On January 20, the Ministry of Defence introduced the National Defence Industry Policy (NDIP), signaling a strategic effort to propel Malaysia’s defense industry towards greater self-reliance while supporting high-value manufacturing goals. Implemented across four phases, the NDIP is designed to build a resilient local defense sector through initiatives such as minimum 30 % local content requirements in defense procurement, expanded R&D support, and more targeted technology transfer under the Industrial Collaboration Programme (ICP). To anchor early industry participation, the initiative prioritizes advancing capabilities, including “kamikaze drones” or loitering munition systems, defense modeling technologies, laser defense systems, and passive radar systems.
The NDIP announcement is accompanied by a 2.9% defense budget increase, amounting to an RM 21.74 billion (~USD 5.4 billion) allotment for the year. With increasing defense prioritization, the Royal Malaysian Air Force has been actively procuring more advanced combat-ready aircraft to spur modernization efforts through its Capability Development Plan 2055. Maritime security continues to hold the spotlight for collaboration among ASEAN states. This year, Malaysia has potential leverage to mobilize finalization of the South China Sea Code of Conduct (COC) as co-coordinator alongside China for ASEAN-China Dialogue Relations. Although the COC avoids addressing overlapping claims, it establishes a framework to enhance waterway security, with the wider goal of deterring regional frictions and trade disruptions.
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