Religious and racial divisions have brought Malaysia to the "brink of disaster" in the past and continue to hamper its growth, the country's premier said.

Prime Minister Abdullah Ahmad Badawi said Malaysia, Southeast Asia's third largest economy, could not succeed unless racial and religious issues were resolved.

About 60 percent of the nation's 27 million people are ethnic Malay Muslims. The rest are mostly Buddhist, Hindu or Christian Chinese and Indians.

"We do not want to pretend and say everything is okay. We do not want to be in a state of denial. Tell the truth even if it is painful," he told the Sunday Star newspaper.

"We have been solving one racial issue after another. We have even been on the brink of disaster," he added, referring to 1969 clashes between majority Malays and the minority Chinese community, in which hundreds were killed. Since then the country has been largely peaceful.

Growing Islamisation

Abdullah made the remarks as political parties prepare for a possible election early next year.

Malaysian commentators have sounded alarm over the growing "Islamisation" of the country and the increasing polarisation of the three main ethnic communities, who mingle much less than they once did.

Many of Malaysia's ethnic Chinese minority believe the government's economic policy discriminates against them in favour of the Malay majority.