Tourist island of Langkawi is providing a large plot of land to wealthy investors from the United Arab Emirates to build luxury homes and boost business ties, a report said today.

Kedah Menteri Besar Mahdzir Khalid said a 60-hectare plot of land had been identified for the Arab millionaires.

"A company from the United Arab Emirates has approached us to build bungalows on the island for rich Arabs who want to make Langkawi their second home," Mahdzir was quoted as saying in the New Straits Times .

"We are very happy to accommodate them and have already identified a 60-hectare spot for the project," he said.

In return for the deal, the chief minister said the Arab businessmen had promised to invite several state-owned companies to participate in development projects in the UAE, the newspaper reported.

Mahdzir said the land was co-owned by the state government and the Langkawi Development Authority, which is under Malaysia's ministry of finance.

He said the homes to be built will cost between RM2 million and RM5 million, and the UAE company also planned to construct a marina.

"This project will help boost Langkawi's image as a prime holiday destination," he said.

Mainly Muslim Malaysia in recent months has announced measures to attract foreign investors, particularly Muslim and Middle Eastern funds, to its finance and property sectors.

On April 1, the government removed capital gains tax on property, while in December, it relaxed property ownership rules to allow foreign nationals to buy high-end residential properties without government approval.