Protestors gathered on July 26th under placards of “Turun Anwar,” calling for the resignation of Malaysia’s Prime Minister. The protests come days after Anwar announced additional measures aimed at curbing cost of living challenges. Image Source: MalayMail

Earlier on July 23rd 2025, Anwar announced a series of measures in response to cost of living concerns. These included a one time cash aid of RM100 to all citizens aged 18 and above, to be distributed from August 31st, and increased the total cash aid allocation for 2025 to RM15 billion, up from RM13 billion. He also pledged to cap the subsidized price of RON95 petrol at RM1.99 per liter, down from RM2.05.

Some analysts welcomed these immediate relief measures but cautioned that delays in Anwar’s broad subsidy reform could present new challenges to the government’s important goal of reducing national deficit to 3 per cent by 2028.

Efforts to realize this goal, including an expansion of the sales and services tax as well as reforms to the fuel subsidy regime, are at the heart of the protestor’s frustration, with the preplanned gathering on July 26th proceeding despite the additional cost of living support announced on July 23rd.

Critics contend that these fiscal policies, while aimed at broadening revenue, risked increasing prices for consumers already struggling with inflation. The government has chiefly levied taxes against corporations, though many protestors fear the costs will inevitably be passed down to regular consumers.

A Platform of Reform and Thinning Patience

Anwar’s coalition came to power in November 2022 on a platform of institutional reform, transparency, and action against corruption. However, opposition have argued that progress has been slow. Former Prime Minister Mahathir Mohamad, who addressed the rally, sharply criticized the pace of reforms and argued that voters had seen little change in three years.

Anwar’s coalition came to power in November 2022 on a platform of institutional reform, transparency, and action against corruption.

Despite these criticisms, polling suggests that a majority of Malaysians continue to support Anwar’s leadership, citing visibly increased political stability and Malaysia’s elevated regional profile, including its role as ASEAN chair in 2025.

A View from Sabah

The government’s investment in political stability can also be seen particularly in Sabah, where Anwar played a key role in resolving the 2023 political crisis, known locally as “Langkah Kinabalu.”

On 6 January 2023, UMNO Sabah and Barisan Nasional formally withdrew support for Chief Minister Hajiji Noor, who leads the Gabungan Rakyat Sabah (GRS) coalition. Anwar and Deputy Prime Minister Ahmad Zahid Hamidi travelled to Kota Kinabalu in Sabah to mediate the dispute.

The crisis culminated in the Sabah legislative assembly passing an anti party hopping law on 25 May 2023, which helped Hajiji retain his position and stabilize the state government.

This was politically important for Anwar as Sabah remains politically influential in the federal government. Parties from the state—including GRS, the United Progressive Kinabalu Organisation (UPKO, a Pakatan Harapan component), and Warisan (a cooperation partner)—support Anwar’s unity government. Their backing underpins his two thirds majority in Parliament, which is necessary for constitutional amendments and promised legislative reform.

Sabah’s GRS, the United Progressive Kinabalu, and Warisan support Anwar’s unity government.

However, the future of Sabah’s fiscal autonomy remains a point under discussion. Under the Malaysia Agreement of 1963 (MA63), Sabah was promised 40 per cent of tax revenue collected within the state. While Anwar asserts that the federal government’s 2024 allocation of RM16 billion exceeded that threshold, critics—including UPKO leadership and legal figures—argue that the funds are project-tied and fall short of the fiscal flexibility desired by some for Sabah’s state government.

Efforts to mediate continue as Anwar’s partner parties seek to maintain the political stability critical to progress in Sabah while pressing their arguments ahead of state elections this year.

Efforts to mediate continue as Anwar’s partner parties seek to maintain the political stability critical to progress in Sabah while pressing their arguments ahead of state elections this year.

Separately, Anwar’s government has successfully defended Malaysia in international legal proceedings against eight Filipino individuals claiming to be heirs of the former Sulu Sultanate, who sought nearly $15 billion in historical compensation related to Sabah.

Anwar has struck a conciliatory balance with Manila, emphasizing that the Philippine government does not endorse these claimants. Courts, including in Europe, have ruled in Malaysia’s favor, nullifying the arbitration award. However, public discussion in Sabah around the issue remains comparatively muted next to other issues, with residents perhaps seeing the threat of foreign claims as distant compared to day-to-day concerns on funding and reform.

As Anwar’s government enters its third year, its ability to address rising living costs, calls for speedier reform, as well as maintain the political balance it has established in Sabah may determine its future.

REFERENCES

Azhar, D. & Latiff, R. Reuters. (2025b, July 23). Malaysia PM announces new measures to address rising living costs. Retrieved from https://www.reuters.com/

Borneo Post Online. (2023, May 25). Party hopping ends in Sabah. Retrieved from https://www.theborneopost.com/

Latiff, R. & Leong, M. Reuters. (2025a, July 26). Thousands rally in Malaysia to call for PM Anwar’s resignation. Retrieved from https://www.reuters.com/

Lee, S., & Fong, D. R. (2024, June 1). Warisan: 40% net revenue payment to Sabah is a constitutional right. The Star. https://www.thestar.com.my/

Vanar, M. (2024, August 12). Sabah’s 40% revenue rights different from RM16bil federal allocation. The Star. https://www.thestar.com.my/

Zolkepli, F., & Zack, J. (2025, July 26). Rally ended peacefully, no untoward incidents reported, says acting KL police chief. The Star. https://www.thestar.com.my/