Malaysia’s plans to upgrade its current inventory to deal with the territorial disputes and protect its territory in the South China Sea will see its defense spending growing at an estimated CAGR of 5.3% over the period 2022-2027, says GlobalData, a leading data and analytics company.

GlobalData’s latest report, “Malaysia Defense Market Size and Trends, Budget Allocation, Regulations, Key Acquisitions, Competitive Landscape and Forecast, 2022-27,” reveals that Malaysia’s defense acquisition expenditure spending recorded a robust CAGR of 12.5% from $762.8m in 2018 to $1.2bn in 2022. The increase is largely attributed to a slew of defense procurements in military fixed-wing and naval vessels.

Malaysia has mostly focused on economic development and hence its military spending has largely remained flat. Most plans for force modernization have been repeatedly delayed or canceled due to economic cuts in the past. But a positive turn can be seen in the defense budgets passed by the parliament in the past few years with a significant jump of 8.4% annual growth in 2023.

Akash Pratim Debbarma, Aerospace & Defense Analyst at GlobalData, comments: “Malaysia is aware of the technological gap in its navy and air force inventory to maintain control over its territories. To deal with this gap, Malaysia will need more warships and, perhaps, even ground-launched anti-ship cruise missiles to create a credible deterrence in the region. However, the country’s biggest acquisition program to purchase six units of Boustead Naval Shipyard’s second-generation patrol vessel – littoral combat ships (SGPV-LCS) and four littoral mission ships (LMS) is expected to give a boost to its maritime capabilities.”

Other major ongoing procurements of Turkish Anka UAVs and AW139 to cover the retirement of the Nuri helicopters will satisfy Malaysia’s needs to boost its air force capabilities and secure its border territories.

Debbarma concludes: “With the Southeast Asian countries increasing their defense budget to deal with the territorial disputes in the South China Sea, Malaysia’s 2022 and 2023 defense budget shows the country’s desire to fulfil its transformational goals while meeting its security requirements. Malaysia’s defense budget is expected to reach $5.2 billion in 2027 scaling up many planned and anticipated programs.”