Former political detainee Lim Guan Eng wasted no time leaving his mark on Penang after the brash opposition politician won power in the Malaysian state in 2008 elections.

He quickly balanced the books of the former British colonial outpost, which were stained red after a half-century under the control of Malaysia's authoritarian ruling coalition.

He has virtually eliminated its debt, launched a campaign to halt official corruption, and has, by most accounts, injected new vigour and efficiency into the government of the important economic hub.

Today, Penang -- a colorful mix of colonial architecture, pre-war Chinese shophouses, tropical beaches and high-tech factories -- is on the up, as property values soar and foreign investment rolls in.

With potentially pivotal new elections expected to be called within months, Lim -- a 51-year-old ethnic Chinese former banker with slicked-back hair and a wide chin -- says the implications of his record are clear.

"If you can show that you can govern well, it will be a model, a showcase... a precursor of governing the federal government," he said, pointing to the possibility of the opposition led by Anwar Ibrahim taking power.

Malaysia's long-ruling Barisan Nasional (BN) coalition faces voter unease over allegations of misgovernance, corruption, and racial tension, the latter often blamed on policies that promote majority Malays over minority Chinese and Indians.

But the BN insists the Anwar-led opposition can do no better.

Lim's success in Penang has called that claim into question, however, and his outspokenness mark him as the country's most potent symbol of minority impatience.

Lim earned a one-year jail term in 1998 for sedition after he criticised the dropping of rape charges against a Malay top ruling party politician and he launches regular broadsides against the BN over its frequent financial and other scandals.

His detractors call him a domineering self-promoter who is benefiting from UNESCO's 2008 listing of Penang's capital Georgetown as a World Heritage Site, a bid launched before he took over.

But even opponents acknowledge he gets results.

"He is very clever, very authoritarian," said Teng Hock Nan, Penang's top official for Gerakan, the ruling coalition partner ousted by Lim's Democratic Action Party (DAP) in 2008. "When he gives a directive, it gets done."

One of Britain's oldest Asian settlements, Penang was a cosmopolitan trading hub in its 19th-century heyday before going into what Lim calls a "graceful decline".

Today, run-down Georgetown shophouses -- the distinctive rows of buildings seen in parts of Southeast Asia -- are being transformed into trendy hotels, cafes and art galleries injecting new life into old neighbourhoods.

A federally-backed grant programme provides seed money for such renovations.

Many credit Lim's attempts to clean up the rampant backroom deals and political patronage that are typical of Malaysia, whose rating by Transparency International on corruption in recent years has steadily sunk.

Lim launched an unprecedented system of open tenders for state projects and his top officials this year took the unheard-of step of declaring their assets.

Business figures privately say once-routine demands for payoffs are now rare and the bureaucracy more efficient.

"What is sad about Malaysia is that things that are the international norm (clean government) are abnormal," Lim said.

Foreign investors have signalled their approval. Home to much of Malaysia's high-tech industry, Penang led the nation in luring manufacturing investment the past two years.

Lim's moves have been "very substantive in managing finances, cleaning up the government, and initiating green policies", said Bridget Welsh, a Malaysia politics analyst with Singapore Management University.

"I've gone there for years and can tell you there is a big difference."

Australian investors Karl Steinberg and Christopher Ong, who is Penang-born, have restored an Edwardian bungalow and other decaying heritage properties into boutique hotels, lured by the new energy and official "cleanliness".

"There are places where corruption can make it hard to get things done. Penang is relatively free of that," Steinberg said.

But Lim's directness rubs many raw and he faces criticism for overly fast growth as soaring property prices have worsened a low-cost housing shortage. Plans for huge infrastructure projects have fuelled the concerns.

Gerakan accuses him of stoking racial tensions, and national leaders including premier Najib Razak have warned vaguely of threats to Malay dominance, widely seen as referring to ambitious non-Malays like Lim.

But Francis Loh, head of independent Penang-based democratic rights group Aliran, says Lim's government has been racially inclusive.

"They represent the opening up of government in Malaysia," he said.

Leading Malaysia pollster Ibrahim Suffian said Lim looks so secure that the ruling coalition likely views Penang as a "lost cause" in the next polls.

Nationally, the picture is less clear.

Lim doubles as national head of the Chinese-dominated DAP, one of three members of the opposition front, including Anwar's multi-racial party and an Islamic party.

The alliance won historic gains over the BN in 2008 but remains fractious and its performance is mixed in three other states -- Malaysia has 13 -- it won four years ago.

But Lim remains hopeful. He relaxes by reading British historian Niall Ferguson's works on the failures of past national governments through history, in case the opposition wins control.

"If we win... I need to know what are the pitfalls," he said.