The two countries will explore setting up a "direct connection" communication link between Malaysian Maritime Region 1 Base in Kuantan, Pahang, and Vietnam's Southern Command.
Defense Minister Hishammuddin Tun Hussein made the announcement after discussions with his Vietnamese counterpart, Gen. Phung Quang Thanh, in Hanoi this week.
Hishammuddin said a direct link would enable the two countries to contact each other in case of problems at sea during military operations and exercises, Bernama reported.
"I also conveyed our intention for Malaysia and Vietnam to cooperate to make the Association of Southeast Asian Nation Defense Industry Collaboration a reality," he said.
"It is to increase defense industrial inter-dependence among ASEAN members, so that we will not depend on sourcing outside ASEAN."
Hishammuddin and Thanh also agreed to hold annual meetings of senior military and defense staff, exchange personnel for training and conduct joint military exercises, Bernama reported. Malaysia and Vietnam have had a defense cooperation pact since 2008.
The announcement of closer cooperation with Vietnam comes after Hishammuddin's three-day trip to Beijing where he agreed to start joint military exercises with China beginning next year," the New Straits Times reported.
Hishammuddin said the exercises -- for the army, navy and air force -- are part of a range of joint working groups.
"Both sides have agreed to foster greater cooperation in defense, particularly in holding joint exercises, exchange of military personnel, establishing cooperation in the defense industry and fighting terrorism and transnational crime," he said.
Hishammuddin met with several of China's top leaders, including Vice Chairman of the Central Military Commission, Gen. Fan Changlong. His visits to Vietnam and China were the first since he became Defense Minister in May.
Malaysia officially established military cooperation with China in 2005, but the result has been only exchanges of visits.
Hishammuddin's trip to Beijing was after the state visit of China's President Xi Jinping to Malaysia in early October.
Malaysia's agreements with Vietnam and China are amid increasing tension from overlapping territorial claims in the South China Sea.
Malaysia and Vietnam are involved in the multinational claims -- with China, Philippines, Taiwan and Brunei -- over some of the Spratly Islands, which Vietnam claims is entirely Vietnamese territory.
None of the islands has an indigenous population, but Malaysia, Vietnam and China individually occupy or manage some of the territory's islands, coral reefs and shoals.
Vietnam sent several Buddhist monks to perform religious rituals in previously abandoned temples on several of the islands in March 2012.
The Spratly dispute has erupted into open military confrontation on occasions. About 70 Vietnamese military personnel were killed during the brief 1988 Johnson South Reef skirmish with China.
Vietnam and China also have competing claims on the nearby Paracel Islands, where China's arrest of Vietnamese fishermen in 2012 set off a war of words concerning ownership.
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