Taiwan threatened to cut direct air travel connections with the Philippines as the diplomatic row escalates over the death of a fisherman by the Philippines coast guard.

Taiwanese Premier Jiang Yi-huah said his government "is assessing the matter" after rejecting a second apology by diplomats flying in from Manila in an attempt to dampen rising tension over the May 9 incident.

Taiwan's retaliatory measures against the Philippines effective immediately include a freeze of the importation of Filipino laborers and suspension of economic exchanges and aviation negotiations, a report by Taiwan's Central News Agency said.

Business promotion activities, bilateral agricultural and fishery cooperation have been stopped. The government also suspended high-level exchanges including ministerial-level meetings at the World Health Assembly starting May 20 in Geneva.

The moves were taken in light of what Taiwan described as the Philippines' inadequate response to its demand that Manila issue a formal apology, compensate the victim's family, investigate the case and punish those responsible and rapidly start fishery talks.

Taiwan's Minister of Transportation and Communications Yeh Kuan-shih also said he "won't rule out the possibility" of severing aviation links, the CNA report said.

This week Philippines President Benigno Aquino sent a personal envoy, Amadeo Perez Jr., chairman of the Manila Economic and Cultural Office, accompanied by MECO Director Manuel Dimaculangan, to Taipei to deliver Aquino's official apology.

"The president appointed Perez as his personal representative who will convey his and the Filipino people's deep regret and apology to the family of (fisherman) Mr. Hung Shi-chen as well as to the people of Taiwan over the unfortunate and unintended loss of life," Philippines presidential spokesman Edwin Lacierda said.

Both sides appealed for calm among their populations, especially in Taipei where an estimated 85,000 Filipinos work in domestic services, a report by The Philippine Star newspaper said.

Lacierda appealed to Taiwanese not to harass Filipino workers or tourists in Taipei.

"We appeal to the people of Taiwan, if the reports are true, not to involve our Filipino nationals there," Lacierda said.

"We appeal for calm. We appeal for sobriety on this unfortunate incident. Let us not involve our Filipino compatriots there. They are there working and they are there working for an honest living. So we ask them not to involve our Filipino citizens," he said.

A senior Taiwanese immigration official said the population shouldn't resort to irrational acts of violence when dealing with Filipino workers amid widespread public anger at Manila, CNA reported.

The incident happened between the northern tip of the Philippines and the southern coast of Taiwan.

The killing in waters both countries claim is another incident highlighting disputed maritime boundaries and fishing rights in the increasingly contentious South China Sea.

A Philippines coast guard surveillance vessel encountered four Taiwanese fishing boats in an area the Philippines considers an exclusive economic zone, the Philippines coast guard said in a statement at the time.

The coast guard said one of the Taiwanese boats allegedly tried to ram the coast guard vessel as officers attempted to board the fishing boats.

The surveillance vessel fired warning shots at the fishing boat and shot at the engine and propeller of the fishing ship to disable it, the statement said.

A crew member from one of the Taiwanese boats said the Philippines vessel shot at a fuel tank, resulting in the death of the 65-year-old fisherman.

Taiwanese officials dispute the Philippines' account, questioning the timing and whether a Taiwanese vessel tried to ram the Philippine vessel.

Jiang objected to Aquino's statement that the shooting was an "unfortunate and unintended loss of life," a report by the BBC said.

Jiang demanded again demanded an explanation why the Philippines vessels shot the unarmed Taiwanese fishing boat.

Jiang also reiterated earlier Taiwanese demands for compensation for the victim's family and that the Philippines investigates the shooting and punishes those responsible.