Malaysia is turning 2200 square km (850 sq miles) of the southern state into an industrial and tourism zone close to its border with Singapore.

Earlier this month, Malaysia and Singapore agreed to set up a joint ministerial committee to oversee the setting up of the Iskandar Development Region, prompting some concern in Malaysia.

But Deputy Prime Minister Najib Razak, who met with investors and government officials in Singapore on Monday and Tuesday to discuss the project, rejected suggestions that Malaysia was giving Singapore too much of a hand in the venture.

"It is not giving up too much power to Singapore," Najib said at a press briefing, adding that Malaysia required support from Singapore on issues such as speeding up the border crossing between the two countries.

"They (the committee) will not decide on their own. They are not to have the executive authority to decide," Najib said, following a lunch with 60 Singapore-based fund managers.

Malaysia's prime minister and his cabinet will have final authority over the project, he said.

Najib said that Singapore-based investors had expressed concern about power outages and crime in the state, and about the free flows of goods and services across the border.

The Johor plan implies heavy investment from neighbouring Singapore, which lies about a kilometre, or less than a mile, away from the state capital of Johor Baru. Najib declined to say how much investors had committed to the project.

Many Malaysians, particularly in Johor, are deeply suspicious of Singapore and some resent its economic success. Singapore separated from Malaysia in 1965 and relations since then have often been prickly.

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