This is a best prospect industry sector for this country. Includes a market overview and trade data
The Malaysian government recognizes the aerospace and defense industry as a strategic industry with vast potential in the country’s industrialization and technological development programs. Malaysia remains embroiled in several territorial disputes with China and its neighboring countries. The government also faces trafficking, piracy, and militants operating in the broader region. Protecting its maritime security is critical for Malaysia as a country that depends heavily on sea trade and holds offshore economic assets.
Most new procurements will need to be imported, as Malaysian manufacturers cannot produce technologically advanced equipment within these segments. However, Malaysian defense development programs remain hampered by budget constraints. The Malaysian Armed Forces (MAF) modernization is progressing slowly as the government prioritizes social and economic recovery over military development. The pandemic’s impact, leakage of funds, and political uncertainty over the past two years resulted in limited significant defense developments. These restraints have also prompted a renewed push to maximize local involvement in procurements.
The Malaysian government hopes to strengthen domestic manufacturing capabilities of defense product collaborations and technology transfers, thus reducing its reliance on defense imports. Therefore, it has enforced an offset policy under the Industrial Collaboration Program and Protégé Program for tenders above a particular threshold value to enhance the participation of its local industries. In almost all cases, the foreign company must take on a local partner before their bids are considered. Procurement often goes through intermediaries rather than being conducted directly by the government.
With the ongoing defense modernization programs, opportunities exist across the entire security and defense industry. Procurement spending will focus increasingly on strengthening Malaysia’s ability to protect its coasts, territorial waters, offshore economic interests, and airspace, as well as developing its intelligence, surveillance, and reconnaissance capability. The Malaysian government is considering a mix of crewed and crewless aerial platforms to fulfill the country’s maritime patrol requirements. A priority will be replacing equipment used by the MAF’s special operations forces, including parachutes, underwater breathing gears, and boats.
Malaysia launched the Malaysian Aerospace Industry Blueprint 2030, an initiative with the vision of Malaysia being Southeast Asia’s most significant aerospace market. Malaysia is currently home to more than 200 aerospace companies comprising both international and local industry players. The demand for civil aerospace services and equipment will recover in a post-pandemic environment as air travel picks up from the borders reopening.
The nation’s overall defense capabilities are highly dependent on foreign suppliers. The Malaysia Defense White Paper highlights territorial disputes involving US-China rivalry and non-traditional threats across its borders, including jihadist fighters, the Rohingya crisis, and cyberattacks. It emphasizes the need to boost Malaysia’s naval capabilities to prepare for possible conflict in the South China Sea. It also focuses on developing a modernized ‘smart army’ using cyberspace technology and state-of-the-art systems. That initiative would reduce reliance on traditional equipment such as battle tanks, ships, and weaponry, instead favoring crewless aerial vehicles, drones, and cybersecurity-related equipment.
The Malaysian Space Agency (MYSA) was formed to lead the implementation of the National Space Policy, empower the national capability in the space sector, coordinate the acquisition of satellite data, and strengthen international cooperation in the space sector. Malaysia is an active member of the International Telecommunications Union (ITU) and has been championing equitable access to satellite orbit rights through public and private sector participation. Malaysia’s geographic location close to the equator may offer cost advantages for horizontal air-dropped satellite launch services compared to the traditional vertical rocket variety. The National Space Policy 2030 is expected to contribute at least 0.3 percent to the GDP by 2030 and create 5,000 new jobs.
The National Space Policy aims to drive the growth of its space sector, particularly the manufacturing of remote-sensing satellites, satellite components, and data-driven downstream services. The application services of space technology are wide-ranging and include internet connectivity, IoT, navigational tracking, disaster management, resource management, governance, meteorology, defense, and security.
Langkawi International Maritime and Aerospace Exhibition (LIMA) 2023: May 23-27, 2023
Defense Service Asia Exhibition and Conference (DSA) 2024: May 06-09, 2024
Resources of Malaysian Government Authorities
Royal Malaysian Air Force
Science and Technology Research for Defense (STRIDE)
Malaysia Institute Defense & Security MiDAS
National Aerospace Industry Coordinating Office (NAICO)