Malaysia proposes strong budget increase with eye on military procurement

Janes Defence Budgets forecasts robust real-terms growth in Malaysia's military expenditure, supported by a strong funding increase proposed for 2023. (Janes Defence Budgets)

Malaysia has proposed a 2023 defence budget of MYR17.74 billion (USD3.97 billion), a nominal 10% increase over the original 2022 allocation of MYR16.14 billion.

The expenditure – announced on 24 February – comprises MYR11.4 billion for operations and MYR6.3 billion for development expenses, including procurement. These represent year-on-year increases of 3% and 26%, respectively.

Anwar Ibrahim, Malaysia's prime minister and finance minister, indicated in his budget speech that the strong increase in development expenditure is intended to bolster the readiness of the Malaysian Armed Forces (MAF). He said “around MYR4.1 billion” of the budget has been allocated to maintenance and acquisitions but provided no details.

The Ministry of Finance (MoF) budget documents show that 71% of operations expenses will be spent on salaries, with most of the remainder allocated to services and supplies.

From the development expenditure, the Royal Malaysian Navy (RMN) and Royal Malaysian Air Force (RMAF) receive 28% and 27%, respectively, while the Malaysian Army has been allocated 16%. All are strong increases.

Anwar also said that the capability of the RMAF had been impacted by shortcomings in the country's defence procurement processes. By way of example, he pointed to Malaysia's procurement of six Littoral Combat Ships (LCSs) from local industry, a programme that has been delayed by several years.

“Past weaknesses in procurement governance have affected the nation's defence readiness,” he said. “The procurement of [the] LCSs has costed more than MYR6 billion [but] none have been completed. Such transgressions cannot be repeated.” The first LCS vessel is expected to be delivered to the RMN by the mid-2020s.