Building Malaysia’s Defence Industry

Dr. Ngeow Chow Bing (Director, Institute of China Studies, University of Malaya)


Not being a specialist with a defense industry background, there are not many specific actionable suggestions that I can make for the Defence White Paper. However, as a scholar on international relations and on China, I would like to offer some general thoughts and reflections on the matter.

In theory, developing an indigenous defence industry makes sense for Malaysia. First, a strong defense industry means that our Armed Forces will be less reliant on foreign suppliers, and this could save the government costly procurements as well. Second, a well-developed defence industry sector can provide many jobs and aid in the industrialization of the nation’s economy. Third, foreign exchange benefits can be gained if its products are exported to other countries.

However, nurturing an indigenous defence industry is enormously challenging, in terms of the amount of capital that needs to be invested, the talent that needs to be trained, and the competitiveness within the weapons industry. Moreover, the products must be of high quality, because the end users are the members of the Armed Forces of Malaysia, who will depend on these products in times of war or armed conflict. Although Malaysia under Prime Minister Mahathir Mohamad during his first term in office (1981-2003) did have a vision to develop an indigenous defense industry, the reality is that, notwithstanding some achievements, we are still far from being able to develop a truly dynamic and capable defence industry.

The weaknesses of our country are not difficult to point out. First, there is a persistent lack of sufficient human talents, especially STEM specialists, and more so perhaps in the defence-industrial sector. Second, there is little harnessing of the R&D capabilities found in local universities and the corporate sector to serve the defence-industrial needs of the country. Third, there has not been strategic patience and vision from the government to groom and guide the industry; instead, too many special and personal interests sometimes come into the picture. And fourth, the Armed Forces of Malaysia is a relatively small customer. In order to sustain the industry, a bigger market is needed.

Addressing and overcoming each of these weaknesses will take years or even decades. Moreover, an additional challenge is that advances in defence technology, especially among more developed powers, mean that an even greater investment of capital and human resources is required to develop a competitive defense industry sector. The challenge is truly daunting. Therefore, in looking into developing our own defence industry, one needs to avoid rushed action. A careful study, done by true professionals, about how other countries with similar weak backgrounds developed their defence industry is needed, and we can identify the useful lessons from others and adapt them for Malaysia.

In my view, Malaysia needs to exercise a clear focus in its defense industry development. Obviously Malaysia is not a big economy or major power, only major powers can afford to do so. We will need to target some specific areas that we have the potential to develop, and to identify the products that we will be able to export as well. Cost-wise, we have to take into consideration the capital that is needed.   

In my view, because of the challenges mentioned above, I would think that having a foreign partner in developing this industry is perhaps necessary, at least in the initial stage. A successful case of development of an indigenous defence industry by a very underdeveloped economy, with a relatively low level of human capital, is Pakistan. Although still a very poor country, Pakistan today is able to produce some very sophisticated weaponry including fighter jets. The key to Pakistan’s defence industry is its strategic partnership with China, in which China is willing to transfer and share technology, out of common strategic interests.

Malaysia, of course, does not have that kind of relationship with China, and it would be difficult to create one given the territorial dispute between the two countries. Partnering with the US is possible but it risks Malaysia’s relationship with China and may raise China’s suspicions. A more plausible candidate to partner with Malaysia will be South Korea. South Korea is now implementing its New Southern Policy and aiming to elevate its strategic and economic ties with Southeast Asian countries. Unlike China and the US, South Korea does not have hegemonic ambitions, and Malaysia’s partnership with it will not undermine the non-aligned position of Malaysia. South Korea’s relatively advanced defence industry can provide the kind of support that Malaysia needs, and Malaysia can collaborate in South Korea projects that are affordable enough for it to manage.

© 2019 MiDAS, All Rights Reserved