Divisions among the three Pakatan Rakyat component parties are also likely to widen if PKR de facto leader Anwar Ibrahim is jailed for sodomy, the publisher said in the June report for Malaysia.
It predicted that Malaysia's political stability will come under moderate threat in the next five years due to internal strife within the two main political alliances.
While the BN is set to remain in federal power in the next general polls, its performance will depend largely on whether it manages to keep its power base intact in Sabah and Sarawak, which contribute more than one-third of its current total of 137 MPs.
"Unresolved issues, such as illegal foreign immigration to Sabah, may cause the BN parties based in (Sabah and Sarawak), or individual MPs from that region, to defect to the opposition in Parliament or use the threat of such action to secure greater influence within the coalition in the run-up to the next general election," the report said.
Najib faces challenge from Muyhiddin
The outcome of the Sarawak election in April was not the resounding victory that the BN had hoped for, it noted.
Should BN fail to secure a clear victory at federal and state level in the upcoming general election, Najib's position as Umno president would be at risk in the next party polls, which have been postponed until 2012.
"The most likely contender to become Umno's next leader is deputy (party head) Muhyiddin Yassin."
The report pointed out that, by tradition, the BN has preferred to call a general election about a year before the end of its term. If this holds true, the next polls could be held in early 2012.
It said snap polls are unlikely this year because BN would fail to obtain the full support of Chinese voters, which is crucial to regaining its two-third majority in Parliament and wresting back the four states ruled by Pakatan.
"The BN is well positioned to win the poll, although how wide its margin of victory will be remains unclear.
"Najib has worked hard at presenting the image of a politician who is committed to economic reform, but this attitude has yet to resonate among the country's ethnic-minority population, the majority of whom voted for the Pakatan in the 2008 general election.”
In addition, support from a significant number of educated, liberal middle-class Malays may continue to decline as Internet news sites and blogs have exposed government corruption and the political intrigues of BN leaders.
The report also said Umno may turn its attention to securing a larger proportion of the Malay vote.
Another important reason that general polls will not be called this year, according to the report, is the rumour that Umno's campaign funds have been heavily depleted due to Sarawak election.
On Pakatan and Anwar
The report also stated that Pakatan could be undermined in the next polls by the newly formed civil rights group, the Malaysian Civil Liberty Movement (MCLM) and the recently founded Parti Kesejahteraan Insan Tanah Air (Kita) led by former PKR leader Zaid Ibrahim.
"Pakatan currently has 76 parliamentary seats and it is possible that at least one-half of these could be contested by the MCLM, (Parti) Kita, or both, thereby potentially taking votes from the opposition alliance."
It opined that Pakatan "still does not offer a sufficiently credible, stable alternative to the BN".
On Anwar's future, the report said he is likely to be convicted for sodomy in the coming months, hence putting the alliance among three Pakatan component parties at risk.
"Without him, the ties that unite the disparate parties making up the Pakatan - PKR, PAS and DAP - are likely to fray.
“The process of choosing a new Pakatan spokes(person) could deepen the divisions within PKR as well as between the (other) member parties.”
Malaysiakini
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