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.