Malaysian PM bows to key state's demands

KUALA LUMPUR (Reuters) - Malaysian Prime Minister Abdullah Ahmad Badawi, fighting for political survival, made some concessions on Saturday to a politically important state whose leaders could decide whether he stays in office.

During a visit to the resource-rich but otherwise largely poor eastern state of Sabah on Borneo island, Abdullah pledged to tackle the problem of illegal immigrants, increase funding for rural development and build a power plant to ease interruptions in energy supply.

"This shows that steps are being taken to address the various issues raised by state leaders," Abdullah told reporters after meeting state government leaders.

The premier also bowed to other demands by the state's lawmakers, including allowing the state government to have direct access to federal funds allocated for the state.

Ruling coalition lawmakers from Sabah and neighbouring Sarawak state have long complained about being marginalised by the federal government and recently warned of defections to the opposition, threatening to unseat Abdullah.

The opposition alliance needs just 30 more seats to win a simple majority and form the government. It won a record 82 seats in the 222-seat lower house of parliament in the March general election. The remaining seats are held by the ruling coalition which now leads the country.

Lawmakers from Sabah and Sarawak account for about a third of the total seats held by the ruling coalition.

Abdullah's government has been dogged by the prospect of being toppled after de facto opposition leader Anwar Ibrahim claimed he has enough support to form a new government, with most defections likely to come from Sabah and Sarawak.

Abdullah also faces mounting pressure from some members of his United Malays National Organisation party to quit after the ruling coalition recorded its worst-ever performance during its 50-year rule in the March election.

The government lost its two-thirds parliamentary majority and surrendered five states to the opposition in the election.