The Malaysian government has slapped down plans by the hardline Muslim rulers of Kelantan to introduce the Islamic dinar and dirham currencies, reports said Monday.

Authorities in northern Kelantan, the only Malaysian state ruled by the Pan-Malaysia Islamic Party (PAS), said the gold and silver coins could be used to pay civil servants as an alternative to the national ringgit currency.

Senior PAS official Husam Musa said the currencies would first be introduced in the Islamic system of pawnbroking, the Ar-Rahnu.

"If there is no problem with the Ar-Rahnu, there is a possibility that it can be implemented in other sectors," senior PAS official Husam Musa said at a seminar on Islamic banking and finance, according to the Bernama news agency.

Husam said the Kelantan government would introduce the new currency within three months and that once the initiative was well understood by the public, it hoped to use it to pay staff salaries.

"The state government employees can choose either to be paid in dinars or ringgit," said Husam, who is in charge of economic planning and finance in Kelantan.

Proposal shot down

According to Islamic law, the dinar measures 4.25 grams of gold, while the dirham is 3.0 grams of pure silver.

However, Prime Minister Abdullah Ahmad Badawi, whose administration promotes a moderate form of Islam that emphasises economic and scientific development, shot down the proposal.

Speaking from Egypt where he was attending the World Economic Forum (WEF) Middle East, he said state governments were not allowed to issue their own currency.

The ruling National Front coalition is reeling after a weekend election in eastern Sarawak state on Borneo where the opposition parties had their strongest showing in two decades.