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KUCHING, Malaysia, April 15 (Reuters) - Malaysia's government will likely retain control of a key state which heads to the polls on Saturday but significant opposition gains in the ruling coalition's bastion could delay Prime Minister Najib Razak's pursuit of economic reform.
The Sarawak poll will provide a reading of public support for the coalition as Najib considers calling a snap general election to consolidate his grip on power and overhaul Malaysia's economy to attract investors.
"This is the biggest political test for Najib ahead of the next general election and if the opposition makes major inroads it may force him to delay the next general election," said Ibrahim Suffian, director of the independent opinion polling outfit, Merdeka Center.
A strong win in the resource rich but rural state on Borneo island could hasten the next general election which isn't due until 2013, and further weaken Anwar Ibrahim's opposition alliance which has been on the back foot since scoring its best win in 2008 national polls.
Support for the ruling National Front coalition has been eroded by complaints of religious discrimination and dissatisfaction with the state's long-serving chief minister.
Analysts polled by Reuters last month predicted that Najib's coalition would secure a two-thirds majority, with the opposition seen as not strong enough to mount a serious challenge. [ID:nL3E7E408N]
But the opposition could increase its seats from 7 to 18 in the 71-seat legislature on voter unhappiness about rural poverty, government corruption allegations and the rule of chief minister Taib Mahmud, said political analyst Ong Kian Ming.
The opposition is looking to make inroads in Sarawak to rejuvenate its bid for national power after being weakened by a string of recent local election losses.
The opposition's campaign events in many urban seats have consistently drawn thousands of supporters, signalling strong support, with colourful banners strung up throughout the state capital Kuching asking the electorate to "vote for change".
"We've been promised development by the government for decades, but it's only when elections happen that they get serious about it," said Rubiah Karim, a 47-year-old general worker at a laundromat in Kuching. "A lot of people are fed up."
Despite the ruling coalition's attacks on Anwar, who is battling a sodomy charge in court and allegations of involvement in a sex video scandal, both of which he has denied, a close fight is expected in Sarawak.
"This state election will have an impact nationally, and the people will signal that they reject the politics of corruption and cruelty," Anwar told reporters in Kuching on Friday.
The most heated contests are taking place at 12 seats dominated by ethnic Chinese. At the last election, the ruling coalition won 6 of these seats.
The outcome in these seats will be read as a barometer of Najib's efforts to regain support from Malaysia's minorities who abandoned the ruling coalition in 2008 national polls, leading to record losses for the government of the Muslim-majority nation.
Ethno-religious tensions have been fuelled by an ongoing court row over the right of Malay-speaking Christians to use the word "Allah", which in early 2010 led to attacks on places of worship.
The dispute also saw the government seizing Malay language Bibles, sparking anger among the country's Christians who make up 9.1 percent of the population and over 40 percent of the population in Sarawak. [ID:nL3E7EU1IH]
Efforts are ongoing between the government and church groups to resolve the Bible issue, but widening opposition support in Sarawak will signal continuing anger and trouble for Najib in regaining support from minorities at the next general election.
OSK Research in a March 21 note said that with voter unhappiness in the state over the Bible seizure issue, "the election results may be uncertain and may add to market volatility".
Editing by Liau Y-Sing and Raju Gopalakrishnan