KUALA LUMPUR - Malaysia will raise oil royalties for its petroleum-producing states to 20 percent from the current 5 percent, Prime Minister Mahathir Mohamad said on Thursday.

"Everybody will get 20 percent of the profit from their area," Mahathir told reporters in parliament. "So if the area produces a small amount, they get 20 percent of the profit from the area. We will pay whatever is due to them."

Mahathir's party had earlier promised to increase petroleum royalties for all producing states as part a slew of economic and financial reforms in the lead-up to his surprise election win in May.

(Reporting by Joseph Sipalan; Writing by Emily Chow; Editing by Kenneth Maxwell)

© Reuters News 2018