Malaysia proposes strong budget increase with a view to military procurement

February 28, 2023

by John Grevatt & Andrew McDonald

Jane’s Defense Budget forecasts solid growth in Malaysia’s military spending in real terms, supported by strong funding increases proposed for 2023. (Jane’s Defense Budget)

Malaysia has proposed a defense budget of RM17.74 billion (US$3.97 billion) for 2023, a nominal 10% increase from the initial allocation of RM16.14 billion in 2022.

The expenditure announced on February 24 comprises RM11.4 billion in operating costs and RM6.3 billion in development costs, including procurement. These represent year-over-year increases of 3% and 26%, respectively.

Malaysian Prime Minister and Finance Minister Anwar Ibrahim said in his budget speech that the significant increase in development spending is aimed at strengthening the readiness of the Malaysian Armed Forces (MAF). He said “approximately 4.1 billion ringgit” of the budget has been allocated for maintenance and acquisition, but did not provide details.

According to the Ministry of Finance (MoF) budget document, 71% of operating costs are spent on salaries, with most of the rest allocated to services and supplies.

Of the development expenditure, the Malaysian Navy (RMN) and Malaysian Air Force (RMAF) receive 28% and 27% respectively, while the Malaysian Army is allocated 16%. Both numbers have increased significantly.

Mr. Anwar also said that the RMAF’s capabilities have been affected by flaws in the country’s defense procurement process. As an example, he pointed to Malaysia’s procurement of six Littoral Combat Ships (LCS) from local industry, a plan that is several years behind schedule.

“Past weaknesses in procurement governance have impacted the nation’s defense preparedness,” he said. “Procurement of” [the] LCS cost more than RM6 billion. [but] None have been completed. Such violations cannot be repeated. ”The first of her LCS vessels she is scheduled to be delivered to her RMN by the mid-2020s.