By Manny Mogato

MANILA, Feb 22 (Reuters) - The Philippines wants to beef up cooperation with the Malaysian and Indonesian navies to stop Muslim militants, traffickers and pirates slipping between their sprawling islands, senior officials said on Thursday

"We've started the building blocks on a more secure maritime security environment in the region," Commander Winifredo Banua, the Philippine Navy's planning chief, told Reuters over tea and raw fish on Thursday.

Muslim extremists, including two key suspects in the 2002 Bali bombings, use the Philippines' southern islands as bases, and the United States and other regional powers want to stop them slipping through unpatrolled harbours and coves.

Manila, Jakarta and Kuala Lumpur have been exchanging information since 2002 but Banua said Manila wanted a more formal arrangement with its two neighbours, patterned after the "eyes in the sky" cooperation between Singapore, Malaysia and Indonesia in the Strait of Malacca.

Captain Jose Luis Alano, the navy's chief of operations, said the Philippines and Malaysia were holding maritime exercises twice a year and an annual border-crossing drill with Indonesia to curb illegal migration and transnational crimes.

But analysts say deeper cooperation between the three countries is hampered by a lack of resources and, between Kuala Lumpur and Manila, by distrust over Manila's lingering claim on the east Malaysian territory of Sabah.

"I think the remaining unresolved dispute over Sabah would certainly throw in a problem for Malaysia and the Philippines especially in terms of naval cooperation in the seas near the southern Philippines," said Malcolm Cook, programme director at Australia's Lowy Institute.

The three countries have benefited from external funding and advice to improve their maritime patrols and, since 2005, navy officials from Manila, Jakarta and Kuala Lumpur have held tabletop exercises, sponsored by the U.S. Pacific Command.

Another exercise is scheduled in Manila in August 2007.

LESS SOPHISTICATED

Alano said the Philippines, which has used a naval blockade to help flush out and kill dozens of senior Muslim militants on the remote southwestern island of Jolo, was considering renting more planes and ships to beef up its southern borders.

"Outsourcing is actually one of the concepts we are looking at," he said. "That's an option, but based on our experience, it's cheaper for us to maintain our less sophisticated equipment like surveillance planes and patrol ships."

Alano said they were hoping to get fast, cyclone-class 400-tonne patrol boats from Washington to enhance their ability to outrun smaller but swifter boats used by smugglers and Islamic terrorists.

Malaysia has said it is hampered by lack of patrol boats and personnel. It is seeking an additional 116 boats and funds to double to 4,000 the strength of its maritime force in border areas.

Banua said the Philippine military would ask civilian government employees such as customs officers and immigration officials to help patrol its southern region in a similar approach to Australia's coast watch system.

"Our concept of border control is allowing the free flow of people and goods to develop our economy, but, at the same time, trying to control the 'evils' that they bring with them." (Additional reporting by Jamil Hamid in Kuala Lumpur)

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