The defence minister says it includes stricter procurement rules, a stronger push for local content, and a clampdown on foreign dominance in maintenance and repair work.
Speaking at the launch of the National Defence Industry Policy by Prime Minister Anwar Ibrahim, defence minister Khaled Nordin said future defence procurements will clearly stipulate minimum local participation.
“In every defence procurement, the percentage of local content will be clearly set at not less than 30%,” he said.
Khaled said original equipment manufacturers (OEMs) will no longer be allowed to dominate maintenance, repair, and overhaul (MRO) activities.
All MRO services must be carried out by local companies, except during the warranty period, which can only be handled by the OEM, he said.
He warned that local firms would not be protected if they failed to innovate or deliver value.
“Every local company involved must demonstrate innovation and improvements that increase local content and reduce costs. If they fail, we will terminate their MRO contracts, even if they are local companies, because our priority is the national interest,” he said.
He said terminated contracts would be reopened for tender to companies that are genuinely capable.
On technology transfer, Khaled said the ministry would adopt a more selective and results-driven approach through the Industrial Collaboration Programme (ICP).
“Technology transfer will only be provided to defence companies that truly have the capability and capacity to receive it, not to companies that cannot benefit from the technology,” he said, adding that ICP incentives would be limited to firms that can produce tangible outcomes.
He also stressed the role of research and development as a core pillar of the defence ecosystem, saying ICP funding could support local R&D through the Defence Science and Technology Research Institute (STRIDE), alongside direct government allocations.
Khaled also announced the start of several national defence projects, including the development of a local defence satellite to replace current services when the existing contract ends in 2029, a national defence laser system, land vehicle chassis assembly and manufacturing capabilities, weapons system assembly and production, passive radar production, loitering munition systems, and defence simulators.
“This is a strategic investment for our sovereignty, security, and the future of the nation,” he said, calling on all stakeholders to support the National Defence Industry Policy to reduce reliance on foreign countries and ensure a more secure defence supply chain.
He said the policy will not succeed without strong, coordinated support across the government, further stating that Putrajaya was “clear and unwavering” in its commitment to develop Malaysia’s defence industry.
Allegations should not taint entire armed forces, says Anwar
Launching the National Defence Industry Policy, Anwar said there were “shocking” claims about corruption and fund misappropriation in the defence ministry, which comes after former army chief Hafizuddeain Jantan was summoned by the Malaysian Anti-Corruption Commission in connection with a probe into alleged corruption and misuse of funds involving army procurement.
MACC chief Azam Baki said the anti-graft agency will likely propose criminal charges against several senior officers following investigations into a top armed forces officer and a cartel linked to army procurement contracts and tenders.
Anwar stressed that the allegations should not cast a shadow over the entire armed forces. He said strengthening the defence ecosystem requires strong governance, building a local supply chain, and commercialising research and development.
“The majority understand their responsibility to the country and serve with integrity,” he said, adding that problems involving a small group under investigation, “must not tarnish others who are serving well”.
“We must begin with strong governance and good administration,” he said. - FMT
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