Malaysia defence Budget 2016-2020

In October 2014, Prime Minister Najib Razak announced that Malaysia’s defense budget would be increased to $5.4 billion in 2015, a hike of ten percent.  At the same time, the defense procurement and research budgets were increased by six percent to over $1 billion. This increase in defense funding, however, did not include the replacement of aging major weapons platforms such as MiG-29 jet fighters.

Malaysia’s increased defense spending was designed to meet two concerns: security threats from the southern Philippines and Chinese assertiveness in the seas around James Shoal. For example, defense funds will be used to relocate 19 light combat fighter planes to Labuan island. The airstrip at Labuan will also see the basing of the US Navy’s P-8 Poseidon maritime patrol aircraft on a case-by-case basis.

It is significant within this context that the Chief of the Royal Malaysian Navy, Admiral Aziz Jaafar, revealed in his New Year address on January 7, the navy had requested $2.86 billion in funding under the 11th Malaysia Plan, 2016-2020.

These funds, if approved, would be used primarily for the procurement of eight guided missile corvettes and six anti-submarine helicopters as well as for the acquisition of small craft and the replacement of obsolescent torpedo and missile systems on navy ships.

Malaysia Struggles to Update Military

by Dzirhan Mahadzir

 - February 7, 2014, 11:20 PM

The current political climate and government austerity measures in Malaysia mean that a number of programs for the Malaysian armed forces look likely to be postponed until the time frame of the 11th Malaysia Plan, which covers government spending for the period of 2016-2020. A combination of public dissatisfaction over the cutting of government subsidies and the government’s need to balance an increasing deficit has made spending on military procurement politically unviable at the moment.

One of the key programs already on hold indefinitely is the Royal Malaysian Air Force MRCA (multi-role combat aircraft) requirement to replace its MiG-29s, though all four contenders for the program–Boeing, Dassault, BAE Systems and Saab–have, in the light of the current situation, made proposals such as long-term repayments and lease options to Malaysia in an attempt to persuade the country to make a decision soon to go ahead with the program.

However, it appears that even this will not be enough for Malaysia to proceed in the near future, even though the timetable has already fallen behind the RMAF’s projected target date of 2015 for phasing out the MiG-29s. The RMAF currently has restricted the MiG-29 fleet (which number around eight aircraft) to operational duties and missions only in an effort to preserve their operational lifespan. Previously, the MiG-29 also carried out public event duties such as fly-pasts and airshow displays.

Delay for Lead-in Fighters

The delay on the MRCA program has also impacted the RMAF’s plans for additional lead-in fighter trainers to add to the eight MB-339CMs it currently operates, as the RMAF has held off ordering additional MB-339CMs due to a combination of budget constraints and wanting to see which type of aircraft would be chosen for the MRCAprogram. It could then decide whether additional MB-339CMs or a more compatible lead-in fighter trainer for the new MRCAs would be required.

At the moment, the RMAF faces a shortfall in lead-in fighter trainer aircraft for its current training requirements, though the planned deactivation in 2015 of No. 12 Squadron, which currently operates two RF-5Es and four F-5E/Fs, would free up fighter pilots for duties in other squadrons. For basic pilot training the RMAF is expected to sign a contract in April this year for additional PC-7 Mk IIs to add to its current fleet during the Defense Services Asia (DSA) exhibition in Kuala Lumpur.

AEWC on Hold

Another program on hold indefinitely is the airborne early warning and control (AEWC) requirement; the RMAFhas had a long-term requirement for at least four aircraft but the government has balked at the potential cost of purchasing and operating such aircraft. RMAF chief general Tan Sri Rodzali Daud has tried to persuade the government to purchase AEWC aircraft on the basis that such an aircraft would also be of use in other roles, such as surveillance and monitoring of Malaysian waters and airspace, and also provide surveillance support for Malaysian civilian enforcement agencies in addition to the traditional military missions of such platforms. However, there still seems to be little government interest in providing funding for such a platform.

Two RMAF programs are expected to commence soon, namely the upgrade of the RMAF’s Lockheed C-130 fleet and the service life extension of 15 of the RMAF’s 28 operational Sikorsky S-61 Nuri helicopters. TheRMAF C-130 fleet, numbering around 14 aircraft, are to be upgraded with avionics and navigation systems that would bring them up to compliance to international aviation requirements along with a glass cockpit.

The upgrade for the C-130s would be done in batches–an initial number of four to eight aircraft is currently funded, with Malaysian company Airod to do the work along with an assigned foreign partner selected by theRMAF. Esterline CMC, Astronautics, Marshall Aerospace and Rockwell Collins are said to be on the RMAF’s down-select list for this program and an announcement is expected to be made at DSA in April.

The S-61 upgrades will also be done by Airod. The lack of funding to purchase additional EC725s to add to the 12 in service has forced the RMAF to prolong the life of 15 S-61s as the Malaysian Armed Forces has laid down the requirement that the RMAF must have a minimum of 27 medium-lift helicopters in service.

Attack Helicopter on Hiatus

While last year’s incursion by Sulu militants into eastern Malaysia initially provided impetus for the acquisition of an attack helicopter capability for the Army Air Corps, again the financial crunch has placed the program in a hiatus. Boeing and Airbus Helicopters have been marketing the AH-64 and Tiger, respectively, for this requirement though recently the Bell AH-1Z Cobra has been promoted as a cheaper alternative to both. The army is also seeking to arm its 11 A109 helicopters, which are currently operating in the light-observation helicopter role for the Army Air Corps. As a stop-gap contingency measure, three of the RMAF’s S-61 Nuri helicopters in eastern Malaysia have been outfitted with .50 caliber door guns to provide gunship support.

Since 2011 the Royal Malaysian Navy has been proposing the acquisition of at least six antisubmarine warfare helicopters to add to its current fleet of six Super Lynx and six Eurocopter AS555 Fennecs. However, the chief of the RMN, Adm. Tan Sri Aziz Jaafar, told AIN that the likelihood of funding for the ASW helicopters also may come about only in the timeframe of the 11th Malaysia Plan.

The U.S. has already been heavily promoting the MH-60R Seahawk for this requirement with exercises and port calls by U.S. Navy ships to Malaysia, emphasizing the helicopter’s role and capabilities along with familiarization flights for Malaysian navy personnel and defense ministry officials. However, there has also been talk of a navalized Eurocopter (Airbus Helicopters) EC725, which would ensure some compatibility of logistics and maintenance with the Royal Malaysian Air Force’s EC-725 fleet. However the RMN is said to be leaning towards the MH-60R.

Currently, ground-based air defense capabilities for Malaysia is limited to some 15 Jernas SAM systems, 28 Oerlikon Skyguard Systems (operated by the Army Air Defence Artillery Group–known as GAPU in the local acronym), along with an assortment of MANPADS. including the IGLA (operated by GAPU and RMAF), Anza Mk 2 (used by the Army’s parachute battalions) and the FN-6 (operated by GAPU). The Starburst MANPADs have all been phased out of service. GAPU has been tasked with formulating the ground-based SAM system requirement for all three services and a report was tabled by them late last year, although again funding for any procurement in the near term appears to be unlikely.

Malaysia's military expenditure is expected to increase to US$7.2 billion by 2020

Bloomberg

Over the historic period, Malaysia's defense expenditure registered a growth rate of 3.66%, increasing from US$4.7 billion in 2011 to US$5.4 billion in 2015

Malaysia's military expenditure, valued at US$5.4 billion in 2015, is expected to increase to US$7.2 billion by 2020, registering a CAGR of 5.89% over the forecast period.

 Malaysian military expenditure will be driven by the modernization of defense systems, international peacekeeping operations, and territorial disputes with neighboring countries

The Defense Ministry is expected to procure corvettes, multi-role aircraft, armored personnel carrier, and jet fighter.

Malaysia Expected To Order Fighters In 2016-20

Mar 23, 2015Bradley Perrett | Aerospace Daily & Defense Report

Malaysia’s long-running requirement for a MiG-29 replacement is expected to turn into an order in the country’s 2016-20 planning period, with the Saab Gripen looking like a prospect because of the drop in oil prices that has created additional budgetary pressure on the oil-producing country.

Malaysia issued a brief request for proposals for fighters in 2011. With the two main parts of its territory separated by the South China Sea, it wanted a fighter with two engines, eliminating the Gripen.

But the price of crude oil, a key factor supporting the national finances, has halved since then.

“I don’t think the requirement for two engines is set in stone,” says Kaj Rosander, head of major programs for Saab.
The other contenders for the order are larger, have two engines and should be somewhat more expensive: the Eurofighter Typhoon, Dassault Rafale, Boeing F/A-18E/F Super Hornet and possibly the Sukhoi Su-30. Lockheed Martin appears not to be offering the F-35.

Malaysia needs fighters to replace MiG-29s under the Multi-Role Combat Aircraft program. It introduced 18 MiG-29s in the early 1990s; about 10 remain in service. The industry has been expecting Malaysia to order about 18 replacement fighters, but that figure is probably not firm. Malaysia adopts the common practice of five-year government planning periods, so the industry expects the order to appear in the next one, covering 2016-20.

Apart from two engines, the 2011 request for proposals, which was a preliminary document more like a request for information, specified a radar with an active electronically scanned array. Contracts for Malaysian manufacturing and exports to offset some of the value of importing the fighters are likely.

Saab expects Malaysia to adopt the increasingly common practice of specifying a required capability, measured as annual available flight time, rather than a certain number of aircraft. The Swedish firm thinks 16 Gripen C/Ds could provide the flight time that will probably be required.

The timing of the program is not ideal for Boeing. No decision is likely within a year, but Boeing’s Super Hornet program manager, Dan Gillan, said this month the company would have to decide in the middle of the year whether to support continued production of the type. To remain a candidate for Malaysia, the Super Hornet will need further orders from elsewhere.

Howard Berry, vice president for Super Hornet sales, emphasizes the payload-range capability of the Super Hornet, which has twice the empty weight of the Gripen C/D. It also has the advantage that the Royal Malaysian Air Force operates the F/A-18D Hornet, of which the Super Hornet is an enlarged derivative.

Rosander and Berry spoke to Aviation Week at the Langkawi International Maritime and Aerospace Exhibition in Malaysia last week, where Andy Lavin of BAE Systems also detailed the offer of the Eurofighter Typhoon. Officials from Dassault and Sukhoi representative Rosoboronexport were not available.

The clear advantage of the Gripen C/D is that it presents a relatively low challenge to the Malaysian budget. Malaysia wants all of the candidates to reduce the fiscal challenge by offering a lease deal, something that the Swedish company has experience in doing. The Czech Republic and Hungary lease their Gripens.

Saab must offer Gripens of the C/D version, because the enlarged Gripen E/F, which will replace the C/D in production, must first be built for Sweden and Brazil. But because the C/D is leaving production, an order would be needed within a year, which is unlikely. If Malaysia moves too late, then C/Ds could be supplied otherwise, Rosander says. He declines to be more specific, but the obvious source would be secondhand aircraft, perhaps supplied as interim equipment pending later deliveries of E/Fs.