Q&A - What is at stake in Malaysian by-election

By David Chance and Razak Ahmad

KUALA LUMPUR (Reuters) - Campaigning starts on Tuesday in a by-election in Kuala Terengganu, a parliamentary seat held by the government.

While the outcome of the Jan. 17 poll will not significantly alter the balance of power in parliament, it is a key test for Najib Razak, the man who will become Malaysia's prime minister in March, and for Anwar Ibrahim's opposition.

Najib has declared it a "must win" seat.

The government has 137 seats in parliament, Anwar's coalition has 82 and there are two independents who quit the government.

WHY IS KUALA TERENGGANU IMPORTANT?

Ethnic Malays account for 87.4 percent of the 80,326 voters in the constituency. The main government party, the United Malays National Organisation (UMNO) won the seat in the 2008 general election by a slender majority of 628 votes, despite a massive national swing to the opposition. In the 2004 elections, UMNO had a 1,933 majority.

The government is still reeling from the 2008 election in which it lost power in five of 13 states as well as its once iron-clad two-thirds parliamentary majority. The opposition maintained that momentum with a huge by-election win for Anwar in August 2008 when he was returned to parliament for the first time in a decade.