Construction of a Malaysian dam that will flood a rainforested area half the size of Singapore and displace 20,000 tribespeople was given the green light Saturday by the state government, local media reported.

"The construction will commence as soon as possible," Adenan Satem, chief minister of the state of Sarawak on Borneo island, was quoted by The Star as saying.

The announcement will be a major disappointment for indigenous groups who have staged increasing demonstrations and road blockades in the rugged region to stop rampant logging and dam-building in the state, and have made blocking the dam on the Baram river a priority.

Peter Kallang, head of Save Rivers, a coalition of Sarawak NGOs and environmental groups, dismissed Adenan's claim that the project had been blessed by local tribal leaders.

Activists allege authorities in the state have a history of buying off or pressuring community leaders to approve unpopular projects.

"How can the community leaders give their support when there has been no news on compensation and resettlement? They always will say yes to the government and there's no transparency at all," he said.

"Adenan should go and listen to what the poor indigenous people have to say, not the community leaders."

Occupying northern Borneo island, much of Sarawak is a jungled landscape crossed by untamed rivers.

It is one of Malaysia's poorest states despite being rich in natural resources, but authorities have plans for around a dozen hydroelectric facilities as they seek to accelerate economic development.

Three already have been built.

Critics call the projects destructive white elephants that will create far more electricity than the state needs.

But authorities say the power capacity is required to lure industry to Sarawak.

Former British premier Gordon Brown once called the destruction of Sarawak's rainforests "the biggest environmental crime of our times."