LMS Price Reduction, All To Be Made in China

The latest China made LMS model displayed at DSA 2018.

SHAH ALAM: LMS price reduction. It appears that the review of defence contracts announced by Defence Minister Mohammad Sabu shortly after being appointed in May, 2018, has been completed and the first one to be made public, is apparently the deal for the four LMS for the RMN.

The price of the original contract for the LMS was RM1.17 billion, it has now dropped to RM1.048 billion, a cut of some RM122 million. All four ships will also now be built in China instead of two in China and another two in Malaysia as off the original plan.

The latest CGI of the LMS. Note the main gun and containers on the foredeck.

From NST

KUALA LUMPUR, March 15 (Bernama) — Boustead Holdings Bhd (BHB) today announced the revision of terms of contract for the supply of four littoral mission ships for the Royal Malaysian Navy.

In a filing with Bursa Malaysia, BHB said the government agreed that all four vessels would be built and delivered in China at a revised contract price of RM1.048 billion.

BHB was referring to an earlier announcement with regard to the signing of a contract between the Ministry of Defence Malaysia and Boustead Naval Shipyard Sdn Bhd, a subsidiary of BHB, for the supply of four littoral mission ships in collaboration with a partner shipyard in China.

Under the initial contract, the first two vessels would be built and delivered in China and the remaining two would be built and delivered in Malaysia for RM1.17 billion.

The keel laying of the first LMS in October, last year. Mindef.

Based on the small reduction in the contract cost, it is likely that the equipment originally planned for the ships will remained the same. And the cost of the four ships will still be higher than the three APMM OPVs.

The latest CGI of the MMEA OPV being built by THHE Destini.

As for the defence contract review, I will write more about it soon.

— Malaysian Defence

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Shah Alam

22 Comments

  1. Seems obvious where the savings come from.

    A win for real defence, instead of the usual crony jobs program

    Although it’s a shame we cannot just get rid of this incompatible China-made rojak

    Reply
    The crony is Boustead which is majority owned by LTAT, the military pension fund.

  2. Some reduction, but still it is very expensive compared to any patrol ships china has build for anyone. It is still even more expensive than those DAMEN OPV 1800 being built for APMM (RM246.6 million, vs now price of LMS RM262.5 million)

    Anyway if the mindef is serious to reduce cost…

    Cancel the Kedah batch 2 project, those 12 more OPVs, even if built to the lower USD150 million target cost, would still cost at least USD1.8 billion overall. Building 12 Damen OPV 1800 for APMM instead would only cost USD672 Million, nearly 1/3 the cost of the proposed lower cost Kedah batch 2.

    Swallow our pride, promote the sense of ASEANess and buy MRSS in the form of Makassar class LPD direct from PT PAL. Those ships cost less than USD50 million each.

    Reply
    There is no Kedah 2 project just the RMN plan. The talk is that despite the seemingly endorsement for 15 to 5 it is unlikely to go much further than the LCS. And there are even rumours about that. I have not got any confirmation on this so I am leaving it at that.

  3. With all good ideas put forward by Mr …., I wonder if an decision maker in MinDef read that & put into their consideration.

  4. I strongly believe we will go for affordable purchase.. no more 15 to 5. We will back to rojak… I also believe this is the first n last china made vessels we hoing to have, unless the government change on next election.

  5. BTW india manage to build an even larger 97 meters long, 2,140 tons displacement OPV for half the cost of the LMS! Each of the Vikram-class OPV costs USD32 million each, around RM131 million. This ship is even bigger than TLDM Kedah class OPV, and is similarly armed to the LMS and APMM damen OPV 1800, which is a single 30mm RCWS.

    https://www.iastoppers.com/wp-content/uploads/2017/10/OPV-Vikram-iastoppers.jpg

    http://www.b4umedia.in/wp-content/uploads/2018/04/006-1.jpg

    https://pbs.twimg.com/media/DaeaFCDXcAASHwe.jpg

    https://defpost.com/wp-content/uploads/2017/10/ICGS-Vikram-OPV.jp

  6. 122 million, what we going to use it? If all build in China, do we still have right build locally in the future? A lot of saving action will end up pay more later like the LRT3 n MRT3. Smaller size train, lesser train…this is our answer n result.

    Reply
    Many questions no answers at the moment

  7. Quite obvious where the cost savings went: no locally built of the 2 ships here. It may be a cost savings for Mat Sabu but there is the job loss for not building them here.In terms of actual savings: NIL.

  8. @ michael

    Yeah, the biggest question is, will the LMS68 continue to be build past the 1st 4 units? There is still possibility of building the next batch in malaysia. Or there is an alternative posibility that it would be ended at just 4 units. Then there would be questions to the MCM capabilities on LMS as the current Mahamiru class minethunters are going to be refitted and life extended.

  9. Boustead already got enough in their hands subject to they continue with Maharaja lela batch 2 or even Kedah batch 2 but highly unlikely. Shoukld there is any further need for LMS, then it should be from original builder dockyard.

    If there is a Maharaja lela batch 2 (a very big if), it should be bigger hulls with emphasis on on Anti-Air warfare. The Mica should be replaced with at least the Aster 15 but to offset the overall cost, the hull number should only be 2 to 4.

  10. @ Kamal

    The original 15 to 5 plan sees the LCS Gowind to number 12 ships in total.

    http://www.navy.mil.my/index.php/informasi/penerbitan/buku/file/1464-strategy-document-for-rmn-15to5-transformation-programme

    The TLDM plan is:

    RMK11 2016-2020 – 3x Gowind
    RMK12 2021-2025 – 3x Gowind
    RMK15 2036-2040 – 4x Gowind
    RMK16 2041-2045 – 2x Gowind

    In my writing here
    http://www.malaysiandefence.com/another-look-rmn-15-to-5/
    My alternative plan is with no NGPV Kedah batch 2 to be build, it would be:
    RMK11 2016-2020 – 3x Gowind USD1300 mil
    RMK12 2021-2025 – 3x Gowind USD1300 mil
    RMK13 2026-2030 – 2x Gowind USD900 mil Gowind no.7 & 8
    RMK14 2031-2035 – 1x SGPV Gowind USD450 mil Gowind no.9; 2x Arrowhead 140 USD700 mil
    RMK15 2036-2040 – 2x Arrowhead 140 USD700 mil

    This would give TLDM a fleet of 9x Gowind Frigates tasked mainly for ASW duties with 4x Arrowhead 140 large frigates for general purpose, command, and air defence duties.

    I am not a fan of stretching the Gowind further, as it is actually a corvette design stretched into a small frigate to form the SGPV Maharajalela class.

  11. @joe
    Sure. Then we simply have to tell TLDM, okay, this amount you are paying is not for additional equipment, but for jobs.

    Could have bought 4 boats for Rm 1.05 billion, but TLDM budget is now charged Rm1.17 billion for 4 boats, because jobs.

    Just remember that other people buy and field 600 whatevers, you only field 300 whatevers for the same budget, the reason is because jobs.

    Remember and be happy, don’t be dengki. Because jobs.

  12. @Kamal
    A stretched Gowind would basically be the Belharra class. It is still on the drawing board though.

    Having another class of frigates would mess up the 15 to 5 plan. I have written about this previously, we don’t have a need for a large multipurpose frigates which are more suited to blue oceans. For our littoral defence, various Gowinds configured for point air defence (via Mica), & for medium range air defence (via Aster 15 mounted on raised VLS silos), with both mounting NSM for AShM/Anti-Surface attack. The hull and machinery would be the same, simplifying production and maintenance.

  13. @Chua
    Don’t be ridiculous. All TOT involves job creation, but because of this the cost increases. I’m only stating the obvious which without the TOT the price will reduce (which it has). That would mean foregoing the jobs it would have created if it was made here (which it did). There wasn’t any real price reduction on Mat Sabu’s part.

    @Neb
    Please state where was I complaining? I was only stating the obvious result by foregoing making some of the ships here. Do read carefully.

  14. If our gempita is so overprice why d gov is not investigating this matter. This is not small amount of money there must be a trace somewhere. Don’t tell me this one also need jho low LOL.

    Reply
    I don’t know the answer to your question

  15. @joe
    Which part of what I said is ridiculous? As you say, I also am stating the obvious.

    Nobody is claiming that Mat Sabu magically reduced the price of steel or guns or whatever. Mat Sabu reduced the overall cost to TLDM by cutting the requirement to build locally, cutting out local contracts which would have funded Msian jobs.

    And if anybody doesn’t like that, then go tell May Sabu to go and tell TLDM: look, we need to provide Msians jobs so pay a little extra from your budget to provide them jobs.

    There is little so-called “transfer of technology” involved here. Chinese systems and weapons and even steel will still come from China. It’s only a matter of assembling here or there, and it can be seen that there’s no reduction from buying locally – in fact buying off the shelf from overseas is cheaper.

    Which should be a guideline for future defence purchase decisions.

    RE: Belharra
    It’s not a derivative of the Gowind, it’s a new design featuring a very interesting “tumblehome” bow. Probably more expensive than Gowinds however considering it carries Aster missiles and more advanced electronics

  16. Yes belharra is not a derivative of the Gowind, as it is a clean sheet new design. It is more expensive than the gowind.

    Issues going with belharra

    1. More expensive than the gowind, unlike the target cost of T31e Arrowhead 140, which is actually cheaper by about USD130 million (around RM500 million) each.

    2. French boycott of malaysian Palm Oil.

  17. Also on this…

    Our planned largest frigate dimensions (gowind)

    Length 111m, displacement 3100 tonnes.

    Other ships that is going to play in SCS

    vietnam coast guard DN 4000
    Length 122m, displacement 4000 tonnes
    https://3.bp.blogspot.com/-EtxhQXH6K-0/W0jJNAXgBXI/AAAAAAAA7VM/YIVJUTFW9BwFFKxmdsAx2__IYlO9J8U5wCLcBGAs/s1600/photo1516868141048-1516868141048914145430.jpg

    China type 55 destroyer
    Length 180m, displacement 13000 tonnes
    https://2.bp.blogspot.com/-6hDcJcn_jdw/W0cGhJ0MALI/AAAAAAAAWqg/ZRCW_QHhbWoLdyq6jRsXgElin-g5BM21ACLcBGAs/s640/Dh3puJQU0AA6pJQ.jpg

    China coast guard 3901 cutter
    Length 164m, displacement 12000 tonnes
    https://defpost.com/wp-content/uploads/2017/06/China-Coast-Guard-CCG-3901-cutter.jpg

    Compare with Arrowhead 140
    Length 138.7m, displacement 5700 tonnes.
    https://ukdj.imgix.net/e3acef77d3e73bc4a10da21dbcdf7d87_/Arrowhead-140web.jpg

  18. Back to the LMS topic.

    Will the new Laksamana be frank and tell if the LMS68 is really fit for what missions that they originally need?

    I don’t see the LMS68 as any more capable of doing missions that the laksamana class corvettes or even the perdana class FACs are capable doing. Does the LMS68 really has a place in TLDM?

    Should we get something like this instead to fulfill LMS missions?
    http://www.malaysiandefence.com/wp-content/uploads/2018/07/LMS-B-concept.png

  19. All we can do is dreaming. The country is in shambles. Good luck with modernizing the navy or even the whole armed forces. I can only think negatively of our economy and politics right now.

  20. Still it is a ripped of at rm262 mil per ship. Talking about tot. Technology transfers are no use if you can’t build a hull with military grade cutting facilities. What we are doing with the maharajalelas are only weldings all the steel & components installations. Not by modules. Let’s say gowind have 6 modules. BHIC build 3 & dcns build 3 voila we get a gowind. If tot are done like what we are doing now i bet we would never see a local company build its own class like PT Pal & DSTA. RSN LMV are build locally and its a fine ship too. Their standards are good.

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