanese companies would still be involved in the project, in the transfer of technological know-how, but the proprietary right would belong to Malaysia.

One year preparation

FEC (M) Sdn Bhd chief executive Kunioki Ichioka told reporters that the chip can also be inserted into the human body, animals, bullets, credit cards and other items for verification purposes, and can replace price bar codes used to tag products.

He said the Silterra factory has sufficient facilites to produce the chip but it may take a year to make preparations.

Earlier, he was quoted by the Malay-language Utusan Malaysia as saying that the chip would cut the production cost of Malaysia's national "smart identity card" from RM7 to RM1.

The smart card, the world's first for citizens, launched two years ago, wraps passport, identification, driver's license, medical and other personal details in a piece of plastic the size of a credit card.

The project is seen as another feather in the cap for the 77-year-old Mahathir before his retirement in October after 22 years in power.

The premier launched the MSC in 1996, and it now houses 887 technology firms, 29 institutions of higher learning and nine incubator companies.- AFP