Gen Prayuth expressed his concerns after soldiers in Narathiwat found about 100 Malaysian flags lying on the Yaring-Cho Airong road in Cho Airong district's tambon Chuab on Wednesday.
"[The flags] must be the work of ill-intentioned people," he said.
Gen Prayuth said he had also ordered Isoc to foster better understanding with local people about the flags.
Isoc spokesman Banpot Phupian said Thursday authorities had clear evidence that southern insurgents want to raise Malaysian national flags and put up banners bearing messages criticising Thai authorities Saturday.
"The insurgents hope they'll create misunderstanding between Thailand and Malaysia," Col Banpot said. However, the Malaysian government would not approve of the insurgents' actions either, because altering or misrepresenting a national flag is illegal, he said.
Meanwhile, a man was found dead in a Narathiwat durian plantation on the Hulo Pare-Tanyong Limo road in tambon Tanyong Limo, Rangae district, early Thursday.
He was identified as Samuelee Jeko, 29, who lived in tambon Tanyong Mas in the same district, according to Pol Lt Rachata Nuanhom, the investigator in charge of the case.
A bullet wound was found at the back of the victim's neck.
A police investigation showed Samuelee was wanted by police in relation to a security case.
He was gunned down by an unidentified number of attackers while he was picking durians in the plantation, Pol Lt Rachata said, citing a preliminary police investigation.
The motive for the murder could be either a personal conflict or another attempt to stir up violence in the deep South, Pol Lt Rachata said.
In Yala, the special military ranger task force in tambon Wang Phaya of Raman district interrogated Koder Sulong, 27, who was wanted by police on motorcycle theft charges in Pattani's Muang district. The suspect is from Mayo district in the same province, and had previously been detained in Yala's Bannang Sata district.
Mr Koder allegedly confessed to stealing a motorcycle from Prince of Songkla University's Pattani campus on Feb 11, 2009.
A police report indicated the suspect may be involved with insurgents and the motorcycle he had stolen might have been handed over to separatists for use in attacks.
Authorities are investigating to determine whether Mr Koder is linked to any southern insurgent group.
In Pattani, defence volunteer Mahamasoj Wate, 49, was shot dead by a motorcycle pillion rider on a road in tambon Karubee of Kapho district.
Meanwhile, HRH Crown Prince Maha Vajiralongkorn Thursday accepted two children of imam Yacob Raimanee of the Pattani Central Mosque under his royal patronage. Imam Yacob was a Muslim leader in the deep South who was shot dead early this month in Pattani's Muang district.