Malaysia’s defence industry faces structural and policy challenges that continue to hinder efforts to build credible and sustainable military power. Gaps in governance, funding, communication, and capability development have slowed progress in strengthening the nation’s defence ecosystem.
At the centre of these concerns is the effectiveness of the National Defence Industry Policy (NDIP), which aims to enhance military capability while building public trust in national security institutions. However, constraints within the system have limited the industry’s ability to fully execute the government’s intent.
The stability and effectiveness of the defence industry remain critical to the success of the whole-of-government and whole-of-society (WOGOS) approach in developing military power. Key issues include weak communication, low stakeholder awareness, insufficient budget allocation, gaps in human capital development, policy misalignment, and procedural inefficiencies.
The defence industry serves as a crucial bridge between Original Equipment Manufacturers (OEMs) and the Malaysian Armed Forces (MAF) in sustaining and enhancing operational capabilities. Yet, industry growth continues to be constrained by policy inconsistencies, contractual limitations, and dependence on foreign technology – creating significant capability gaps.
Financial limitations further restrict the industry’s ability to invest in advanced defence technologies. These challenges have also affected governance, increasing the risk of corruption and misuse of power in procurement processes. In response, procurement activities have been frozen pending the Ministry of Defence’s mitigation plan to establish a more transparent framework.
The widening gap between government strategic intent and operational capability continues to weaken Malaysia’s military power. Contributing factors include reliance on foreign systems, ageing assets leading to obsolescence, governance shortcomings, limited domestic industry capability, and policy constraints. These issues also affect maintenance, supply chain resilience, currency exposure, and technology transfer.
Budget allocation remains a persistent challenge, with competing national priorities such as healthcare, education, and economic development often taking precedence over defence spending. This ongoing trade-off continues to constrain military capability development.
Through the WOGOS approach, the military can mobilise national resources without permanently owning them, thereby reducing operational costs. However, obstacles remain – including inter-agency silos, agency-centric mindsets, limited private sector participation, and low public awareness.
The NDIP 2026–2030 has been introduced as a strategic framework to drive self-reliance, innovation, and technological advancement in the defence industry. It aligns with national aspirations to strengthen research and development, reduce reliance on foreign capabilities, and build a resilient defence ecosystem.
Despite these ambitions, communication gaps persist, with no effective mechanism to clearly cascade policy intent to all stakeholders.
The MAF also continues to face budgetary constraints in maintaining strategic assets. Although allocations have increased annually, they do not fully reflect operational requirements, highlighting the need for more detailed and needs-based budget planning.
To address these challenges, comprehensive policy restructuring is required. The NDIP must be recalibrated to reflect Malaysia’s strategic environment, industrial capacity, technological readiness, fiscal position, and institutional strengths.
The target of achieving self-reliance by 2030 should also be reassessed through a phased and prioritised implementation model. This would allow for clearer identification of priority capability areas, better sequencing of investments, and the establishment of measurable short-, medium-, and long-term milestones – making the goal more practical and credible.
Equally important is the alignment of national policies towards a shared strategic objective. Fragmentation weakens coherence, creates duplication, and limits impact. A harmonised framework would provide clearer direction and integrate military development within a broader national resilience strategy.
At the institutional level, procedural realignment between the Ministry of Defence and the Ministry of Finance is essential to reduce bureaucratic inefficiencies and improve policy execution.
Defence funding must also be strengthened to reflect the evolving security landscape, with greater focus on force modernisation, research and development, maintenance and sustainment, talent development, and industrial innovation.
Broader stakeholder engagement is also needed to refine the NDIP’s conceptual and operational frameworks. A more inclusive approach would improve policy quality and strengthen ownership across the ecosystem.
Finally, an institutionalised and continuous communication framework must be established to enhance coordination, improve transparency, reduce inter-agency friction, and build trust among stakeholders.
A restructured NDIP – supported by phased implementation, policy alignment, institutional coordination, adequate funding, inclusive stakeholder participation, and effective communication – would provide a stronger foundation for Malaysia to pursue defence self-reliance and develop military power that is practical, sustainable, and strategically meaningful.
Brigadier General Nor Azmi Abdul Rahman RMAF is a senior officer in the Royal Malaysian Air Force and is currently attending the National Resilience College at the National Centre for Defence Studies (PUSPAHANAS), Putrajaya.
The views expressed here are the personal opinion of the writer and do not represent that of Twentytwo13.
Main image: Malaysian Armed Forces
