A total of 127 Sri Lankans will be charged for entering Malaysia illegally while nine Malaysians, four Indonesians and four Sri Lankans will be investigated for human smuggling, Malaysia's national police chief Mohamad Fuzi Harun said in a statement.

This comes in the wake of boatload of 131 Sri Lankans, believed to be heading for Australia or New Zealand, was intercepted when authorities halted the modified tanker on Tuesday off the coast of southern Johor state, Malaysia. 

ome Affairs Minister Peter Dutton said the ship had the potential to reach New Zealand, and warned the country was now being "marketed as a definite destination" by people smugglers.

The tanker was reportedly carrying 98 men, 24 women, four boys and five girls.

Air Vice-Marshal Stephen Osborne said the smuggling operation was "far more complex and sophisticated" than most, with a "larger number of people involved". 

"This was a much larger vessel than we have seen for some time," he said. 

New Zealand Home Affairs minister Peter Dutton said Malaysia had done "great work" intercepting the vessel. 

Asked to elaborate on the "sophistication" of the smugglers, Dutton said the ship was connected with a "well known" group of smugglers who brought "experience to the task". (With inputs from SBS)