Political stability will come under moderate threat during the next five years, not because of any major shift in the balance of power, but rather owing to internal strife within both the governing Barisan Nasional (BN) coalition and the main opposition Pakatan Rakyat (PR) alliance. The BN, which is tightly controlled by its largest constituent party, the United Malays National Organisation (UMNO), is set to remain in government during the forecast period, during which there will be a general election. (The next election must be held by April 2013 but is likely to happen sooner, most likely in 2012.) Although the last general election, in 2008, revealed that UMNO could no longer count on the strong support of the majority of Malays, the PR still does not offer a sufficiently credible, stable alternative to the BN.

The BN's success in remaining in a position of strength will depend largely on whether it manages to keep its power bases intact in Sabah and Sarawak, on the island of Borneo. BN legislators from the two states make up more than one-third of the BN's total of 137 members of parliament (MPs). The outcome of the recent Sarawak state election, in which the ruling coalition retained its two-thirds majority but lost eight seats to the opposition PR, was not the resounding victory that the BN had hoped for. Unresolved issues, such as illegal foreign immigration to Sabah, may cause the BN parties based in Borneo, or individual MPs from that region, to defect to the opposition in the national parliament or use the threat of such action to secure greater influence within the coalition in the run-up to the next general election.

Although voters in the rural heartland of peninsular Malaysia continue to support UMNO, there have been suggestions that the party has lost the support of a significant number of educated, liberal middle-class Malays. This decline in support may have intensified as Internet news sites and blogs have exposed government corruption and the political intrigues of individual members of the ruling administration. The more conservative Malays have, meanwhile, been voicing concerns about the government's plan to reform policies favouring bumiputera (ethnic Malays and other indigenous peoples), as they believe that the special rights accorded to them in the constitution could be rescinded. Recent by-election victories for the BN raised hopes that the ruling coalition had succeeded in strengthening its appeal to the country's smaller ethnic communities, but the outcome of the Sarawak state election, in which the BN lost six seats to the Chinese-dominated Democratic Action Party (DAP) and another two to Parti Keadilan Rakyat (PKR, a component of the PR), suggests that much work needs to be done in this area before the BN makes a bid to increase its parliamentary majority and win back control of state assemblies that it lost to the opposition coalition in the 2008 elections.

UMNO's internal leadership elections, which have been postponed until 2012, could be a source of political instability in the forecast period, particularly if the party fails to secure a resounding victory at federal and state level in the coming election. Under such circumstances, the credibility of the prime minister, Najib Razak, would be undermined, putting his position as president of UMNO-and hence his role as head of government-at risk. This in turn could halt, or even reverse, Mr Najib's programme of economic reforms. The most likely contender to become UMNO's next leader is the deputy prime minister, Muhyiddin Yassin.

The leader of the PR, Anwar Ibrahim, a former deputy prime minister, is likely to be convicted on a charge of sodomy in the coming months. Mr Anwar claims that the case against him is politically motivated. Without him, the ties that unite the disparate parties making up the PR-the reformist, multicultural PKR, the conservative, Islamist Parti Islam se-Malaysia and the left-of-centre, predominantly ethnic-Chinese DAP-are likely to fray, while the process of choosing a new PR spokesman could deepen divisions within Mr Anwar's PKR as well as between the opposition coalition's member parties.