Foreign defence firms must work with domestic companies
HULU SELANGOR: Foreign defence companies will have to work with or develop domestic firms to remain involved in Malaysia’s defence sector.
Foreign defence firms in Malaysia will need to collaborate with or establish local companies in order to remain active in the country's defence sector, as announced by Defence Minister Datuk Seri Mohamed Khaled Nordin. The government will no longer extend maintenance, repair, and overhaul (MRO) contracts to foreign companies, except for work covered by warranties.
Currently, there are 18 foreign firms still providing MRO services to the Malaysian military, with contract values ranging from RM100 million to RM1 billion. Khaled emphasized that the policy aims to bolster the domestic defence industry and lessen reliance on foreign suppliers. The ministry will continue to encourage local firms in other defence projects, requiring at least 30% local components in certain procurements, including future major acquisitions like fighters and MRCA aircraft.
Khaled believes that this move is crucial for developing Malaysia's industrial capabilities, as the nation will lose significant ground if it continues to depend on other countries for even basic items like screws. The government's policy, announced in January, mandates a minimum of 30% local content in defence procurements and ends original equipment manufacturer involvement in MRO work under the National Defence Industry Policy (DIPN).
Khaled believes that Malaysia's technical universities and skilled graduates can contribute significantly to the development of the local defence industry, with positive spin-offs from these efforts.
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