This year may be the year of reckoning for Malaysia's longstanding bid to achieve developed nation status by 2020.
As it turned out, last year was an annus horribilis for Prime Minister Najib Razak but he appears to be entering the new year much more secure than he could ever have imagined just a few months ago.
Forced to use controversial methods to fight off tremendous pressure to resign over reports that some US$700 million (S$988 million) linked to state investment firm 1Malaysia Development Berhad (1MDB) ended up in his private accounts, Datuk Seri Najib looked steady in the boat by last month following the Umno general assembly.
However, he still faces daunting challenges.
Mr Najib has made wide-ranging subsidy cuts that will likely stir even more dissent against the government. Fuel, highway tolls, electricity, public transport and even airfares have all gone up as subsidies were cut or abolished in recent months. His administration is hard put to maintain the subsidies because government revenues have taken a hit as oil prices plunge on the world market, and the ringgit nosedived last year.
Officials have warned that further price increases are on the way.
Malaysia's biggest lender, Maybank, expects inflation to soar to about 3 per cent this year, well above the 2.2 per cent average registered last year on the back of plunging oil prices.
Public grumbling over the cost of living could lead to a renewed assault on Mr Najib's leadership, especially if the 1MDB scandal continues to fester. The state investment firm has been offloading assets aggressively in the latter part of last year, and the wind could be taken out from critics as the firm said it has succeeded in reducing its massive RM42 billion (S$13.7 billion) debt pile to manageable levels.
Analysts say the lack of a viable alternative will also likely see the Umno president and Prime Minister remaining secure in his seat.
With charismatic opposition leader Anwar Ibrahim sentenced last February to five years behind bars for sodomy in yet another controversial conviction, there does not appear to be a formidable challenger across the aisle. The removal of Umno's deputy president, Tan Sri Muhyiddin Yassin, from the Cabinet over critical comments has also given the Prime Minister clear daylight between himself and second-liners in Umno.
Vice-president Ahmad Zahid Hamidi is widely popular in the dominant ruling party, and his appointment as deputy premier further entrenches his position. But to some, there is doubt he is of prime ministerial material. "Not many people trust him with the economy and, even worse, people don't trust him with national unity," Ideas policy think-tank head Wan Saiful Wan Jan told The Sunday Times.
The Sarawak state elections set to take place in the first quarter is a potential bellwether, with all eyes on whether the ruling Barisan Nasional coalition can still garner a two- thirds supermajority in the state assembly. Such an outcome could well give Mr Najib a platform to prove his leadership is still relevant.
But the state polls could also be a test for the divided opposition, which failed miserably to capitalise on the weaknesses of the ruling coalition last year. After years of constant bickering, the Democratic Action Party and Parti Keadilan Rakyat have forged a separate path from Parti Islam seMalaysia (PAS). The opposition split has led to increasing speculation about a unity pact between Umno and PAS - the two Malay Muslim-based parties.
Much, therefore, is at stake on the political and economic front for Malaysia in the new year.
This article was first published on Jan 3, 2015.
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