Malaysian government predicts big by-election win

HULU SELANGOR, Malaysia (Reuters) - Malaysia's government predicted it would score a big win in a tense by-election on Sunday during which 10 people were arrested in scuffles between rival groups.

The vote in a marginal opposition-held seat is seen as a referendum on Prime Minister Najib Razak's economic reforms and one which the government that has ruled this Southeast Asian country for 52 years must win after a string of electoral losses.

Vehicles crawled along roads to the rural enclave of Hulu Selangor in opposition-controlled Selangor state in central Malaysia as the government bussed in flag-waving supporters. By 8 p.m. British time, turnout was 63.74 percent.

"The National Front (government's) key performance indicator for this seat is (a majority of) 6,000," Deputy Prime Minister Muhyiddin Yassin told a press conference.

Watched by about 1,000 police, a pro-government crowd faced off against supporters of Anwar Ibrahim's opposition alliance at polling stations in the marginal parliamentary constituency that fell vacant after an opposition lawmaker died.

Analysts said anything less than a substantial majority may raise questions about Najib's leadership.

State police chief Khalid Abu Bakar told Reuters 10 people had been arrested after minor scuffles.

For Anwar, who is on trial for sodomy, a defeat would add to a string of setbacks that have seen a series of party defections.

FAMILY DIVIDED

"My family is divided over the elections," said Yusoff Hashim, a 33-year-old graphic designer, after he voted. "My father says we have to be loyal to the government because they helped us. I don't think it's true."

Some voters also said they were unhappy with politicians' failure to address their biggest worries -- taxes and incomes -- in a campaign that mostly focussed on opposition candidate and former law minister Zaid Ibrahim's alcohol drinking.

Alcohol is forbidden for Malays, who are Muslims and make up half of the 28 million people.

Although the election will not affect that balance of power, the government is keen to retake the seat in Selangor state that abuts the capital Kuala Lumpur and is Malaysia's richest.

Najib has hit the campaign trail and handed out cash to Malay estate settlers, with promises of more to come, in an election that he dubbed a referendum on his first year in office as well as his New Economic Model that involves rolling back race-based affirmative action policies favouring Malays.

"Najib needs to win very big so that he builds up the momentum to take back the Selangor state from the opposition, if and when there is a general election," said Bridget Welsh, a Malaysia expert with Singapore Management University. She said Najib needed a majority of 3,000 for a convincing win.

The premier's first year in office has been marked by strained public finances and delays in fuel subsidy reforms and a goods and services tax due to fears of a voter backlash.

The National Front has lost seven out of nine by-elections after its worst performance in national polls in 2008. Mounting political tensions have dented investment. Outflows hit $61 billion (39.7 billion pounds) in 2008 and 2009, official data showed.

Winning the Hulu Selangor parliamentary seat is crucial for the opposition, which needs to show it remains a serious contender to wrest power in the next elections. Anwar needs to boost his standing after the recent defections of four MPs.

(Editing by David Chance and Paul Tait)