INTRODUCTION

Federal-state relations in Malaysia today are more dynamic than ever before, with states having changed leadership several times following the 2022 general election and several state-level elections between 2020 and 2023. At present, there are seven states under the Pakatan Harapan–Barisan Nasional (PHBN) grand coalition—three with PH Chief Ministers and four with BN Chief Ministers, four states under the Perikatan Nasional (PN) coalition comprising the Malaysian Islamic Party (PAS) and Parti Pribumi Bersatu Malaysia (Bersatu), and Sabah and Sarawak under their respective state-specific coalitions Gabungan Rakyat Sabah (GRS) and Gabungan Parti Sarawak (GPS), the latter two of which support the unity government at the federal level.

Although run by different coalitions, states have increasingly demanded more policy autonomy and higher fiscal transfers. But what immediate and long-term solutions are available for policymakers at both federal and state levels in resolving these tensions? This Trends in Southeast Asia provides a timely update on federal-state relations under the Madani government led by Prime Minister Anwar Ibrahim, focusing on administrative, fiscal and political developments. Significantly, November 2024 marks the second anniversary of his administration.

This article builds on Yeoh (2020), which outlined a historical perspective on federalism in Malaysia, and elaborates on institutional and financial mechanisms through which greater concentration of power to the federal government has taken place, thereby leaving minimal control to the subnational level of government. Yeoh (2020) examines how federal-state political alignments benefit states in terms of development approval and allocations. This article, however, focuses more on the political aspects of federal-state relations, given the unprecedented political activity and fluidity that have transpired over the past four years. Finally, greater emphasis is placed on the relationship between the federal government and the East Malaysian states of Sabah and Sarawak, given how the latter states have increased their demands on the centre in recent years.

A BACKGROUND SKETCH

Political Status of State Governments

Over the last few years, there have been tremendous movements in state governments and their ruling coalitions. Between 2018 and 2023, all states in Malaysia except for Sarawak went through two state elections and at least one change in state government (see Hutchinson 2024 for a detailed analysis). See Table A1 in the Annex, which provides a breakdown of all states and their respective coalition governments over the five-year period.

Based on Table A1, it is clear that coalition arrangements have been fluid and shifted rapidly over this period of time. Four state governments (Johor, Kedah, Malacca and Perak) changed hands following the February 2020 Sheraton Move that brought down PH federal government and which saw a new government being formed comprising Perikatan Nasional (PN) and BN.