KUALA LUMPUR, MALAYSIA - A MALAYSIAN minister warned on Wednesday that investors might be deterred if a fundamentalist Islamic party retains control of its stronghold in northern Kelantan state.

'Foreign investors study the capability of the state government first before making their investments,' Deputy Finance Minister Awang Adek Hussin told the Bernama news agency, as campaigning heats up ahead of March 8 elections.

He said that controversial comments from party leaders - including that ugly women should be given priority in government jobs because pretty women can find rich husbands - were not business-friendly.

Prime Minister Abdullah Ahmad Badawi last year launched a US$33.5 billion (S$47 billion) development plan for Malaysia's poor eastern states, including Kelantan, the only state run by the hardline Pan-Malaysia Islamic party (PAS).

The East Coast Economic Corridor project, drawn up by the national oil company Petronas, is aimed at developing the rural Malay heartland states of Kelantan, Terengganu, Pahang and the district of Mersing in Johor state.

Mr Awang said the PAS state government might not be able to attract all the promised investment under the plan, and that it was not able to afford its election pledges.

'They can make so many promises that they are not capable of delivering.

The people will be the real losers,' he said.

PAS holds only a wafer-thin majority in Kelantan, a state considered a key battleground in the polls. -- AFP