Whenever the Islamist party PAS comes to power in Terengganu, its political agenda has been to combine populist-type development programmes with the wish to turn Terengganu into a shariahcompliant state.

Terengganu's state budget is however heavily dependent on the federal government, to the tune of 80–90 per cent. This hinders the state government's policymaking and implementation, especially when the federal government is controlled by its political opponents.

This article argues that the politics of development play a more central role in determining the durability of the PAS state government in Terengganu than it does in neighbouring Kelantan. In other words, PAS cannot simply carry out its Islamic agenda without being complemented by tangible economic progress if it aspires to govern beyond a single term; PAS's loss in the 2004 election after being in power for one term is a prime example of this dynamic.

The key for the PAS state government to rule beyond the current term is its ability to negotiate the tense federal-state relationship, develop other sources of revenue, and find ways to claim credit for economic progress, in addition to burnishing its Islamic governing credentials by making Terengganu a shariah-compliant state.