Malaysian police on Thursday arrested eight tribespeople blocking access to a dam which they say will displace them from their lands, amid increasing protests on Borneo island.

Police arrested the eight Penans including two teenagers, took down banners and dismantled wooden barriers on the road to the remote $1.3 billion Murum dam in Sarawak state, said activist Raymond Abin.

Abin, an official with the NGO Save Sarawak's Rivers Network, said some 100 other Penans remained at the site to continue the blockade.

"The authorities just find that this is the only way to deal with the people -- refusing to deal with their demands," Abin told AFP. "The easy way is to arrest them in order to intimidate and threaten them."

A local police official confirmed eight were in custody but declined to comment further. Abin said the Penans were not told the reason for their arrest.

The Penans set up the blockade in September to demand 500,000 ringgit ($157,000) for the loss of their land, property and livelihood.

The dam is expected to flood 245 square kilometres (95 square miles) and cause 1,500 Penan and 80 Kenyah natives to lose their homes.

Sarawak Energy said the 944-megawatt dam began filling in late September and would be completed within 14 months.

It added that relocation of affected natives was set to be completed by year-end and insisted that displaced villagers were being compensated fairly.

The company dismissed the protest as "instigated" by activists.

The Murum dam is one of a series of hydroelectric facilities planned by the Sarawak state government as it pushes economic development in one of Malaysia's poorest states.

But the building spree in the resource-rich state along the powerful jungle rivers has been dogged by controversy.

Activists allege massive corruption, while natives complain it has flooded rainforests and uprooted tens of thousands of people.

Hundreds of Malaysian tribespeople have also blockaded the construction site of the nearby Baram dam.

While the Baram dam is expected to generate 1,200 megawatts of power, activists claim it will flood 400 square kilometres of rainforest (154 square miles) and displace 20,000 tribespeople.

Sarawak's longtime chief minister Taib Mahmud has faced mounting accusations of enriching himself and cronies through a stranglehold on the state's economy, charges which he denies.