The Southeast Asian country has one of the world's hottest piracy markets, costing the U.S. movie, music, software and publishing industries combined losses of almost $1 million a day, according to a U.S. industry group.

Trade law enforcers in just one operation last year seized more than 2,000 street vendors of illegal CDs, VCDs and DVDs from all nooks and crannies of the country.

"There are about 500 of them (pirates) who are back and these are hardcore, repeat offenders," Domestic Trade and Consumer Affairs Minister Muhyiddin Yassin told reporters.

"We are going to go on a major campaign with the police and will be looking at other legal instruments that may be available with the police to ensure these pirates will not be operating as they are now," he said.

Muhyiddin did not give specifics. Police and ministry officials are set to meet next Tuesday for further discussions.

A senior police official in Kuala Lumpur told Reuters that banishment, or Restricted Residence (RR) as it is known locally, was among the penalties being considered for intellectual piracy.

RR is used mainly on habitual criminals whose movements are restricted to a particular place to ensure they have limited access or opportunities to cause trouble.

Occasionally used against gangsters and pimps, the police official said, "We plan to use the same kind of action now against VCD pirates now."

Intellectual pirates currently face a fine of up to 10,000 ringgit ($2,632) or five years jail for each illegal copy in their possession.

Muhyiddin also announced at Friday's news conference a campaign against illegal software beginning September 1.

The International Intellectual Property Alliance (IIPA) estimates that U.S. trade losses due to piracy in Malaysia rose to $316.5 million last year from $140 million in 2000.

U.S. officials say Malaysia has good piracy laws but was not rigorously enforcing them.