Malaysia's Prime Minister Mahathir Mohamad said yesterday that the toxic chemical incident in Pasir Gudang district in Johor is "under control", as he visited the southern state which is grappling with the clean-up of a river and the treatment of more than 2,700 people who had taken ill after inhaling the noxious fumes.

Seven people were still in critical condition yesterday, down from the 12 reported on Wednesday.

The alarm caused by the incident led the Malaysian Parliament to debate yesterday whether the federal government should declare an emergency for the area in south-east Johor, just north of Pulau Ubin.

"The community here must view it as a serious matter but... everything is under control," Tun Dr Mahathir told a news conference yesterday.

Asked if a state of emergency needed to be declared, he said: "It has not reached that level. We do not need to declare a state of emergency or evacuate residents. We just need to be cautious."

He added: "We cannot say the worst is over; on the other hand, we don't think it is going to be more serious than now. What is important is that we know how to handle this problem."

Malaysia's de facto Deputy Law Minister Hanipa Maidin told Par-liament that a state of emergency was not necessary as the Johor government had not asked for such a declaration.

All 111 schools in Pasir Gudang were ordered closed by the Education Ministry on Wednesday after scores of students were taken ill.

The federal government has approved a one-off RM8 million (S$2.7 million) allocation for clean-up works, adding to RM6.4 million being disbursed by Johor and a RM1 million donation by the Sultan of Johor.

The incident is believed to have occurred when toxic chemicals, believed to be from an illegal tyre recycling plant in Kulai, Johor, were dumped into Sungai Kim Kim last week.

A hazardous materials response team that conducted tests on samples found the presence of benzene, toulene, xylene, ethylbenzene and d-limonene, with the last chemical usually a by-product of recycling tyres, Environment Minister Yeo Bee Yin said yesterday.

The Johor and federal authorities were working together to clean up the waste, focusing on a 1.5km stretch of the river which discharges into the Strait of Johor to the north of Pulau Ubin.

Ms Yeo said the military and national oil firm Petronas are also being roped in to assist in clean-up operations.

"The Department of Environment has discovered that the pollution is caused by a black oil-like substance which was dumped in Sungai Kim Kim," she said.

In two major Johor hospitals, health officials were treating people - mostly students - who had been affected by the fumes.

Johor's Sultan Ibrahim Ismail Sultan Iskandar asked the state's Menteri Besar Osman Sapian to set up a special committee to ensure that a similar disaster will not recur. The ruler suggested the implementation of an early warning system for air or water pollution incidents.

A total of 2,775 people have sought treatment at hospitals and clinics in various parts of Johor due to the toxic waste, said Johor's health, environment and agriculture committee chairman Sahruddin Jamal.

Political finger-pointing has already surfaced, with the opposition attacking the Pakatan Harapan government in Parliament for allegedly being slow to react to the crisis that started last week, when the toxic waste was first discovered.

Three men were arrested earlier this week over the toxic waste dumping. The authorities had wanted to charge the owner of the illegal tyre recycling factory yesterday, but delayed the move in order to obtain more details from the investigations.