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Prime Minister Najib Razak (C) leaves Friday prayers at Putra Mosque in Putrajaya outside Kuala Lumpur July 10, 2009/Bazuki Muhammad

Rising political tension in Malaysia over ethnic and religious rivalries and the trial of opposition leader Anwar Ibrahim are key challenges facing the ruling coalition led by Prime Minister Najib Razak.

The National Front ruling coalition’s dominance through 52 years in power was dented by historic losses in 2008 polls, shifting the political landscape and increasing political friction. Many voters, especially the country’s Chinese and Indian ethnic minorities, abandoned the National Front in favour of Anwar’s three-party opposition and show little signs of returning to the coalition.

Race and religion have always been explosive issues in Malaysian politics. Najib took power pledging a more inclusive approach to ethnic Chinese and Indian minorities, but his United Malay National Organisation (UMNO) party that is the linchpin of the ruling coalition is beginning to cast this approach aside in a bid to woo conservative Malays.

The caning of three women under strict Islamic laws last month for having illicit sex signalled the government’s increasing adoption of a stronger Islamic agenda, which has worried some investors. A heated row over the use of the word “Allah” by Christians, which sparked attacks on religious establishments, is also threatening to prolong minority unhappiness with the government.