KUALA LUMPUR (AP) -- Malaysia's government faced growing pressure Thursday to be more transparent in awarding public contracts after it signed a huge land swap deal without an open bidding process.

The deal has revived opposition demands for authorities to scrap a long-held practice of handing state contracts mainly to ethnic Malay majority businesses in secret tenders, despite concerns among foreign investors that the policy breeds cronyism and corruption.

The government signed an agreement with property developer Naza TTDI last week, giving it 26 hectares of prime state-owned land in Kuala Lumpur in exchange for the company's construction of Malaysia's biggest convention centre for the International Trade Ministry, a project expected to last five years.

International Trade Minister Mustapa Mohamed defended the deal in Parliament on Wednesday, saying his ministry was "in dire need of a large space for exhibition" events that it holds regularly.

Mustapa rejected opposition claims that Naza TTDI had received an excessively sweet deal. The land was valued at about RM197 million, while the convention centre would cost RM628 million to build, he said.

The government did not hold open tenders because Naza TTDI had proposed the project, he added.

Opposition leaders insisted the centre was unnecessary, saying there were similar buildings elsewhere in Malaysia's biggest city that are underused. They also pointed out that the market value of the land is expected to soar after Naza builds other offices and residences there.

"The lack of transparency in the building-for-land deal... could cause a further plunge of Malaysia's competitiveness and corruption perception rankings next year," opposition lawmaker Lim Kit Siang said in a statement.

Scrutiny over massive government-backed projects has risen after Malaysia's main port authority incurred debts of more than US$1 billion while developing an industrial hub that opened in 2006. Anti-corruption officials are investigating government and corporate officials, including a former transport minister, for possible fraud that led to cost overruns.

The government said earlier this month it has stepped up efforts to combat corruption and maintain investor confidence after the country's ranking fell by nine spots to 56 out of 180 nations on watchdog group Transparency International's Corruption Perceptions Index for 2009.

The drop in Malaysia's transparency ranking was attributed to perceptions that there has been little political will to curb corruption, which activists say ranges from small bribes to police officers to millions of dollars for state contracts. (By SEAN YOONG/Associated Press Writer)