Mahathir stressed the importance of freedom of navigation in the busy waterway, saying in an interview with ABS-CBN News Channel in Manila that if there were no restrictions and sanctions, "the claims made by China will not affect us very much."
Efforts by the Philippines, for example, to explore for undersea deposits of oil and natural gas in Reed Bank west of its Palawan island province have been stymied for years by Chinese protests and claims to the offshore region. The Philippines has declared a moratorium on exploration in the area in the past because of Chinese threats.
"We have to talk to China on the definition of their claims and what is meant by their ownership or so-called ownership they claim to have so that we can find ways of deriving some benefits from them," Mahathir said.
"I think that whatever may be the claim of China, the most important thing is that the South China Sea in particular must be open to navigation," Mahathir said. "There should be no restriction, no sanction, and if that happens, then I think the claims made by China will not affect us very much."
During talks in Manila between the visiting Malaysian leader and President Rodrigo Duterte, the territorial conflicts were high in the agenda.
"We emphasized the importance of maintaining and promoting peace, security, stability, safety and freedom of navigation and overflight over the South China Sea," Duterte said after the meeting, adding that force or the threat of it should not be resorted to.
Duterte thanked Malaysia for brokering peace talks between the Philippine government and Muslim guerrillas in the south, homeland of minority Muslims in the largely Roman Catholic nation. The rebels have become leaders of a new Muslim autonomous region in the country's south under a peace deal.
The Malaysian leader, who at 93 is the world's oldest prime minister, visited the Philippines as his country's leader in 1987 and 1994.
"I'm glad to see that, at last, peace has come to the southern Philippines. Development cannot take place in war. In war, we destroy but in peace we build," Mahathir told a business forum in Manila before meeting Duterte.
With enormous economic opportunities opening up in the former battlefields, Mahathir said Malaysia is looking forward to investing in the region and pledged that his country will continue to back Philippine peace efforts. Philippine Trade Secretary Ramon Lopez said the two countries plan to resume the ancient practice of barter trading between Malaysia and the southern Philippine towns of Jolo, Siasi and Bongao to ease poverty that breeds criminality and terrorism.
A Malaysia-led team of 28 international peace monitors will remain in the south until all Muslim guerrillas have demobilized under the peace deal, Malaysian officials said. The European Union, Japan and Brunei also have contributed personnel to the peacekeeping contingent.
Moro Islamic Liberation Front chairman Murad Ebrahim, the former Muslim rebel leader who now heads the five-province autonomous region called Bangsamoro, attended a state banquet hosted by Duterte for Mahathir. Officials were trying to arrange a meeting between Mahathir and Murad.
The Philippines and Malaysia, along with Western governments and the guerrillas, see effective Muslim autonomy as an antidote to nearly half a century of Muslim secessionist violence which the Islamic State group could exploit to gain a foothold in the region.
Malaysia, the Philippines and Indonesia agreed in 2017 to carry out sea and aerial patrols to confront a wave of abductions along their sea border by Abu Sayyaf militants and allied gunmen from the southern Philippines. The sea abductions have eased but ransom-seeking Abu Sayyaf militants are still holding a Malaysian and two Indonesians captive in their jungle hideouts.
"Malaysia is committed to take the necessary steps to address the serious issue of terrorism and violent extremism" through the accord, Mahathir said.