Federalism in Malaysia dates back to the establishment of the Federated Malay States in Peninsular Malaysia, then known as Malaya. Federalism in Malaysia took a more concrete form with the establishment of the Federation of Malaya. The merger of Malaya with Singapore, North Borneo (now Sabah) and Sarawak further complicated the situation. As of 2008, although Malaysia is a de jure federation, many perceive it as a de facto unitary state. Some suggest that opposition triumphs in several of the 2008 state elections will alter the political climate and approach towards federalism.
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State governments
The state governments are led by chief ministers (Menteri Besar or Ketua Menteri, the latter term being used in states without hereditary rulers), selected by the state assemblies (Dewan Undangan Negeri) advising their respective sultans or governors.
Resemblance of unitary state
Although Malaysia is a federal state, political scientists have suggested that its "federalism is highly centralised":
Our federalism gives the federal government not only the most legislative and executive powers but also the most important sources of revenue. State governments are excluded from the revenues of income tax, export, import and excise duties, and they are also largely restricted from borrowing internationally. They have to depend on revenue from forests, lands, mines, petroleum, the entertainment industry, and finally, transfer payments from the central government.
The 2008 general elections saw a loose coalition between the Democratic Action Party, People's Justice Party and Pan-Malaysian Islamic Party win a majority in five of the thirteen state legislative assemblies. Previously, the ruling Barisan Nasional coalition controlled twelve of the state governments, with the exception of Kelantan. In an editorial, The Sun suggested that this would herald changes for the relationship between state and federal governments:
[Civil servants] have got used to Malaysia acting like a unitary state because most of the time all the states are ruled by BN parties. And the states act as one because of political control effected through the state BN. But as a result of the general election five states are now ruled by non-BN parties and there is likelihood they are going to act more individually than they have been in the past.