PAS leaders, speaking late Saturday at a public forum organised by the Democratic Action Party (DAP) here, said they also needed to allay fears among Muslims about their cooperation with the Chinese-dominated DAP.

"Our cooperation with DAP was used to discourage Malays from voting for PAS," Abdul Hadi Awang, PAS chief minister in the eastern state of Terengganu, told a crowd of more than 1,000 people.

At the same time, Prime Minister Mahathir Mohamad's ruling National Front coalition used the opposition pact to scare non-Muslims from voting for DAP, Hadi said.

"We need to meet the people, explain our stand and be ready to listen to their demands and criticisms," he added.

DAP chairman Lim Kit Siang said at the forum that the two parties have to "debunk all baseless fears" about their cooperation.

"We must fight the government lies that PAS is an extremist party and that DAP is anti-Muslim. The people must not fall in the government trap again," Lim said.

PAS and DAP, along with the National Justice Party (Keadilan) and the Malaysian People's Party, are part of the Alternative Front alliance which contested November's general elections.

The National Front coalition kept its two-thirds parliamentary majority but lost another 18 seats compared to the last parliament.

The Islamic party, rather than its secular opposition allies, was the main beneficiary of a protest vote by ethnic Malays. It more than tripled its parliamentary seats to 27, retained Kelantan state assembly and captured neighbouring Terengganu.

The DAP won just 10 seats in what Lim dubbed a "catastrophic" showing, Keadilan took five and the Malaysian People's Party failed to win any.

The DAP blamed its setback on a "fear and scare" campaign by the National Front -- which told the ethnic Chinese minority that a vote for the DAP was a vote for PAS's ultimate goal of an Islamic state.

Lim acknowledged that both PAS and DAP would continue to have different political ideology, but said their cooperation was based on common "ideals for democracy, good governance, justice and freedom."

Hadi said Malay voters had supported PAS because they "know our cooperation is based on the fight for justice."

He said non-Muslims had nothing to fear as PAS would not neglect their interests but would appoint Chinese representatives to the state government.

Hadi pledged to ensure a "just and transparent government, committed to eradicate poverty irrespective of race and religion."

"We will also make available interest-free loans for low-cost housing to non-Muslims as well as Muslims. Chinese and Tamil schools will receive aid," he added.

Since coming into power in Terengganu, PAS has abolised bridge tolls and taxes on residential properties. It also plans to halt gambling, limit alcohol sales and shut down entertainment centres in the state.

But a proposal to impose a religious-based tax or "kharaj" on non-Muslim businesses has met a storm of protest.

Hadi told the forum that the state government was still assessing the situation but assured non-Muslims that the tax would only be imposed "if other taxes can be eliminated."

He also said state leaders would be given six months to one year to "clean up all irregularities" in state government agencies and subsidiary companies.

Many of the companies had suffered losses under the previous National Front administration but the top management was still being paid heftily, he said.

Mustafa Ali, who heads the economic development, petroleum and industry committee, cited a joint venture project with Indonesian firm Gunawan Steel which led the state to lose 90 million ringgit (23 million dollars).

"Terengganu does not need the factory, yet due to vested interest by the previous government, money was poured into the venture," he told AFP.