KUALA LUMPUR: Malaysia marked its 51st birthday yesterday with a mammoth parade that did little to mask the uncertainties a reborn opposition poses to the government's uninterrupted hold on power since independence in 1957.

Thousands of people marched in the historic Merdeka (Freedom) Square, watched by Malaysia's King and government leaders.

A colourful parade with dances by Malaysia's three main ethnic groups - majority Malays and minority Chinese and Indians - passed through the historic Dataran Merdeka, or Independence Square.

Fighter planes and helicopters roamed the sky above.

For the first time, a gathering of nearly 300 religious leaders representing different faiths was held.

'Our fathers and grandfathers fought with their blood and tears to get independence. All that is expected of us is to sacrifice our time and energy to maintain it,' said 40-year-old Ahmad Kamil, who works with Kuala Lumpur City Hall.

He was among thousands of Malaysians who lined the streets of the capital to watch the National Day parade. Millions of others watched the event live on TV.

Smaller scale National Day celebrations were also held in state capitals around the country.

But beneath the pomp and gala, Malaysia's embattled government is heading into major political turbulence.

This year's celebrations are different from past years due to the political and economic uncertainties.

Opposition leader Anwar Ibrahim has said he is seeking to win over 30 defectors from the ruling Barisan Nasional (BN) coalition to form a new government by his self-imposed deadline of Sept 16.

Datuk Seri Anwar's Pakatan Rakyat alliance, which made unprecedented gains in the March general election, has 82 seats in the 222-seat Parliament. It needs 30 more to win a simple majority.

The prospect of a power struggle has alarmed foreign investors and unnerved the financial markets. The Malaysian currency, the ringgit, is near an 11-month low, and the stock market hit a 20-month low last week.

Many Malaysians are also reeling from high inflation, and worried about an economic slowdown.

Government leaders have played down prospects of their MPs crossing over to Pakatan but kept up with the scare-mongering about Mr Anwar.

Deputy Prime Minister Najib Razak said the country could lose its independence if BN loses power.

'If we do not safeguard the nation's independence, we will only be left yearning for it if we lose power,' he said on Saturday.

Mr Anwar is banking on BN MPs from Sabah and Sarawak, which complained their grouses have often been overlooked by the federal government.

Prime Minister Abdullah Badawi moved to appease Sabah and Sarawak by proposing major infrastructure projects in his 2009 Budget speech on Friday.

In his National Day speech, Datuk Seri Abdullah asked Malaysians to rally behind his government to face 'all enemies and challenges'.

Mr Anwar rejoined Parliament on Thursday after a 10-year absence and immediately clashed with the government, leading an opposition walkout.

At the same time he must fight a new sodomy charge, which he says is politically motivated, at a trial that begins this month. If the new sodomy prosecution is successful, he could get 20 years in jail, effectively ending the 61-year-old's political career. Even if he is not found guilty, months in court could overshadow his push for power.

REUTERS, ASSOCIATED PRESS, BERNAMA