The ethnic diversity in Malaysia makes politics an endless balancing act that is reflected in the public sphere as an endless series of controversies and crises. This was certainly true of 2006, Abdullah Badawi's third year as prime minister.

The long-term effects of Mahathir's 22 years in power had by now become more and more undeniable, and put to the test the ability of his successor to control the excesses of that period. The constitutional right to worship freely also became a pressing issue throughout the year, alongside heated debates about the affirmative action programmes — the New Economic Policy (NEP) — and the methods used to monitor them.

Reforms to fight corruption and wastage were pushed to the back seat by events that aggravated inter-ethnic and inter-faith relations, and threatened to damage the already dented image of the dominant party, the United Malays National Organisation (UMNO).

On 6 June 2006, former premier Mahathir Mohamad finally decided to vent his frustration over government policies by attacking Abdullah Badawi himself. This occurred soon after the latter cancelled the Johor Bahru–Singapore “half- bridge” project. The country witnessed half a year of confusing accusations being hurled at Abdullah Badawi, with the situation calming down only after Mahathir suffered a mild heart attack in November.

Where foreign relations are concerned, Abdullah Badawi's administration was able to improve matters substantially immediately on coming to power. This he managed to do with ties to governments both near and far. Unlike the home front, Malaysia's foreign relations did not provide much drama during the year.

Economically, signals have been mixed. However, worries about the long- term health of the country's economy have been steadily rising. The gross national product ended at around 5.6 per cent, inflation was on average at an eight-year high of 3.6 per cent, and, most worrisome of all, foreign domestic investments have been falling sharply.