Malaysia eyes polls in push to develop Malay region

KUALA TERENGGANU, Malaysia, Oct 29 (Reuters) Malaysia kicked off an ambitious bid today to transform its ethnic Malay heartland into an agriculture, energy and tourism powerhouse by pouring in 34 billion dollars by 2020.

Prime Minister Abdullah Ahmad Badawi launched Malaysia's third development corridor as his government tries to position the country for future growth amid expectations that national elections could be held in early 2008.

''We expect to create more than new 560,000 jobs in the corridor over the next 12 years,'' Abdullah said.

Agriculture and tourism are key focus areas, with nearly half the funds earmarked to strengthen transport links and infrastructure in some of the poorest states, home to nearly 4 million people in Malaysia's northeast.

Abdullah was speaking in Kuala Terengganu in Terengganu state, where two members of an Islamist hardline opposition party were wounded last month after police fired to disperse rioters at a political rally.

Malaysia's opposition parties called the incident the country's worst political violence in recent years, and analysts see Abdullah's plan as a major sweetener to win back support for his ruling United Malays National Organisation (UMNO) party.

Neighbouring Kelantan is the last remaining stronghold of the Islamist opposition Parti Islam se-Malaysia, which wants to turn the country into an Islamic state that punishes thieves by chopping off their hands.

Malaysia will woo foreign investors to participate in the plan, which expects to raise a fifth of the needed 34 billion dollars from the private sector, another 27 per cent from public-private initiatives, and the rest from government, planners have said.

Terengganu is Malaysia's largest crude oil producer, with state energy firm Petronas and Exxon Mobil Corp being the biggest operators in the state.

Petronas, charged with chalking out the plan, has said it also intends to invest in the region. ''We will be investing in the oil and gas like we have been doing all this while,'' Chief Executive Hassan Marican said last month.

Energy services firms are likely to benefit from a slew of potential projects in the so-called East Coast Economic Region.

They include Petronas Gas, Dailog Group , KMN Group, Kencana Petroleum, MMC Corp and Muhibbah Engineering.

The ECER Abdullah launched on Monday sprawls over 51 per cent of the Malaysian peninsula, through the northeastern states of Kelantan, Terengannu and Pahang to Mersing in southern Johor.

He said the plan would involve upgrading of airports, roads, ports and telecommunications facilities. It will also expand a gas and petrochemical hub and set up a zone for plastic makers.

He also announced plans to set up a major international Internet exchange in Terengganu to serve the Southeast Asian.

Education is also targeted in the plan, while the property sector will get a boost from moves to ease development of land that cannot now be sold to non-Malays.

Nearly half the land not owned by the government in the eastern development region is in this category, state news agency Bernama said when the plan was announced last month.

In July Malaysia launched a 51 billion dollar development plan to turn its mainly agricultural north into a logistics, food-processing and tourism zone by 2025.

Last November, it unveiled an ambitious two-decade blueprint to turn 2,200 square km (850 square miles) of Johor next to Singapore into an industrial and tourist zone.

REUTERS SYU HS1033