Malaysia's growth rate could hit 6.5 percent next year, propelled by tourism from the Middle East, the robust economies of China and India, and soaring oil prices, a senior minister said today.

"We are confident we will achieve 6.0 to 6.5 percent growth next year," second finance minister Nor Mohamed Yakcop told reporters.

"All in all we are confident our growth rate will continue to proceed in a smooth trajectory," he added.

Oil prices broke through new records of more than US$96 in Asian trade Thursday after the Federal Reserve lowered interest rates following news of a surprise decline in US crude stocks.

Nor Mohamed said revenues from state-run oil company Petronas will improve as prices rise.

"For every US$1.00 increase in crude oil (per barrel), we could be better off by RM250 million ringgit per annum," he said. Malaysia is a net oil exporter.

Nor Mohamed said the oil boom would attract more Middle East investment and tourists bringing petro-dollars to Malaysia.

"Middle East tourists find Malaysia to be a comfortable holiday destination," he said.

The middle class population

Tourism is Malaysia's second-largest foreign exchange earner. Officials are targeting 20.1 million visitors for 2007 generating revenue of RM44.5 billion.

Nor Mohamed said the rapid growth of Asian giants China and India will also cushion Malaysia's economy if its traditional partners are hit by an economic slowdown.

"I believe China and India will continue to grow in the years ahead. The rise in the middle class population will also boost our economy as they travel to Malaysia," he said.

Nor Mohamed said that domestic consumption and investment would also fuel the economy.

"We have increased the salaries of government servants and this will have an impact on consumption," he said.

The second finance minister said Malaysia had diversified its economy and is not held captive by the fortunes of its US and European trading partners.

"We have taken measures to diversify our economy and not to be over dependent on exports," he said.

Malaysia is a major manufacturer of electronic goods and semi-conductors and manufacturing is a key component of the economy.