Malaysian Christian challenges "Allah" CDs seizure

KUALA LUMPUR (Reuters) - A Christian is challenging the confiscation of CDs referring to "Allah", church officials said on Tuesday, a case that could deepen a row over Christians' use of the word to refer to God in mostly Muslim Malaysia.

Rising religious tensions could threaten Prime Minister Najib Razak's efforts to rebuild a ruling coalition hit by big losses in 2008 elections as well as Najib's efforts to put Malaysia back on the global investment map, analysts said.

The latest case follows a recent court ruling that allowed a Catholic newspaper to use "Allah" in its Malay-language edition which prompted Muslims to protest at mosques and sparked arson attacks on nine churches and a Catholic school.

Jill Ireland Lawrence Bill, a member of Sidang Injil Borneo (SIB), the Borneo Evangelical Church, is seeking a court declaration that it is her right to possess the material.

"It is our right to continue to use the word, we have been using it from even before Merdeka (Independence)," Daniel Raut, president of the church in mainland Malaysia, told reporters outside the court in Kuala Lumpur.

The church filed a suit in 2007 to challenge the confiscation of six boxes of Sunday school religious reading material that also contained the word "Allah". That case is also awaiting a hearing.

The use of "Allah" is common among Malay-speaking Christians, who account for 9.1 percent of Malaysia's 28 million population, especially in the Borneo states of Sabah and Sarawak that are electoral strongholds for the coalition that has ruled Malaysia for 52 years.

"The government will face a backlash from Christian native groups in Sabah and Sarawak as this issue is no longer seen as religious or civilisational, but as a political issue," said James Chin, political science professor at Monash University in Kuala Lumpur.

INVESTOR CONCERNS

The arson attacks are also raising concerns among investors at a time when Najib has pledged to woo back investment to Malaysia which in has lagged neighbouring Thailand and Indonesia.

"The political and security risk premiums attached on the market as 'perceived' by foreign investors would have moved up another notch, and this is negative for the market longer term," said Deutsche Bank in a Jan. 11 report.

Malaysia saw portfolio investment outflows totalling 114 billion ringgit ($34.15 billion) between the second quarter of 2008 and the second quarter of 2009, according to central bank data, as sentiment was hit by political uncertainty and the global economic downturn.

Money only began to trickle back in the third quarter, with an inflow of 8.8 billion ringgit.

Malaysia, which between 1990-2000 accounted for half all foreign direct investment into it, Thailand and Indonesia has now lost its leading position and Najib has tried to woo back investors with economic liberalisation measures.

"This is not a healthy thing for perceptions of Malaysia," Nicholas Jeffreys, president of the American Chambers of Commerce in Malaysia said at a business conference on Tuesday.

"Any negative news for any country doesn't play well in terms of investors. Recognise that there are some people who have never been to Malaysia," he said.

(Reporting by Razak Ahmad and Royce Cheah; Editing by Paul Tait)