China's State Grid to invest $8 bln in Malaysia-report

KUALA LUMPUR, Dec 15 (Reuters) - China's main power grid operator plans to invest up to $8 billion to set up an aluminium plant and three hydro-electric dams in the Malaysian state of Sarawak on Borneo island, a newspaper reported on Tuesday. State Grid Corp of China (SGCC) has signed a joint cooperation agreement with 1Malaysia Development Berhad (1MDB), the country's new wealth fund, to make the investment, the widely read Star newspaper said, citing a source. "The Chinese partner has the technical expertise and considerable capital," the source said. "As for 1MDB, it can help facilitate the investment from the standpoint of the state and federal governments and power through all the bureaucracy." News of the deal comes a month after Malaysia awarded a commercial bank license to Industrial and Commercial Bank of China, the country's biggest bank. Malaysia has slipped behind regional peers such as Indonesia and Thailand in the race for foreign investment. The deal also marks the first major investment for resource-rich but underdeveloped Sarawak state, which has struggled to draw in financiers. The only other big investor in Sarawak is Rio Tinto but its joint venture with local construction group Cahya Mata Sarawak to build a 720,000 tonne capacity aluminium smelter has yet to take off. (Reporting by Niluksi Koswanage; Editing by Kim Coghill)