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Malaysia Defense Market Size and Trends, Budget Allocation, Regulations, Key Acquisitions, Competitive Landscape and Forecast, 2021-2026

The defense budget in Malaysia is valued at $3.4 billion in 2020. The market is expected to grow at a CAGR of over 5% during the forecast period 2022-2026. The Malaysian defense budget is driven by efforts to modernize its armed forces, participation in peacekeeping programs, and ongoing territorial disputes with neighboring countries. The Malaysian MOD is currently working on modernizing its armed forces with advanced equipment. The proposed budget for 2022 fulfills transformation goals while meeting all operational requirements. This is expected to impact military modernization efforts, which may see many planned and anticipated programs scaled up.

Overview of the defense market in Malaysia

Overview of the defense market in Malaysia

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Military doctrine, modernization goals, and Malaysia’s national defense strategy

Malaysia has evolved a comprehensive security doctrine that leverages a broad array of security assets, including robust socio-economic policies and diplomacy, in addition to the development and deployment of robust military capabilities in a preemptive, positive manner to ensure tranquility, peace, and stability. The Malaysian Collective Security doctrine includes the application of social and economic forces, inclusive of non-governmental organizations (NGO) in addition to the military, diplomatic, and political measures used to achieve the desired objectives.

As an independent and sovereign country, Malaysia is aware that the most appropriate measures to safeguard its interests and national security are through the pursuit of self-reliance, which is the core of its defense policy. It involves not only combat forces but also the logistical support network of military-industrial cooperation in line with national development priorities. Hence, self-reliance should not be limited to military efforts but should also involve all relevant government agencies and the people. However, considering the limits, national self-reliance is generally based on acting independently without external assistance in matters concerning internal security and territorial integrity.

How has COVID-19 affected Malaysia’s defense spending?

Due to COVID-19 Malaysia had to limit its defense procurement plans. The impact of the virus has not only caused the economy to contract but led to the government prioritizing funding towards mitigating the impact of the pandemic on Malaysia’s populace. The outlook is positive for defense procurement, as the Perikatan Nasional government has given its approval for the RMAF to acquire one ground-based radar system, unmanned aerial vehicles (UAVs) and maritime patrol aircraft (MPA) in 2021. The government has released funding to the armed forces for small-scale procurements of all terrain vehicles, 4×4 transports, rigid hull inflatable boats, and fast interceptor craft, in addition to the leasing of two helicopters for the RMN.

What are the segment classifications in the Malaysian defense market?

The defense market in Malaysia is segmented into MALE, frigate, multirole aircraft, infantry fighting vehicle, and others. MALE is the largest segment of the Malaysian defense market followed by frigate.

Defense market in Malaysia, by segment

Defense market in Malaysia, by segment

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What are the import and export market dynamics in the Malaysian defense market?

Malaysia imports the majority of its defense procurements from Spain, Turkey, South Korea, the UK, and Germany. Spain accounted for the majority of the country’s defense imports during 2017-21 followed by Turkey, South Korea, the UK. Other significant suppliers were South Africa, China, France, and Denmark, among others.

The Malaysian defense industry does not have the requisite technological capability to competitively develop advanced defense equipment and compete with the global arms industry. Malaysia is currently unable to sell arms in the international market, and the majority of the country’s domestic companies are unable to develop and manufacture technologically advanced defense systems.

Who are the major market players in the Malaysian defense market?

Major companies in the Malaysian defense market include Boustead Holdings, Composites Technology Research Malaysia, and DRB-HICOM Defense Technologies.

Defense market in Malaysia, by key players

Defense market in Malaysia, by key players

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Market report scope

Market size (Year – 2020) $3.4 billion
Growth Rate (2022 to 2026) CAGR of >5%
Base year 2020
Forecast Period 2022-2026
Segmentation MALE, frigate, multirole aircraft, and others.
Key players Boustead Holdings, Composites Technology Research Malaysia, and DRB-HICOM Defense Technologies.

This report provides a comprehensive analysis of the defense market in Malaysia and contains an in-depth analysis of the following:

  • Malaysia’s Defense Budget: detailed analysis of Malaysia’s FY2021 defense budget broken down into market size and market share. This is coupled with an examination of key current and future acquisitions.
  • Regulation: the procurement policy and the process is explained. This is coupled with an analysis of Malaysia’s military doctrine and strategy to provide a comprehensive overview of Malaysian military regulation.
  • Security Environment: political alliances and perceived security threats to Malaysia are examined; there help to explain trends in spending and modernization.
  • Import and Export Dynamics: analysis of prevalent trends in the country’s imports and exports over the last five years
  • Competitive Landscape and Strategic Insights: analysis of the competitive landscape of the Malaysian defense industry.

Reasons to Buy

  • Determine prospective investment areas based on a detailed trend analysis of the Malaysian defense market over the next five years
  • Gain an in-depth understanding of the underlying factors driving demand for different defense and internal security segments in the Malaysian market and identify the opportunities offered.
  • Strengthen your understanding of the market in terms of demand drivers, market trends, and the latest technological developments, among others
  • Identify the major threats that are driving the Malaysian defense market providing a clear picture of future opportunities that can be tapped, resulting in revenue expansion
  • Channel resources by focusing on the ongoing programs that are being undertaken by the Malaysian government
  • Make correct business decisions based on an in-depth analysis of the competitive landscape consisting of detailed profiles of the top defense equipment providers in the country. The company profiles also include information about the key products, alliances, recent contract awarded, and financial analysis, wherever available

Key Players

Boustead Holdings

Composites Technology Research Malaysia

DRB-HICOM Defense Technologies

Table of Contents

Table of Contents

Executive Summary

Defense Budget Assessment

Budgeting Process

Defense Market Size Historical And Forecast

Drivers Of Defense Expenditure

Analysis Of Defense Budget Allocation

Military Doctrine And Security Environment

Military Doctrine And Strategy

Primary Threat Perception

Political And Strategic Alliances

Geopolitical Social And Economic Scenario

Market Entry Strategy And Regulations

Procurement Policy And Process

Market Regulations and Market Entry Route

Key Challenges

Market Attractiveness And Emerging Opportunities

Market Attractiveness, 2021-2026

Top Defense Segments By Value

Import And Export Market Dynamics

Import Market Dynamics

Defense Platform Acquisitions

Defense Platform Acquisitions By Value

Maharaja Lela-class Littoral Combat Ship

Aludra SR-10

AV8 Gempita

Tun Fatimah class

Fleet Size

Competitive Landscape

Defense Companies Operating In Malaysia

Main Defense Companies

Appendix

About This Report

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Frequently Asked Questions

The defense budget in Malaysia is valued at $3.4 billion in 2020.

Malaysia’s defense expenditure is expected to register a CAGR of more than 5% during the forecast period 2022-2026.

In 2020, the Malaysian defense budget as a percentage of GDP is 0.90%.

Military UAVs is the largest sector within Malaysia’s defense market.

Leading companies in the Malaysian defense market include Boustead Holdings, Composites Technology Research Malaysia, and DRB-HICOM Defense Technologies.

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