Police raided a huge methamphetamine factory in Fiji's capital, arresting seven people and seizing enough chemicals to make $540 million worth of the drug.

Officers found drugs "bubbling away" in a three-building complex stacked with drums of chemicals and equipment, Fiji police commissioner Andrew Hughes said.

They arrested four Asians and three Fijians, Hughes said.

The raid underscored recent warnings by Australia and New Zealand that South Pacific countries could become havens for organized crime if they do not improve their policing, stamp out widespread corruption and improve their economies.

"This is a frightening example of transnational organized crime elements using Fiji (search) as a staging ground for their illegal activities," Hughes told reporters.

"Increasingly we are seeing these elements coming to Fiji and joining up with local organized criminal groups," he said.

Fiji's parliament is debating tougher drug laws that will increase sentences for serious drug offenses from a maximum of 20 years to life in prison.

Hughes said the laboratory, on an industrial site on the outskirts of Suva, was set up to produce methamphetamine (search) for the Australian, New Zealand, U.S. and European markets.

An initial assessment of the chemicals found in the warehouses showed there was enough to produce 2,200 pounds of crystal methamphetamine, Hughes said.

He said the laboratory had the capacity to produce 1,100 pounds of the drug each week.

New Zealand and Australian federal police were in Fiji to assist with the investigation. New Zealand police experts will remain for about two weeks to clean the warehouses of toxic wastes, Hughes said.

Fiji, a nation of 869,000, lies in the South Pacific about 2,200 miles east of Australia.