There is no cover-up of the theft and sale of the RM50mil (S$20.4 million) fighter jet engine last year, said Prime Minister Datuk Seri Najib Tun Razak.

He said the Defence Ministry and Royal Malaysia Air Force reported the theft to the police immediately after it was discovered and co-operated fully with the authorities to ensure that the matter was thoroughly investigated.

"To the credit of RMAF and Mindef, there was no intention of covering up (the theft) at all. I was the minister in charge at the time and I decided it should be reported to the police.

"Mindef took the position that we have to address this and take the necessary action, even criminal action, against those involved," he told reporters after a special meeting with the Malaysian Industry-Government Group for High Technology and chairing the Malaysian Aerospace Council meeting yesterday.

It was reported that a General Electric J85-21A after burner turbojet engine - the power plant for the single-seater F-5E Tiger 11 and RF-5E Tigereye - was discovered missing from the Sungai Besi RMAF airbase during a routine maintenance service. Also missing were its maintenance and service records.

It was reported that a brigadier-general and 40 other armed forces personnel had been sacked over the incident.

Defence Minister Datuk Seri Zahid Hamidi later said it was an inside job.

On why the brigadier-general continued to receive his pension and other retirement benefits despite having been sacked, Najib said such decisions would depend on the wrong that was committed and that it would be up to the armed forces to decide.

He said it would be better to wait for the full report on the incident to be completed.

Earlier, Najib said the Government would provide financial and tax incentives to companies involved in the aerospace industry after it recorded an 11% annual growth over the last five years.

He said the Malaysian Aerospace Council meeting agreed with a Finance Ministry proposal to provide the incentives for companies involved in research and development, system integration, manufacturing and assembly, general aviation, aerospace training, certification and maintenance, repair and overhauling.

Najib said the proposal for the incentives was made after looking at the tremendous growth of the industry which also recorded a 300% jump in the total investment in the last three years.

He said the industry, which employed about 54,000 people, registered a turnover of RM25bil last year.

He said re-investments and new investments totalling RM1.4bil were expected to create an additional 2,700 jobs.

He added that a detailed announcement on the incentives would be made soon.