The foreign ministry of Malaysia -- a magnet for labourers and refugees from poorer regional countries -- said combating "this heinous crime" was "still a work in progress".
"Malaysia has taken substantive measures in the past two years to improve the situation related to human trafficking and smuggling of migrants. In this light, the US State Department should reconsider its assessment on Malaysia," it said in a statement.
It also said it believed information used to prepare the report was "flawed, inaccurate" and "provided by dubious organisations".
AFP