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| Malaysian and US ships on an exercise around the Strait of Malacca. (Image: Flickr User - Official U.S. Navy Page) |
By Prashanth Parameswaran
A look at what a budget trim for next year actually signifies.
As I noted in an earlier piece, Malaysia looks set to cut its defense budget for next year by 2.25 percent according to figures unveiled by Prime Minister Najib Razak in an annual speech to the nation October 23.
Specifically, the amount allocated for defense was just 17.3 billion ringgit ($4 billion), a decrease of 2.25 percent relative to the 17.7 billion ringgit allocated for 2015 (See: “Malaysia Cuts Military Budget for 2016 Amid Economic Woes”).
As I pointed out before, the decrease itself is not surprising to close observers of the Southeast Asian state, particularly given severe concerns about the economy. Growth, already sluggish this year due to falling commodity prices and a state investment fund scandal implicating Najib himself, is expected to slow even further to between 4 and 5 percent next year. The Malaysian ringgit has been Asia’s worst-performing currency this year, losing more than a fifth of its value against the U.S. dollar. Spending on defense in Malaysia, which has fallen victim to politicization in the past, is even less popular at a time of economic distress.
But the defense budget cut is still likely to play into the existing narrative that budget constraints are preventing the country from meeting its growing defense needs. Numerically, as far as year-on-year increases go, a 2.25% percent decrease from 2015 to 2016 is quite a dramatic figure relative to the 10 percent increase we saw from 2014 to 2015.
Read the full story at The Diplomat