I am seeing it potentially escalating.

When my open-minded Malay friends were discussing the issues of Islam with me in Australia, I was embarrassed, because I literally know nothing about the development of Islam in Malaysia.
For too long Malaysians have been living segregated by race, and as religion is too sensitive an issue for even academic discussion, non-Muslims know very little about Islam and Muslims know very little about other religions.
In my opinion, non-muslim scholars have the duty to understand and study Malaysian Islam, not only because it’s the official religion but because it’s the religion of the majority population. If we don’t understand Malaysian Islam, we can’t really talk of social reform, because we don’t even know how the majority Malaysians look at various issues. Unfortunately, this is very lacking.
Take me for example, all of my Malay friends (acquaintances) are open-minded type, which is why I can’t even catch a glimpse of ‘real world’ Malaysian Islam. I see more and more Malay girls wearing tudung, more and more Malay men wearing Arab clothes, but I never know what’s going on behind.
Most non-muslims would simply blame the BN government for allowing or even encouraging the ‘radical Islamization’ of Malay society, which is partially true, but never the full picture. The development of Malaysian Islam is a complex interplay between various parties, domestic and foreign, political and religious.
And Malay society is also becoming highly polarized. On one hand we have lower and middle class Malay becoming more religious, on the other hand we have middle-upper and upper class Malay who have been very open-minded and becoming more Westernized. The two Malay societies are drifting apart, not a good sign for the country.