MRCA Programme: The Push

PETALING JAYA: IT appears that as I had mentioned in my post Offer to Lease-Buy Gripens to RMAF we are in the National Interest phase of the programme, the transfer of technology and off-set package.

Yes its that phase where National Interest trumps over everything especially common sense. Twenty-odd years ago the sensible choice was to select a single fighter jet for our air force preferably as many as possible to reduce procurement cost, a type that was cheap to maintain and support.

Our national interest dictated however, we buy two type of fighter jets, some Russian (Mig-29) and a smaller number of American ones (F/A-18 Hornets). To add to the mix we also buy another batch of training jets (Hawks) to supplement the two fighters, as if we did not have another batch of training jets (MB-339As).

And now we have come full circle, we are still operating the two fighter jets and training jets supplemented by another batch of training jets (MB-339CMs) and a squadron of Sukhoi Su-30MKM Flankers. The Flankers are supposed to be dedicated multi-role combat aircraft, able to dogfight and bomb with the best of them. But alas, we have another MRCA programme, one to replace the Fulcrums.

With the Swedish gambit of offering a lease buy option, the others still in the hunt, the Typhoon, Rafale and Super Hornets (with the Flankers still in the mix) are making the final push although they concede the decision will be made after the general elections. Of the trio, the Typhoon and Super Hornet “national interest” package I am told are already largely in place. Rafale on the other hand is still “meeting with Malaysian companies” to fully comply with the offset requirement packages.

This was confirmed at a breakfast meeting with the Press today (Oct 3, 2012) with Eric Trappier, Executive Vice-President of Dassault Aviation and Managing Director of Rafale International.

Trappier said “Rafale International is offering a large and complete package of industrial and commercial programme. We are committed to the Malaysian market and strongly support the development of local capabilities through in-depth technological and production cooperation. This cooperation is also extended to the the academia sector whereby local tertiary institutions have the opportunity to tap Rafale International’s substantial educational and scientific programme.”

A single seat Rafale

Rafale International underlined that their relationship with Malaysia is a long-term and strategic commitment. With the Rafale being a showcase of the mastery of advanced technologies by the French industry, the company is hoping to share expertise with Malaysian companies in particular in the areas of high added value technologies. Sectors such as education, research and development as well as production, and services are expected to be the immediate primary beneficiaries.

The cooperation is expected to help address human capital development while creating a large number of sustainable jobs, reinforcing Malaysia’s capacity to address new markets and business opportunities.

Going forward, Rafale International is actively working with both public and private organisations in Malaysia on a wide range of areas such as component design, composite manufacturing, system integration, health, agriculture, cities infrastructure and biomass.

Trappier said, “We are prepared to transfer the advanced Rafale technology to Malaysia should we get the opportunity to perpetuate the long-standing military cooperation between both our countries. We are now establishing links with local industry and academia with the intention of forming concrete projects that are long term collaborations.” Rafale Release

It is interesting to note that the visit of Trappier happened to coincide with the news of the first Rafale to be delivered with an AESA radar. Read Here.. Before this only the Super Hornets come with an AESA radar while the Typhoon and Gripen are still testing theirs.

I guess Trappier has more things to say when he meet the RMAF chief then. Anyhow, on the India MMRCA deal, Trappier (who will be stopping in India next) said that negotiations for the contract was on-going and it was reported that the India want to conclude it by March next year.

By the way, what is our offset requirement? For the full document, go here
1)Greater policy emphasis to be given to direct as opposed to indirect offsets.
2)Application, exceptionally, of multiplier credits, subject to the extent to which Malaysian companies, universities and R&D-based organisations are able to exploit the intellectual properties derived from joint projects.
3)Introduction of a procurement threshold of Euro 10m to activate offsets requirements.
4)Establishment of a countertrade target of 100% of the defence contract value, subject to a minimum of 50% of contract value; this to be split between counterpurchase and offsets, with offsets forming at least 50% of countertrade value, subject to review on a case-by-case basis.
5) Inclusion of a compensation requirement of 5% of the contract value to be paid to the Malaysian government at contract commencement, representing liquidated damages for any unfulfilled counterpurchase/offsets obligations.

The text above was written by the former head of the Defence Ministry Defence Industry Division Kogila Balakrishnan
in 2010 while she was in the ministry.

Among others she wrote “The politics of the offset purchase can overshadow completely the need or the desirability of the military acquisition. This also creates significant tension between the two different parts of the government involved – usually the Finance or Economics Ministry supervising the offset purchase and the Defence Ministry purchasing the military asset.”

A very interesting document indeed.

— Malaysian Defence

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