08 September 2021

Malaysia boosts industry collaboration requirements in response to Covid-19

by Jon Grevatt

Malaysia's Technology Depository Agency (TDA) has launched a series of economic-recovery strategies linked to procurement in strategic sectors including defence.

Malaysia's defence procurement expenditure is forecast by Janes Defence Budgets to remain relatively flat at about USD900 million a year during the near term before climbing in the second half of the 2020s. (Janes Defence Budgets)

The new measures – disclosed by the TDA to Janes on 7 September – are the latest in a series of similar efforts across the Indo-Pacific to boost the effectiveness of defence offsets and similar industrial policies.

The TDA's three new measures augment the agency's existing Industrial Collaboration Programme (ICP), which commits foreign defence contractors to engage with Malaysian industry.

The new strategies include supporting local skills advancement, supporting the development of local small and medium-sized enterprises (SMEs), and encouraging collaboration between contractors and local industry.

The training programme is focused on leveraging industrial collaboration to support employment opportunities particularly in technical, high-skilled, and specialised fields, said the TDA. This includes emphasis on ‘upskilling' opportunities through the ICP that are funded by contractors. Such activity will be encouraged through ICP multipliers.

The strategy to develop SMEs is aimed at enhancing capacity and capability. According to the TDA, the strategy requires contractors to “increase minimum mandatory local content to 40%”. In the ICP, minimum local content is 30%. Another objective is increasing the involvement of local firms in supply chains. Foreign direct investment will also be incentivised.

The strategy to encourage collaboration commits contractors to engage with government initiatives such as the Vendor Development Program (VDP) in helping locally owned firms become more technically competent and competitive, according to the TDA.

TDA's head of strategic communications Raziz Rashid told Janes

Malaysia's Technology Depository Agency (TDA) has launched a series of economic-recovery strategies ...

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