Businesses Grow Wary as Malaysian Islamist Party Gains Traction

Infineon Technologies facility at Kulim Hi-Tech Park in 2024. Photographer: Samsul Said/Bloomberg Photo by Samsul Said /Photographer: Samsul Said/Bloomb

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(Bloomberg) — At the octagon-shaped market in the heart of Malaysia’s Kelantan state, women call out from stalls stacked with coconut-rich sweets and fish sausages. Nearby, shoppers contemplate a spread of machetes. Lining the steps, a handful of beggars sit quietly with hands outstretched to passersby, a reminder that prosperity has been slow to reach this corner of the country.

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The state has long ranked as Malaysia’s poorest. Much of the semiconductor and data center investments flowing into the Southeast Asian nation have bypassed the area, leaving it anchored in lower-value industries. On the outskirts of the state’s capital, Kota Bharu, a nearly century-old matchstick factory stubbornly stands as the last in Malaysia. Water from the tap can run cloudy and brown.

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Kelantan has for decades been the stronghold of Parti Islam Se-Malaysia (PAS), a stridently Islamist party once consigned to ruling rural Malay heartlands. But a so-called “green wave” of support for PAS, after the party’s primary color and flag, has reached urban middle class Muslims and could propel it to kingmaker status in the next election, posing a formidable challenge to the fragile government coalition.

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Businesses are also growing wary of PAS’s influence. In Kelantan, a focus on social rather than economic policies has led to restrictions on gambling, alcohol, hospitality and entertainment that are uncommon in other parts of Malaysia.

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“The state is very, very slow about getting things done,” said Ahmad Nazri Che Omar, chairman of the group that represents the more than 1,300 Malay traders at Siti Khadijah Market in the state capital. “But PAS has traditionally had a stronghold here and has a big influence on the people.” 

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When Prime Minister Anwar Ibrahim came to power in 2022, he promised sweeping reforms after the 1MDB scandal helped bring down Barisan Nasional’s decades-long rule, triggering years of political instability. But some voters say progress has fallen short and the political compromises needed to sustain Anwar’s broad coalition, along with concerns about the pace of reform, have eroded much of the optimism that accompanied his rise.

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The strain appears to be benefiting PAS, and two state polls in July and August are being tipped as bellwethers for a possible snap general election later this year, but due at least by 2028.

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PAS has steadily expanded its electoral footprint from 18 parliamentary seats in 2018 to 43 in 2022, the largest of any single party, and controls four of the country’s 13 states. Although unlikely to secure an outright majority in Malaysia’s fragmented political landscape, it could be on track to be the dominant partner in a coalition government.

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“For many voters, PAS is not seen merely as a political party, but as a vehicle for expressing religious identity, moral certainty and cultural belonging,” said Amir Fareed Rahim, director of strategy at consultancy firm KRA Group. “As Malay politics become more fragmented and as parties compete to define what Malay political identity means, some voters are drawn toward what feels more certain and less negotiable: Islam.”