KUALA LUMPUR, Malaysia, March 8 (Reuters) - Malaysia's
opposition threatened on Saturday to hand the ruling coalition
its biggest upset in 40 years by winning the northern
industrial state of Penang, putting the prime minister's
political future at risk.
 

The multi-racial National Front coalition is almost certain
to get a majority and form the government at the federal level,
but it was as yet uncertain of retaining the two-thirds
majority it has held for most of its five-decade-long rule.
 

"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) in Penang, which was set to lead the new government
in the state.
 

Works Minister Samy Vellu, chief of the Malaysian Indian
Congress, one of the parties in the ruling National Front
coalition, lost the seat he had held for nearly 30 years,
because many Indians thought he was out of touch with their
concerns.
 

Chinese and Indians account for a third of the population
of 26 million and many complain the government discriminates in
favour of Malays when it comes to education, jobs, financial
assistance and religious policy.
 

"This looks like a revolution," said Husam Musa, vice
president of the Islamist opposition party PAS, which looked to
be winning in northeastern Kelantan state. "The people have
risen and are united. The message to government is, 'Enough is
enough'", he told reporters.
 

The final result is unlikely to be clear until at least
1600 GMT on Saturday. About 70 percent of Malaysia's 10.9
million eligible voters had cast ballots, the country's chief
election official said.
 

"What has happened is there were aspects of unhappiness
everywhere -- Indians, Chinese and Malays," the source said,
adding that price rises and religious disputes had fed the
discontent.
 

"All these storms came together and there's this massive
swing. The only thing you can say now is that there will be a
simple majority. It will be the biggest setback since 1969."
 

Race relations have become a big issue in a country that
has long been proud of the racial harmony among its majority
Muslim Malays, and ethnic Chinese and Indian minorities.
 

Opposition rallies drew big crowds, especially Chinese and
Indian voters unhappy with Abdullah's Malay-dominated
coalition.
 

An early hint of the changing political winds was a police
ban on victory processions. Malaysia's worst episode of racial
violence in 1969 was sparked by such a parade.
 

The poll, called before it was due in May 2009, was widely
seen as a referendum on Abdullah's rule.
 

But the electoral system was also on trial as opposition
parties accused the multi-racial Barisan Nasional coalition of
vote-rigging to continue its five-decade-long grip on power.
 

A phone survey on election eve showed non-Muslim voters
were set to deliver a protest vote against the coalition, said
Ibrahim Suffian, of local market-research firm, the Merdeka
Center.
 

It also showed signs of a protest vote among the Muslim
majority, which is made up almost entirely of ethnic Malays and
generally votes for the main ruling party, UMNO.
 

Barisan held 90 percent of the seats in the outgoing
federal parliament. Political experts had predicted Abdullah's
continued leadership could be in jeopardy if his majority fell
back below 80 percent, or around 178 seats, in the new 222-seat
parliament.
 

The economy has been growing at a 6 percent annual clip but
inflation and a likely U.S. economic slowdown inspire worry.