The procurement of the surface-to-air missiles was part of the armed forces modernisation program and would be made under the Ninth Malaysia Plan from 2006-2009, he was quoted as saying by Bernama news agency.

"Details of the procurement and offset programme will be finalised later should Malaysia give its full commitment," he said after the signing of a memorandum of understanding on the purchase. The cost of the weapons were not revealed.

Under the pact between China National Precision Machinery Import and Export Corp. and two local companies, CNPMIEC would transfer technology on production of the FN-6 shoulder-launched missiles to Malaysia if it purchases its medium-range KS-1A missiles, Bernama said.

This includes provisions for special test facilities, tools, manufacturing process document, training and technical support.

CNPMIEC president Wang Bingyan said China had also offered to conclude the KS-1A transaction on flexible payment terms, including counter-trade, barter and deferred payments.

Malaysia has procured very short-range air defence systems from Russia, Pakistan and Britain under the Eight Malaysian Plan from 2001-2005, Bernama said.

The government has in the past two years embarked on a major arms procurement spree, ranging from Russian Sukhoi fighter jets and British missile systems to French submarines and Polish attack tanks.

Malaysia has denied its weapons build-up could spark an arms race in the region, saying the purchases are simply designed to upgrade its defences and that it has no aggressive intentions.

WAR.WIRE