PAS seeks to woo foreign investors

PAS seeks to woo foreign investors

Eileen Ng, Associated Press/Kota Bahru, Malaysia

Malaysia's sole opposition-led state, Kelantan, has embarked on a
campaign to woo foreign investors, especially from China, to shed
its image as a rural backwater ruled by a fundamentalist Islamic
party.

Economic development in Kelantan, which is among the poorest
of Malaysia's 13 states, has been sluggish since the Pan-
Malaysian Islamic Party known as PAS came into power in 1990.

"Kelantan is not poor. We have the resources but we need
investment. We want to breathe new life into the economy and
create a modern Kelantan," PAS Vice President Husam Musa said in
an interview.

PAS, which eschews material riches and tells supporters they
will be rewarded in heaven if they are good Muslims, has run
Kelantan along deeply religious lines.

Its goal of setting up a theocratic state in multiracial
Malaysia with strict Islamic laws including amputation for theft
and stoning for adultery has put off investors in the past.

PAS has banned gambling, limited alcohol sales and shut down
entertainment outlets. Muslim women must cover their heads and
are discouraged from wearing lipstick. It once told hotels to
build separate swimming pools for men and women and ban unisex
salons, although these rules are not strictly enforced.

Such laws have made the state appear something of an oddity
for the rest of Malaysia, ruled by moderate Muslim Malays in a
coalition with minority Chinese and Indians. Nearly 60 percent of
Malaysia's 26 million people are Malays.

PAS' defeat in last year's general elections by the coalition,
led by Prime Minister Abdullah Ahmad Badawi, was a wake-up call
to the party to step up economic progress in Kelantan, catch up
with the rest of the country and show voters that its brand of
Islamic administration could work, party officials say.

Husam, 46, an economist who is among a new generation of young
leaders picked by the party in internal polls earlier this month,
said Islamic rules will ensure that the state is corruption-free,
a magnet for investors.

Last year, the state government set up a new international
relations and investment committee that has led several trade
missions to China, said Husan, who heads the state economic
planning committee.

The state has cut red tape to expedite investment, and handed
out tax incentives to lure investors. Officials note that the
cost of doing business in Kelantan is among the lowest in
Malaysia -- thanks to cheap labor, the result of poor economic
growth.

State officials say about 10 billion ringgit (US$2.6 billion)
in investment has been committed over the next 10 years for
several large property and tourism projects.

A vast tract of forest has been cleared along the river
snaking through the state capital, Kota Bharu, where work is in
progress on a proposed 2 billion ringgit riverfront project with
a water theme park resort, shopping mall and condominiums, state
officials say.

A second new shopping mall opened in the capital late last
year, and several large commercial and retail property projects
are underway in various parts of the state.

Also on the drawing board is another 2 billion ringgit venture
to build a new fishing and marine township to boost tourism.

A 200 million ringgit port is also being planned in nearby
Tumpat that will transform the coastal town into a regional
transportation hub, a selling point for the state as it seeks to
lure cash-rich Chinese companies to invest in mining activities.

"A port is crucial because companies from China have expressed
interest in exploring iron ore mining and coal trading here,"
Husam said. "It will make us a transportation hub and change the
economic scenario of Kelantan."

Lee Seng Loong, deputy president of Kelantan's Associated
Chinese Chambers of Commerce and Industry, acknowledged that
Islamic laws could be hurdles to growth but said it should not
deter non-Muslim investors.

"Islamic rule can be restrictive in some ways. There is little
entertainment here. But for businessmen it is OK. Because we find
it easy to deal with the state government," he said.

Lee, who owns a hardware store supplying building materials,
said his business has benefited from the building boom and urged
the PAS-led government to continue its economic reforms.