* Jets bomb area, hundreds of troops involved
* Outcome of operation is unclear
* At least 27 killed in standoff
* Sparks political crises for Malaysia and Philippines
* Violence disrupts palm oil industry
(Adds details on operation, U.S. embassy travel warning)
By Al-Zaquan Amer Hamzah
KUALA LUMPUR, March 5 Malaysian troops backed by
fighter jets stormed the camp of an armed Filipino group on
Tuesday, trying to end a standoff on Borneo island after
violence that killed at least 27 people and sparked fears of
broader insecurity in the resource-rich region.
Jets bombed the area in Malaysia's eastern Sabah state for
more than 30 minutes before hundreds of ground troops moved in
to search for about 200 Filipinos believed to be hiding near a
coastal palm-oil plantation, Malaysian officials said.
The outcome of the operation remained unclear more than 11
hours after it began. Malaysian officials said their forces
suffered no casualties but they gave no details on the fate of
the Filipinos, whose allies based in Manila claimed they had
survived and were still resisting.
The government-run New Straits Times newspaper reported
explosions at a site 30 km (19 miles) away from the main
After telling reporters earlier the operation had been
successful, police said it was still going on and that gunmen
could still be at large.
"The government has to take the right action in order to
preserve the pride and sovereignty of this country," Malaysian
Prime Minister Najib Razak said in a statement announcing the
The group is demanding recognition and an increased payment
from Malaysia for their claim as the rightful owners of Sabah,
part of Borneo island and which the sultanate leased to British
colonialists in the 19th century.
Malaysia has refused the demands and Manila has repeatedly
told the group to put down its weapons and come home. But the
violence has sparked a political crisis ahead of elections in
both countries. Each government says it is investigating
allegations of opposition involvement.
Najib, who faces a tough election within weeks, has come
under pressure to take a firm stance against the group, which
arrived by boat about three weeks ago claiming to be descendants
of the southern Philippines' sultanate of Sulu.
The security headache could prompt him to delay the polls,
which must be held by June, adding to nervousness among
investors over what could be the country's closest ever
Philippine President Benigno Aquino has said he suspected
his country's opposition backed the obscure group in an attempt
to undermine him ahead of congressional elections in May.
The insecurity has disrupted operations in Sabah's huge palm
oil industry. Prolonged trouble could dampen growing investor
interest in energy and infrastructure projects in the state,
although the main oil fields are far from the standoff.
Oil majors such as ConocoPhillips and Shell
have poured in billions of dollars to develop oil and gas fields
in Sabah. Chinese companies have been investing in hydro-power
and coal mining.
The violence, which is occurring close to popular diving
spots, could also hit tourism. The U.S. embassy in Malaysia
issued a statement on Tuesday advising against travel to the
Two policemen were killed along with 12 militants when
Malaysian security forces tried to tighten a cordon around the
group on Friday. That sparked more violence over the weekend.
AQUINO BLAMES "CONSPIRACY"
Aquino has come under pressure from opponents for supporting
Malaysia's rejection of the group's claim to Sabah, which
remains a dormant Philippine policy goal.
He in turn has suggested the political opposition encouraged
the intrusion as a way of undermining a historic peace deal
signed with Muslim rebels last year, calling it a "conspiracy".
Sulu is a Philippine island chain that lies between Sabah
and the Philippines' Mindanao island. The sultan's family, the
Kirams, are traditional rulers, with no formal political powers.
"The family of Sultan Jamalul Kiram could not possibly have
settled on this course of action alone," Aquino said on Monday.
"All those who have wronged our country will be held
The Philippines has asked for a Philippine navy vessel to be
allowed to provide humanitarian, medical and consular assistance
and to take the armed group home.
For Malaysia, the crisis is complicated by the illegal
immigration of Filipinos to Sabah, whose population has more
than quadrupled since the early 1970s. The Philippine government
says about 800,000 Filipinos now live there.
Sabah residents have been transfixed in recent weeks by a
public inquiry into allegations that illegal immigrants were
handed identity cards by the ruling United Malays National
Organisation (UMNO) in a citizenship-for-votes scheme.
Much of the population in the area affected by the violence
has cultural and family links to the southern Philippines -- an
hour away by speedboat -- raising doubts over their allegiance.
That could hinder efforts to capture the gunmen and make
immigration an awkward issue for Najib. Voters in Sabah,
traditionally a bastion for the UMNO-led National Front
coalition, could swing the election to the opposition if it can
build on recent gains there.
Three Malaysian palm oil refineries with a combined capacity
of 1.8 million tonnes were running at reduced capacity and are
preparing to halt operations if the violence drags on, refinery
officials with direct knowledge of the matter told Reuters.
The refineries are owned by Singapore's Wilmar International
and Malaysia's KL Kepong and Kwantas Corp
. Sabah is Malaysia's top oil palm growing region,
accounting for a quarter of national production.
Much of the palm oil from Sabah is shipped to China -- the
world's second-largest consumer of edible oils.
(Additional reporting by Niluksi Koswanage in Kuala Lumpur;
Manuel Mogato and Rosemarie Francisco in Manila; Writing by
Stuart Grudgings; Editing by Dean Yates and Neil Fullick)