Malaysia: The World Top Arms Importer! Edited

KUALA LUMPUR: Based on the Trends in international arms transfers, 2009 Paul Holtom, Mark Bromley, Pieter D. Wezeman and Siemon D. Wezeman SIPRI Fact Sheet it appears that Malaysia, Singapore and Indonesia, are in an arms race.

The 722 percent figure cited by the publication really sounds alarming doesnt it? But the data must be seen in its full context though. Since we had to procure arms in 10 year cyclical basis, no thanks to the 1997 economic crisis, one would expect such spike in percentage however. But since explaining such matters are the purview of people with more power and getting more money than me, I will leave it to them then.

The statement by SIPRI has been published for a while now but it has not received much publicity so far until Reuters used that data in its report here. I am sure will make a meal out of this.

Online news portal, Malaysiakini also jumped into the bandwagon, but alas their take on their issue is really a poor cut and paste job!

–Malaysian Defence

Posted in Malaysian Defence, budget, commentary, defence Industry | 14 Comments »

No Sukuk For The Needy

KUALA LUMPUR: It appears that the plan to use Sukuk (The Islamic equivalent for bonds) to raise money for the purchase of arms and defence-related infrastructure projects had been torpedoed by the Treasury.
The main reason for this I am told is that it was a bad idea in the first place to propose such financial arrangements for the arms purchases.
It was also feared that if the sukuk issuance is under subscribed it will affect other similar attempts from the Malaysian government to raise money in the open market. Yes I know LTAT may have a lot of funds but its own rules limits its investments to a small percentage of its assets.
I am guessing that Mindef will have to be content with whatever doled out to them in RMK10. With the Home Ministry asking for at least RM8 billion from RM23 billion allocation set aside for the security, one has to wonder whether how many items in the ATM wish-list will be deferred yet again…

–Malaysian Defence

Posted in 1Malaysia, budget | 12 Comments »

10th Malaysian Plan (Repost)

KUALA LUMPUR: Datuk Seri Najib Tun Razak unveiled the 10th Malaysian Plan this morning. The allocated ceiling budget for the plan is RM230 billion of which 10 per cent is allocated to the Security sector.

No details of the allocation was released and no one is saying officially how much of the RM23 billion will be allocated between defence and national security.

The unveiling of the plan is also a clear indication that the Kuala Lumpur air base and Sg Udang camp will soon be redeveloped into other things perhaps by next year. As does the Batu Cantoment camp

It will be easy for the army to move out from Sg Udang as most of the commandoes are already at the Mersing camp but it will be much harder for TUDM to move out from Sg Besi.

Going from the emphasis on national security, I am assuming that defence will probably get at the most RM18 billion or it could be even lower although I dont think it will go below RM15 billion. Najib did say that the full details of the spending plan for the next two years will be made public in August but the numbers above does not augur well for the armed forces wish list.

Listed below are projects that had been officially announced for RMK10. Most of the figures are mine however and therefore provisional, unless noted.

1) NGPV Batch II (at least RM6 billion)
2) MPSS (RM2.2 billion, confirmed figure)
3) EC725 (RM1.6 billion, confirmed figure)
4) Nuri Upgrade (RM500 million, my estimate)
5) C130 Upgrade (RM400 million, my estimate)
4) A400M (RM2.5 billion, my estimate)
6) AV8 (RM4 billion with another RM4 billion to borne out in RMK11, my estimate)

With only 6 projects we are already reaching the upper limit of my estimate for the defence allocation. And thats not counting the other projects, AWACs, M4, SPH etc.

If you count these projects you know that Mindef cannot afford all of them. One also must not forget that Mindef also need to spend a lot of money to modernise camps around the country. Oh, they also need to replace a lot of trucks…

–Malaysian Defence

Posted in Kementerian Pertahanan, Malaysian Armed Forces, Malaysian Defence, budget | No Comments »

Say No to The AV8

The AV8Buster Logo

Why? Its not that there are cheaper solutions, which there are of course. The main reason? Its the money of course, or the lack of it.

There are other valid reasons for going against the AV8 project. The past failures of national interest programmes was to first things that come to mind.

The latest failure is the Aludra UAV project which had not benefited the armed forces at all in terms of capability and capacity. It is such failure that Mindef do not even have the stomach to sign a production contract nor the instinct to kill it off for good measure.

As usual the thing will drag on for a few years more before it will die natural death, leaving the armed forces so behind the technology curve when it comes to UAV even when other nations in the region are contemplating UCAVs!

Furthermore, the Army, as we all know, has other numerous project which are as important as the 8X8 but the lack of funds has caused these projects to be shelved.

Of course we could argue until the moon turned blue which projects are more important and necessary to the Army but one cannot deny the fact that we cannot afford the AV8 project as it stands now.

I would even argue we cannot even afford to purchase 200++ 8X8 ACV off-the shelf now as it would also cost us at least RM3 billion to get the whole lot with another RM2 billion thrown in to maintain them for the next 20 years or so.

Yes, the Menhan had said that the project may or may not cost RM8 billion but certainly we dont have the luxury to spend even half of that amount. And we are supposed to spend RM1 billion annually to develop the ACV8?

Yes the unit price could go much lower if we replace the Sibmas and Condor on one to one basis. But how do we know whether the unit price will go down even if we add another 200 vehicles to the original order?

So what next? Do we really need to replace the Condors and Sibmas? Of course we do and at the same time we must also helped our defence industry. How are we going to do it then? My solution is for us to embark an upgrade programme for the KIFV fleet bought for the Bosnian mission to the Adnan ACV standard. Done by Deftech in Pekan of course.

Since the UN paid for the KIFV, we already save almost RM1 billion in procurement costs and perhaps we need to spent only RM1 billion to upgrade these Korean imports and another RM1 billion to keep them working for at least another 15 years. I know the estimates above could be wrong but I believe this is a far fairer and cheaper solution to our needs considering our defence budget and ambitions.

Is there a way to keep the AV8 project and the other projects in the Armed Forces wish list? Of course there is. More money of course. Show me money!

– Malaysian Defence

Posted in 1Malaysia, Defence Contract, budget, commentary | 72 Comments »

A400M Just Gets Costlier

KUALA LUMPUR: Based on the story below, it appears that we may end up paying up to RM700 million for each of our 4 A400M despite assurances to the contrary previously. Not a very good start to the upcoming RMK10, which according to most observers will only give around RM5 billion for defence….

A400M Cost Overrun Set at 10%

PARIS – An agreement by customer nations to provide 3.5 billion euros ($4.8 billion) of financial support for the A400M represents a 10 percent cost overrun on the airlifter program, with Britain expected to cancel two or three aircraft, French Defense Minister Hervé Morin said March 8.

–Malaysian Defence

Posted in 1Malaysia, A400M, budget | 8 Comments »

UAE purchase two Erieyes for USD220 million or RM739 million

KUALA LUMPUR: The story below is self-explainatory. But since we are reportedly in the midst of purchasing the same system (as I mentioned before the deal was set to be signed last year but fell through due to the economic crisis), the UAE contract should be a benchmark for our deal.

According to my calculation, the deal is worth RM739 million. I must admit for starters ours would be much higher even if we purchase the same type of aircraft, the SAAB 340, due to the middleman mafia. The AEW deal is one of the most important item for RMK10, which according to some, defence would only be allocated RM5 billion, yes, a billion a year…..

Saab signs contract with United Arab Emirates for airborne surveillance system

Defence and security company Saab has signed a contract for the sale of an airborne surveillance system to the United Arab Emirates (UAE). The contract is worth approximately 1.5 billion SEK.

The contract covers two Saab 340 AEW (Airborne Early Warning) systems, comprising of the Saab 340 aircraft equipped with the advanced Erieye radar system. The contract also includes ground equipment as well as logistics and support services. Together with associated ground equipment, the system will provide a detailed situational picture that can be used in conjunction with, for example, border control and rescue operations.

“We’ve been conducting discussions with the UAE for several years concerning an airborne surveillance system,” says Saab’s CEO Åke Svensson. “This contract is an additional proof of our expertise and international competitiveness within the field of network-based solutions for defence and civil security.”

Saab’s Erieye surveillance system is a market success. The first Erieye surveillance system was delivered to the Swedish Air Force on a Saab 340 aircraft platform. The system has also been sold to Thailand with the Saab 340 as a platform, and this time the United Arab Emirates. The radar system has also been installed on the Embraer-145 aircraft and is operational in Brazil, Mexico and Greece. The system will soon be delivered to Pakistan on Saab 2000 aircraft.

–Malaysian Defence.

Posted in 1Malaysia, Erieye, Saab, budget | 23 Comments »

2010 Budget

KUALA LUMPUR: AS usual its the defence and security sector got the stick whenever the economy goes bad. Based on my cursory reading of the Economic Report its the only Main sector of the government that had its budget reduced. Oh, well…

Management Budget for 2010, which pays for maintainaince and spares; operations and emoluments.

RM16.233 billion (last year was RM18.232 billion). From the amount, defence got RM9.101 billion (2009: RM10.651 B) while Internal Security got RM7.132 billion (2009: RM7.851)

Development Budget 2010. Cash for the good followers!

RM3.728 billion (2009: RM4.547B). Defence got RM2.581 billion (2009: RMRM3.028) and Internal Security got RM1.146 B (2009: RM1.519). However as outlined in the speech below, the allocation for MINDEF gets smaller. Its getting only RM1.9 billion, PDRM got RM1 billion while the MMEA got RM622 million.

This is what Dear PM said in his speech about security.
RMM3.7 Billion To Enhance Security
KUALA LUMPUR, Oct 23 (Bernama) — A total of RM3.7 billion will be provided to increase the efficiency of the security force, including providing modern and sophisticated equipment.

Prime Minister Datuk Seri Najib Tun Razak said RM1 billion would be provided to further improve the services of the police next year to achieve the government’s objective of reducing crime, which is one of the National Key Results Area.

“The government targets to reduce the crime index by 5 per cent, including reducing street crimes, such as snatch thefts and robberies by 20 per cent by the end of 2010,” he said when tabling the 2010 Budget in parliament Friday.

He said that among the measures taken was to provide mobile police stations in 50 crime hot spots.

The government would also train and enhance the efficiency of 3,000 members of the Rela voluntary corps and Civil Defence Department to conduct joint patrol with the police.

Najib said the security of the nation’s borders would be given serious attention by providing RM1.9 billion to the armed forces for equipment as well as to build and upgrade sentry posts.

In addition, he said, RM600 million would be allocated to the Malaysian Maritime Enforcement Agency to ensure that the national waters were free from smuggling activities, encroachment and pirate threats.

– BERNAMA

–Malaysian Defence

Posted in 1Malaysia, Malaysian Defence, budget | 38 Comments »

MAF RMK10 Wish List

KUALA LUMPUR: KUALA LUMPUR: As mentioned previously listed below are the Malaysian Armed Forces Tenth Malaysian Plan wish-list. The list was the procurement plans mentioned by the PAT for the Armed Forces Day interview in September.

Since I was not asked to prepare the questions (last minute rush, as usual) and the fact that I was not able to be at Mindef for the formal interview, I had agreed to embargo the list below for my colleagues who went for it. Obviously, a lot of things were missed in the interview, I had not other choice but to run the wish list below.

I do not claimed that the wish list below are the complete list submitted by MAF to the ministry. As usual the PAT only answered the questions that was forwarded to him in advance. So if you missed a question, the good general wont offer any clue. And by tradition no numbers or type were revealed. By the same time next year I am hoping I will be able to ask more questions and hopefully get more answers.

RMAF
1) AEW (the PAT confirmed the Government had agreed to purchase AEW asset in 2008 but it was deferred due to the economic crisis. Malaysian Defence had reported that the Govt had in principle agreed to purchase the Saab AEW system but without the involvement of Embraer.
2) Nuri Replacement Programme. The Cougar remained a very serious contender and Eurocopter Malaysia is working hard to get the deal signed. Will it be signed during LIMA? At the moment, I am still saying no.
3) MPAs.

The PAT also said RMAF was still studying the further MRCA requirements so its apparent no PLANNED procurement is expected within the next three years. It does not necessarily mean that we wont buy them if the politicians suddenly decide we need to beef up the lone Sukhoi squadron!

Army
1) 8X8 APC replacement. They wont replace the Sibmas and Condor on one to one basis. Don’t how many at this point in time. So the mechanised regiments will have to make do with KIFV and Adnans. The APC replacement programme was supposed to come in the Ninth Malaysian Plan but got the chop due to you know what. The general did say that the wheeled APC programme was meant for international peace keeping missions and MRAPs was not in their planning.

2) A regiment of Self-Propelled Howitzers. No firm candidate yet, but the Caesar remained the most probable. It will be attached to a mechanised regiment so the numbers could be 12 + 12.

3) Man-portable AT and AD missiles. The AT system was tendered last year and it was rumoured that the Javelin had been selected with some 20 launcher and up to 200 missiles to be purchased. Nothing about training missiles though. No candidates for the AD missiles have been confirmed.

RMN

There was nothing about the MPSS. It was not asked I believed but I guess with the Inderapura fire, the MPSS is back on the table. In 2007 at LIMA, Najib said the MPSS project had been given the green light but since then matter had gone quiet. At that point, the Dokdo was the shoe-in candidate with the Mistral coming a close second.

1) Lekiu Batch 2. Yup its still there but I am not sure it will be finalised due to the price quoted by BAE Systems (RM3 billion per ship for local ,manufacture, half the price if built in the UK)

2) NGPV batch 2

3) Hydrographic ships. We need these ships to map our seas. The three items above were holdovers from RMK9. as of number 5, 7 and 8.

4) Littoral Combatant Ship. Indeed the PAT had not used the exact term used by the Americans (Littoral Combat Ship) but I am assuming we no longer have blue water navy aspirations and that FACs are no longer in their plans.

5) Naval Electronic Warfare Support Systems (NEWOSS). The NGPV were commissioned without these vital systems as mentioned by the National Audit Department report previously.

6) Possible purchase of Nakhoda Ragam class. RMN had confirmed that they had looked at the ships and found it suitable for its needs. It now depends on the Govt financial capability.

7) Minesweepers

And last but not least, ASW helicopters.

Is that all? Of course not, as I mentioned earlier, the answers were based on the questions posed to the PAT. The actual wish list is probably longer but if the same allocation in the RMK9 was allocated (around US$5 billion) you can safely assume that it will not be enough even for the systems mentioned in the interview!

–Malaysian Defence

Posted in 1Malaysia, Kementerian Pertahanan, Malaysia -Armed Forces, budget | 46 Comments »

US to Select New Carbine, Next Year or M4 is the New Dodo

KUALA LUMPUR: The story below from Defensenews is self explanatory. I would like to say I told you so but I do not feel I had won anything. Malaysian Defence and its readers had since 2006 questioned the decision to adopt the M4/M16A4 as the standard Malaysian Army assault rifle and the story from DefenseNews vindicated our concerns. The US Army is to ditch the M4 soon and perhaps within two years, they will be equipped with new carbines and even rifles. It is most likely the rest of the US forces, Marines and others will follow the Big Green transition to the new weapon and ditch the Black Rifle. The Malaysian Army in the meantime, will be using the M4 and M16A4 for at least another 20 years or so. We already accepted some 14,000 rifles and if not for the economic downturn, we could have ordered another 30,000 or more of the Black Rifles.
By next year, the US will field its last batch of M4s and M16A4s , so we will have the dubious honour of fielding new Black Rifles in the foreseeable future. Of course, thousands of M4s will be available within the next two decades, but it will be funny isnt it if we were to start looking for a new rifle to replace the Black Rifle within the next few years so. At the same time, it will also be funny for the Malaysian Army to continue purchasing new M4s and M16A4s as the primary user had declared it redundant.
Also from the story below, it appears that SMEO had paid Colt LLC for nothing by acquiring the exclusive manufacturing rights in the country as the design rights of the M4 had been taken over by the US Army. Does this mean that SMEO now has to sign a new contract with the US Army and perhaps has to fork out extra payment to manufacture the M4 in-country now? I am not sure about that but when I found out I will report it here.

US Army Will Open Competition for Carbine – As Soon As Congress Passes Budget

Soldiers could have a new carbine by 2012, unless a Congressional budget impasse slows it down. The Army requested $9.9 million for fiscal 2010, money needed to start the solicitation process for a competition that stands to draw dozens of small arms companies waiting for the chance to unseat the M4 as the Army’s primary soldier weapon.
In July, the service took control of the design rights to the M4 carbine from its sole maker, Colt Defense LLC. The transition of ownership of the M4 technical data package marked the end of an era and Colt’s exclusive status as the only manufacturer of the M4 for the U.S. military for the past 15 years. The transfer of the licensing agreement also frees up the Army to give other companies a crack at a carbine contract. Last November, Army senior leadership announced the service’s intent to open a competition for a new carbine this fall. Then Army Secretary Pete Geren directed the Army’s Infantry Center at Fort Benning, Ga., to update the carbine requirement in preparation for a search for a replacement for the M4. At the same time, the Army is slated to finish fielding the last of its 473,000 M4 requirement some time next year.
Small-arms companies waiting for the chance to compete for the Army’s next carbine view Colt’s loss of the M4 TDP as a new beginning for the industry and for soldiers serving in Iraq and Afghanistan.

–Malaysian Defence

Posted in 1Malaysia, SMEO, budget, defence Industry, m4 | 40 Comments »