Malaysia's 2026 Budget: A $5.148 Billion Commitment to Defence Modernisation and Maritime Security

Malaysia Bolsters Defence and Security with Record 2026 Budget

Mohd Hanif Ismail - : Oct 10, 2025 - : 11:20 pm

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Malaysia, a key player in Southeast Asia, has consistently prioritised the enhancement of its defence capabilities in a rapidly evolving geopolitical landscape. As a nation bordering the vital Malacca Strait and facing increasing maritime and cyber threats, particularly in the contested Asia-Pacific region, its strategic spending decisions are closely watched by international defence partners and trade circles. The budget announcement, delivered by Prime Minister and Finance Minister Dato' Seri Anwar bin Ibrahim on 10 October 2025, underscores a profound commitment to national security, guided by the ancient Chinese wisdom: “In times of peace, one should be vigilant against threats and dangers”. This philosophy of proactive preparedness forms the backbone of the MADANI Budget 2026.

Record Allocation for Defence and Public Order

The 2026 MADANI Budget signals a major uplift in security expenditure, allocating RM21.74 billion ($5.148 billion USD) to the Ministry of Defence. This represents a notable 2.92 per cent increase from the 2025 allocation of RM21.13 billion ($4.999 billion USD). Furthermore, the Ministry of Home Affairs is set to receive RM21.2 billion ($5.018 billion USD). The Malaysian Armed Forces (MAF) will see a substantial portion of the defence funds, with RM14.11 billion ($3.340 billion USD) earmarked for Operating Expenditure (OE) and RM7.63 billion ($1.806 billion USD) for Development Expenditure (DE).

The MAF leadership, headed by General Tan Sri Hj Mohd Nizam bin Hj Jaffar, welcomed the announcement, emphasising that the funding will drive its core strategy of "Jointness"—the seamless integration of the Malaysian Army, Royal Malaysian Navy, and Royal Malaysian Air Force. This integrated approach is vital for developing a Future Force that is prepared for sophisticated, multi-domain threats.

Strategic Procurement and Asset Modernisation

A key focus of the 2026 budget is the modernisation of defence and public order assets, with RM6 billion ($1.420 billion USD) specifically dedicated to the maintenance and procurement of new defence assets. The MAF's acquisition pipeline includes crucial air defence systems:

Medium, Short, and Very Short Range Air Defence (M/S/VSHORAD) systems.
Two new Multi Role Support Ships (MRSS), which are vital for projecting humanitarian assistance, disaster relief, and general maritime security in the Asia-Pacific.
Ten MALBATT vehicles to support Malaysia’s international peacekeeping commitments.

Concurrently, RM1 billion ($237 million USD) is allocated for maintenance and procurement for the Royal Malaysia Police (PDRM) and other uniformed agencies under the Home Ministry. This includes:

100 4x4 pickup trucks for PDRM intelligence and operations.
Four Fast Patrol Vessels for the Marine Police Force.
One Maritime Surveillance Aircraft for the Malaysian Maritime Enforcement Agency (MMEA). This investment highlights the growing emphasis on maritime domain awareness in the region.

The government is also investing over RM1.5 billion ($355 million USD) to build and upgrade new facilities for uniformed bodies, including complexes in Kelantan, Sarawak, Sabah, and the Artillery Training Centre in Negeri Sembilan. A major development for maritime security is the planned replacement of the Tun Sharifah Rodziah offshore platform, which protects the eastern coast of Sabah, with a new Multi Purpose Command Platform.

Enhanced Border Security and Digital Sovereignty

In line with the Asia-Pacific's push for digital resilience, the budget includes significant measures to combat both physical and cyber threats.

The Malaysian Border Control and Protection Agency (AKPS), which has already blocked over 10,000 unauthorised foreign entries, receives RM45 million ($10.65 million USD) to secure the nation’s borders. The agency will prioritise recruiting military veterans to fill its 220-strong workforce, leveraging their experience for heightened preparedness.
To address the rising global issue of cybercrime, the government is drafting a new Cyber Crime Bill.
The National Cyber Security Agency (NACSA) is establishing a Cyber Security and Cryptology Development Centre to strengthen digital sovereignty.
The National Scam Response Centre (NSRC), now directly managed by PDRM for faster and more efficient financial fraud case handling, is allocated RM12 million ($2.84 million USD).
PDRM's D11 division, which handles sexual crimes, will be strengthened with RM20 million ($4.73 million USD) for modernising digital forensics and establishing a Behavioural Science Unit to profile and analyse criminal patterns.

Welfare and Human Capital Development

Beyond hardware, the budget stresses the importance of human capital. The MAF confirms that member welfare will remain a priority to maintain high morale and sustainability among its personnel, ensuring commitment to national sovereignty.

The government has also mandated that companies awarded procurement contracts by the Ministry of Defence must utilise the PROTÉGÉ scheme to provide employment opportunities and training (including certificate and diploma courses) to military veterans before their retirement. This includes funding for Work-Based Learning (WBL) and the Readiness To Work Programme, creating a smoother transition for service members back into civilian life.