Malaysia on Thursday called on Asian countries to wean themselves off economic protectionism and move towards greater integration in order to remain competitive globally.

"Leaders of Asian countries must push aside the occasional populist clamour for blind protectionism and embrace the reality of a globalised world economy," Deputy Prime Minister Najib Razak said at the two-day Asia Economic conference.

Najib noted that intra-Asian trade was growing faster than trade with other regions but that greater cooperation was needed to spur on investment and and growth.

"Today, Asia is Asia's largest market for exports," he said in a written speech delivered by Mustapa Mohamed, a minister in the prime minister's office.

"Today, East Asian nations hold some two-thirds of total world foreign reserves. We buy US Treasuries and bonds and help finance the US deficit and then borrow from the US at higher interest rates to fund our development needs. This is inefficient," he said.

Najib said Asian countries should try to better utilise their large foreign reserves so they could be a tool to benefit the whole region.

The comments come as the 10-member Association of Southeast Nationsplans to hold an inaugural East Asia Summit in Kuala Lumpur in December.

The summit will involve all the Asean members as well as China, India, Japan, South Korea, Australia and New Zealand.

Although a largely symbolic meeting, it is seen as part of moves towards a future East Asia economic community.

Why worry?

Najib downplayed suggestions that a closer Asia represented a future threat to Europe and America.

"There is no reason for anyone to be worried. The region wants peace and security just as Americans and Europeans do. The East Asia grouping is an important vehicle to promote greater regional co-operation. It should not be seen as a counter trade bloc to the European Union or the Americas," he said.

"The East Asia Summit (here) later this year will make it clear that it is not a counterforce to any country or region."

The deputy prime minister highlighted China's booming economy and aruged that it boom would provide opportunities for Asian countries to profit and advance their economies.

Najib also lauded China's move last week to un-peg the yuan from the US dollar as a sign of Beijing's willingness to open up to the global economy.

He said the move was "a positive sign that China recognises the value of working constructively with the rest of the world."