By Manuel Mogato and Praveen Menon
KUALA LUMPUR (Reuters) - ASEAN host Malaysia is set to give in to pressure from some neighbours and address the sensitive issue of land reclamations in the South China Sea with a draft summit statement saying such action may undermine peace, security and stability.
The statement to be issued after the closing ceremony of the Association of Southeast Asian Nations (ASEAN) Summit in Kuala Lumpur on Monday will raise the "serious concerns" of some leaders over the land reclamations, according to the draft statement seen by Reuters.
The statement says that reclamations have "eroded trust and confidence and may undermine peace, security and stability in the South China Sea".
"We reaffirmed the importance of maintaining peace, stability, security and freedom of navigation in and over-flight over the South China Sea," it said.
China claims 90 percent of the South China Sea, which is believed to be rich in oil and gas, with overlapping claims from Brunei, Malaysia, the Philippines, Vietnam and Taiwan.
While many of the claimants have built facilities like airstrips on some of the islets and shoals they occupy, China's efforts have been by far the most extensive and dramatic.
Disputes over how to address the increasingly assertive role of China - an ally of several ASEAN states - in the strategic waters of the South China Sea has placed the issue squarely as Southeast Asia's biggest potential military flashpoint.
"They cannot ignore that some ASEAN members had strong statements on the issue, particularly the Philippines, which has expressed serious concern over these developments that could create tensions in the region," said an ASEAN diplomat.
Philippines has called on Southeast Asian nations to push for an immediate halt to China's reclamation. President Benigno Aquino held bilateral talks with Vietnam Prime Minister Nguyen Tan Dung on Sunday evening to discuss issue.
Recent satellite images show China has made rapid progress in building an airstrip suitable for military use in the South China Sea's Spratly Islands and may be planning another.
China's official Xinhua news agency on Monday lambasted the Philippines for bringing up the issue at ASEAN.
"Manila's recent finger-pointing over China's island reclamation in South China Sea is just thief shouting thief," it said in a commentary.
Malaysia, which has close economic ties with China, has traditionally downplayed tensions. An advance copy of Najib's statement, as of April 16, made no mention of China's reclamation work in the disputed territory. [ID:nL5N0XH17B]
In a speech to open the summit on Monday, Malaysian Prime Minister Najib Razak did not talk about the reclamations, and only said the developments in the South China Sea should be addressed "in a positive and constructive way".
"There would be a couple of paragraphs on the South China Sea, but the Malaysians are very careful about the language and they did not include Philippines' call on China to stop its reclamation activities," said the diplomat.
(Additional reporting by Ben Blanchard in Beijing; Editing by Michael Perry)