"We see Malaysia being divided into religious and ethnic ghettos," said Farish Noor, a Malaysian political analyst based in Berlin. "That's why I find it so difficult to celebrate the 50th anniversary of independence because I see so few 'Malaysians.' ... Everyone speaks of his own tribe."
At the heart of the polarization is deep disenchantment among the minority Chinese and Indians over two issues. One is a long-running affirmative action program for Malays, a Muslim people that make up 60 percent of the population. The other is the growing influence of Islam, with the apparent blessing of the government.
Analysts warn that minority discontent could upset the ethnic peace that has been the bedrock of Malaysia's stability and economic prosperity. Ethnic Chinese represent 25 percent of the country's 26 million people, and Indians, 10 percent. About 5 percent belong to indigenous groups.
"Sometimes it is disgusting how the Malays treat us. They have no respect for us Indians," Murali Mogan, a 19-year-old barber, said. "If I could, I would leave and settle in London."
Further, if Islamic conservatism is not controlled, many experts fear that Malaysia could become a breeding ground for hard-liners who want to impose a strict interpretation of Islam.
"If you give them space to move in, to maneuver, they will come in," said Al-Mustaqeem M. Radhi, a Malay Muslim who runs the Middle-Eastern Graduates Center, a think tank in Kuala Lumpur. Malaysia "could become a fertile ground to train and nurture the extremists."
But Radhi and others play down worries that Malaysia could become a haven for the al-Qaida terror network and its regional affiliate, Jemaah Islamiyah. The two organizations tried to recruit Malays and held at least one key meeting here to plot the Sept. 11 attacks. But the network has been rolled up in Malaysia since early 2002.
Economically, Malaysia has much to celebrate.
From a postcolonial tin-mining backwater in the 1950s, Malaysia has grown into an industrial state that exports semiconductors and other electronic goods and aspires to become a fully developed country by 2020.
It boasts the Petronas Twin Towers, the third tallest building in the world, and its new capital, Putrajaya, is a sprawling, leafy city of grand architecture, palatial ministerial homes and fantastically shaped bridges.
Only 5 percent of the population lives in poverty, down from 50 percent at independence. Annual per capita income, adjusted for inflation, has jumped from US$290 (€210) to US$3,700 (€2,700).
The nation's political stability stems from a power-sharing arrangement that has kept the National Front, a coalition of Malay, Chinese, Indian and other parties, in power since 1957.
The unspoken threat of a law that allows indefinite detention without trial also helps keep dissent at bay.
"The Malaysian state realizes that you can maintain soft authoritarianism through a combination of threat and patronage ... to keep things warm but never on the boil," Farish said. "It never lets the situation reach a boiling point but it can cook the Malaysian public for eternity."
Race riots broke out in May 1969, but Malaysia has otherwise enjoyed five decades of generally peaceful ethnic relations. Malik Imtiaz, a prominent constitutional and human rights lawyer, says that reflects racial tolerance, not racial integration.
Entire neighborhoods, and sometimes towns, are identified with a particular ethnicity. The three groups rarely mix outside the workplace and know little about each other's cultures. In university cafeterias and shopping malls, young people tend to cluster by race.
"There is a lot of tolerance among races in many respects. But the comfort level with each other is not there," said Azmi Khalid, the environment minister and a member of the ruling Malay elite.
Minority anger has grown over the New Economic Policy, which has given preference to Malays — historically the poorest group — in jobs, education and businesses since 1971. The policy is credited with lifting the education level of Malays, also known as Bumiputeras, or "sons of the soil." But critics say it has evolved into a tool to benefit a few well-connected Malays.
There are growing calls, even from some Malays, to scrap the policy.
"The NEP has to be dynamic. It has to change with time," said Tengku Zafrul Aziz, a beneficiary of the NEP's education quota and now the CEO of TuneMoney, an investment and insurance company. "You can't continue to have the same policy. It will raise racial tensions especially if you use it as an excuse to benefit a selected few Bumis."
The government has eased the quota system at universities and exempted a special industrial zone in the southern state of Johor from a requirement that companies have at least 30 percent Malay ownership. Still, the government remains loath to scrap the NEP, because it fears losing Malay votes.
The spread of Islamic conservatism is adding to ethnic tensions.
Islamic preachers have begun telling Muslims not to attend Christian or Hindu festivals, and some condemn Christians and Jews at Friday prayers, said Radhi of the Middle-Eastern Graduates Center.
Most Malay women now wear the head scarf, not part of their traditional attire. "Five years ago, I never saw so many head scarves," Radhi said.
Some schools have started reciting Muslim prayers at the start of the day.
While new mosques are built with taxpayer money, obtaining government permission to build Christian churches and Hindu temples is virtually impossible, despite a constitutional guarantee of religious rights.
A series of court verdicts this year have found that civil courts have no jurisdiction in Islamic matters, even when applied to non-Muslims. Imtiaz, the lawyer, said the Constitution is clear that civil courts can overrule the Islamic courts — but judges are unwilling to rule against Islam.