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Malaysia is a de-facto secular regime, with Islam as the state religion. However, the secular credentials of the country did not undergo proper maintenance under the ruling National Front party as a result of decades of political competition with the theocratic Pan-Malaysian Islamic Party. Malaysia is a multiracial country, and 60.4% of it's population are Muslim.

Originally, the draft Constitution of Malaysia did not specify any official religion for the state. This move was supported by the rulers of the nine Malay states, who felt that it was sufficient that Islam was the official religion of each of their individual states. However, Justice Hakim Abdul Hamid of the Reid Commission which drafted the Constitution came out strongly in favour of making Islam the official religion, and as a result the final Constitution named Islam as the official religion of Malaysia. All ethnic Malays are Muslim (100%) as defined by Article 160 of the Constitution of Malaysia. As required by Malaysian law and defined in the Constitution of Malaysia, a Malay would surrender his ethnic status if he were not Muslim.

Nine of the Malaysian states, namely Kelantan, Terengganu, Pahang, Kedah, Perak, Perlis, Selangor, Johor and Negeri Sembilan have constitutional Malay monarchs (most of them styled as Sultans). These Malay rulers still maintain authority over religious affairs in states. The states of Penang, Malacca, Sarawak and Sabah do not have any sultan, but the king (Yang di-Pertuan Agong) plays the role of head of Islam in each of those states as well as in each of the Federal Territories of Kuala Lumpur, Labuan and Putrajaya.

The Sunni Islam of the Shafi'i school of thought is the official, legal form in Malaysia, although syncretist Islam with elements of Shamanism is still common in rural areas. Mosques are an ordinary scene throughout the country and adhan (call to prayer) from minarets are heard five times a day. Government bodies and banking institutions are closed for two hours every Friday so Muslims workers can conduct Friday prayer in mosques. However, in certain rural states such as Kelantan and Terengganu the weekends fall on Friday and Saturday instead of Saturday and Sunday. The Malaysian authorities have strict policies against other Islamic sects including Shia Islam. Ahmadiyya Muslim Community has faced persecution in Malaysia. A notable sect that has been outlawed is Al-Arqam.

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