BANGKOK: An official of Malaysia's ruling party has defended the calling of ethnic Chinese "pigs" - a deeply insulting slur in the predominantly Muslim nation, where racial tensions are rising.

Jamal Mohamad Yunos said that for Muslim Malays the word pig is sensitive but "for the Chinese what is the problem? It is their food".

Demonstrators shouted "Cina gila babi" which translates to "crazy Chinese pig" during a Malay supremacy and pro-government demonstration in Kuala Lumpur on Wednesday.

A journalist reported she was called a pig and told to "go back to China".

Critics have accused the United Malays National Organisation, the party that has governed the country for decades, of using the race card to divert attention from graft allegations swirling around prime minister Najib Razak, who is under intense pressure to resign.

Malaysia's population of 30 million consists of 67 percent Malays, most of whom are Muslims, 24 percent Chinese and seven percent Indians.

Race riots in 1969 led to an UMNO-led government implementing an affirmative action program that granted Malays economic and other privileges over ethnic Chinese, Indians and other minorities.

Opposition figure Anwar Ibrahim, who is now serving a jail sentence on what he says are trumped up sodomy charges, pledged to dismantle the system if he won elections in 2013.

Authorities in Kuala Lumpur, who have in the past been quick to arrest scores of government critics under draconian laws, have not moved against protesters who uttered racial slurs during Wednesday's demonstration that turned unruly, with police having to fire water cannon.

Mr Jamal is an UMNO official and one of the key leaders of the protest.

Mr Najib said anyone who broke laws at the event should be prosecuted.

But in his latest public comments the prime minister lashed out at critics demanding he explain how US$700 million ($975 million) mysteriously turned up in his personal banks accounts in 2013, or what happened to the money, saying blackmailers, forgers and foreigners are interfering in the country.

"There is no lie they will not tell, no rumor they will not spread, so that they can say Malaysia is on a dangerous course," he told an UMNO gathering.

"But they are the danger. In their desperate wish to overthrown a democratically elected government they are willing to risk instability that has led to violent revolutions in many countries, some very close to us."

Instead of attacking the organisers of Wednesday's government-approved demonstration he condemned an outlawed but peaceful two-day anti-government protest on August 29 and 30 that attracted one of the biggest crowds in Malaysia's recent past.

"It is not right to organise rallies dominated by one race, which the expressed aim of toppling the government . . . as we have seen, this then leads to rallies by other races," he said.

As well as the unexplained money in his accounts, Mr Najib is under fire over state investment fund 1Malaysia Development Berhad which is billions of dollars in debt. He oversees the fund.

Mr Najib has also denied new allegations raised over the murder in Kuala Lumpur in 2006 of then pregnant Mongolian translator Altantuya Shaariibuu, who was shot dead and had her body blown up with explosives.

Two of Mr Najib's body guards have been convicted over the murder and sentenced to death.

One of them, Sirul Azhar Umar, who is being held in Sydney's Villawood detention centre after fleeing to Australia, is alleged by the Al Jazeera news network to have asked for a bribe to keep quiet about the scandal.

"I won't bring down prime minister," he is alleged to have written in text messages.

Mr Najib has strongly denied any wrongdoing in the case that has been the subject of intense comment in Malaysia's social media but has only received scant attention in the country's government controlled mainstream media.