The Malaysian state of Penang says it will no longer follow a controversial central government policy favouring ethnic Malays above other citizens.
Many voters were angry about the pro-Malay policy
Penang is one of five states now controlled by the opposition, after elections on Saturday saw big losses for the governing coalition.
Malaysia has had a policy of favouring ethnic Malays in jobs and education for almost four decades.
The large Chinese and Indian minorities have become increasingly angry.
Correspondents say it was largely this anger that led to the dramatic election results over the weekend.
Lim Guan Eng was sworn into office as head of state in Penang, after his Democratic Action Party (DAP) won a convincing election victory.
Street protests in November highlighted discontent
As soon as he was appointed, he immediately targeted the central government's long-standing New Economic Policy favouring ethnic Malays.
"We want to run the state government administration free from the New Economic Policy that only breeds cronyism, corruption and systematic inefficiency," he told reporters.
"This is also a government that believes in equal opportunity and social economic justice. We are here to build a dynamic Penang for all," he said.
The policy was started in the early 1970s, to increase opportunities for the often poverty-stricken ethnic Malays - giving them preference in jobs, university seats and access to services.
But many Malaysians - even some Malays - say that it has only benefited an elite few.
The country's large Chinese and Indian minorities - who make up more than a third of the population - have become increasingly critical of what they regard as blatant racial discrimination.
Ethnic Indians held a large protest rally in November which attracted more than 80,000 people.
Mr Abdullah's National Front coalition suffered its worst election result in five decades in Saturday's elections.
It won more than half of all seats in parliament, but still suffered unprecedented losses.
An alliance of opposition parties won seats in the states of Penang, Kedah, Perak and Selangor, and the Pan-Malaysian Islamic Party (PAS) retained control of Kelantan, leaving the governing coalition in control of just eight states.