Obama also offered continued US support in the search for missing flight MH370 as he held talks with Prime Minister Najib Razak, after which the two leaders declared the start of a warmer new era in relations.
"Today across a whole range of areas -- security, trade, and regional institutions -- we are working more closely than ever before," Obama said during a joint press conference, calling Malaysia "central" to stability in Southeast Asia.
These include overlapping claims with Malaysia and others in the South China Sea.
But Obama was drawn into Malaysia's highly polarised politics during the press briefing with Najib, whose government is accused of stifling free expression and using courts and police to harass or jail opponents.
Obama said he stressed to Najib the importance of respecting dissent and ensuring rule of law and would "make sure that we are making progress on that front".
"I think the prime minister is the first to acknowledge that Malaysia still has some work to do, just like the United States still has some work to do," he said.
While intending to focus on Washington's "rebalance" of strategic and economic attention to Asia, Obama has repeatedly had to deal with foreign-policy crises elsewhere, particularly Ukraine.
Today he said new international sanctions set to come into force against Russia would send a message that it must stop its "provocation" in increasingly chaotic eastern Ukraine, where fears of a possible Russian military invasion are growing.
While in South Korea, Obama addressed signs that North Korea -- which he called a "pariah state" -- was preparing for a fourth atomic weapons test in defiance of the United Nations.
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