Malaysia ruling coalition suffers surprise upset

By Mark Bendeich

KUALA LUMPUR (Reuters) - Malaysia's opposition was set on Saturday to hand the ruling coalition its biggest upset ever, winning the northern industrial state of Penang and putting the prime minister's political future at risk.

The multi-racial National Front coalition was almost certain to get a majority and form the government at the federal level, but the two-thirds majority in parliament it has held for most of its five-decade-long rule was looking shaky in early returns.

"It's bad. They have lost Penang," a source close to Prime Minister Abdullah Ahmad Badawi told Reuters just two and a half hours after polling booths closed at 0900 GMT. "It's a perfect storm," he added. "Big guns are falling all over the place."

The chief minister of Penang conceded defeat and said he would hand over power to the opposition, one of the state's opposition leaders said.

"He has contacted the governor. He respected the wishes of the people and hoped there are no untoward incidents," said Chow Kon Yeow, head of the Chinese-dominated Democratic Action Party (DAP), which was set to lead the new government in the state.

The surprise defeat for the ruling National Front coalition aroused memories of the last time it failed to win a two-thirds majority, in 1969, when deadly race riots erupted between majority ethnic Malays and minority Chinese.

Abdullah said he accepted defeat in some areas and urged people to remain calm, the Star newspaper reported.

Police officials vowed to use tough internal security laws against anyone spreading rumours of race riots, and banned victory processions after the results, one of which had triggered the violence in 1969.