Malaysia Defence Industry

The domestic defense industry was largely neglected for many years, the nation relying mainly on foreign sources for most military equipment. Defense planners have indicated in the early 1980s that they had a long-term plan to work toward self-reliance, however. As of early 1984 Malaysia had a small domestic arms production capacity, which was sufficient to meet much of the armed forces requirements for small arms, ordnance, and ammunition. Dockyards at several ports were capable of performing routine maintenance, and new dry-dock facilities at Lumut and dockyards near Singapore could provide full maintenance and repair facilities. During the early 1980s Italian M. B. 339 aircraft were locally assembled, and the air force was capable of performing major overhauls of up to fourth-echelon maintenance.

In mid-1983 a task force was formed to work out the details of setting up domestic production of assault rifles, envisioned to take the form of a joint venture between a government-owned corporation and a foreign arms manufacturer. The decision to proceed toward domestic production was taken for military rather than economic reasons: rifles could undoubtedly be purchased at a cheaper rate on the competitive international market than they could be made locally, but for national security purposes, it was deemed necessary to ensure an uninterrupted source of supply.

The government decided to privatize some of the Armed Forces facilities in the 1970s. The objective then was primarily to create an indigenous defence industry in line with the nation's aspiration to embark on a self-reliance defence posture. At the same time, this strategy also supported the national agenda to develop capability in high technology sectors such as aerospace. Malaysia started by privatizing the Armed Forces Depot, maintenance and overhaul facilities in 1972 which is today known as AIROD. This was followed by privatisation of the PSD Naval Dorkyard in Navy Base Lumut in 1997, currently known as Boustead Naval Shipyard Sdn. Bhd.

At that time, most of these companies were still heavily reliant on the Armed forces personal to support them particularly in the MRO activities. The industries had minimal capability, were heavily reliant on the OEM for even base line maintenance. Today many of these companies have gained the expertise and know-how to be able to compete for business locally as well as internationally.

To name a few, Sapura has developed the TCR 5100 radio in collaboration with Thales of France. This radio is now being used by the Malaysian Armed Forces and is also exported to Pakistan, Indonesia, Venezuela and India. AIROD has become the most certified C-130 center in the world with capabilities in the maintenance of landing gear, structural repair, tanker conversion and stretch modification. Another company, Ikramatic has capability in-house in simulator development.

The Malaysia Defence Industry Council [MDIC] was formed in 1999 to coordinate the orderly development of the Malaysia Defence Industry Sector. This loose conglomerate which is currently chaired by the Minister of Defence has 56 members from both the Government and private sector.

The MDIC had held its annual general meeting at the Boustead Naval Shipyard facility within the Royal Malaysian Navy's Lumut naval base on the 21st July, 2008. The Defence Minister Dato' Sri Mohd Najib bin Tun Haji Razak urged the local defence industry to support and commit to the aspirations of the government to make the industry stronger, independent and more competitive in today's trying time. While the government gives precedence to the defence sector, the global economic slowdown has forced the government to take financially prudent measures in its national spending. As a result, the need to make the government's aspirations a reality sooner than later is emphasized more strongly now.

In the 1990s Malaysia's defense industry produced mainly small arms ammunition and AUG Styer assault rifles under license. Malaysia ventured into the aircraft industry with Lockheed in a joint-production of digital flight data equipment for export. Another joint venture is with Aerospatiale ofFrance for aircraft production including the transfer oftechnology. Additionally, joint-ventures are beingundertaken with Russia, Germany, UK and Australia in both shipbuilding and aerospace industry.

The Government of Malaysia is fully committed to developing the nation's competitiveness by enhancing its economic and technological capabilities. Guided by the macroeconomic framework of Malaysia's Five Year Development Plans, Industrial Master Plan and the National Policy on Science and Technology, it is the policy of the government to utilize the instrument of Government Procurement to leverage, through the Countertrade Programs, economic and industrial benefits and support for the further development of the country. In line with existing Government Procurement policy and regulations, countertrade/offsets obligation will be a requirement for major defence procurement.

The government has been actively engaging & marketing the Malaysian Defence Industry though exhibitions such as LIMA. The Langkawi International Maritime and Aerospace Exhibition is one of the largest defense and civil showcases in the Asia Pacific, regularly attracting the global maritime and aerospace industry to Langkawi. The LIMA show receives overwhelming support from the Government of Malaysia and works closely with the Ministry of Defense and all relevant agencies in providing the foundation for a world class event. LIMA is abound with important networking act ivit ies, from official funct ions hosted separately by the Prime Minister of Malaysia, The Minister of Defence, The Chief of Navy and The Chief of Air Force to the networking golf, receptions and cocktails hosted by visiting warships and other events. LIMA is the proven gateway to Asia Pacific markets for nearly 20 years.

LIMA is one of the largest maritime and aerospace exhibitions in the world for defence and civil applications. It regularly attracts over 500 companies and boasts the leading defence contractors like Airbus, BAE Systems of United Kingdom, Finmeccanica of Italy, Boeing, DCNS of France and Navantia of Spain amongst its exhibitors. The combination of aerobatic displays, boat demonstrations and the congregation of warships from leading regional Navies make LIMA a unique and exciting destination.

Since 1997, the exhibition has had two organisers and two separate venues, the Mahsuri International Exhibition Centre (MIEC) for the aerospace segment and for its maritime equivalent, at Awana Porto Malai. Both venues will still be maintained for LIMA '09, with the exhibition being held at MIEC whilst the Star Cruises jetty at Awana Porto Malai will be dedicated to warship and vessels display.

The twelfth installation of the Defence Services Asia (DSA) 2010 exhibition and conference was scheduled from April 19th to 22nd at Kuala Lumpur's Putra World Trade Centre (PWTC). With the theme, 'The Global Defence Services and Government Security Event,'the event will host around 700 companies from more than 40 countries, 27 national pavilions, 200 VIP delegations from 30 countries and more than 25,000 trade visitors. The venue has a 42,000sqm and had the participation of countries like Australia, China, Czech Republic, Germany, India, Italy, Malaysia, Norway, Russia, South Korea, the UK and USA.