Malaysia Defence & Security Report Q3 2013 - New Market Report

From: Fast Market Research, Inc.
Published: Wed Jun 12 2013

At the time of writing Malaysia was bracing itself for a potentially historic election in May 2013. While the ruling Barisan Nasional coalition, led by Prime Minister Najib Tun Razak and his United Malays National Organisation, looked likely to hold onto office, there remained a real possibility that the opposition could take power for the first time in Malaysia's history as an independent nation. The likelihood of the election threatening Malaysia's stability is slim. However, the prospect of unrest will increase if the ruling party reverts to its old instincts when it comes to repressing the opposition, or if there is any suspicion that the government has stolen the election. However, in the build-up to the May poll, all the indications were that the process would be peaceful.

Malaysia's security situation remains generally benign. The country's relations with neighbours Thailand, Singapore and Indonesia are cordial, and China's territorial disputes with a number of countries in the region has so far had relatively little impact on Malaysia. However, two events in the early part of 2013 have caused concern. One was China's decision to send an amphibious fleet to James Shoal, the southernmost point of the maritime territory in the South China Sea that is claimed by China, and an area lying close to the East Malaysian coast. Until now, Malaysia has played down the threat of Chinese expansionism; however, this episode is causing some in Kuala Lumpur to re-evaluate China's growing military presence in the region.

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The second incident was the invasion of an area of Sabah in East Malaysia by around 100 armed men, who claimed the territory on behalf of the Sulu Sultanate (the Sulu Archipelago now being a part of the Philippines). The action resulted in an assault on the area by the Malaysian military, which left at least 31 of the militants dead. It also strained Malaysian-Philippine relations, and may have implications for the ongoing peace process in the southern Philippines. However, in the run-up to the election, the Malaysian prime minister could not appear weak in dealing with the crisis, and military reprisals were probably inevitable once the militants refused to leave peacefully. All in all, this was a bizarre and unexpected incident, and there is no indication that it will be repeated.

Major defence procurements have been put on hold in the months preceding the election, but these should be able to resume in the second half of the year. In particular, the Air Force is keen to press forwards with the procurement of a new multirole fighter aircraft (MRCA). Although the requirement is relatively small at around 18 aircraft, would-be suppliers have already begun lobbying fiercely for the contract. Boeing, Dassault, Eurofighter, Saab and Sukhoi are all believed to be interested in fulfilling the Malaysian requirement.

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