Malaysia's premier Abdullah Ahmad Badawi has signalled he is firmly in the saddle by opening his party's annual talks with plans to fight corruption and tackle the budget deficit, observers said today.

Abdullah, who has had a patchy record since succeeding veteran leader Dr Mahathir Mohamad two years ago, set the tone late Tuesday in a speech to some 2,500 leaders of the ruling Umno.

He earned a standing ovation with a promise to help advance the country's majority ethnic Malays, as well as weed out the graft that has for decades dogged the party which has ruled since independence in 1957.

But in contrast to Mahathir who had a penchant for grandiose schemes like the Proton national car, Abdullah told the delegates that the government was committed to resolving nuts-and-bolts issues like the deficit.

"We will reduce the deficit but we will ensure economic growth. We do not want unmanageable deficit," Umno supreme council member Rahim Tamby Chik quoted him as saying in the closed-door speech which opened the congress.

The government hopes to cut the budget deficit to 3.5 percent of gross domestic product in 2005 from 4.0 percent in 2004.

Noted Umno-watcher Shamsul Amir Baharuddin said it was clear that Abdullah was emerging out of Mahathir's shadows and exhibiting his own style of leadership, and this was fueling support from the 3.4 million UMNO members.

"Abdullah is gaining strong support from its members. He is firmly in power. There is no one challenging him," said Shamsul, a lecturer at the National University of Malaysia.

Transparent leadership

Abdullah pressed Umno leaders to provide economic input during the talks which conclude Saturday, as the government prepares to launch its next five-year economic blueprint from 2006.

"I hope you will provide good suggestions so that Malays will not be disappointed," he reportedly said.

Umno's mandate is to champion the rights of the Malays who represent some 60 percent of Malaysia's 25 million population, living alongside sizeable Chinese and Indian minorities.

Its goal is to ensure 30 percent of the economic pie is in the hands of Malays, but despite affirmative action programs they have just 18 percent while the affluent Chinese minority holds about 30 percent.

Political observers say that an equal spread of wealth among the races in Malaysia is crucial for continued stability, so the government is sensitive to emerging problems, like the current high unemployment among ethnic Malay graduates.

In his speech, Abdullah also vowed to pursue a transparent leadership style and promote clean governance, warning that only credible Malay contractors would be awarded government contracts.

The prime minister declared the fight against graft a cornerstone of his administration after succeeding Mahathir, but was soon criticised for not achieving immediate results.

Then last month Umno shocked the country by suspending cabinet minister Isa Samad for six years for buying votes in last year's party leadership elections.

Treading carefully

However, P Ramasamy, political science lecturer at the National University of Malaysia, said "money politics" was so entrenched within Umno that Abdullah faces a daunting task.

"He is the number one. There is no overt opposition to him but his anti-graft war could generate opposition against him," he told AFP .

Ramasamy said Abdullah has to tread carefully or risk Umno members retaliating by shifting their support to another leader.

"Just as in all political parties there are factions in Umno. And there is no doubt Najib is eyeing for the number-one post," he said, referring to Umno's deputy president who is Abdullah's heir apparent.