Anwar has Malaysia's murky defence deals in his sights. Can he plug the leaks and 'rebuild credibility'?

A decade since Sharuddin Omar launched a campaign to raise pensions and benefits for tens of thousands of Malaysia's former servicemen, he says many remain in poverty, too old for the job market and living in poor conditions on meagre monthly allowances. Many of the older retired servicemen survive on as little as 1,000 ringgit (US$223) a month.

In his 2023 budget, Prime Minister Anwar Ibrahim sought to soothe some of the pain by promising to upskill veterans for the job market.

"These are a group of people who sacrificed for the country and now they are really struggling," said Sharuddin, who heads the Veterans' Association of Malaysian Armed Forces. "How can they live in this situation?"

Do you have questions about the biggest topics and trends from around the world? Get the answers with SCMP Knowledge, our new platform of curated content with explainers, FAQs, analyses and infographics brought to you by our award-winning team.

Presenting the budget to parliament last week, Anwar set aside 17.7 billion ringgit (nearly US$4 billion) for the defence sector overall, a marginal increase from the 16.4 billion ringgit budgeted for 2022.

The bulk of this year's purse is expected to go to maintenance and the upkeep of existing assets.

But the budget did not outline any strategic plans or new asset procurements - although the armed forces did sign a US$920 million deal last month for 18 Korean FA-50s to replace its ageing fleet of trainer and light-combat aircraft.

Instead, Anwar vowed to clean up the Southeast Asian nation's notoriously murky defence procurement processes, promising to cut out the middlemen who soak up state money.

Yet experts warn that Malaysia still lacks a coherent defence strategy to manage emerging sea, air and cyber threats in an increasingly complex and febrile neighbourhood.

Veterans' advocate Sharuddin welcomed the establishment of career programmes for those who had just left the service or were on the cusp of retirement, but said they were likely to be of little use to others well into their twilight years.

Of the veterans' association's 176,000 members, nearly half of them were "really in difficulty", he warned.

In 2013, the government revised armed forces salaries upwards, translating into higher pensions. But the move did not apply retrospectively, leaving thousands of veterans who retired before the salary revision stranded on limited incomes.

"The pensions before 2013 were very low. These people are now 50, 55, up to 80 years old and struggle to get income from whatever sources they have now," said Sharuddin, who urged the government to raise the pensions of those who retired before that year.

While Malaysia is largely peaceful now, its early years were rife with armed conflict. Security forces spent about 20 years fighting communist insurgents from the Malayan Communist Party in what was known as the Second Malayan Emergency between the 1960s and 1980s.

The country also had a brief armed conflict with Indonesia from 1963 to 1966 called the Konfrontasi, during which Indonesia's then President Sukarno launched numerous attacks in a bid to unravel the creation of Malaysia from the merger of Malaya and Singapore with Sabah and Sarawak in Borneo.

Veterans' welfare is just one of many long-standing issues that have plagued the defence sector.

During his budget speech, Anwar trained his sights on the middlemen who broker defence deals, which he said had cost the nation billions.

The prime minister pointed to the latest scandal involving the 9 billion ringgit procurement of six littoral combat ships (LCS), which the navy was supposed to receive by August last year.

The government has already paid out 6 billion ringgit, but not one ship has been delivered.

"We cannot have a repeat of this. From now on, the practice of middlemen must be stopped immediately," Anwar said.

Last year, a French court charged defence equipment manufacturer Thales with complicity in bribery to secure a US$1.2 billion submarine deal with Malaysia in 2002.

"Middlemen, officially sanctioned or otherwise, have long been a bane of defence acquisitions," said Thomas Daniel, a senior analyst with the Institute of Strategic and International Studies Malaysia.

"Together with unrealistic notions of self-sufficiency and driving the local defence industry, it has led to a messy, opaque and corrupt system, which has been exploited by many powerful and vested stakeholders."

That had ultimately eroded the ability of the armed forces "to effectively do the job entrusted to them", he added.

Getting rid of middlemen, however, is just one part of the equation and experts say optimising how the government spends its money requires a clear direction in its defence priorities.

Among those should be raising naval capacity in the South China Sea, according to Hoo Chiew Ping, a senior lecturer in strategic studies and international relations at Universiti Kebangsaan Malaysia.

At the same time, the country needed to bolster defence partnerships and networks neglected over years of domestic political turmoil.

"We need to rebuild our credibility and to send the signals that we are serious about regional and global crises, and we are ready to work with as many partners as possible," Hoo said.

Over the long term, Malaysia would need to make significant investments in naval and aerial assets, Thomas said, including for its coastguard, to make sure that the nation could put up at least a "credible deterrence" for potential adversaries in the region.

"A second area would be in the cyber domain, where defence planners need to build up solid cyber defence and offence operations capacity. A thorough understanding of proper cyber trends, doctrine, hygiene is also important," Thomas said.

Besides removing middlemen, the government should also minimise the role of politicians when it came to deciding on procurement of assets and capacity building for the military, a retired officer said.

"Previously you had situations where the political leadership acted as though they knew better than the service chiefs about what we need," retired Brigadier-General Mohamed Arshad Raji told This Week in Asia.

"Look at the LCS. We lost 6 billion ringgit. Who decided on it?" added Mohamed Arshad, who heads veterans' group the National Patriots Association.

"The navy didn't want those ships ... Service chiefs must be given full responsibility for decisions relevant to their service; the government should just fund those decisions."

This article originally appeared on the South China Morning Post (SCMP).

Copyright (c) 2023. South China Morning Post Publishers Ltd. All rights reserved.