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Malaysia Defence and Security Report Q1 2011


Malaysia Defence and Security Report Q1 2011

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Price $530.00
Meta Description No
Publisher Business Monitor International
Date of Report Aug 1, 2011
Quick Overview
The ruling Barisan Nasional (BN) coalition is likely to remain in power after the next general elections, which is due in 2013, although it could be called as early as 2011. Prime Minister Najib Razak, who also leads the United Malays National Organisation (UMNO, the leading partner in BN) has implemented a number of official initiatives since assuming the top post – namely the Economic Transformation Programme (ETP) and 1Malaysia – with the aim of helping to improve Malaysia's economy and mend ties between the country's various ethnic groups, respectively. While we doubt the efficacy of these policies, we believe Najib's efforts will have a morale-boosting effect on the electorate, at least in the short term.
Piracy in South East Asia is still a major security issue, especially in the Malacca Strait. and waters around Indonesia, near Malaysia. The Strait is one of the world's main maritime ‘chokepoints.’ There had been fears that terrorists could block the channel. However, in 2009 there were only seven attacks for the whole year.
On July 20, defence minister Zahid Hamidi announced that Malaysia will use more offsets and financial packages, such as investment, for new defence equipment procurement. This will apply to Malaysia’s new five-year plan for defence purchasing, which begins in January 2011. Further, the government is to establish the region’s first extensive defence and security technology park in Sungkai, Perak. The park will contain resources for manufacturing, support industries, and research & development. Construction begins in October.
The Malaysian Armed Forces is planning spend MYR2.2bn on three multi-role support ships (MRSS) to provide faster humanitarian aid and disaster relief. Five shipbuilders from several European and Asian countries will build one of the three MRSSs. The other two will be constructed locally. The MRSS, containing a helicopter pad, will supply food, medicines, clothing and other utilities to disaster zones.
Malaysia's Q310 real GDP growth came in at a 5.3% year-on-year (y-o-y), decelerating from the 8.9% figure registered in Q210. In particular, the domestic economy – led by private consumption and investment growth – performed especially well. This helped compensate for the external sector's drag on overall expansion due to relative growth outperformance in imports versus exports, as well as lower government consumption. We expect the positive growth momentum to persist well into Q410 and enable the country to register full-year expansion of 6.4%. Going forward, we believe the pace of economic growth will moderate significantly in 2011 and 2012. Indeed, we expect the external sector to be adversely affected by a region-wide economic slump, dragged down by a slowdown in Chinese growth.
Therefore, we forecast 2011 real GDP growth to come in at a still-respectable 4.0%, before accelerating slightly to 4.3% in 2012 in line with a regional economic recovery.
Table of Contents
Executive Summary ........................................................................................................................................ 5
SWOT Analysis ................................................................................................................................................ 6
Malaysia Security SWOT ...................................................................................................................................................................................... 6
Malaysia Defence Industry SWOT ........................................................................................................................................................................ 7
Malaysia Political SWOT ..................................................................................................................................................................................... 8
Malaysia Economic SWOT ................................................................................................................................................................................... 9
Malaysia Business Environment SWOT .............................................................................................................................................................. 10
Global Political Outlook ................................................................................................................................ 11
Global Hotspots .................................................................................................................................................................................................. 12
Global Election Timetable, 2010 And 2011 ........................................................................................................................................................ 14
Latin America: More Of The Same ..................................................................................................................................................................... 19
Western Europe .................................................................................................................................................................................................. 20
Central Europe ................................................................................................................................................................................................... 22
South Eastern Europe ......................................................................................................................................................................................... 22
Russia And The Former Soviet Union ................................................................................................................................................................. 23
Middle East: Mostly The Same Old Challenges .................................................................................................................................................. 24
Sub-Saharan Africa: Definitive Elections Pending ............................................................................................................................................. 26
Asia: Accommodating A More Powerful China .................................................................................................................................................. 27
Wild Cards .......................................................................................................................................................................................................... 29
Global Security Outlook ............................................................................................................................... 31
South East Asia Security Overview .............................................................................................................. 37
Political Overview .......................................................................................................................................... 50
Domestic Politics I .............................................................................................................................................................................................. 50
Domestic Politics II ............................................................................................................................................................................................ 51
Long-Term Political Outlook .............................................................................................................................................................................. 53
Security Risk Analysis .................................................................................................................................. 58
BMI’s Security Ratings ....................................................................................................................................................................................... 58
Table: Asia Pacific Regional Security Ratings .................................................................................................................................................... 58
Table: Asia Pacific State Vulnerability To Terrorism Index ............................................................................................................................... 59
Malaysia’s Risk Ratings ...................................................................................................................................................................................... 60
City Terrorism Rating ......................................................................................................................................................................................... 60
Table: BMI’s Asia City Terrorism Index ............................................................................................................................................................. 61
Security Overview ......................................................................................................................................... 62
Internal Security Situation .................................................................................................................................................................................. 62
Table: Insurgent Groups ..................................................................................................................................................................................... 62
External Security Situation ................................................................................................................................................................................. 62
Territorial Disputes ............................................................................................................................................................................................ 62
Insurgent And Terrorist Activity ......................................................................................................................................................................... 63
Piracy ................................................................................................................................................................................................................. 64
Table: Piracy Attacks And Attempted Attacks, 1996-2006 .................................................................................................................................. 64
Bilateral and Multilateral Relations ................................................................................................................................................................... 65
Armed Forces and Government Spending .................................................................................................. 67
Armed Forces ..................................................................................................................................................................................................... 67
Table: Regional Armed Forces, 2010 Forecast (including conscripted, ‘000 personnel) .................................................................................... 67
Defence Budget ................................................................................................................................................................................................... 68
Multilateral And Bilateral Defence Relations ..................................................................................................................................................... 69
International Deployment ................................................................................................................................................................................... 70
Weapons Of Mass Destruction ............................................................................................................................................................................ 70
Market Overview ............................................................................................................................................ 71
Industry Trends And Developments .................................................................................................................................................................... 72
Arms Trade Overview ......................................................................................................................................................................................... 73
Procurement Trends and Developments ............................................................................................................................................................. 73
Industry Forecast Scenario ........................................................................................................................... 75
Table: Malaysia’s Armed Forces, 2000-2008 (‘000 personnel) ........................................................................................................................... 75
Table: Malaysia’s Defence Personnel – Available Manpower For Military Services; 2008-2015 ...................................................................... 75
Table: Malaysia’s Government Defence Figures, 2008-2015 .............................................................................................................................. 76
Table: Malaysia’s Defence Expenditure: % Of GDP; 2008-2015 ....................................................................................................................... 77
Table: Malaysia’s Defence Exports; 2008-2015 (US$ mn) ................................................................................................................................. 78
Table: Malaysia’s Defence Imports; 2008-2015 (US$ mn) ................................................................................................................................. 79
Table: Malaysia’s Defence Trade Balance; 2008-2015 (US$ mn) ....................................................................................................................... 80
Key Risks To BMI’s Forecast Scenario ............................................................................................................................................................... 80
Macroeconomic Outlook ..................................................................................................................................................................................... 81
Table: Malaysia - Economic Activity; 2008-2015 ............................................................................................................................................... 83
Company Profiles .......................................................................................................................................... 84
AIROD ................................................................................................................................................................................................................ 84
Composite Technology Research Malaysia (CTRM) .......................................................................................................................................... 85
Deftech ................................................................................................................................................................................................................ 87
EADS .................................................................................................................................................................................................................. 88
Malaysia Marine and Heavy Engineering (MMHE) ........................................................................................................................................... 89
SME Ordnance ................................................................................................................................................................................................... 91
BMI Methodology .......................................................................................................................................... 92
How We Generate Our Industry Forecasts ......................................................................................................................................................... 92
Defence Industry ................................................................................................................................................................................................. 92
City Terrorism Rating ......................................................................................................................................................................................... 93
Table: Methodology ............................................................................................................................................................................................ 95
Sources ............................................................................................................................................................................................................... 96




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