The arrests and the charging of a student activist under the country’s Sedition Act signal a hardening stance by the government after the May 5 poll, which it won in unconvincing style that has highlighted electoral system problems.

Police also raided the offices of three opposition newspapers and seized hundreds of copies of their publications for suspected infringement of regulations, the interior ministry said in a statement.

The long-ruling Barisan Nasional (BN) coalition lost the popular vote for the first time in 44 years in its worst election result, but still won 60 percent of parliamentary seats thanks to a election system that gives heavy weight to its rural strongholds.

The opposition, led by charismatic former deputy prime minister Anwar Ibrahim, is refusing to recognize the result and alleges the BN also benefited from widespread fraud.

Anwar has staged a series of rallies around the Southeast Asian country to protest against the result and some opposition activists have called for mass street protests, testing the patience of Prime Minister Najib Razak’s government.

Conservatives in the United Malays National Organisation (UMNO), the main party in the ruling coalition, have urged Najib, who faces a possible leadership battle within months, to take a firm line against “dissent”.

“The recent arrests are a matter for the police, who are acting to uphold the law,” a government spokesman said. “The detentions came after the police received numerous reports against the defendants by members of the public.”

SEDITION LAW USED

Opposition member of parliament Tian Chua, who is vice president of the opposition Pakatan Rakyat (People’s Alliance), and pro-opposition activists Haris Ibrahim and Tamrin Ghafar, were arrested for offences under the Sedition Act, Kuala Lumpur police chief Mohamed Salleh told Reuters.

He would not say if there would be further arrests.

Tian Chua said on his Twitter page that he had been picked up by police as he was about to board a flight at Kuala Lumpur’s budget air terminal.

Earlier, 24-year-old activist Adam Adli was charged under the Sedition Act, which human rights group Amnesty International said this week should be abolished as it posed a “chilling effect” on freedom of expression.

Adli was charged for a speech he made at a forum on May 13. Tian Chua and Haris had also attended that forum, online media sites reported.

Adli, who could be imprisoned for up to three years if found guilty, was reported as saying at the forum that people should not wait for another election to “overthrow” the government.

His lawyer, N. Surendran, told Reuters that his client had pleaded not guilty because his statements had not been seditious and that the charges were unconstitutional.

Under the Sedition Act, which has been implemented over the years to repress political dissent, it is a criminal offence to make statements with “seditious tendency”.

Najib has repealed and revised several colonial-era security laws in response to growing demands from the country’s middle class for more freedoms, but has left the Sedition Act on the books despite pledging last year to abolish it.

(Additional reporting by Niluksi Koswanage; Editing by Stuart Grudgings and Robert Birsel)

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Najib’s Barisan Nasional (BN) coalition retained power in Sunday’s election in the multi-ethnic Southeast Asian nation. But the coalition lost the popular vote and turned in its worst-ever electoral performance as it was heavily abandoned by the minority Chinese and rejected by many voters of all races in urban areas.

Najib was quick to blame the outcome on the swing by Chinese voters to the opposition alliance, putting a racial interpretation on the result that has struck a chord with traditionalists in his United Malays National Organisation (UMNO).

UMNO, which dominates Barisan, now faces a leadership election in October or November that is likely to be fought between traditional and reformist wings.

“The ideological lines have been drawn within UMNO,” said Khairy Jamuluddin, a reformist who heads the party’s youth wing, in a posting on Twitter. “Game on.”

Any major reforms are likely to be postponed until the leadership is decided, although Najib has said he will push for national “reconciliation” and press ahead with a $444 billion economic masterplan aimed at attracting investment and doubling incomes by 2020.

Conservatives have blamed ethnic polarisation and Chinese “disloyalty” while reformists have urged Najib to expand steps to make UMNO more inclusive beyond its base of poor, rural Malays.

Utusan Malaysia, a newspaper controlled by UMNO, sought to portray Sunday’s election result in racial terms, with one headline saying: “What more do the Chinese want?”

Malaysia’s former and longest-serving prime minister, Mahathir Mohamad, a powerful figure in UMNO, was quoted by local media as saying “ungrateful Chinese” and “greedy Malays” were to blame for the result.

“It may be the starting shot of what’s to come for Najib,” Oi Kee Beng, deputy director of Singapore’s Institute of Southeast Asian Studies, said of conservative reactions to the result. “At the same time, I think he is their (UMNO’s) best asset despite everything.”

FRAUD

Najib also has to deal with a strong opposition that is claiming that Barisan won the election through fraud. On Wednesday, tens of thousands of opposition activists thronged a stadium on the outskirts of the capital Kuala Lumpur in response to a call from opposition leader Anwar Ibrahim.

“This is merely the beginning of the battle between the people and an illegitimate, corrupt and arrogant government,” Anwar, a former deputy prime minister, told the crowd, many of whom wore black to symbolise mourning.

Najib, the 59-year-old son of a former prime minister, had far higher approval ratings than his party in the run-up to the election and has few obviously strong rivals to replace him.

Taking power in 2009, he staked his fortunes on reforms aimed at spurring growth, increasing transparency and dismantling affirmative action policies.

But Najib’s ambitions have been curbed by conservative interests within UMNO. He has failed to come up with major steps to roll back the ethnic privileges that are seen as having benefited an elite of well-connected Malays more than the poor majority.

The government does not provide an ethnic breakdown of the population, but Malays make up about 60 percent of the 28 million people, while Chinese comprise more than 25 percent. The country also has a significant minority of ethnic Indians.

Barisan won 133 seats in the 222-member parliament, but only 47 percent of the popular vote, compared to the opposition’s 50 percent.

“The polarisation in this voting trend worries the government,” Najib said. “We are afraid that if this is allowed to continue, it will create tensions.”

But Barisan has also come in for criticism from younger voters for corruption and patronage politics that critics say have been the hallmark of its 56 years in power.

Liew Chin Tong, an opposition member of parliament from the southern state of Johor, said Najib appeared to be taking the wrong message from the election result.

“It was not just the Chinese who swung against Barisan Nasional. There were many young first-time and second-time voters who voted against the BN,” he told Reuters.

Najib now looks more vulnerable to traditionalists in his party who are opposed to his tentative steps to phase out the policies that favour ethnic Malays, introduced two years after traumatic race riots in 1969.

Those policies have been a pillar of UMNO’s support but have been a prime cause of ethnic Chinese and Indian alienation and investors say they stunt growth and investment in Southeast Asia’s third-largest economy.

Najib’s efforts to roll back these policies and other politically sensitive reforms – such as the introduction of a consumption tax to reduce Malaysia’s dependence on oil revenues and lowering fuel and food subsidies to tackle a chronic budget deficit – could be put on the backburner for now.

“The outlook for direct investment will remain uncertain until it becomes clearer whether or not Najib’s reform-minded policies will continue,” HSBC economists said in a note after the result.

The opposition’s Liew said Najib’s choices of cabinet members in the coming days would be a crucial indication of whether his new government would try to appeal across ethnic groups or only to its Malay base.

“His comments on the Chinese is rhetoric,” Liew said. “What we need to see is who he will include in his cabinet. Will it be made up of UMNO extremists or younger members from the middle ground? We also have to see if he will include the Chinese.” (Additional reporting by Niluksi Koswanage, Siva Sithraputhran, Anuradha Raghu and Angie Teo; editing by Raju Gopalakrishnan)

Najib’s Barisan Nasional (BN) coalition retained power in Sunday’s election in the multi-ethnic Southeast Asian nation. But the coalition lost the popular vote and turned in its worst-ever electoral performance as it was heavily abandoned by the minority Chinese and rejected by many voters of all races in urban areas.

Najib was quick to blame the outcome on the swing by Chinese voters to the opposition alliance, putting a racial interpretation on the result that has struck a chord with traditionalists in his United Malays National Organisation (UMNO).

UMNO, which dominates Barisan, now faces a leadership election in October or November that is likely to be fought between traditional and reformist wings.

“The ideological lines have been drawn within UMNO,” said Khairy Jamuluddin, a reformist who heads the party’s youth wing, in a posting on Twitter. “Game on.”

Any major reforms are likely to be postponed until the leadership is decided, although Najib has said he will push for national “reconciliation” and press ahead with a $444 billion economic masterplan aimed at attracting investment and doubling incomes by 2020.

Conservatives have blamed ethnic polarization and Chinese “disloyalty” while reformists have urged Najib to expand steps to make UMNO more inclusive beyond its base of poor, rural Malays.

Utusan Malaysia, a newspaper controlled by UMNO, sought to portray Sunday’s election result in racial terms, with one headline saying: “What more do the Chinese want?”

Malaysia’s former and longest-serving prime minister, Mahathir Mohamad, a powerful figure in UMNO, was quoted by local media as saying “ungrateful Chinese” and “greedy Malays” were to blame for the result.

“It may be the starting shot of what’s to come for Najib,” Oi Kee Beng, deputy director of Singapore’s Institute of Southeast Asian Studies, said of conservative reactions to the result. “At the same time, I think he is their (UMNO’s) best asset despite everything.”

FRAUD

Najib also has to deal with a strong opposition that is claiming that Barisan won the election through fraud. On Wednesday, tens of thousands of opposition activists thronged a stadium on the outskirts of the capital Kuala Lumpur in response to a call from opposition leader Anwar Ibrahim.

“This is merely the beginning of the battle between the people and an illegitimate, corrupt and arrogant government,” Anwar, a former deputy prime minister, told the crowd, many of whom wore black to symbolize mourning.

Najib, the 59-year-old son of a former prime minister, had far higher approval ratings than his party in the run-up to the election and has few obviously strong rivals to replace him.

Taking power in 2009, he staked his fortunes on reforms aimed at spurring growth, increasing transparency and dismantling affirmative action policies.

But Najib’s ambitions have been curbed by conservative interests within UMNO. He has failed to come up with major steps to roll back the ethnic privileges that are seen as having benefited an elite of well-connected Malays more than the poor majority.

The government does not provide an ethnic breakdown of the population, but Malays make up about 60 percent of the 28 million people, while Chinese comprise more than 25 percent. The country also has a significant minority of ethnic Indians.

Barisan won 133 seats in the 222-member parliament, but only 47 percent of the popular vote, compared to the opposition’s 50 percent.

“The polarization in this voting trend worries the government,” Najib said. “We are afraid that if this is allowed to continue, it will create tensions.”

But Barisan has also come in for criticism from younger voters for corruption and patronage politics that critics say have been the hallmark of its 56 years in power.

Liew Chin Tong, an opposition member of parliament from the southern state of Johor, said Najib appeared to be taking the wrong message from the election result.

“It was not just the Chinese who swung against Barisan Nasional. There were many young first-time and second-time voters who voted against the BN,” he told Reuters.

Najib now looks more vulnerable to traditionalists in his party who are opposed to his tentative steps to phase out the policies that favor ethnic Malays, introduced two years after traumatic race riots in 1969.

Those policies have been a pillar of UMNO’s support but have been a prime cause of ethnic Chinese and Indian alienation and investors say they stunt growth and investment in Southeast Asia’s third-largest economy.

Najib’s efforts to roll back these policies and other politically sensitive reforms – such as the introduction of a consumption tax to reduce Malaysia’s dependence on oil revenues and lowering fuel and food subsidies to tackle a chronic budget deficit – could be put on the backburner for now.

“The outlook for direct investment will remain uncertain until it becomes clearer whether or not Najib’s reform-minded policies will continue,” HSBC economists said in a note after the result.

The opposition’s Liew said Najib’s choices of cabinet members in the coming days would be a crucial indication of whether his new government would try to appeal across ethnic groups or only to its Malay base.

“His comments on the Chinese is rhetoric,” Liew said. “What we need to see is who he will include in his cabinet. Will it be made up of UMNO extremists or younger members from the middle ground? We also have to see if he will include the Chinese.”

(Additional reporting by Niluksi Koswanage, Siva Sithraputhran, Anuradha Raghu and Angie Teo; editing by Raju Gopalakrishnan)

Najib, 59, had staked his political future on strengthening the ruling coalition’s majority in parliament in Sunday’s general election on the back of a robust economy, reforms to roll back race-based policies and a $2.6 billion deluge of social handouts to poor families.

But he was left vulnerable to party dissidents after his Barisan Nasional won only 133 seats in the 222-member parliament, seven short of its tally in 2008 and well below the two-thirds majority it was aiming for.

It also lost the popular vote for the first time in 44 years, local media reported, underlining opposition complaints that the electoral system is stacked against it. Opposition leader Anwar Ibrahim’s People’s Alliance won 89 seats, up 7 from 2008 but well short of unseating one of the world’s longest-serving governments.

Undermined by the result, Najib now faces a difficult task persuading his dominant United Malays National Organisation (UMNO) to press ahead with economic reforms and phase out policies favouring majority ethnic Malays over other races.

“We could see Najib step down by the end of this year,” said a senior official in UMNO, which leads the coalition.

“He may put up a fight, we don’t know, but he has definitely performed worse. He does not have so much bargaining power,” said the official, who spoke on condition of anonymity.

Former Prime Minister Mahathir Mohamad, still a powerful figure in UMNO, told Reuters last year that Najib must improve on the 140 seats won in 2008 or his position would be unstable.

Kuala Lumpur’s stock market surged nearly 8 percent in early trade to a record high on investor relief that the untested opposition had failed to take power, but later gave up some gains to trade 3.1 percent higher. The Malaysian ringgit jumped to a 20-month high.

Ethnic Chinese, who make up a quarter of Malaysians, continued to desert Barisan Nasional, accelerating a trend seen in 2008. They have turned to the opposition, attracted by its pledge to tackle corruption and end race-based policies, undermining the National Front’s traditional claim to represent all races in the nation of 28 million people.

MCA, the main ethnic Chinese party within the ruling coalition, only won seven seats, less than half its 2008 total.

Najib, the son of a former prime minister, said he had been taken by surprise by the extent of what he called a “Chinese tsunami.” Alarmingly for Najib, support from ethnic Malays also weakened, particularly in urban areas, a sign that middle-class Malays are agitating for change.

Najib, who polls show is more popular than his party, could face a leadership challenge as early as October or November, when UMNO members hold a general assembly and elect the party leader.

“In the next round of elections within UMNO, you will see some dissidents emerging and asking for Najib to resign,” said the official, who has held cabinet positions in government. He said Mahathir would be among those who back the dissidents.

ANWAR CRIES FOUL

Barisan Nasional also failed to win back the crucial industrial state of Selangor, near the capital Kuala Lumpur, which Najib had vowed to achieve.

“Najib is now leading a coalition that lost the popular vote, a coalition that will really struggle to prove its legitimacy,” said Wan Saiful Wan Jan, head of the Institute for Democracy and Economic Affairs in Kuala Lumpur.

“My feeling is it’s not going to be very easy for him.”

Investors had hoped that a strong mandate for Najib would enable him to push ahead with planned reforms such as subsidy cuts and a new consumption tax to reduce Malaysia’s budget deficit, which is relatively high at around 4.5 percent of GDP.

Those reforms now seem in doubt, Credit Suisse said in a report on Monday, although Najib is expected to push ahead with $444 billion Economic Transformation Programme aimed at boosting private investment and doubling per capita incomes by 2020.

“A tight election race means the government is unlikely to deliver budgetary reforms,” it said, adding that the racial divide would be a “huge challenge” for Najib.

Najib himself told Reuters in an interview in March that “a strong government is necessary” to accelerate reforms.

For Anwar, the election could mark the final act of a tumultuous political career that saw him sacked as deputy prime minister in the 1990s and jailed for six years after falling out with his former boss, Mahathir.

His three-party opposition alliance had been optimistic of a historic victory, buoyed by huge crowds at recent rallies, but faced formidable obstacles including the government’s control of mainstream media and a skewed electoral system.

Anwar, who vowed to step down from national politics if he lost, said the election had been marred by widespread voter fraud. He had accused the coalition of flying up to 40,000 “dubious” voters, including foreigners, across the country to vote in close races. The government says it was merely helping voters get to home towns to vote. (Additional reporting by Yantoultra Ngui in Kuala Lumpur and Saeed Azhar in Singapore; Writing by Jason Szep and Stuart Grudgings.; Editing by Raju Gopalakrishnan)

Najib, 59, could come under pressure from conservatives in his ruling party for not delivering a stronger majority in Sunday’s election despite a robust economy and a $2.6 billion deluge of social handouts to poor families.

The National Front won 133 seats in the 222-member parliament, down from 140 in 2008 and well short of the two-thirds majority that Najib had aimed to capture. The opposition won 89 seats, up from 82 last time.

Kuala Lumpur’s stock market could gain on Monday on investor relief that the untested opposition failed to take power, but any optimism could be tempered by the prospect of political uncertainty due to the weak win. The Malaysian ringgit surged to a 10-month high early on Monday.

While support for the ruling coalition from majority ethnic Malays remained solid, ethnic Chinese who make up a quarter of Malaysians continued to desert the National Front, accelerating a trend seen in the previous election.

Ethnic Chinese have turned to the opposition, attracted by its pledge to tackle corruption and end race-based policies favoring ethnic Malays in business, education and housing.

“We will work towards more moderate and accommodative policies for the country,” a grim-faced Najib told a news conference after the majority was confirmed. “We have tried our best but other factors have happened … We didn’t get much support from the Chinese for our development plans.”

Former Prime Minister Mahathir Mohamad, still a powerful figure in the dominant United Malays National Organisation (UMNO), told Reuters in an interview last year that Najib must improve on the 140 seats won in 2008. Najib could face a leadership challenge from within UMNO later this year as a result of falling short.

ANWAR CRIES FOUL

The National Front also failed to win back the crucial industrial state of Selangor near the capital Kuala Lumpur, which Najib had vowed to achieve.

The three-party opposition alliance led by former deputy prime minister Anwar Ibrahim had been optimistic of a historic victory, buoyed by huge crowds at recent rallies.

But as counting went late into Sunday night, it became clear that the fractious opposition would be unable to unseat one of the world’s longest-serving governments and pull off what would have been the biggest election upset in Malaysia’s history.

After claiming an improbable early victory, Anwar later said he rejected the result because the Election Commission (EC) had failed to investigate evidence of widespread voter fraud.

“It is an election we consider fraudulent and the EC has failed,” he said.

The National Front has significant advantages, including its deep pockets, control of mainstream media, and an electoral system skewed in its favor.

“The new government does have a credibility deficit at the very moment due to the very tenacious and contentious election process,” said Oh Ei Sun, a senior fellow at the S. Rajaratnam School of International Studies in Singapore.

“I think they have to redouble their efforts in rebuilding their trust among the people.”

Anwar had accused the coalition of flying up to 40,000 “dubious” voters, including foreigners, across the country to vote in close races. The government says it was merely helping voters get to home towns to vote.

The opposition also lost control of the northern state of Kedah, one of four it had taken over in the 2008 success.

The 2008 result signaled a breakdown in traditional politics as minority ethnic Chinese and ethnic Indians, as well as many majority Malays, rejected the National Front’s brand of race-based patronage that has ensured stability but led to corruption and widening inequality.

Ethnic Chinese parties affiliated with the National Front suffered heavy losses in 2008 and were punished by voters again on Sunday. The National Front’s ethnic Chinese MCA party won just five seats, down from 15 in 2008, according to the latest count.

That leaves the National Front dominated more than ever by ethnic Malays, who make up about 60 percent of the population, increasing a trend of racial polarization in the country.

“There needs to be an effort to look back at racial harmony,” said Khairy Jamaluddin, the head of UMNO’s youth wing and a member of parliament. “We don’t want the results to be looked at through a racial lens.”

(Additional reporting by the Reuters Kuala Lumpur bureau; Writing by Stuart Grudgings and Niluksi Koswanage; Editing by Jason Szep and Paul Tait)