Lim's government, led by his DAP party backed mainly by ethnic Chinese, was sworn into office on Tuesday in Penang in a quiet ceremony witnessed by sombre-looking civil servants who have only ever worked for the long-ruling National Front.
The strongly Islamist Parti Islam se-Malaysia (PAS) will lead or share power in four states, including three - Kedah, Perak and Kelantan - that share borders with Thailand, which has been battling an Islamic insurgency with historical links to Malaysia.
PAS and the DAP have vowed to review federal projects on the drawing board in their areas, but said would not stand in the way of projects that were already approved and were beneficial to the people, and have warned they would not tolerate cronyism.
Malaysia's politics of patronage, whereby state contracts are given to businesses aligned with ruling-party interests, has nurtured a powerful political-business establishment whereby contracts are often awarded without open, competitive tenders.
The Edge Financial Daily said in an editorial on Tuesday that was a major factor in Saturday's election.
"Indeed, one can say that one reason why the people voted so strongly for the opposition in the elections is to send a message that they have had enough of political cronyism and awards of contracts and deals to politically connected companies," it said.
The prospect that this nexus could be cut, and the possibility of policy gridlock now that the National Front has lost its iron-clad two-thirds majority in parliament and faces strong opposition in heartland states, has spooked the markets.
Malaysian shares rose 2 percent on Tuesday after plunging 9.5 percent on Monday, wiping out some $30 billion in market capitalisation, probably the biggest single-day loss in the market's history. Analysts saw it as a short-lived rally.
Prime Minister Abdullah has a tricky task ahead in fending off leadership challenges, especially with his UMNO party - the dominant coalition partner - set to hold leadership elections in June. He will also need to fill gaping holes in his Cabinet - four ministers lost seats in the weekend election.
The winning opposition parties also face a delicate task. The Chinese-dominated DAP has long harboured deep suspicions about the Islamist agenda of PAS, which advocates Islamic law for Muslims, including punishments such as stoning and amputations.
In their first test, the DAP, PAS and People's Justice party were still hammering out power-sharing arrangements on Tuesday in Kedah, Perak and central Selangor state.
PAS kept power in Kelantan state and its government was due to be sworn-in on Tuesday evening.
