By Niluksi Koswanage

KUALA LUMPUR (Reuters Life!) - The world may be cloaked in economic gloom, but the makers of a dress decked with 751 diamonds worth $30 million are confident that the desire to flaunt wealth has not quite been extinguished.

Worth nearly 5 times the top bonus paid out to American International Group Inc executives, the silk and taffeta evening gown has a 70 carat pear-shaped diamond at the center of the bodice, topped off with a train sparkling with diamonds.

And the extravagance may seem out of place in amid the world's worst economic slowdown for decades, the masterminds behind the dress seemed unconcerned.

"Stocks drop, gold is even falling but a diamond is forever. This is a dress with diamonds. Why do backwards, why can't we go forwards?" the designer of the dress, Faisol Abdullah, told Reuters as he showed off his sketches.

"We are going to the fantastic, but its real. You are getting value for money with these diamonds," he said in the cavernous confines of a jewelry shop in an upmarket Malaysian mall owned by Middle-Eastern diamond merchants Mouawad, who are bringing in the Belgium-cut diamonds.

Abdullah is rushing to finish the dress, dubbed the "Nightingale of Kuala Lumpur," in time for the STYLO Fashion festival early next month in the Malaysian capital.

Although it usually takes six to seven months to source more than 700 diamonds, ample diamond supplies in Mouawad's warehouses around the world made it easier, said Antoine Bakhache, head of the firm's Asia operations.

"It's a security and insurance nightmare buts it's worth it. Its not throwing 100 million ringgit down the drain, it is an investment for the super-rich," said Bakhache, who belongs to the Mouawad family who controls the firm.

Asked if the dress would attract buyers, Nancy Yeoh, chief executive of STYLO which commissioned the dress said: "Its art and there are still enough rich people who would want to buy.

"Actually, we have a plan to present the dress to the royal courts around the world starting with the Middle East," she said, adding that if the dress was sold, 5 percent would go to the Gaza Humanitarian Fund.

But Malaysian shoppers thronging Malaysia's busiest shopping street in central Kuala Lumpur were unimpressed.

"Its frivolous. The dress does not make sense at such a bad time for the economy," said Fauziah Suhaimi, a 28-year-old sales executive.

"But there is one reality here, the rich will keep on getting richer and buying such dresses while ordinary people like you and me can just watch and dream."

(Editing by Miral Fahmy)