High costs, long lead times and limited resources are challenges as Indo-Pacific nations aspire to build resilient defense industrial bases to reduce reliance on foreign suppliers. However, developing a defense industry is not merely a technical or economic choice, it is a strategic decision.
Malaysia’s defense white paper, approved in 2019, emphasizes the importance of building a self-reliant and sustainable defense industrial base as a cornerstone of national security. It highlights the need for a robust defense ecosystem that integrates local industries, research institutions and government agencies to reduce dependency on foreign suppliers. The strategy also prioritizes technology innovation and dual-use capabilities to enhance Malaysia’s defense readiness while contributing to broader economic growth. By aligning defense industrial base development with strategic priorities such as strengthening regional partnerships, modernizing defense capabilities and fostering resilience, Malaysia can enhance its national security.
These efforts mirror other countries’ challenges, such as sustainability. Market projections are not always reliable, and procurement priorities can shift rapidly due to changing budgets or policy directions. For mid-size economies such as Malaysia, achieving economies of scale can be difficult without access to international markets. As a result, defense-related firms must evaluate their capabilities and strategic fit before committing to the sector.
The United States public and private sectors support Malaysia’s defense modernization and regional capacity-building. For example, U.S. defense and aerospace industry representatives attended the biennial Langkawi International Maritime and Aerospace Exhibition (LIMA 25) in May 2025. More than 400 U.S. military personnel also participated.
“LIMA 25 showcases the deepening defense and economic partnerships between the United States and Malaysia and our shared commitment to regional security,” U.S. Ambassador to Malaysia Edgard D. Kagan stated. “From our aircraft and warships to our companies and innovators, the American presence at LIMA 25 demonstrates our robust military and commercial engagement across the region.”
Defense industrial base development should begin with identifying firms with the technical expertise, skilled workforce and financial means to meet national defense requirements. These firms can be nurtured as core suppliers for specific components, systems or services. By fostering stable contract volumes and implementing long-term planning, governments can achieve cost efficiencies and strengthen local industries. Since guaranteed contracts without competition may foster complacency — which can undermine innovation, affordability and performance — a balanced approach that encourages competition while providing strategic support is essential.
A well-managed defense industrial base enhances strategic autonomy, strengthens national resilience and reduces exposure to external disruptions. To mitigate risk, nations can adopt a segmented approach, focusing on areas where local capacity can be realistically developed. Maintenance, repair and overhaul (MRO) is one such area, offering an entry point for capability development, workforce growth and operational readiness.
MRO encompasses predictive, preventive and corrective maintenance, as well as inventory management, and is critical for minimizing disruptions, improving safety and achieving performance goals. Malaysia has prioritized development of local capability for aircraft MRO, positioning itself as an emerging aerospace hub in Southeast Asia. This focus not only strengthens the defense industrial base but also creates opportunities for economic growth and regional competitiveness.
Civilian institutions such as the Malaysian Investment Development Authority, primarily focused on manufacturing and services, can also support defense-adjacent sectors including aerospace, electronics and advanced materials. Improved coordination between national investment bodies and defense planners could unlock funding, attract strategic partnerships and strengthen dual-use industrial capabilities.
Building a credible, self-reliant defense industrial base requires strategic foresight, disciplined execution and the courage to take calculated risks. Success lies in cultivating a competitive, capable defense industry that contributes to national security and economic resilience — in times of peace and crisis.
