Malaysia is going ahead with plans for a shiny new international financial district at the center of Kuala Lumpur, costing around RM 26 billion (US$8.4 billion) to house major banks, professional services firms, government institutions and shariah specialists.

The new district is one of the $444 billion worth of projects the government listed as part of last month’s economic transformation program announcement, and will be funded by sovereign wealth funds 1Malaysia Development Bhd and Abu Dhabi’s Mubadala Development Co.

According to Bloomberg/Businessweek, the project forms part of Malaysia’s plans to capitalize on its Islamic credentials and attract more investment from the Middle East, in the face of recent diminishing investment from other foreign sources. Mubadala also has its eyes on a $7 billion aluminum hydroelectric-powered project in Sarawak state and PetroSaudi International Ltd last year signed up to joint venture with 1Malaysia to specialize in ‘high-impact projects’. The Qatar Investment Authority also signed a deal in May 2010 to invest $5 billion in Malaysian projects including energy and real estate.

This and Malaysia’s other major economic transformation projects, including mass transit and nuclear power aspirations, are designed to take Malaysia further along the road to its 2020 ‘developed nation’ goal and establish its status as an international financial center with a strong focus on Islamic finance services.

source & article: Bloomberg BusinessWeek