Malaysian Prime Minister Anwar Ibrahim is facing significant political challenges following a recent decision to allow former premier Najib Razak to serve the remainder of his prison sentence under house arrest, coupled with the resignation of his transport minister in protest against the clemency.

The Pardons Board, chaired by King Sultan Ibrahim Iskandar, announced on September 22 that Najib would be permitted to complete his sentence at home, contingent upon the payment of a 50 million ringgit (approximately HK$96 million) fine related to his corruption conviction. This move has sparked public discontent, particularly among supporters of Anwar’s Pakatan Harapan (PH) coalition, who view it as a setback to the government’s reformist agenda.

In response, Anthony Loke, secretary general of the Democratic Action Party (DAP) and transport minister, declared his intention to resign, signaling his disapproval of the royal pardon. Although he has yet to formally step down, Loke is scheduled to represent Malaysia at the 12th Apec Transportation Ministers’ Meeting in Beijing and will join Anwar for an official visit to Shanghai later this week. Anwar said he has been informed of Loke’s decision but has not accepted the resignation, noting the need to discuss the matter further and acknowledging Loke’s principled stance.

The political fallout comes amid a difficult period for the ruling coalition. PH has recently suffered defeats in two state elections, both of which benefited from a resurgent United Malays National Organisation (Umno), a longtime political rival. Umno has successfully mobilized the Malay-Muslim majority vote by campaigning on issues of national unity and dissatisfaction with PH’s perceived failure to enact meaningful reforms against entrenched corruption and abuses of power.

Within PH, the DAP remains a significant player, with 11 other ministers and deputy ministers actively serving in the government. Analysts suggest that Loke’s resignation and the DAP’s vocal opposition to the clemency could exacerbate ethnic and political tensions in Malaysia, where the party is often viewed with suspicion by Malay nationalists. James Chin, a professor of Asian studies, remarked that by holding a special emergency meeting, the DAP may have intensified the controversy, which might have been less inflamed had the issue been accepted as a royal prerogative by the Malay majority.

Nevertheless, Chin warned that a complete withdrawal of DAP members from the cabinet could seriously destabilize Anwar’s government and strengthen Umno’s call for early general elections, which the opposition sees as an opportunity to capitalize on the government’s vulnerability.

Currently, the parliamentary numbers still favor Anwar and PH, even if all 30 DAP MPs were to leave. However, a mass cabinet resignation by the DAP risks being perceived as a rejection of the royal institution and could deepen political polarization along ethnic lines.

Observers note that while the situation is tense, it could subside if Anwar manages to contain the dissent within his coalition and avoid a wider political crisis. According to analysts, the government’s best path forward may be limited to demanding clarifications about the pardon while striving to maintain coalition unity in the face of mounting pressure from opposition forces.