109 Australian Journal of Sustainable Business and Society Volume 1 No. 1 March 2015 MALAYSIAN FEDERALISM – ISSUES AND ACCEPTANCE Nazri bin Muslim National University Malaysia, Malaysia Faridah Jalil National University Malaysia, Malaysia Nurhafilah Musa National University, Malaysia Khairil Azmin Mokhtar International Islamic University Malaysia, Malaysia Rasyikah Md Khalid University of Technology MARA, Malaysia Abstract After the 2008 General Election, Malaysians were witnessing dynamics of a federal system of government after being ruled by the same coalition parties of Barisan Nasional (National Front) since Independence. When the coalition of Pakatan Rakyat (People’s Front) won five states in the 2008 General Election, many intergovernmental conflicts occurred. Pre-2008, the conflict was confined to family matters such as legal effects of conversion to Islam in a non-Muslim marriage. Post 2008, the federal conflict entered the public law sphere involving a legal tussle between the federal government and the state of Kelantan in the petroleum royalty issue. These federal conflicts have been highlighted in the mass media, catapulting the public from being ignorant about federalism to being curious as to which level of government actually has the power to manage the issues raised. A quantitative study was conducted to find out Malaysians’ level of knowledge, understanding, acceptance and perception towards the federal system in the country. The paper discusses some of the outcomes of the study. JEL Classification: K490 Keywords: Malaysian Legal System, Malaysian Federalism, Kelantan Petroleum Royalty, Conversion to Islam Corresponding Author’s Email: hafilah@ukm.edu.my INTRODUCTION One of the outcomes from 2008 Malaysia General Election is that Malaysians are able to witness the dynamics of a federal system of government. When five states won by the coalition of Islamic Party Malaysia (PAS), Democratic Action Party (DAP) and People Justice Party (PKR), many conflicts relating to the division of powers between the federal government and the state governments arose. Major issues such as legal effects of conversion to Islam and petroleum royalty became headlines in the mainstream media, catapulting the public from being ignorant about federalism issue to being curious as to which level of government actually has the power to manage the issues raised. The outcome of the 2008 and 2013 General Elections have denied Barisan Nasional (National Front) two third majority in the Parliament, making it difficult for any constitutional to be passed for the next few years. For the 2008 General Election, Barisan Nasional lost five states to Pakatan Rakyat (People’s Alliance) while in the 2013 General Election, Pakatan Rakyat managed to hold on to three states; Kelantan, Penang and Selangor. The states that have experienced being ruled by a difference party from Barisan Nasional are Kelantan, Sabah and Terengganu. The impact of being in a federal system was not obvious as the states were in the east coast of Malaysia and did not have a lot of resources. When Pakatan Rakyat managed to wrest Penang and Selangor, two of the richest states in Malaysia, from Barisan Nasional, the impact is different because these two states are industrial states and the focus of foreign investments. These two state governments were able to formulate and finance policies that benefitted the people in the states. This created a situation where the people in the states of Selangor and Penang can compare policies made by the states with the policies made by the federal government on similar matters. On the other side of the coin, there are many unresolved problems in the operation of Malaysian federalism. Two of the problems which are going to be discussed in the paper are relating to legal effects on conversion to Islam in a non-Muslim marriage