The document outlines Malaysia's expanding domestic market, security challenges, and evolving political landscape under Prime Minister Najib Razak, who seeks reform and improved civil rights. It discusses defence and security spending, the importance of foreign investment, and existing export licensing criteria related to human rights and national security. Despite past criticisms, Malaysia's human rights record is reported to be improving, while the nation's military capabilities and engagements in peacekeeping missions are also highlighted.

1. Malaysia
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2. Malaysia: Headlines
 Fast expanding domestic market and
hub for South East Asia
 Security threats in Sabah, borders,
South China Sea, peacekeeping
 Licensing concerns mostly limited to
the human rights record of the police,
which is improving
 And transit/transhipment of items of
WMD proliferation concern - also
improving
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3. Licence Approvals and
Refusals in 2013
Approvals
 Ballistic shields and helmets for
police
 OIEL for respirators to Special
Action Unit of police, armed
forces, fire and rescue services,
but not regular police (require
SIEL – unlikely to be denied)
 IMSI grabber for police (no
utility in crowd control)
 Ammunition for the police
Refusals
 In 2013: one OIEL for imaging
cameras. No SIELs refused
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2013: Military £31m, Dual Use £53m

4. Political Context
 Constitutional Monarchy
 multi-ethnic society of 28.4 million
people, with a majority Muslim
population
 a federation of 13 states and three
federal territories. The communities
coexist in relative harmony, although
there is little racial interaction
 Although since 1971 Malays have
benefited from positive
discrimination, ethnic Chinese
continue to hold economic power.
Malays remain the dominant group in
politics while the Indians are among
the poorest.
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5. Political: PM Najib
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 The long-governing National Front - a coalition of ethnic
Malays, Chinese and Indians - won the 2013 national
elections with a weakened majority to extend its
unbroken, 56-year rule.
 Mr Najib Razak assumed the post of prime minister
following the resignation of his predecessor in 2009,
and was sworn in for a second term after the 2013
elections
 The son of the country's second prime minister and
nephew of the third, Mr Najib is a British-trained
economist. He first entered parliament at the age of 23 -
becoming the youngest MP in Malaysian history. He has
held numerous cabinet posts - including finance and
defence

6. Political
 Mr Najib’s rise to power was marked by a
government crackdown on the resurgent
opposition, with allegations that strong-arm
tactics were being used to stifle dissent
 But he has pledged radical reforms and a more
transparent government. One of his priorities is
to close a widening ethnic and religious divide
 He has announced his intention to repeal the
Internal Security Act and other restrictive
legislation, and appears to be moving towards
greater respect for’ civil and political rights.
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7. Economy
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 Malaysia's economic prospects have
been dented by the global economic
downturn, which has hit export markets
hard
 But it remains a vibrant economy,
growing by over 7%
 It presents opportunities not just for
sales but also for investment and is an
ideal entry point to the wider ASEAN
market.

8. UK Relations
 A substantial and growing number of UK companies
have a presence in Malaysia and many use the
country as a hub for their regional business
interests.
 One-third of the 21,000 skilled jobs in Malaysia’s
Multimedia Super Corridor have been created by
British firms.
 Around 40,000 Malaysians take UK qualifications in
their home country and 13,000 travel to the UK each
year to study. They include the Prime Minister, who
studied at Nottingham University and Malvern
College
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9. Defence and Security Market
 Active: 109,000 Army 80,000 Navy
14,000 Air 15,000 Paramilitary 24,600
 Five Power Defence Arrangements
(Australia, Malaysia, New Zealand,
Singapore, UK).
 Involvement in international
deployments 882 troops and police:
 Lebanon – UNIFIL
 Bamiyan Province, Afghanistan
 Medical and humanitarian team
Mindanao
 International Monitoring Team Gulf
of Yemen
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10. Defence and Security Market
 reigned in its defence spending in recent years; however, there are indications that spending is
once again on the increase with the announcement of major vehicle, ship, and multi-role combat
programmes.
 Defence budget currently $4.7bn, of which some $3bn on imports
 planning to modernise its armed forces, which are historically land dominated but have recently
diversified through a recognition that peninsular Malaysia is effectively a maritime nation.
 Priorities are: Sabah, China/South China Sea, border security
 Royal Malaysian Navy has grown its ability to project force and is in the process of
transforming from a coastal to a deep water navy
 the air force is seeking to extend its range by the acquisition of surveillance and longer range
strike aircraft.
 support, maintenance and upgrade programmes are a priority
 Malaysia regularly contributes to UN peacekeeping missions (it currently has a major deployment
to Lebanon) and is developing its expeditionary forces.
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11. Defence and Security Market
 The Government’s defence acquisition policy is
inextricably linked to its wider aspirations to develop
industry and move itself up the value chain to
becoming a manufacturing hub with the potential to
export to the wider Asia- Pacific region.
 In order to achieve this step change it needs to attract
both foreign investment and technology transfer. It is
therefore essential to be responsive to these drivers
and be prepared to contribute to the country’s
technological development by means of technology
transfer, shared development and local manufacture.
 The willingness of exporters to establish a joint
venture with local industry is a key discriminator from
the Government’s perspective.
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12. Export Licensing Criteria Concerns
1. UK’s International Commitments
2. Human Rights and Internal Repression
3. Internal Situation of recipient country
4. Regional Stability
5. National Security of UK and allies
6. Behaviour of recipient country
7. Diversion
8. Economic Sustainability
+ Other Factors – commercial, political, strategic
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Criteria 1-4 are
mandatory

13. Concerns: Criteria 1 & 7
 Malaysia is an important trans-shipment hub,
and proliferation networks (Iran, DPRK,
Libya) have exploited its weak export controls
in the recent past.
 The Strategic Trade Act, introduced in 2010,
is an important step towards the introduction
of solid and comprehensive export controls.
 But the Act’s implementation is still under
way, little is known of its effectiveness yet.
 Substantial number of entities and individuals
based in Malaysia have been included in the
US Sanctioned Entity List. Exporters should
be thorough in exercising due diligence, and
always seek to verify the bona fides of
provided end-users.
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14. Concerns: Criterion 2:
Human Rights
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 Malaysia's human rights record has come in for international criticism.
Internal security laws allow suspects to be detained without charge or trial.
 Main concerns with the Royal Malaysian Police, over the policing of
demonstrations and the use of teargas and water cannons. Last used
disproportionate force during a protest rally in April 2012.
 Since then there have been a large number of street rallies and
demonstrations, including a huge opposition rally in Kuala Lumpur in
January 2013 (150,000+ people). All passed off peacefully without
interference from the police – even when it had been made clear that one
of the rallies was technically illegal
 HMG and Malaysian government discussing public order training
 no Criterion 2 concerns with the Malaysia armed forces or fire and
rescue services, nor the Special Action Unit of the police (not involved in
crowd control - an elite high-profile counter-terrorism and special
operations tactical unit, which was established with the assistance of 22
New Zealand SAS Regiment. This unit performs SWAT duties, VIP
protection, and undercover missions.)

15. Criteria 3/4: Internal Tensions
 Eastern Sabah Security Zone
(ESSZONE) established by Prime
Minister Najib in response to
incursions in 2013 by Sulu militants
from the Philippines which provoked a
significant Malaysian military response
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16. Concerns: Criterion 4: Regional
Tensions
 Competing claims with China
to a small number of islands
in the Spratlys – which may
have oil and gas
 Disputes are usually
resolved through dialogue.
Malaysia has downplayed
Chinese naval incursions into
their waters.
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17. Conclusions
 Domestic defence market, constrained in recent years,
likely to resume growth in light of security threats in
Sabah, borders, South China Sea, and peacekeeping
requirements
 licensing concerns mostly limited to the human rights
record of the police, though this is improving
 no significant licensing concerns with military
 transit/transhipment of items of WMD proliferation
concern - also improving
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18. Any questions?
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Richard Tauwhare
Green Light Exports Consulting
Email: richard@greenlightexports.co.uk
Web: www.greenlightexports.co.uk
Phone: +44(0)770 311 0880