Asia must find ways to resolve its territorial disputes if it wants to play a more central role in world affairs, Association of Southeast Asian Nations chief Surin Pitsuwan said Wednesday.

Flashpoints such as the South China Sea need to be settled to give the international community confidence that Asia can "manage its own affairs" and continue to attract trade and investment, he said.

The ASEAN secretary general welcomed an agreement announced earlier Wednesday between China and Southeast Asia on guidelines for an eventual code of conduct in the strategic waters.

But he said more needed to be done to prove to the world that Asia did not need outside help in hot-spots such as the Spratly islands and the Thai-Cambodia border.

"All of us are aware that we have become critical to the global community economically," he told AFP on the sidelines of an ASEAN meeting on the Indonesian resort island of Bali.

"Any situation that will impair the confidence in the region will certainly impact on our role and our potential."

The South China Sea is believed to contain vast deposits of oil and gas and is a key route for global shipping.

Islands in the sea are claimed entirely or in part by China, the Philippines, Vietnam, Brunei, Malaysia and Taiwan, while the United States has declared its national interest in keeping the sea's shipping lanes open.

The agreement on the guidelines for the code of conduct, reached after nine years of negotiations, was "very significant," Surin said.

It showed that China and Southeast Asia understood that with the region's growing economic might came a "sense of urgency" to resolve long-standing territorial differences.

But the former Thai foreign minister could not put a time frame on when the actual code of conduct might be finalised, and other senior Asian diplomats expressed disappointment at the guidelines' limited scope.

Philippines Foreign Secretary Albert del Rosario said they lacked "teeth", and noted that there was not even consensus over which areas were in dispute.

Meanwhile tensions rose in the Spratlys as Philippine lawmakers raised two Philippine flags above a government building on the archipelago.

"Filipinos are willing to die for their soil," legislator Walden Bello told reporters on the trip, which came after a series of incidents involving Chinese and Philippine vessels in the area.

China, which lays historical claim to the entire sea, has long resisted pressure to negotiate territorial matters with the 10-nation ASEAN as a single block, preferring to deal with each country's rival claims bilaterally.

Surin said that while each overlapping dispute would have to be resolved country-to-country, ASEAN had to be part of the solution.

"In the end it will have to be bilateral but ASEAN can offer a moral framework and a political support system," he said.

While only four ASEAN states -- Brunei, Malaysia, the Philippines and Vietnam -- had claims to territory in the South China Sea, the disputes were of vital importance to the entire region.

"All of us are importing, exporting, open economies and we depend on trade, investment and international confidence, so we have a direct interest," he said.

"If you want to keep the region free from external involvement, you have to demonstrate to the world that you can manage things within the region," he added.