The government, which has long harboured ambitions to establish a submarine fleet, agreed to order three French vessels in its maiden subs deal, official sources said. Jane's Defence Weekly has put the deal at 1.05 billion dollars.

The defence ministry sealed a 220 million pound (316 million dollar) contract with European consortium MBDA to buy the JERNAS short-range missile system to form a new air defence regiment.

It also inked a 48-million-dollar deal with Russian state-owned company Rosoboronexport for the IGLA air defence system on the sidelines of a major Asian defence services exhibition here.

The two contracts came a day after the ministry signed three agreements worth 304.65 million ringgit (80.2 million dollars) to buy assault rifles and equipment in the first round of a defence shopping spree.

Malaysian Defence Minister Najib Razak, who witnessed the signing ceremony, told reporters that the Russian and European orders were expected to be delivered within three years.

Najib said JERNAS, the only air defence system that can be used in all weather conditions and can combat small targets, would significantly boost the air force's "credibility and air power."

IGLA, which involves portable shoulder-launched missile systems, would complement the British-designed JERNAS and be used by the Malaysian infantry, he said.

The government has also announced plans to buy more than 60 tanks from Poland and is considering a deal to buy Russian Sukhoi SU-30 fighter jets.

Malaysia has dismissed fears of a regional arms race, saying its weapons procurement is not designed to attack perennial rival Singapore or any other country.

Singapore already has four submarines, designed and built in Sweden.

"We are not competing. We are doing it our way. It's part of our modernisation programme," the defence minister said.

Asked about plans to purchase submarines from French state-owned warship builder DCN International, Najib said: "I cannot confirm, neither can I deny."

Government sources, however, told AFP that the defence ministry last month signed a letter of agreement with DCN's Malaysian agent, the Perimekar company, to buy three subs.

The firm has been given three months to finalise details of the contract, which could involve a spin-off deal to give Malaysia Airlines more landing rights in Paris, the sources said.

The Malaysian carrier currently flies thrice a week to Charles de Gaulle airport in Paris but wants to increase the frequency to five times a week, they said.

Apart from DCN, Germany's Howaldtswerke-Deutsche Werft and the Netherlands' RDM Submarine were also believed to be bidding for the contract.

DCN executive vice-president Henri de Bronac told AFP Wednesday that talks to transfer an overhauled ex-French navy submarine, the Agosta 70, for initial training and two new Scorpene-class submarines were coming to an end.

"For many months now, we have been negotiating for the supply of the Scorpene submarines and training for Malaysian navy officers. The negotiation is coming soon, we hope, to a final point," he said.

Asked about the airline issue, he said: "We know there are some discussions on that but we are not handling that part."

The new-generation medium-sized Scorpene-class submarine is developed by DCN in collaboration with Spanish shipmaker Izar.

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