The open spat between defacto law minister Rais Yatim and Chief Justice Eusoff Chin indicates "a major crisis of confidence" with the Malaysian legal system, an economist said today.

It also explain why there is such a low foreign confidence in the legal system, said Charles Santiago, who is co-ordinator for the Stamford Centre for Economics and Social Research.

"This outburst simply lead the people to the conclusion that the judicial system is being manipulated by individuals."

With the perception that our judicial system serves individual interests, according to Santiago, this can only undermine the business confidence of those within the country as well as foreign investors.

Santiago was commenting on a survey on legal systems in Asia which ranked Malaysia a dismal eighth out of 12 economies studied, only ahead of India, Vietnam, China and Indonesia.

The survey, by Hong Kong-based Political and Economic Risk Consultancy (Perc) which produces risk reports on the business environment in the region, gave the Malaysian legal system a score of 7.43 out of 10 (10 is the worst possible score and zero the best).

The survey results ranked Malaysia's legal system behind Singapore, Japan, Hong Kong, Taiwan, South Korea, even behind the Philippines and Thailand.

"The implication here is clear, it is time to change. There is a need for a more responsible judicial system," said Santiago, referring to the survey results polled from more than 1,000 foreign expatriates.

"Furthermore, the call for change has not only come from the business people, but also within the government," he added.

"Why should Malaysians do a disservice to itself? Why should a few individuals benefit from the legal system at the expense of civil society?"

He cautioned that with countries such as the Phillippines and Thailand beginning to make a conscious effort to change and bring their legal systems to international standard, Malaysia risks getting left behind when investments divert to the other countries.