Abdullah said the government would spend an initial 5.0 billion ringgit (1.54 billion dollars) to kickstart the Sarawak Corridor of Renewable Energy, with private investment targeted at 300 billion ringgit (93 billion dollars).

The Sarawak plan -- the last of five regional economic blueprints being rolled out ahead of elections expected in March -- focuses on developing the state's energy resources of hydropower, coal, natural gas and petroleum.

"The development, distribution and consumption of energy is a core element leading to the success of the Sarawak Corridor," Abdullah said at the launch.

The premier said the project aims to bring economic growth and eradicate poverty in the predominantly rural state by 2030, by creating some 800,000 jobs and luring billons in private investment.

"It's not going to be less than 300 billion (ringgit). It's a huge amount but it involves large developments in various fields ... in Sarawak, which is a very large (state)," he said.

The area earmarked for development is a 320-kilometre stretch along the Borneo coast facing the South China Sea, and covers an area of 70,708 square kilometres -- 57 percent of the state.

Officials say the main engine of growth for the project is the use of hydroelectricity supplied by the controversial Bakun Dam to power various large-scale heavy industries.

The 2.5 billion dollar dam project has been condemned as an environmental disaster after an area of rainforest the size of Singapore was inundated, forcing up to 10,000 tribal residents to relocate.

National University of Malaysia environmental scientist Abdul Latiff Mohamed said activists feared the environmental costs of economic growth in Sarawak would far outweigh the benefits to the state.

"I am afraid and very sceptical of the situation in Sarawak as the level of caution about the environment is still not at acceptable levels," he told AFP.

"We need the development but the business circle is just not environmentally friendly and such scale of development will have a devastating impact there, where law enforcement is so weak," he said.

Abdullah on Monday witnessed the signing of a 5.25 billion ringgit power-supply deal between Rio Tinto Alcan and Malaysian utility Sarawak Energy Berhad for a planned aluminium smelter on Borneo island.

Rio Tinto and local partner Cahaya Mata Sarawak (CMS) have proposed building a 2.0 billion dollar smelter, which would be among the world's largest.

Malaysian conglomerate Sime Darby Berhad and Sarawak Energy Berhad also inked a deal worth 22 billion ringgit to manage the 2400-megawatt Bakun dam and construct its transmission cables.

The two companies will also undertake a project to lay undersea power cables to transmit electricity from the dam to peninsular Malaysia.

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