The battle flags are fluttering in Kelantan, as the federal government campaigns to dislodge Islamic PAS leaders from their last stronghold in March elections.

The hotly contested district of Pasir Mas near the beaches of the state capital Kota Bharu has been festooned with hundreds of blue government banners which face a sea of green flags for PAS.

Coffee shops are abuzz with talk of the fight for the hearts and minds of Malay voters in March 8 general elections in which the Barisan Nasional coalition is intent on claiming the only state left in opposition hands.

A victory would be a huge morale boost for Prime Minister Abdullah Ahmad Badawi, whose Umno leads the coalition which is expecting to lose some of its majority in federal parliament.

"The coming election will really see whether Malays have lost faith in PAS's religious and development agenda or whether they think Umno will make a better alternative," says political analyst Shahrudin Badarudin.

"Either way, it is going to be a tough call in Kelantan as the battle between religion and development continues," he says.

While the Barisan Nastional is dangling billions of dollars in development projects, PAS is offering its own brand of pious values and sedate economic growth in the state which is dominated by Muslim Malays.

Currently, PAS holds Kelantan by just a one-seat majority and the vote will be keenly watched as an indicator of the appetite for fundamentalist Islam in Malaysia, which is also home to large ethnic Chinese and Indian communities.

After 18 years under PAS control, Kelantan is one of Malaysia's poorest states, with an economy reliant on rice, rubber and tobacco farming, and fishing along its long coastline.

Being left behind

At the height of its power, PAS controlled Kelantan and neighbouring Terengganu state which it won in 1999 elections.

But its tough line, including a campaign to turn Malaysia into a religious state, and prohibitions on nightclubs, skimpy clothes and alcohol, coupled with excitement over Abdullah's new administration saw it lose Terengganu in 2004.

The conservative party of Muslim scholars absorbed the painful lesson, shifting away from its fire and brimstone rhetoric and offering a softer line with more emphasis on development.

"PAS today is viewed differently from when we came to power in Kelantan in 1990, as back then people thought we were very fundamentalist and too conservative," says Takiyuddin Hassan, 61, a senior executive councillor.

"We are trying to provide a balance between economic development and spiritual development."

If PAS retains Kelantan, they are pledging free education and hospital care and a reduction in petrol prices which are set to rise elsewhere in the country.

But the coalition say PAS's plans are a pipe dream, compared to its 34-billion-dollar development plan for Malaysia's poor eastern states which promises to transform the fishing villages and hamlets of Kelantan.

"PAS spends about 400 million ringgit on development in Kelantan annually while neighbouring Terengganu spends about 2.0 billion annually," says the BN's deputy chairman in Kelantan, Awang Adek Hussin.

"There is just no comparison as to how backward Kelantan has become as a result of a lack of development," he says.

PAS government is good

However, religious leaders like Ustad Abdul Rahman Ismail, who teaches at one of Pasir Mas's famous pondoks or religious schools, refuses to accept the government's carrots.

"PAS has helped develop the economy here, we are not looking to be like Kuala Lumpur, a metropolis, we want a government who gives us religious development along with economic development," he says.

"We don't mind lacking money as long as we do not lack in being able to practise our religion," he tells AFP.

His view is shared by many villagers who rely on the ulamas for political as well as religious guidance. But for others, future prospects are more important.

"I know the PAS government is good and helps the people but I also want a better life for my children," says food vendor Norhayati Ismail as she dishes up piping hot fried bananas to a line of customers.

"If BN can give us more to hope for then I will have to support them."