2016 Budget: A Preview

RMAF A400M M54-01 landing at Subang airport after performing a flypast on 2015 Merdeka Day

SHAH ALAM: ARMED Forces chief General Zulkifeli Mohd Zin is not known to shy away from a fight. But even the veteran soldier seemed uncomfortable when the conversation turned to the 2016 Budget at a function on Thursday.

He did not really say anything on the budget – he would have to if I had followed up with a question – but his body language was enough to show – at least to me – that the Defence Ministry will get a big hit when the Prime Minister presented the 2016 Budget on Oct 23, 2015.

General Zulkifeli was speaking to the press after a ceremony to honour serving and retired Armed Forces personnel who were injured in service. During the meet and greet session prior to the ceremony, Zulkifeli even said the food served for lunch was too little “due to the economic crisis”. It could have been a joke but the lunch menu seemed to reflect what he had said.

The Sultan of Johor conferring the GGK Golden Jubilee medal to Armed Forces chief Jen Tan Sri Zulkifeli Zin
The Sultan of Johor conferring the GGK Golden Jubilee medal to Armed Forces chief Jen Tan Sri Zulkifeli Zin

At the Press conference later, General Zulkifeli acknowledged that one question he could not answer was “when will the disability pension be increased?”. It was the most repeated questions especially from those who had retired. He said the Armed Forces had forwarded the request to the government and hopefully “it will be raised when the government can afford it”.

It was at this point I knew I could asked about the 2016 Budget, but I decide against it. There are still less hot-button issues – the AV4, Blackhawks, Yemen and others – that had not been asked. So I decided to focus on the issues and leave the budget questions to the politicians.

Anyhow, as I stated before it is likely that the budget for the Defence Ministry and the Armed Forces will be reduced next year. No one I spoke too was able to come out with a figure though so its up to me to come with it based on my conversations and a review of the budget for the last ten years.

A graphic from the Finance Ministry 2015 budget document on the allocation for the Defence Ministry.
A graphic from the Finance Ministry 2015 budget document on the allocation for the Defence Ministry.

(The budget from 2011 to 2014 are the final allocation for the financial year including the additional funds sought during the mid-year, an annual ritual)

Based on the graphic above, we can surmised that the 2016 budget – the first in the RMK11 – could even be lower than the 2011 figure (RM14.2 billion) the first one for RMK10.
How much lower? It will be RM12.1 billion, of which RM11.3 billion will be the Operating Expenditure (OE) while whats left will be the Development Expenditure (DE) or procurement budget.

What they are going to do with around RM800 million for procurement then? Not much really, apart from all of the project already in the books like the LCS, AV8, A400M (one this December, with two more in 2016) and the Pilatus PC-7 Mk II (to be delivered by early next year).

If thats the case, can the Ministry signed on for new stuff? Yes, they can as most of the payment only starts when the items are delivered.

A US MH-6 Little Bird carrying operators on a rig designed to carry personnel. US Army picture
A US MH-6 Little Bird carrying operators on a rig designed to carry personnel. US Army picture

It must be noted that if the OE is at RM11.3 billion, 60 per cent of the amount will be for Emolument (salaries and allowances) and the rest is for non-personnel emoluments like operational costs from fuel, spare parts and maintenance.

RMAF Beechcraft B200T MPA
RMAF Beechcraft B200T MPA

So the Armed Forces will have to make do with around RM4 billion or so to pay for its operations for the next 12 months even though it has more stuff – new and old – than five years ago. Basically each services will get around RM1.5 billion each to pay for everything. Yes they can ask for extra allocation during the mid-year review but it will be very tough for those planning operations and maintenance.

And that if the Defence Ministry gets the amount I am predicting. What if its lower then? You guess is a good as mine. As for the Home Ministry and its agencies, it will also be in the same boat as Defence though its unlikely they will curtail normal policing operations.

Home Ministry's five year allocation from the 2015 budget.
Home Ministry’s five year allocation from the 2015 budget.

I am also of the opinion that the Home Ministry will get a lower allocation that the 2011 figures. Again as the 60 per cent of the OE allocation will be for Emolument, the DE will also be much smaller. For 2016, I expect that the Home Ministry allocation will be around RM9.5 billion – RM9 billion for OE and RM500 million for DE.

Anyhow, please check back this website on the evening of Oct 23, 2015, for the review of the 2016 budget. I hope I am wrong about the allocation for defence and national security.

— Malaysian Defence

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Shah Alam

39 Comments

  1. It is “due to the economic crisis”?

    All of the politicians are telling the people our economy is “good and stable” and the armed forces chief is saying otherwise LoL.

    Anyway most of the countries around us is increasing their defence budget. It would paint a bad picture of malaysia if we don’t.

  2. “…due to economic crisis”.

    As RM falls against USD and EURO, with majority asset sourced from abroad, and allocation gets lower by the year, I agree that it will be tough on those in charge of maintenance .

  3. Reality bites. With gst n reduction in subsidies everywhere the gov still dont have enough money to go round. How sad. The amout of gst collected to date is more than RM6 billion de

  4. It will be a tough year for all when global n local economic still uncertainty. Hope the $ we pay through product n road will give us a better life.
    Poor to arm forces where they need new equipment or extra units to operate n keep our country safe…
    Hope the defence budget not as low as you forecast

  5. When it is convert to $$$ instead of RM you will see the real big hit.
    Now, we can regret to have 12 variants gempita while actually there is only 5 variants are enough.

  6. National interest. There is plenty of money being spent on all sorts of nonsense. Who is to blame? The Rakyat is to blame because they allowed this to happen in their name.

  7. Its about time that the armed forces chief to really point the reality to each of the services head. Plan to get the best possible equipment and services within the available budget. Please stop planning “daydream” requirements that is not in line with the available budget.

  8. Improvisation is the way I see it. The emoluments should not be look at as just for the welfare of the personnel but to buy their brains. North Korea and Iran have been sanctioned for a long time yet they are feared by big power. Maybe with significant backup from certain another big power but nonetheless most ground work are their own initiatives.

  9. 12 variants gempita, The Atlas procurement really take effect now. The armed forces will pay the prices for what it doesnt need at first place.

    Reply
    The Army needs a new AFV.

  10. Well, the army really need new afv to replace the condor and sibmas. But not super overpaid Pars. With so called Transfer of technology. That suck up almost entire armed force budget.

  11. The high price we paid for PARS is good for country own defence development but subject to the company do they fully utilize the technology n knowledge to build more country defence or not.
    We had alot local assembly -> “local made” product but….? Non of them are Malaysia pride.

  12. GST is hell. Economic instability is hell.No money is hell. Hopefully the Almighty can get us all out of hell.
    My article is ready and ready to send.

  13. “The emoluments should not be look at as just for the welfare of the personnel but to buy their brains. ”

    One view is they don’t have much brains. Another view is they aren’t allowed to use their brains. My view is if you don’t allow people to use their brains, the good ones will leave or not join at all.

  14. I guessed by completing this procurement of gempita afv..Deftech might have capability of know how toward weponaries & sersors which they next project to build new MBT for army cooloberate with OBRUM new stealth MBT.shall we see

  15. Azroy,

    DEFTECH is still a very, very, very long way before it could do that. Even then, it would still need a foreign partner to supply the design and the various components that we don’t have the technology to produce. Economics of scale will also be needed.

  16. If lack of money is the issue, the condors could always be refurbished/modernised/”resetted”. You don’t even need TOT to do that. All of the condors running gear, engine, transmissions are commercial off the shelf mercedes unimog items. Its too high and easy to topple I hear? The chaiseri mrap is as high as the condor too, and to lessen the risk, latest abs system from the new unimog could be retrofitted to the condor.

    Btw the esscom scenario is different to the south Philippines. In esscom we are trying to prevent them from coming in, while in South Philippines it is their operating area with hideouts, ieds, and ambushes. So our priority should be ISR, situational awareness, high speed interceptor boats, helicopters operating ala hitron uscg teams. New mraps should be last in the list.

  17. Talking about DEFTECH I wonder what is happening with the DEFTECH/Bumar Laberdy partnership to overhaul Cambodian
    T-54/55s. The last we heard (Janes) was that a Malaysian bank was providing the Cambodians with a loan to finance the project.

  18. The Condors are 30 years old and high mileage. Irrespective of whether parts are still available it doesn’t make sense to subject the fleet to a full upgrade now : we should have done so years ago, the time has past. There is also the question of what an “upgrade” entails. A upgrade will lead to certain improvements but will not “overcome the main issues with the Condor.

    At best, we can select those in the best condition and overhaul or refurbish them. Like what MMC has been doing : overhaul of the engine and gear box; new battery, new wiring, etc. In other words the bare minimum to keep them operational for a few more years.

    Yes focus should be on preventing the f*****s from coming in but the MRAP requirement is largely because what we have there is not really suitable for daily patrolling in much of the terrain encountered in ESSCOM and there are worries that the “Royal Sulu Army” might land again and do things differently compared to 2013.

  19. Hilux. With grenade mats, reinforced firewalls and ballistic door inserts. The IED risk in Sabah is lower, mainly because there is not a lot of high explosive easily and readily available like in Iraq, Syria and Libya. Improvised explosives are of course a concern and if the tracking and controls on nitrates is not in place, then we are stupid. More crippling is our lack of operating monies and insufficient training.

    Reply
    It was supposed to be uparmoured Hilux up to two years ago but I guess the more the merrier..

  20. There is a reported ambush yesterday in south thailand . Two rangers killed n thecrest injured. The armoured vehicle was thrown off road by explosion n nosevwas wrecked. I wonder if its the chaiseri we are buying

    Reply
    I am not sure what vehicle is involved but if it’s southern Thailand it’s most likely a Humvee

  21. M1a1 abrams, chinooks, apaches etc are also more than 30 years old. Those condors spend 90% of their lives under garages, not operational in jungles etc.

    As you said the “royal sulu army” might again land in sabah. The answer to that is not mraps, but better ISR capability, better situational awareness, more fast attack boats and helicopters that is capable of quick deployment to intercept them (something like a QRA system but with fast boats and helicopters)

  22. Yes and M-113s, BTR-60s and Carl Gustavs are 40 years old but so what?

    There comes a point when one has to ask whether spending more than absolutely needed is justified in a vehicle that is of a certain age, has reached a certain mileage and is going to be retired : we’ve reached that point with the Condor. To keep them running for a few more years requires nothing more than the periodic overhauls that MMC has been performing for the past 2 decades or more. If the Condors have indeed spent 90 percent of their time in a garage; they wouldn’t be so worked out, even taking into account their age and the fact that there based on a lorry chassis.

    The MRAP is needed because of the types of terrain encountered in many parts of ESSCOM. Terrain in which operating a KIFV won’t be practical and in which a wheeled vehicle would be better but the wheeled vehicles we have have zero ballistic protection.

  23. Still, we need to upgrade the ISR as well… Though, budget would be likely vague about it. Whatever it is, gotta tighten up that loose strings around Sabah. I don’t mind about the MRAPs but surveillance is needed to keep ourselves ready for any threat.

  24. I totally agree: priority should be in preventing them from entering our waters and reaching ours shores as opposed to worrying what to do if they enter. I have said so here in numerous posts since 2013.

    Having adequate patrol and ISR assets however isn’t sufficient, we also need good intel and stability in Mindanao; that’s what the BBL is supposed to achieve and why were the 3rd party peace facilitator and have been hosting peace talks in K.L. for more than a decade. The problem is the BBL is delayed #thanks to Manasapano) and there are people – for their own reasons – who want to see the BBL fail.

  25. A soldier from Port Dickson got 7 months jail for IS image on mobile phone.

    Now an airman at Sungai Besi might want to peel off his Hamas sticker from his car.

  26. Reconditioned is OK for Alphard, should also be OK for MRAP kan? Go lah minta Obama for 30 or 40 MRAPs they are GIVING away. Now with the outcry over transfers to Police Departments, our Military Attache in DC should have been front and center asking for some. LHD? No problem….Mamat Kondor dah biasa. Anyway, with these things so big anyway.

    Sama jugak other systems. Preloved Czech BVP-90, OT-64, semua harga murah-murah.

    Sekarang zaman kemelesetan, duit Ringgit dah merosot. So kenalah bijak dengan duit. The old ‘kalah tak pe, gaya mahu’ attitude may not be ideal lah.

  27. I have no issues with buying pre owned and cheap; as long as it doesn’t create too much commonality issues and doesn’t in the long run become “expensive” to run. Apart from former U.S. MRAPs something pre owned we should have bought were ex Dutch or German Leopards. Better baseline protection level and more growth potential, compared to our PT-91s.

    Sure the Leopards are heavier than the PT-91 but better baseline protection comes with a price and MBT’s aren’t required to go everywhere. There are also few places where a MBT with a 1,500HP engine and adequate engineering support can’t go and our MBTs will be operating in urban areas and other places; not in the jungle.

  28. Azlan

    I have to agree with u regarding the leopard. Who says our soil and infrastructor cant with stand anything above 50 tons? When did we ever use the railroads to transport tanks? Btw if i was not mistaken the leopard have a lower ground pressure compared to the twardy. But still i could be wrong. We used to make fun of the indonesian when they decided to go with the german made tanks. But have anybody seen any of their tanks stuck in some mud somewhere? No?

    But personaly i would like to see the leclerc in our arsenal. With the devaluation of the euro surely will make scondhand leclerc affordable. Its newer, better prottected, and got the autoloader to minimize the crew number. Its damn sexier too. Hey it is also in line with our french ‘theme’ la bro. Gowind, ec725, mica, scorpene and ect.

  29. If only reconditioned 2nd hand asset (such as MRAP,zeroed hours MBT,restored Kiowa)can make a comeback to our shores through not EDA but outright Donation. Maybe “allergic” of “buy 2nd hand” but accept gladly “donation of 2nd hand”.

  30. Shed,

    The Leopard was ruled out by the Armour Directorate on the grounds that its weight was an issue in many of the areas it would operate it and that bridges in these areas can’t support the weight (it had zero to do with rail transportation) : it was not my personal opinion about the Leopard being too heavy.

    My position is that there will always be areas where MBTs and other vehicles can’t operate in but that there are few places where an MBT with adequate engineering support can’t operate in.

    The decision to acquire a Soviet/Russian designed MBT was made as far back as the 1990’s. The PT-91 was first demonstrated here in 1997 at LIMA. Of all the tracked vehicles we operate, the Scorpion has the lowest ground pressure.

  31. Marhalim,

    In your Eks Haringgarroo video, is that an M-16 with a bipod at 7.30? The whole unit has M-4s, what is it doing there?

    Reply
    Aah, the Udang Galah, we had a long discussions on the M16 with the bipod, It was the SAW when we did not have the SAW. I guess they had used it as back=up SAW for the exercise.

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