Companies investing in tourism, financial services and certain other industries in the state of Johor, which neighbors Singapore, will be exempt from corporate income tax for 10 years, Prime Minister Abdullah Ahmad Badawi told an investment conference in Kuala Lumpur today.

Abdullah wants to encourage more investment to help boost growth in Malaysia's economy, which has been outpaced by Singapore for 21 of the past 30 years. The government expects the 382 billion ringgit (US$109 billion) redevelopment of Johor to create 800,000 jobs in 20 years and transform the area into an international destination for businesses and tourists.

"The incentives are very good on paper," said Tan Teng Boo, who helps manage US$100 million at Capital Dynamics Asset Management in Kuala Lumpur. "Still, it will be crucial to ensure that the follow-through and implementation of the project is efficient."

The Kuala Lumpur Property Index gained 2.4 percent as of 2:54 p.m. local time, outpacing a 1.5 percent gain in the Kuala Lumpur Composite Index. Selangor Properties Bhd., a Malaysian property developer, climbed 3.2 percent to 3.82 ringgit, while IGB Corp. rose 1.6 percent to 2.48 ringgit.

The April 1 abolition of tax on gains from property sales, first imposed in 1975, may cost the government 200 million ringgit a year, according to estimates by Sia Ket Ee, an economist at OSK Research Sdn. Removing the tax, which makes up 0.2 percent of the government's revenue, will help lure more foreign investments, he said.

The property measures are "definitely good" for the economy, said Quek Leng Chan, a Malaysian billionaire whose assets range from the Hong Long Group to local cement producer Tasek Corp. and is estimated by Forbes to be worth US$2.9 billion.

Growth in Malaysia's US$147 billion economy is expected to accelerate to a three-year high in 2007, the central bank said yesterday. Southeast Asia's third-largest economy is forecast to expand 6 percent this year after growing 5.9 percent in 2006, Bank Negara Malaysia said.

The current capital gains tax on property is 30 percent within the first two years, falling to 5 percent by the fifth year, according the Inland Revenue Board's Web site. For foreigners, the tax starts at 30 percent for the first five years, and drops to 5 percent in the sixth and subsequent years.