Businesses grow wary as PAS gains traction
The possibility of a PAS-led federal government is beginning to figure in the minds of foreign investors who perceive the party as more economically nationalist
PAS president Abdul Hadi Awang (right) remains the party’s dominant figure, but younger leaders such as Ahmad Samsuri Mokhtar are claimed as projecting a new image.
KUALA LUMPUR: 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.
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.
Kelantan has for decades been the stronghold of Parti Islam Se-Malaysia (PAS), a stridently Islamic 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.
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.
“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.”
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.
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.
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.
“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.”
The party’s strength comes from a formidable grassroots machinery in the rural Malay heartlands including networks of mosques, religious schools and volunteers that give it an organising reach few rivals can match.
Decades of outward migration have helped establish pockets of support across Malaysia’s more populous west coast states.
Malays, the vast majority of whom are Muslim, are the largest ethnic group in Malaysia at around 60% of the population. The rest of the country is made up of smaller ethnic groups, as well as Chinese-Malaysians and Indian-Malaysians.
Survey data underscore Islam’s central role in shaping political attitudes in Malaysia, more so than in neighboring Indonesia, home to the world’s largest Muslim population.
About 86% of Malaysian Muslims support adopting Sharia law as the primary legal system, compared with 64% in Indonesia, according to a Pew Research report in 2023. And 58% of Malays say religious leaders should play a role in politics, versus 49% of Indonesians.
The possibility of a PAS-led federal government is beginning to figure in the minds of foreign investors who perceive the party as more economically nationalist, said Peter Mumford, who covers Southeast Asia at risk consultancy Eurasia Group.
“The concerns mostly center on navigating more conservative social policies, including the implications for products and services sold in the country,” he said.
Within Malaysia’s business community, some executives privately question the party’s capabilities, noting that many of its leaders come from religious or grassroots backgrounds rather than technocratic ones, according to people familiar with the discussions.
Certain companies have begun quietly reviewing their longer-term strategies, including whether to step up investments elsewhere like Singapore, Thailand or Indonesia, the people said, stressing that any such deliberations remain at a very early stage.
China General Nuclear Power Corp., which has energy investments in Malaysia, as well as China Construction Bank Corp. are among foreign firms that have begun engaging PAS to get a better sense of the party’s policy strategies and build rapport with its top leaders, one person said.
Representatives from China General Nuclear Power and China Construction Bank didn’t respond to requests for comment.
The four states that are governed by PAS rank among Malaysia’s least developed, relying heavily on federal funding to drive growth or lean on oil revenue. Much of the country’s rare earth resources and solar energy capacity lies in those areas too, although little economic policy has been communicated to the public on how they could be exploited.
“It’s a question of capacity and competency,” said Bridget Welsh, a researcher of Malaysian politics with the University of Nottingham Asia Research Institute Malaysia, based in Kuala Lumpur. “Despite many serious challenges, Anwar’s government has been able to position Malaysia quite effectively in the region. PAS doesn’t necessarily have those same skillsets.”
In Kedah, one of the four states, Kulim Hi-Tech Park has become one of Southeast Asia’s semiconductor clusters, hosting global giants including Intel Corp., Infineon Technologies AG and AMS-Osram AG.
Although the park pre-dates the PAS-led administration, which has little to do with the federal-run initiative, the party has nonetheless touted it as proof conservative politics won’t deter foreign investors.
But PAS has raised eyebrows in other ways. It’s already vowed to close the country’s only casino if it wins an election. The entertainment complex in Pahang, the largest state on the Malaysian peninsula, is part of billionaire Lim Kok Thay’s Genting Group, a leisure and hospitality empire.
Anwar has also committed not to build more casinos in an attempt to burnish his own Islamic credentials, pushing Genting to consider other markets such as the US. In December, Genting won a casino license in New York.
After taking over Kedah in 2020, PAS moved to close down lottery outlets by refusing to renew their operating and business licences. Although courts ruled last December that the ban was unconstitutional, all 45 outlets remain closed till now. PAS enforced the same rules when it took control of Perlis state as part of a coalition in 2022.
Traders in Kelantan say the state has done little to attract tourists, an important economic driver in a country that welcomed more than 42.2 million international visitors last year, the second highest in Southeast Asia.
PAS Information Chief Ahmad Fadhli Shaari has rejected claims that the party’s governance is responsible for lower incomes, arguing in a May letter published by Free Malaysia Today that regional disparities reflect decades of uneven development, federal centralization and the concentration of investment and industry in Malaysia’s wealthier west coast states.
PAS party leaders didn’t respond to several requests by Bloomberg for an interview.
Malaysia’s longest-serving Prime Minister, Mahathir Mohamad, who took on an advisory role to the four PAS-controlled states in 2024, said the party has “softened its image,” styling itself as a nationalist rather than a religious party.
“PAS is no more the extreme party that it was once perceived and portrayed,” the 100-year-old said in an interview. “The party now promotes individuals who are more professionally qualified and moderate in their outlook. The dilution of this image will lead to PAS being more acceptable on the west coast.”
Mahathir says that new image is embodied by people like Ahmad Samsuri Mokhtar, the chief minister of Terengganu known as ‘Dr Sam’. Unlike the party’s traditional religious clerics, he’s an aerospace engineer who studied in the UK, appears on podcasts and uses social media to connect with young, moderate Malay voters.
In May, Singapore’s former Prime Minister Lee Hsien Loong met with Ahmad Samsuri and discussed potential collaboration with Terengganu in tourism and renewable energy. The city-state is also open to sharing expertise with the party’s officials, Lee said in an interview with Singapore news outlets.
Still, ‘Dr Sam’ is bound by the party’s rules and policies. In 2022, shortly after winning all of the parliament seats in the state of Terengganu, the party imposed new laws to punish Muslim women for out-of-wedlock pregnancies.
Since August last year, his party has threatened to jail Muslim men in the state who neglect Friday prayers. A Merdeka Center for Opinion Research poll of about 8,000 people conducted in early June found that about 6% considered Ahmad Samsuri the best choice for prime minister, ranking him second among at least 10 politicians. Prime Minister Anwar was the clear frontrunner with 43%.
PAS President Abdul Hadi Awang, a religious cleric whose Islamic agenda was in part influenced by the Iranian revolution of 1979, remains a dominant influence. During campaigning for state election elections, he told Muslim voters they were obliged to vote for the Islamic party.
“We see the world in chaos today, facing various problems,” he told worshipers while delivering a Friday sermon at a mosque in his home town in June. “The reason is because people have abandoned Islam.”
Party leaders have previously stated its goal is not to enforce religious practices but to promote universal Islamic values such as opposition to corruption.
Rulers are likely wary of pushing PAS’s religious agenda too aggressively lest they strain racial harmony or trigger resistance from Malaysia’s royal households, whose interests are tied to sectors such as tourism and hospitality.
Regardless, Khairy Jamaluddin, a former health minister from Anwar’s coalition partner United Malays National Organisation (UMNO), said even despite PAS’s “relative under-performance” in parliament, it’s Malaysia’s most formidable political force because of its ideological clarity and disciplined grassroots movement.
“Other parties’ time horizon is the next election,” he said. “PAS’s time horizon is the afterlife. Who do you think is going to win?”
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.
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.
Kelantan has for decades been the stronghold of Parti Islam Se-Malaysia (PAS), a stridently Islamic 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.
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.
“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.”
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.
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.
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.
“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.”
The party’s strength comes from a formidable grassroots machinery in the rural Malay heartlands including networks of mosques, religious schools and volunteers that give it an organising reach few rivals can match.
Decades of outward migration have helped establish pockets of support across Malaysia’s more populous west coast states.
Malays, the vast majority of whom are Muslim, are the largest ethnic group in Malaysia at around 60% of the population. The rest of the country is made up of smaller ethnic groups, as well as Chinese-Malaysians and Indian-Malaysians.
Survey data underscore Islam’s central role in shaping political attitudes in Malaysia, more so than in neighboring Indonesia, home to the world’s largest Muslim population.
About 86% of Malaysian Muslims support adopting Sharia law as the primary legal system, compared with 64% in Indonesia, according to a Pew Research report in 2023. And 58% of Malays say religious leaders should play a role in politics, versus 49% of Indonesians.
The possibility of a PAS-led federal government is beginning to figure in the minds of foreign investors who perceive the party as more economically nationalist, said Peter Mumford, who covers Southeast Asia at risk consultancy Eurasia Group.
“The concerns mostly center on navigating more conservative social policies, including the implications for products and services sold in the country,” he said.
Within Malaysia’s business community, some executives privately question the party’s capabilities, noting that many of its leaders come from religious or grassroots backgrounds rather than technocratic ones, according to people familiar with the discussions.
Certain companies have begun quietly reviewing their longer-term strategies, including whether to step up investments elsewhere like Singapore, Thailand or Indonesia, the people said, stressing that any such deliberations remain at a very early stage.
China General Nuclear Power Corp., which has energy investments in Malaysia, as well as China Construction Bank Corp. are among foreign firms that have begun engaging PAS to get a better sense of the party’s policy strategies and build rapport with its top leaders, one person said.
Representatives from China General Nuclear Power and China Construction Bank didn’t respond to requests for comment.
The four states that are governed by PAS rank among Malaysia’s least developed, relying heavily on federal funding to drive growth or lean on oil revenue. Much of the country’s rare earth resources and solar energy capacity lies in those areas too, although little economic policy has been communicated to the public on how they could be exploited.
“It’s a question of capacity and competency,” said Bridget Welsh, a researcher of Malaysian politics with the University of Nottingham Asia Research Institute Malaysia, based in Kuala Lumpur. “Despite many serious challenges, Anwar’s government has been able to position Malaysia quite effectively in the region. PAS doesn’t necessarily have those same skillsets.”
In Kedah, one of the four states, Kulim Hi-Tech Park has become one of Southeast Asia’s semiconductor clusters, hosting global giants including Intel Corp., Infineon Technologies AG and AMS-Osram AG.
Although the park pre-dates the PAS-led administration, which has little to do with the federal-run initiative, the party has nonetheless touted it as proof conservative politics won’t deter foreign investors.
But PAS has raised eyebrows in other ways. It’s already vowed to close the country’s only casino if it wins an election. The entertainment complex in Pahang, the largest state on the Malaysian peninsula, is part of billionaire Lim Kok Thay’s Genting Group, a leisure and hospitality empire.
Anwar has also committed not to build more casinos in an attempt to burnish his own Islamic credentials, pushing Genting to consider other markets such as the US. In December, Genting won a casino license in New York.
After taking over Kedah in 2020, PAS moved to close down lottery outlets by refusing to renew their operating and business licences. Although courts ruled last December that the ban was unconstitutional, all 45 outlets remain closed till now. PAS enforced the same rules when it took control of Perlis state as part of a coalition in 2022.
Traders in Kelantan say the state has done little to attract tourists, an important economic driver in a country that welcomed more than 42.2 million international visitors last year, the second highest in Southeast Asia.
PAS Information Chief Ahmad Fadhli Shaari has rejected claims that the party’s governance is responsible for lower incomes, arguing in a May letter published by Free Malaysia Today that regional disparities reflect decades of uneven development, federal centralization and the concentration of investment and industry in Malaysia’s wealthier west coast states.
PAS party leaders didn’t respond to several requests by Bloomberg for an interview.
Malaysia’s longest-serving Prime Minister, Mahathir Mohamad, who took on an advisory role to the four PAS-controlled states in 2024, said the party has “softened its image,” styling itself as a nationalist rather than a religious party.
“PAS is no more the extreme party that it was once perceived and portrayed,” the 100-year-old said in an interview. “The party now promotes individuals who are more professionally qualified and moderate in their outlook. The dilution of this image will lead to PAS being more acceptable on the west coast.”
Mahathir says that new image is embodied by people like Ahmad Samsuri Mokhtar, the chief minister of Terengganu known as ‘Dr Sam’. Unlike the party’s traditional religious clerics, he’s an aerospace engineer who studied in the UK, appears on podcasts and uses social media to connect with young, moderate Malay voters.
In May, Singapore’s former Prime Minister Lee Hsien Loong met with Ahmad Samsuri and discussed potential collaboration with Terengganu in tourism and renewable energy. The city-state is also open to sharing expertise with the party’s officials, Lee said in an interview with Singapore news outlets.
Still, ‘Dr Sam’ is bound by the party’s rules and policies. In 2022, shortly after winning all of the parliament seats in the state of Terengganu, the party imposed new laws to punish Muslim women for out-of-wedlock pregnancies.
Since August last year, his party has threatened to jail Muslim men in the state who neglect Friday prayers. A Merdeka Center for Opinion Research poll of about 8,000 people conducted in early June found that about 6% considered Ahmad Samsuri the best choice for prime minister, ranking him second among at least 10 politicians. Prime Minister Anwar was the clear frontrunner with 43%.
PAS President Abdul Hadi Awang, a religious cleric whose Islamic agenda was in part influenced by the Iranian revolution of 1979, remains a dominant influence. During campaigning for state election elections, he told Muslim voters they were obliged to vote for the Islamic party.
“We see the world in chaos today, facing various problems,” he told worshipers while delivering a Friday sermon at a mosque in his home town in June. “The reason is because people have abandoned Islam.”
Party leaders have previously stated its goal is not to enforce religious practices but to promote universal Islamic values such as opposition to corruption.
Rulers are likely wary of pushing PAS’s religious agenda too aggressively lest they strain racial harmony or trigger resistance from Malaysia’s royal households, whose interests are tied to sectors such as tourism and hospitality.
Regardless, Khairy Jamaluddin, a former health minister from Anwar’s coalition partner United Malays National Organisation (UMNO), said even despite PAS’s “relative under-performance” in parliament, it’s Malaysia’s most formidable political force because of its ideological clarity and disciplined grassroots movement.
“Other parties’ time horizon is the next election,” he said. “PAS’s time horizon is the afterlife. Who do you think is going to win?”
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