KUALA LUMPUR, Malaysia -- A multimillion-dollar entertainment city set up six years ago as Malaysia's answer to Hollywood has been abandoned due to financial constraints and after it was sued by a former tenant, officials said Monday.

But the flop of the Entertainment Village has not deterred growth in the Multimedia Super Corridor, a high-tech business hub where the project is located, said officials from the Multimedia Development Corp., which supervises growth in the zone.

The so-called E-Village project, a centerpiece of the zone, was launched in 2000 to turn Malaysia into a key film production hub in Asia.

But plans for eight world-class studios, an academy of dramatic arts, theme parks, hotels and residential areas due for completion in 2007 at a cost of 3 billion ringgit (US$798 million) were halted after the developer ran into financial problems.

The dilemma worsened after local animation house Astrio late last year sued the Multimedia Development Corp. and the government for failing to honor guarantees to provide a one-stop filming center that can compete with entertainment capitals of the world.

Astrio is seeking 8.7 million ringgit (US$2.3 million) in damages, claiming the defendants didn't meet expectations on intellectual property protection nor provided it with competitive financial incentives.

Kamil Othman, a vice president of the development corporation, declined to comment on the legal case. He told reporters there are no tenants in the E-Village now, which houses only a small studio and office building.

Despite this, he said development of creative industries in the high-tech business zone has not been affected because such projects are ongoing outside the E-Village.

"This is just one of the bumps that we go through...creative content is still a major thrust in the MSC and an area where we have a good niche," said Badlisham Ghazali, the new chief executive of the MDC.

Chairman Abdul Halim Ali said it is up to the government to scrap or retain the E-Village project, but a decision is only likely after the legal dispute is resolved.

He said the MDC is looking at improving incentives to lure more foreign investors to the high-tech business hub to counter stiff competition from other emerging high-tech hubs in the region.

Styled after California's Silicon Valley, the MSC is a 750 square kilometer (300 square mile) zone in and around Kuala Lumpur that offers tax breaks and grants to information technology companies and researchers.

It was set up in 1996 as part of Malaysia's efforts to become a developed nation by 2020. There are now some 1,300 companies in the zone hiring some 30,000 employees, officials said.