In the March 2004 general elections, Prime Minister Abdullah Badawi won an overwhelming mandate from Malaysian voters and his soaring popularity was confirmed in an opinion poll conducted among peninsular voters in November 2004 when 91 per cent of those polled approved his performance. Since then, however, his popularity has steadily declined and by November 2007 it had plummeted to a new low of 61 per cent.

Ethnic relations have worsened because the Abdullah administration has reverted to protecting and promoting the Malay Agenda 1 and the Islamization of society. Public confidence in the Prime Minister's promise to battle crime and corruption and reform the police and judiciary has plunged as his administration has done and accomplished little.

In anticipation of an early general election, the opposition has started to mobilize and the return of former Deputy Prime Minister Anwar Ibrahim has clearly reinvigorated the opposition forces, as evident in the forming of alliances between political parties and between political parties and civil society groups.

Economic growth remains credible but there is concern over the rising cost of living and how the mega-projects would impact Abdullah's promise to lower the budget deficits. Malaysia's relations with its Southeast Asian neighbours had more ups than downs over the year; but relations with Indonesia were more strained.

Ethnic Relations and the Hindraf Demonstration

In his maiden National Day speech in 2004, Prime Minster Abdullah astutely promoted himself as a “leader of all Malaysians” and boldly proclaimed, “Let all citizens of Malaysia, without feeling inferior, without feeling sidelined, irrespective of race or religion, rise to become statesmen in our own land. We are equal, we are all Malaysians. No individual in this country is more Malaysian than another”. 2 Abdullah's inclusive message, which seemed to reaffirm the Bangsa Malaysia ideal, and Islam Hadhari, which includes among its ten principles the protection of the rights of minority groups, were thus welcomed by the non-Malays.