LONDON (Reuters) - BAE Systems (>> BAE Systems plc) expects to submit a leasing proposal for the Eurofighter Typhoon jet to Malaysia next month, as its cash-strapped government mulls over renting, rather than buying fighter aircraft.

"The Malaysian government is openly saying they have some issues on finance, and while they're ending subsidies and bringing in new value added tax, it's unlikely there's an appetite to buy Typhoon at this point," BAE's Group Business Development Director Alan Garwood told analysts on Thursday.

"What they have done is solicit leasing proposals from every major aerospace company. We will be submitting a leasing proposal next month for Typhoon together with a purchase option and expect to have further discussions later in the year or maybe even early next year around that," he said.

Last year Malaysia, which had wanted to buy 18 combat aircraft by 2015, said it was choosing between Boeing's F/A-18, Dassault's (>> DASSAULT AVIATION) Rafale, Saab's (>> Saab AB) Gripen and the Eurofighter Typhoon which is built by BAE, Airbus (>> AIRBUS GROUP) and Italy's Finmeccanica (>> Finmeccanica SpA).

Industry sources said in March that the purchase could run into billions of dollars. Malaysia's Prime Minister Najib Razak told Reuters in October the purchase might be delayed.

(Reporting by Brenda Goh; Editing by Neil Maidment)