THE Ministry of Defence (MINDEF) has announced a major shift in its procurement strategy, stipulating that all contracts for the maintenance, repair, and overhaul (MRO) of defence assets will be awarded exclusively to capable local companies, marking a clear move away from reliance on foreign original equipment manufacturers (OEMs).
Speaking at the launch of the National Defence Industry Policy (DIPN) today, Defence Minister Datuk Seri Mohamed Khaled Nordin said that OEMs will only be involved in MRO activities for assets still covered under warranty.
“There will be no further involvement of OEMs in MRO activities. All MRO services must be carried out by local companies, except during the warranty period handled by them. Each participating local company must demonstrate innovation and improvements that increase local content and reduce costs,” he said.
The Minister emphasised that contracts awarded to local firms will be strictly monitored, and failure to perform could result in termination, underscoring that quality and capability are paramount regardless of nationality.
“This step is necessary because the main objective of the Ministry and DIPN is to prioritise national interests, especially in terms of cost efficiency,” Khaled said.
As part of the policy, MINDEF procurement will now require a minimum of 30 percent local content at the outset.
This threshold is intended to facilitate technology transfer and ensure that Malaysia’s defence industry develops the capacity to compete with international brands.
“We do not intend to produce weapons or defence equipment, such as aircraft, overnight. However, we want to begin by developing our own components and services so that local companies can participate significantly in the defence supply chain,” he added.
The announcement signals a strategic move to strengthen Malaysia’s domestic defence capabilities while fostering innovation, cost savings, and a sustainable local supply chain.
“By focusing on local participation, the Ministry aims to ensure that Malaysia’s defence industry not only supports national security but also builds long-term technical expertise and competitiveness on the international stage. - January 21, 2026
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