All Is Well, Part 2

SHAH ALAM: All is Well. In a recent media interview, the MMEA DG stated that it will received its first OPV later this year. What was not said however that the project was delayed as the government (previous one) had delayed the progress payment for the three ships built by the THHE-Destini JV.

Destini revealed the delay in its 2019 annual report made public last week. From the annual report:


A CGI of the first of class MMEA OPV to be named KM Kota Bharu.

Destini’s marine manufacturing business is divided into the manufacturing of para-military vessels and lifeboats. Lower revenue for this business segment under para-military vessels was due to the completion of the Malaysian Maritime Enforcement Agency’s (“MMEA”)New Generation Patrol Craft hence there were no more contributions from the fabrication of this vessels.• Meanwhile, the Group saw a slower progress in building the MMEA’s Offshore Patrol Vessel due to delays in payment disbursement by the Government as planned. Budget constrains from MMEA is also reflected on our lower margins for ship repair services for its vessels.

It must be noted that the last two NGPC – KM Tok Bali and KM Kinabalu – will be officially handed over to MMEA tomorrow at Destine Marine Shipyard facility in Port Klang. The delay in handing over of the two ships were due bureaucratic red tape during the last 24 months as the previous government transferred the MMEA to the Home Ministry from the Prime Minister’s Department. The ships had been ready for delivery for at least 18 months already.

NGPC at Destination Marine jetty at Port Klang on July 31, 2017. Left is 4542, KM Bagan Datuk and partly hidden is 4543.

As for the OPV, it is already mentioned above. Destini also revealed what happened with the MD530G contract.

MD530G test aircraft. Destini is now the main contractor for the helicopters.

The Group’s defence aviation business which is highly dependent on Government contracts saw a decline in revenue due to slower progress in its projects and delays in the decision on project continuities a result of the transition of the Government. In addition, budgetary cutbacks also resulted in a reduction in billings from Government agencies.• The transition also saw the postponement in the execution and completion of the MD530G helicopter project which in turn translated to higher operational and administration expenses including additional interest expenses of RM14.88 million incurred by the Group.• In December 2019, the Malaysian Government gave its approval for the Group to continue executing the remaining contract obligations with the MD350G program. The helicopters are scheduled to be delivered in 2020.• The Government reduced its spending on the procurement of new assets within the defence sector. It however maintained its expenditure on the maintenance of its existing assets, which can be seen from the two MRO contracts that the Group secured during the year

— Malaysian Defence

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