* Najib faces opposition pressure in southern state
* Opposition coalition spotlights 1MDB corruption scandal
* Cost of living increases also a big issue for voters
* Najib is still expected to be elected for another term
By Joseph Sipalan and A. Ananthalakshmi
PARIT RAJA, Malaysia, April 9 (Reuters) - A few days before he triggered the countdown to an election last week, Malaysian Prime Minister Najib Razak headed to the state of Johor with a pocketful of promises: a railway revamp, the widening of a jam-plagued expressway and a new sports stadium.
The coalition government led by Najib's United Malay National Organisation (UMNO), which has ruled the Southeast Asian nation since its independence in 1957, is widely expected to return to power in the election that will be held in the coming weeks.
But UMNO is feeling the heat of an offensive by opponents in Johor, and the prime minister - having survived a long-running financial scandal - could be severely weakened if the government wins fewer than half of the state's 26 parliamentary seats.
"If control of Johor slips into (opposition) hands it would damage Najib's political power and credibility within UMNO after the election," said Peter Mumford, director of Asia at political risk consultancy Eurasia Group.
Many voters here are angry over corruption and the cost of living after the introduction of a national goods and services tax, and many of the palm plantation "settlers" in Johor who have benefited from an affirmative action programme for Malays believe the government is now abandoning them.
Johor, which sits beside Singapore at the tip of peninsular Malaysia, has been one of UMNO's jewels - even its name originates from an Arabic word meaning precious stone. It is the country's third-richest state and has become a hub for investment in recent years, including a $100 billion real estate project being built by China's Country Garden Holdings .
It sends the second-highest number of members to the 222-seat lower house of parliament from Malaysia's 16 states and federal territories after Sarawak state.
An opposition coalition led by Najib's former mentor and Malaysia's longest-serving prime minister, Mahathir Mohamad, has made Johor the focus of its push to exploit Najib's weaknesses.
On the campaign trail, Mahathir and the opposition have focused on allegations of corruption at state fund 1Malaysia Development Berhad (1MDB) and government fiscal mismanagement, linking it to higher housing costs and other increased living expenses.
At a campaign stop in the opposition-held constituency of Pagoh, former deputy Prime Minister Muhyiddin Yassin declared that Johor will change hands in the coming election. Muhyiddin, who joined the opposition after being sacked for questioning Najib over his handling of 1MDB, said that "would give a strong message to the rest of the country."
Najib only narrowly won the last general election in 2013 after losing the popular vote.
At a recent rally of the women's wing of the ruling Barisan Nasional (BN) coalition in Johor's Parit Raja town, spirits were running high: there were deafening cheers from the crowd of more than 5,000 and a cacophony of rattling plastic clappers.
But the chief minister of the state had a warning for them.
"If we allow our party to lose, it is not impossible that we would lose forever," Mohamed Khaled Nordin said. "We must win, because Johor is not a place to experiment and try your luck."
As the birthplace of UMNO, Johor is a barometer of support among ethnic Malay-Muslims, who account for over 50 percent of Malaysia's estimated population of 32 million.
The opposition claims to have the support of a "Malay tsunami" that could hand it control of Johor and hurt the ruling coalition elsewhere in the country, possibly denying it the two-thirds parliamentary majority it needs to pass constitutional amendments. A simple majority of seats is required to rule.
"Johor has always been difficult for the opposition. But if there is any time that change will happen in Johor, I think this is it," said opposition lawmaker Liew Chin Tong of the Democratic Action Party (DAP).
Chief Minister Mohamed Khaled dismissed the opposition's optimism, saying UMNO will not lose any seats in the state. But others in the party are worried and acknowledge that they have a tough battle ahead in Johor.
"Johor will be a good fight," said one UMNO official. "That is the state where we really have to strategise to pass the halfway mark."
DAP's Liew say the opposition could win up to 10 of Johor's 26 seats from BN, which currently holds 21.
Ethnic Malays have traditionally backed the ruling BN. But it has lost support over the last decade among urban populations and ethnic-Chinese and ethnic-Indian voters who have been attracted to opposition pledges to tackle graft and end race-based policies favouring ethnic Malays in business, education and housing.
Driving the opposition's Malay outreach is Mahathir. Although 92, he still holds sway among many rural Malays as the man who, during his 22-year rule, transformed a post-colonial backwater with a drive for modernisation and national pride.
The opposition strategy of emphasising the allegations of corruption at 1MDB seems to be making some headway.
Najib has denied any wrongdoing in the 1MDB scandal and has been cleared by Malaysian authorities even as the U.S. says that more than $4.5 billion was stolen from the fund in a fraud allegedly orchestrated by Jho Low, a financier known to be close to Najib and his family.
"UMNO doesn't protect the people anymore, they only protect Najib," said Anuar, a 70-year-old retired accountant from Johor who backed UMNO for 40 years but switched to the opposition because of the 1MDB scandal.
Editing by John Chalmers and Raju Gopalakrishnan and Martin Howell