More than 130 Sri Lankans were found onboard the Etra.

Immigration Minister Iain Lees Galloway has described human trafficking as "repugnant" after Malaysian authorities busted a human-smuggling ring which had New Zealand in its sights.

One hundred and thirty-one Sri Lankans were discovered in a modified tanker in the waters off Tanjung Gemuk in Kota Tinggi, Johor, reported Channel NewsAsia on Sunday. Authorities believe the ship was heading to Australia and New Zealand.

The ship is believed to be one of the most sophisticated yet to target New Zealand and may have had the capability to reach our shores, unlike most people smuggling attempts with New Zealand as their destination.

GRANT MATTHEW/STUFF Immigration Minister Ian Lees-Galloway: "It's common knowledge that New Zealand has been mentioned as a target in the past."

That will be a concern to New Zealand, which has been labelled a soft touch by some hardline Australian politicians for our stance on the Manus Island refugee situation.

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One of Jacinda Ardern's first acts as Prime Minister was to re-extend the previous government's offer to help resettle Manus Island refugees, an offer Australia has repeatedly refused because it believes that would only encourage more people smuggling operations.

ROYAL MALAYSIA POLICE It is believed the ship was heading to Australia and New Zealand.

Galloway said New Zealand was not involved in the latest operation, but Malaysian success in disrupting the attempt "sends a very clear signal to any people involved in people smuggling".

"Any further details on this disruption are a matter for the Malaysian authorities, but this sort of venture would put lives at extreme risk in the most vast and treacherous ocean in the world. We thank the Malaysian authorities for their efforts.

"New Zealand is strongly committed to regional efforts to combat people smuggling. It's common knowledge that New Zealand has been mentioned as a target in the past.

"Exploitation of individuals and families by people smugglers is repugnant and will not be tolerated."

Ninety-eight men, 24 women, four boys and five girls were discovered on the tanker Etra.

12 people have been arrested by authorities.

Police chief Mohamad Fuzi Harun told Channel NewsAsia that the people-smuggling operation had been going since mid-2017 and "has international connections across Sri Lanka, Australia, New Zealand, Indonesia and Malaysia".

"With these arrests, the Royal Malaysia Police has successfully foiled a large and cunning human smuggling syndicate."