Former Prime Minister Dr Mahathir Mohamad today said his country should move industries to Indonesia to reduce problems with illegal Indonesian migrant workers there.

"It would be better for Malaysia to relocate some of its labor-intensive businesses to Indonesia," Mahathir told reporters here after meeting with Indonesian President Susilo Bambang Yudhoyono.

He said transferring operations to Indonesia would help Malaysia curb the influx of illegal migrants from its southern neighbour as they would be able to find work at home.

Malaysia last week extended until the end of December a deadline for illegal migrants to return home. It had earlier given them until mid-November to leave, but few took advantage of the amnesty.

Malaysia estimates it has at least 1.2 million illegal immigrant workers, mainly from Indonesia and the Philippines.

Mahathir, who stepped down from 22 years in power last year, said most of the discussion with Yudhoyono centered on Indonesia's recent general elections, which he described as peaceful and smooth.