Michael D. Barr and Anantha R. Govindasamy discuss this issue in their article 'The Islamisation of Malaysia: religious nationalism in the service of ethnonationalism' in Australian Journal of International Affairs (2010). The abstract is copied below.
The relationship between religious, ethnic and national identities in Malaysia has long been fraught with uncomfortable tensions especially for the 50 percent of Malaysians who are outside the dominant Malay- Muslim communal grouping. Until the accession of Dr Mahathir to the prime ministership at the beginning of the 1980s, it was clear that ethnic identity trumped religious identity, even though being Muslim was already intrinsic to being accepted as Malay. Being a non-Malay Malaysian was to accept a subordinate, but not a drastically uncomfortable role in the nation. Since the 1980s, however, religious identity appears to have replaced ethnicity as the central element of nation identity as the society has been systematically even aggressively Islamised. Yet appearances can be deceiving, and there is a strong case to be made that Islamisation in Malaysia is basically a variation of the original Malay ethnonationalism, using the nearly complete symbiosis between Malay and Muslim identity as the point of articulation that allows religious nationalism to serve as a cipher for ethnonationalism but a version of ethnonationalism that is much less accommodating of minorities than was traditional Malay nationalism. This article places contemporary events in a historical context and then focuses on just one aspect of Malaysia’s program of Islamisation that is both contemporary and central to national identity developments in the education system, and particularly within the secondary school history curriculum to demonstrate that in this instance at least, religious nationalism is operating as a surrogate for ethnic nationalism and has, in fact, intensified ethnic nationalism by raising the stakes for the communities that are outside the core national group.
Source: Early Malay nationalism
As the title and abstract shows, authors think that the current Islamization is just a way to promote Malay nationalism which has been diluted over the years because two of its main pillars, Malay language and adat, have been widely adopted and are not the distinguishing features anymore. So, Islam is the only distinguishing feature of Malay identity and so it is being used to keep the Malay ascendancy intact and promote the centrality of Malay identity in the national identity. As authors contend:
It should rather be regarded as a tool in the service of that ethnic agenda -- a program of hegemony designed to reinforce Malay occupation at the heart of Malaysia’s nation-building project and to condition non-Malays and non-Muslims to accept their assimilation into the Malaysian nation as subordinate, peripheral partners. We also argue that this project has had the entirely predictable effect of reducing the comfort levels of the non-Muslim minorities.
To prove their point, authors trace the history of Malaysia and show that Islam was previously only a part of Malay identity and was not given much prominence. Since Dr Mahathir became Prime Minister in 1981, however, Islamization of state has made great strides. Islamic diet, dress, architecture etc. have been promoted by the state. There also have been changes in laws and constitution and non-Malay partners of UMNO have been unable to stop these changes which make them peripheral partners in the national project. Authors also present a detailed analysis of history books of two grades that show how Islam is prioritized.
That Malaysia has been more Islamized since the 1980s is, without doubt, true and almost all of the article gives evidence of that. However, the evidence that authors give for it being a facade for continuing Malay dominance is not strong. Evidence from many Muslim-majority countries shows Muslims societies being more concerned about religious practice and behavior and governments enacting laws to promote them. Why cannot Malaysian elite be following this global trend? Why the change in Malaysian state is not the result of the change in society which is now more religious than thirty years ago? Why is it not the result of identity issues becoming more important for Malays (the main voting bloc for UMNO) as they become more prosperous, making previously dominant economic issues recede in significance?

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