KUALA LUMPUR, Feb 8 (Reuters) - It was a stellar 2023 for Malaysian filmmakers with awards at Cannes and the Oscars, but signs of heightened censorship at home and death threats have fuelled worries about whether the optimism built off the back of the global success can last.

Muslim-majority Malaysia typically restricts content seen as offensive or infringing upon religious, cultural and moral values, but last month, rare criminal charges were levelled at two filmmakers for "wounding religious feelings" through their film "Mentega Terbang".

Filmmakers fear such moves could stifle creative expression and hurt investments, undermining the impact of 2023 successes like a top critics' prize at the Cannes Film Festival for Malay-language film "Tiger Stripes" and a Best Actress Oscar at the Academy Awards for Malaysian-born Michelle Yeoh.

"This is a very good time ... where people around the world are really looking into Malaysian filmmakers. If we do not tap into that curiosity now and then we lose that moment, it will be quite hard for us to get that back," said Khairi Anwar, one of the filmmakers charged for the film "Mentega Terbang".

"Mentega Terbang" follows a teenage Muslim girl exploring different religions while dealing with grief. It was released in 2021 on the online streaming service Viu. Online platforms are not covered by film censorship rules in Malaysia.

Viu, however, stopped streaming the film in February 2023 amid an uproar from some Muslim groups over scenes perceived to be going against Islamic teachings.

Malaysia's home affairs ministry, which oversees the Film Censorship Board, then banned all screening and publicity of "Mentega Terbang" in August for being "contrary to public interest", local media reported.

Khairi and others involved in "Mentega Terbang" even received death threats at the time, media reports show.

"Other than the restrictive environment, filmmakers now are also having to deal with safety and legal issues," said director Badrul Hisham Ismail, known for productions like "Maryam Pagi Ke Malam" and "Voyage to Terengganu".

"This will definitely create a climate of fear."

Malaysia's national film development corporation did not respond to repeated requests for comment. The home affairs ministry also did not respond to a request for comment.

The latest criminal charges come amid growing Islamic conservatism in Malaysia, despite hopes of policy reforms and greater freedom of expression after Prime Minister Anwar Ibrahim's coalition, seen as progressive and reformist, rose to power in November 2022.

Analysts have said Anwar is under pressure to prove his Islamic credentials, with the ultra-conservative opposition seeing growing popularity among the country's majority ethnic-Malay Muslims in recent elections.

The government has previously denied allegations of stifling dissent, saying it wanted to curb the spread of harmful content on race and religion.

CENSORSHIP

Under Malaysian law, films intended for public viewing must be approved by the Film Censorship Board. The board may grant full approvals, approvals with cuts, or refusals for screening.

Content deemed excessively violent, sexually explicit, critical of the authorities or Islam, or portraying same sex relationships, is often cut or censored.

Pixar's "Lightyear", "The Wolf of Wall Street" and Marvel's "Thor: Love and Thunder" are among high-profile Western movies that have been barred from cinemas.

The director of Malaysia's award-winning "Tiger Stripes", a horror film exploring cultural taboos around female puberty, disowned the production's local release after it was screened last year with extensive cuts.

"Creative licenses and creativity in filmmaking cannot override the truth of Islam and the essence of faith," Zabidi Mohamed, who describes himself as a "sharia-compliant scriptwriter and film activist", said in a Facebook post last year around the time "Mentega Terbang" was pulled.

He had criticised the film as "blasphemous to Islam."

Khairi, who declined to comment directly on the case against him, said Malaysian films risked losing interest from domestic and global investors due to the possibility of conservative backlash or heavy government censorship.

SELF-REGULATION

Strict regulations have resulted in self-censorship, where only "safe and stagnant" films are submitted to ensure approval, some filmmakers say.

Some filmmakers have turned to private funding or limit screenings to festivals abroad or online platforms.

But such options often result in returns too minimal to satisfy investors, said film director Amir Muhammad, a producer on 2023's crowd-funded "Pendatang". "Pendatang", which tackles ethnic tensions in Malaysia, aired on YouTube last year.

Brenda Danker, co-founder of Malaysia-based Freedom Film Network, said the industry should be allowed to self-regulate through a system that focuses on content classifications rather than censorship.

This will help "grow the creative economy, protect minors while maintaining the freedom of choice of adults", she added. (Reporting by Danial Azhar; Editing by Rozanna Latiff and Himani Sarkar)