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NoneKUALA LUMPUR: In many respects, 2024 has been a good year for Malaysian Prime Minister Anwar Ibrahim’s unity government. Notwithstanding a poor rating on institutional reforms, Mr Anwar can take pride in how the past year has showcased Malaysia’s political stability, strong economic recovery and growing importance as a hub for artificial intelligence infrastructure investments, and ascending global voice for middle countries. To become prime minister, Mr Anwar had to work with his coalition’s arch-rival UMNO , to the dismay of many supporters. To govern, he had to reset the economic direction and refresh Malaysia’s global image. If anything, he would look back at 2024 as a validation of the tough choices he had to make since the November 2022 general election . Mr Anwar accepts that his government needs time to prove itself, confident that he will be able to turn the poor “D” rating by electoral reform group Bersih into an “A” in due course. The year ahead, however, will likely bring three major tests - political, economic and social - that will test Mr Anwar’s administration and ultimately determine whether Malaysia is indeed a country to watch. POLITICS: SABAH IS MORE THAN A STATE ELECTION For political stability, the only rule is to hold the parliamentary majority. On this front, 2024 has met the mark. Threats of defection against the unity government were minimal or non-existent, and internal conflict among government parties, chiefly DAP and UMNO, were contained among elite leadership. The unity government’s cooperation was successful enough in by-elections, as the unit won more than it lost. So much so that the leaders of the government parties are exploring another partnership in the next general election. Externally, the threats presented by opposition coalition Perikatan Nasional plateaued to a low level, as the chasms between Parti Islam Se-Malaysia (PAS) and Bersatu, and between factions within Bersatu, widened substantially over prime ministerial candidature and political allegiances. Of course, the shadow of former prime minister Najib Razak continues to loom over this government, set off by the partial pardon in February 2024, which sparked outrage among Pakatan Harapan supporters, though celebrated by Najib loyalists in UMNO. A mixed result of Najib’s cases - discharge not amounting to acquittal on the case involving Abu Dhabi state fund International Petroleum Investment Company, but asked to enter defence in the 1MDB-Tanore trial - is an overall neutral effect for the unity government as it escapes the claim of favouritism or interference. In 2025, the most consequential political event that could pose a threat to the unity government, if it happens, is the Sabah state election. Although not due until December 2025, speculation has been rife that the Sabah legislative assembly may dissolve before then. That, however, was before the news of alleged corruption in the state broke out early last month. Before the news broke, the challenge of the Sabah state election was already obvious. Although Gabungan Rakyat Sabah (GRS), UMNO, and Warisan are part of the unity government at the federal level, UMNO and Warisan are opposition parties in Sabah. The question now is what contest formula will be used in Sabah. If the parties of the unity government compete against each other in the state, it could threaten the cohesion of the federal alliance. In other words, this could be the first real electoral test for Mr Anwar’s government - one that will determine if the novel concept of “competition amidst cooperation” is feasible to maintain. It goes without saying that where Mr Anwar stands on the corruption scandal involving the Sabah state government will also impact on his anti-corruption reputation. Relatedly, the Najib permutation is likely to revolve more around his appeal for house arrest rather than his court cases, which could take much longer to resolve. The government has already denied that a proposed new home detention law was to cater to Najib, but the continued pressure from Najib and his loyalists is hard to ignore. If the partial pardon already sparked dissatisfaction, an image of Najib going from prison to home detention will undoubtedly be worse. ECONOMY: SUBSIDY RATIONALISATION AS A HALLMARK REFORM Economically, Malaysia managed to keep domestic numbers stable while attracting record international investments. Improving GDP, inflation and jobs numbers point to a recovering economy amidst global uncertainty and decline. Notably, investments into artificial intelligence , semiconductors and data centres have been significant and will likely continue into 2025. The main question in analysts’ minds in the coming year will be the petrol subsidy rationalisation , which was promised in the Budget 2025 to be implemented by mid-2025. This is significant for several reasons. First, petrol subsidy rationalisation is generally a highly emotive issue, especially for an oil-producing country like Malaysia, which has long enjoyed low prices. Second, the extent of the government’s reform commitments comes down to this issue - past governments have tried and reversed when faced with pushback. Third, it is perhaps the last window for difficult reforms before the unity government enters into the “election cycle” of its final two years ahead of the next general election. Though Mr Anwar has rolled back subsidies relating to diesel, electricity, and select food items, the petrol subsidy rationalisation is unlike any other, thus presenting an outsized challenge to his administration. He has limited the scale by focusing only on the top 15 per cent of income earners, but there is no saying what impact this will have on the wider economy. If he passes this test, however, he would have achieved a feat that his predecessors could not. As a trade-dependent economy, how Malaysia fares in a US-China trade war under Trump 2.0 depends on the depth and breadth of those tariffs. If tariffs increase by at least 10 per cent, then the reshoring to Malaysia, as it had in 2024, will accelerate as more firms search for geopolitically neutral and geographically strategic areas with long-term planning. However, if the breadth of tariffs is higher, i.e affecting more products, as it has semiconductor equipment and solar panels in Malaysia, then the net benefit might be lower. SOCIETY: MALAYSIA’S ASCENDANT GLOBAL ROLE FOR MIDDLE COUNTRIES Finally, it would be remiss to assess 2024 without considering Malaysia’s social fabric, which has long been influenced by ethno-religious tensions. The controversies relating to KK Mart , halal certifications and Chinese-language signboards have been destabilising to varying degrees. While it is impossible to predict if similar incidents will occur in the coming year, it is likely that the any politicalisation of ethno-religious tensions, combined with existing on-the-ground polarisation, will result in reactions similar to those seen in the past year. Therefore, the speed and effectiveness of containment will be key in determining how well Malaysia’s social fabric holds together. There is another wildcard factor for 2025: ASEAN chairmanship . The opportunity it presents is for Malaysia to assert its place in a geopolitically contested world as a middle country. With its rising economic prominence, ASEAN’s bargaining strength in international politics will also increase, providing Mr Anwar the tailwind to influence global change. Middle countries wedged between superpowers will always have to hedge by being friendly to all, but pandering to none. The challenge lies in becoming more active globally without compromising long-term positions. If done successfully, this would serve as a much-needed unifying source of national pride - one that would strengthen Malaysian society, cutting across the ethno-religious stalemate. Maintaining political and economic stability are basic ingredients for a government’s success, but this is increasingly challenging for most countries, near or far. 2025 will likely be registered as the year sizable tests are put on Mr Anwar’s government. If he overcomes them - or better yet, converts them into triumphs - it may prove a consequential year that would put him in good stead. James Chai is a political analyst, columnist and the author of Sang Kancil (Penguin Random House).Eagles try to cast aside perceived Hurts-Brown relationship issues ahead of Steelers showdown