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Malaysia Defence and Security Report Q2 2011
Business Monitor International, April 2011, Pages: 81
Malaysia Defence and Security Report provides industry professionals and strategists, corporate analysts, defence and security associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Malaysia's defence and security industry.
Malaysia's Q310 real GDP growth of 5.3% y-o-y was largely in line with our expectations, supporting our full-year forecast of 6.4% for 2010. Going forward, we expect robust private consumption and investment expansion to compensate for a moderating external sector, allowing Malaysia to register growth of 4.0% and 4.2% in 2011 and 2012 respectively. An upside risk to our forecast would be stronger-than-expected regional economic outperformance, allowing for stronger headline growth going forward.
We expect the overall outcome of the various federal-state disputes in Selangor to eventually favour the ruling Barisan Nasional coalition, which controls Putrajaya. We believe such intermittent political conflicts should not lead to a significant deterioration in the country's overall rule of law, although investor attractiveness may still be undermined.
The joint oil and gas exploration deal signed by Brunei and Malaysia on December 14 paves the way for closer diplomatic ties between the two countries. The bilateral agreement should also improve both nations' fiscal positions, but it particularly benefits Malaysia, which is expected to run a fiscal deficit of 5.8% in 2010. From Brunei's perspective, the deal could open up more trade opportunities with its larger neighbour, providing additional support to its non-oil sector.
There is a general threat from terrorism in Malaysia. The British Foreign and Commonwealth Office (FCO) warns that attacks could be indiscriminate, including in places frequented by expatriates and foreign travellers. However, Malaysia has not seen the high-profile attacks experienced by many of its regional neighbours, although Jemaah Islamiyah, which has been linked to attacks in Indonesia, reportedly maintains a presence.
On July 20 2010, defence minister Zahid Hamidi announced that Malaysia will use more offsets and financial packages, such as investment, for new defence equipment procurement. This will apply to Malaysia’s new five-year plan for defence purchasing, which began in January 2011. Further, the government is to establish the region’s first extensive defence and security technology park in Sungkai, Perak. The park will contain resources for manufacturing, support industries, and research & development. Construction began in October 2010.
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