Prime Minister Abdullah Ahmad Badawi said today his government will not pursue economic strategies adopted two decades ago by his predecessor Dr Mahathir Mohamad.

The comments are the latest salvo in a bitter feud between the two men which has raged this year, creating fears of a split in the ruling party.

"Merely continuing the existing economic model that we have had for the past 20 years will not make Malaysia competitive in the long-run," Abdullah said at the annual gathering of the ruling Umno.

Abdullah said that in the past, wealth was generated not by innovation and creativity, but by foreign direct investment, government contracts and privatisation. "Now that era is gone," he said.

"Since we want to be more broad-based, we cannot entirely rely on construction and manufacturing. We must look at sectors that can still generate wealth for many Malaysians especially those in rural areas, like agriculture."

Mahathir, 81, who turned Malaysia from an economic backwater into one of the powerhouses of Asia, has accused Abdullah of mismanagement and lamented the sidelining of his pet projects.

While in office he eschewed the agricultural sector, in favour of grand projects like the national Proton car, steel manufacturing and the Bakun mega-dam.

New sources of development

Abdullah said his goverment will ensure economic growth by exploring new sources of development and ensuring equitable distribution of wealth, while focusing on rural development and modernization of agriculture.

"The development of the agriculture sector to become higher value-added will give the country a competitive advantage. The move to develop the agriculture sector and agro-based industries is not a backward step," he said.

Umno members at the week-long general assembly are expected to demand Abdullah do more for the economy and to remain committed to an affirmative action plan aimed at helping the country's majority Muslim Malays.

Economic growth hit 7.2 percent in 2004 but slowed to 5.2 percent in 2005. Foreign investment also fell in 2005 to US$3.97 billion from US$4.62 billion the year before.

The ruling party was braced for a showdown between Abdullah and Mahathir at the general assembly, but Mahathir was forced to bow out after suffering a mild heart attack last week.