The Philippines' famous white-sand island destination Boracay is drowning in faeces and may need to be shut down to protect the health of millions of visitors, President Rodrigo Duterte has warned.

The fiery leader gave his brutal assessment of the country's top tourist draw as he told hotels, restaurants and other businesses on the tiny central island to clean up or he would ban tourism there.

"I will close Boracay. Boracay is a cesspool," Duterte told a business forum in his southern home city of Davao late Friday, according to an official transcript released by the presidential palace Saturday.

"You go into the water, it's smelly. Smell of what? Shit. Because it all comes out in Boracay," he said.

Red-faced tourism department officials affirmed Duterte's assessment on Saturday, saying it reflected worsening sewage conditions on an island known globally for its pristine white sands and crystal clear waters.

"It's a shame that Boracay, which has repeatedly been recognised by prestigious travel magazines as the world's most beautiful island, may yet end up a paradise lost if water contamination continues," Tourism Secretary Wanda Teo said in a statement.

Department spokesman Ricky Alegre said a number of establishments drained their sewage directly into the sea.

"There are certain areas there (where)... some establishments have illegally tapped their sewage line into the water line," Alegre told AFP.

Of the 150 Boracay business establishments recently inspected by the government, only 25 were connected to the sewage line, he said.

Many establishments were also building too close to the beach and were even crowding into the roads of the 1,000-hectare (2,470-acre) island, Alegre added.

Boracay attracts more than two million tourists a year and brings in 56 billion pesos ($1.12 billion) in annual revenues, the department and industry sources said.

Duterte warned the situation was a looming environmental "disaster" and a "tragedy" that could soon drive visitors away from the island, located about 190 kilometres (308 miles) south of Manila.

He said he had ordered Environment Secretary Roy Cimatu to clean up Boracay or else.

"I'll give you six months. Clean the goddamn thing," he said he had told Cimatu.

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