This article first appeared in The Edge Malaysia Weekly on August 29, 2022 - September 4, 2022

DEFENCE spending is a hotly debated topic globally, with the discussions focusing on whether a country is spending too much or too little in safeguarding the nation’s sovereignty.

Earlier this year, the Stockholm International Peace Research Institute (SIPRI) reported that the total global military expenditure in 2021 exceeded US$2 trillion for the first time. The biggest spenders were the US, China, India, the UK and Russia, accounting for 62% of the total expenditure.

When compared with the military spending of these five countries, Malaysia’s defence budget appears rather insignificant. The Ministry of Defence (Mindef) has spent between RM13 billion and RM17 billion, or about 4% to 6% of the total federal government expenditure, annually over the past decade. This is no more than 2% of the country’s gross domestic product (GDP) in the last 10 years.

In terms of allocation, operating expenditure makes up the bulk of the annual defence budget at about 70% to 80%, while the rest goes to development expenditure. It should be no surprise that 50% to 60% of the budget is spent on emoluments for the armed forces.

The budget for assets under development spending is small each year relative to the total. For the 2022 Mindef budget, the ministry estimated an allocation of RM5 billion for assets under development expenditure. That is roughly 28% of the ministry’s total budget for this year.

Looking at the details of the budget, the three services — the army, navy and air force — were given an allocation of slightly more than RM1 billion for arms procurement. The rest of the allocation for development expenditure goes towards maintenance of assets, building new facilities and housing for service personnel.

As for high-value assets such as warships and aircraft, industry experts say the cost of purchasing these is also part of Mindef’s budget and is usually divided over several years.

The question one may ask is whether Malaysia is allocating enough to its military spending, especially when geopolitical tensions are high and the threat of war is increasing. Globally, there is no international benchmark on how much a country should spend on its defence as it would largely depend on the country’s defence policies and strategies.

Perhaps the closest thing to a benchmark is Nato, whose members pledge to spend a minimum of 2% of their GDP on defence. But many of the member countries are unable to meet that pledge.

The US is the highest spender among the Nato members, with its defence spending exceeding 3% of GDP each year. In Southeast Asia, data provided by SIPRI show that Brunei, Myanmar and Singapore spend the most on their defence in terms of percentage of GDP, of about 3%.

“Singapore is able to spend the amount it does on defence because it sets aside a fixed percentage of its budget on defence spending annually. This allows the relevant ministry to plan the procurement of assets as well as better plan the operating and development expenditure,” notes a researcher who specialises in security studies.

Industry experts point out that Malaysia’s defence spending, ironically, is not focused on defence but on growing the economy and improving bilateral relations and trade.

“Defence spending is always subservient to the economy. Not much is allocated and it usually gets sidelined if there is an economic crunch,” says the researcher.

However, it should be noted that this is not a problem exclusive to Malaysia as developing countries tend to prioritise economic growth over defence. Defence journalist Marhalim Abas opines that the thought process behind this is that the government thinks the risk of a conflict with countries in the region is low.

Notably, the inaugural Defence White Paper that was released in 2020 states that the primary role of the Malaysian Armed Forces is to maintain peace and be prepared for any armed conflict, in order to effectively defend Malaysia’s sovereignty, territorial integrity and other national interests against external threats.

“The Latin proverb ‘Si vis pacem, para bellum’ means ‘If you want peace, prepare for war’. Thus, defence preparedness is the best guarantee for peace,” says the white paper.

Marhalim opines that defence spending in Malaysia is usually determined by the interests of the government of the day. He cites the example of the request by the Royal Malaysian Air Force back in the late 1990s, in which it listed the requirements for multi-role combat aircraft. The government decided that it would be in the best interests of the country to purchase Russian fighter jets, the Sukhoi Su-30MKM, instead of RMAF’s choice of the US made Boeing Super Hornets. The deal was sealed in 2003 with Malaysia purchasing 18 fighter jets from Russia.

It was a cheaper deal for the country. However, maintenance became an issue because Malaysia was the only user of that type of jet, says Marhalim.

In 2018, then defence minister Mohamad Sabu revealed that only four of the 28 Russian fighter jets owned by the Royal Malaysian Air Force were able to fly. He added that the air force was unable to properly maintain the airworthiness of the fighter jets.

Marhalim’s view is that Malaysia does not spend enough on defence, evident by the long-standing issue of replacing old equipment and modernising facilities.

It is known that Malaysia’s decades-old ambition is to build and develop the local defence industry. Yet many wonder whether it is the right move, especially when it comes to complex military assets.

“A local defence industry must be viable. For a country like Malaysia, we don’t need an industry for complex battleships because we will be the only purchaser of such assets. Other countries are unlikely to buy such assets from us,” says the researcher who wishes to remain anonymous.

He cites the example of the littoral mission ships (LMS), where the initial plan was to have two built in China and another two constructed in Malaysia. In the revised plan, the government decided to build all four LMS in China as it would save the government RM122 million.

He also highlights that small arms such as ammunition, explosives and small patrol vessels can be developed locally. Malaysia does have a handful of successful players in such industries that cater for the export market, he says.

Maharlim agrees that it would make more economic sense to buy complex assets from other countries. But more importantly, he says, buying them in a government-to-government deal as it would reduce the cost and risk.

“The current practice of buying via marketing agents, in turn, opens the risk of corruption and other nefarious deal-making. We have stopped buying local ammo since late 2018 as it is apparently cheaper to buy from overseas,” he adds.

“We are likely the only country in Asean to import ammunition. A vibrant local defence industry may look good on paper but we never allocate enough money to make it viable over the long term.”

As demonstrated by the recent littoral combat ship (LCS) scandal, Malaysia’s defence spending is no stranger to leakages.

The researcher points out that although Malaysia doesn’t spend much on defence, it is in itself expensive. Hence, when probl ems like corruption or leakages are added to the tab, it becomes even more expensive than it needs to be.

“Leakages and scandals are nothing new. What we need is a revamp to take place because until that happens, such scandals will continue to happen,” he says.

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