Justification for increasing the future Malaysian defence expenditure to 1.5% of GDP

 

 tanahairdefence.blogspot.com 

Recently there is a call from the Chief of Defence Force Gen Tan Sri Affendi Buang for the allocation of national defence annual budget to be increased to 1.5 percent of the GDP(Gross Domestic Product). This is corroborated by the Senior Minister of Defence Datuk Seri Hishammuddin Tun Hussein.    tanahairdefence.blogspot.com 

If looking at the defence budget for this year (2022), the amount allocated is RM16.14 billion, which is roughly about 1% of the Malaysian GDP. The latest Malaysian overall GDP for 2021 is put at USD372.7 billion. An annual defence budget of 1.5% of the Malaysian GDP could be around RM25 billion or even more if the Malaysian Ringgit keep creeping towards RM5 to 1USD. Can this be achievable? With proper planning and justification, I believe it can be done. Malaysian defence budget has in the past reached the 1.5% GDP threshold, in 2013 and 2015 for example. 
tanahairdefence.blogspot.com 

To justify defence spending with Defence Industry Policy as proposed by Senior Minister of Defence Datuk Seri Hishammuddin Tun Hussein that wants to show returns to the national economy by the defence industry is the absolute wrong thing to do. There are many other better ways that could justify spending on defence, which is an "insurance" to protect our peace, sovereignty and economy; is money well spent. So how do you calculate peace in monetary scale? How do you calculate economic gains by secure defence? You can calculate peace by putting out the costs of war. How much of the economy and GDP will shrink if Malaysia is at war? It is calculated that Ukraine GDP for 2022 will shrink by 35% due to the effects of the Ukraine-Russia conflict. If that is to happen to Malaysia, that means we will lose RM593 billion from our GDP, and will totally ruin the country for a generation at least. Can you put a price on lives of family, friends lost in a war? Closer to home, the Marawi Conflict in Philippines caused USD348 million in damages and losses with USD949 million needed for recovery and rehabilitation. Spending 1.5% of the GDP so that the GDP will remain strong and incrementally expand annually is a small price to pay as an insurance to protect our peace, sovereignty and economy. Maintaining the way of life, peace, human lives can hardly be put its price. How can defence spending be further linked to our economy? For example annually we are losing RM6 billion due to illegal fishing in our EEZ. Spending money on a proper defence budget can be shown to give a direct economic return by reducing losses due to illegal fishing, and enabling our fisherman to fish in our waters without fear of harassment by other countries. Our economy also highly dependent on free passage of cargo and tanker ships, of which majority of our RM1.2 trillion annual export are moved with. The peace and safety of our waters clearly contributes directly to our economy. What about Tourism? Without being a peaceful country, tourists will avoid coming here. Pre-covid, tourism contributed about RM80 billion to our economy annually. Without peace secured by a strong defence force, such an income will not be possible. Lastly, isn't the defence spending contributing directly to the ability for us to freely undertake oil and gas activities? Without strong defence, how can we protect our offshore oil and gas fields and installations from being annexed or sabotaged by others? Are we willing to give away oil and gas revenues, of which for just Petronas in 2021 was RM48.6 billion profit after tax? 

  tanahairdefence.blogspot.com  

As in the previous paragraph, spending for defence can be shown and clearly justified to be directly contributing to the nation's peace, sovereignty and economy. Currently what is it spent for? What spending can be included in the 1.5% GDP calculation? What sector that needs to be rapidly strengthened? For the current allocation of RM16.14 billion, around RM11.1 billion is allocated for operating expenditure, while RM5.04 billion is allocated for development expenditure. This is the budget for the Army, Navy and the Air Force. If we look at the NATO standard of defence expenditure calculation, the expenditure for the Coast Guard is included, even if the Coast Guard is not operationally under the defence ministry. If we are to include the Coast Guard in the calculation, for 2022 budget, RM554 million is allocated for operating expenditure, while RM183.6 million is allocated for development expenditure. Right now anything that is directly linked to our maritime security needs, must be rapidly strengthened. The planned establishment of a dedicated Cyber Force as the fourth armed service is also needed to be funded. Below is the graph of the potential spending. 

 tanahairdefence.blogspot.com  

As can be seen above, an increase to 1.5% of GDP will give extra allowances to both operating expenditure (giving proper budget to do operational tasks) and development expenditure (buying proper fit for the mission equipment while reducing maintenance for old equipment that can be retired). Operating Expenditure increase will be mainly spent for Operations & Maintenance (O&M), which means that TUDM, TLDM and APMM will have more operational hours rather than just standing by. Long term plans such as this and this can be properly planned. With a possibility of a budget like this, I will write more on my ideal plans for APMM, TLDM and Tentera Darat. Hopefully the future National Military Strategy 2.0, which is to be launched on September 26, 2022; will also explicitly include the range of budget that the defence establishment itself sees fit for their needs.