Philippines president Rodrigo Duterte has said Indonesian and Malaysian troops can bomb retreating Abu Sayyaf militants and their seafarer hostages.

He said action could be taken at sea because the captive crew from tugs "are not supposed to be there," the Tempo daily reported.

Duterte said he had told Malaysian prime minister Najib Razak and Indonesian president Joko Widodo that their forces could enter Philippine waters in pursuit of the militant group.

He added he told his counterparts that if the group was about to escape, they could "bomb them”.

“If they cannot be captured you bomb them. How about the hostages? Bomb them also. They're not supposed to be there, there is a warning."

Abu Sayyaf is said to be holding more than 10 overseas hostages on the southern Philippine island of Jolo after targeting tugs and fishing vessels.

The group has also attacked cargoships and separately snatched a South Korean captain and Vietnamese crewmen in the southern Philippines.