KUCHING, Malaysia (Reuters) - Malaysia's ruling coalition won the Sarawak election on Saturday but saw its grip on its bastion state sharply weakened, reducing the odds of snap polls for Prime Minister Najib Razak to fast track economic reforms demanded by investors.
The ruling coalition won 55 of 71 seats to retain its two-thirds majority but the opposition had 15 seats for its best showing in 24 years after campaigning on a platform of Christian anger against the government and frustration over the rule of the state's long-serving chief minister.
"We need to build on this momentum, what's important is that we maintain support so that it can be translated in the next general elections," Najib was quoted by local media as saying in Kuala Lumpur after the result was announced.
The ruling National Front's losses in the state poll came mainly from areas largely populated by the ethnic Chinese, with its main Chinese party in the state losing 13 of the 19 seats it contested.
Analysts said the poll outcome showed that Najib had yet to win back ethnic minorities who abandoned the ruling coalition in 2008 general elections, which could make him tread softly in pushing for crucial but politically unpopular reforms such as subsidy cuts and the introduction of a goods and services tax.
"With the opposition having more than doubled their seats in Sarawak, the view that Sarawak is a fixed deposit for the Front is no longer true," said Bridget Welsh, a Malaysia specialist at Singapore Management University.
"This is something that will limit Najib's space to hold urgent general elections, because if it can happen here, it can happen anywhere."
The next general election is not due until 2013.
A delay in implementing economic reforms could eventually affect Najib's pledge to further trim Malaysia's budget deficit which hit a 20-year high of 7 percent of gross domestic product in 2009.
Fitch Ratings recently said Malaysia had yet to share in the emerging Asia trend of strengthening sovereign ratings, with public finances remaining a key rating weakness.
Faster consolidation and revenue strengthening reforms would be needed to bolster the case for positive action on Malaysia's Long-Term Foreign Currency Issuer Default Rating, which has been at 'A-' on Stable Outlook since 2004, it said.
The poll result is expected to help revive the People's Alliance opposition headed by former deputy premier Anwar Ibrahim who led the three-party group to record wins at the last general election in 2008.
The Alliance has lost some traction of late as Anwar battles a lengthy court case involving charges that he sodomised a former male aide and more recently, that he was caught on tape having sex with an unidentified woman. Anwar has denied both allegations.
"This is a good sign for us as we have shown that we now have a formidable opposition that is a credible alternative which can take over the government in the next general election," Wan Azizah Ismail, Anwar's wife and president of the opposition People's Justice Party, told reporters in Kuching.
"This is an indicator that will influence how the next general election will go."
The usually quiet Sarawak capital was decked out with banners and flags although polling day was largely uneventful.
"The results of the election is something that even the Prime Minister cannot ignore, because more people are showing that they no longer support the government," said Peter Seah, an electrician in the state capital.
Ethnic and religious tensions have spiked in Sarawak in the past year following a dispute over the use of the word "Allah" by Christians to describe God and the government's seizure of Malay language Bibles, which the authorities are trying to resolve through talks with church groups.
The issues have angered Christians who make up 9.1 percent of the country's population and over 40 percent of the population in Sarawak.
Editing by Liau Y-Sing