SHAH ALAM: How much is that helicopter in the window. It depends actually but according to Wikipedia, the price of a single Leonardo AW139 twin engine helicopter, is around US$12 million (RM50 million). The actual sticker price will be according to the specifications of the buyer, of course.
Anyhow, the cost of the “Day and night multipurpose helicopter rental services for the RMAF” by Weststar Aviation as announced at DSA 2022 is RM265 million (it was not announced publicly but the figure was listed in the greeting book for VIPs at the ceremony).
However ,it does not list out the duration of the contract though if you divide it into four years, the annual rental cost for the four AW139 will be RM66 million (or RM16 million per air frame annually). RMAF, however, will be responsible for the fuel and personnel costs.
RMAF had previously stated the cost of maintenance for the Nuri fleet (for at least 12 aircraft) was about RM70 million annually. It stated that despite this, the number of airframes available were low. This resulted in RMAF deciding that it does not make economic sense to continue operating the Nuri and its decision to lease the replacements instead while waiting for replacements by 2026.
So what do you think of the leased deal?. Is it a fair deal? It must be noted much of the cost of the rental service is the insurance premium, according to an industry source. The premium is higher as the end user is a military organisation instead of a civil one.
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Of course it is not
Because of red tape and bureaucracy, the government rewards waste of money, because it is easier to approve operational expenses, rather than development budget.
If it is bought outright (even of it is the same commercial spec as the leased helicopters), exponentially it would be much cheaper (even direct comparison is cheaper actually), as the lease is just for four years, but buying outright you could use it forever (or in case of nuri, more than 50 years).
The AF could buy the 1st 4 unit. But there’s no guarantee the next menhen going to approve the same model for the next 20 unit. Which would lead to a continuation of rojak air force that increase the operational cost.
An easy way to make politicians commit to a multi decade weapon acquisitions is to set up a local military industrial complex. At that point the politicians would face prospects of voters job loses if they cancelled anything. But that would create a different kind of problem instead.
Leasing military equipment, much like leasing cars or leasing machinery, makes sense up to a certain time period, whereby past it the cost escalates and ROI quickly drops. Marhalim, in your write up, you did not state these GOCOM choppers cost for maintenance & spares would be borne by Weststar during the lease period so there is lesser overheads as TUDM are not tied to that platform when come to decide to buy.
Is it a fair deal? Leases are never fair compared to buying on face value, you pay about the same monthly installments to rent nearly as much as to buy but you don’t have to worry about maintenance & spares costs. So there are pros & cons, and leasing does make valid business sense to some. It certainly must have made financial sense to our stingy beancounters to approve it.
What do you expect TUDM to do when CAPEX is not there but OPEX is unused and there is urgent operational need for utility choppers?
I think so…. . Lease the assets until the RMAF decides what helicopter they really want and the Government gets its s_ _ t together.
Equally expensive to buy outright or to lease
The maths uses by our defence players are different somehow
5Zaft – An easy way to make politicians commit to a multi decade weapon acquisitions is to set up a local military industrial complex”
Must as well drill holes into our skills whilst we’re at it. As it is our small and limited industry has had such a detrimental impact thanks to our neither here nor there self defeating politically driven policy.
5Zaft- ” would face prospects of voters job loses if they cancelled anything”
Going by that reasoning orders would have long ago been placed for follow on Adnans and Kedahs to save jobs at Deftech and BNS. Plus, we’d also be buying more expensive ammo to save jobs at SME rather than buying cheaper alternatives from abroad.
The OPEX and CAPEX issue is a simple matter really to the government. The Finance Ministry could just transfer the money to one part easily. But as usual such things are difficult as no one wants to take the responsibility. Also there is also the fear that will become routine hence the decision not to do it. Its the same with RMN fixing it up its fleet by using the OPEX money saved by the previous chief as part of the 15 to 5 plan
Supplying defence product in malaysia is always about who do you know and never about what did your product can deliver, cost productivity,effectiveness or even opex or capex requirement.
CAPEX is upfront, OPEX is annual. Its easier to pry money from MOF if the amount is RM20m over 5 years than RM100m in Year 1. It could also mean government long-term budget is not stable. In other words, government cashflow is not stable and there is not enough reserves to smoothen out any future shortfalls (hence unable to commit monies up front). Long-run, owning the asset is always cheaper than renting. But it is what it is, rent is the way forward.
Hope the MPA and LCA gets funded in this Malaysia Plan. If it gets delayed and spills over to the next Malaysia plan, the Nuri replacement will have to compete with MPA and LCA funding. This creates the same problem faced by the Navy, where LCS is competing with LMS Batch 2 funding – because of the LCS issue, the Navy is essentially asking for RM3b for LCS and RMXb for LMS Batch 2.
Marhalim, what’s defence spending as % GDP at the moment? Should be app 6 b USD if its 1.5%, is that correct?
Tom Tom – “until the RMAF decides what helicopter they really want and the Government gets its s_ _ t together”
The RMAF knows what it wants and has known for years. Our defence policy is a reflection of many things which have gone to shit in this country. Getting it right requires deep soul searching , acknowledging what we’ve been doing for so long is highly flawed and self defeating and fundamental and institutionalised revamps.
Azlan – our neither here nor there self defeating politically driven policy.
Personal speculation wise, rather then a failure of policy by the civil servants. It’s more of a failure to discipline the politician that’s go around screwing everything up
That’s why we as the rakyat need to make sure the government keep to their words in releasing the defense industry policy publicly (which is now 2 month overdue) and to ensure they keep to their DWP/DIP proposal.
We are afterall a democracy, infact currently the most democratic country is ASEAN. And citizens has a roles in a democracy more than just being a damsels in distressed. Doing that and just leave it to the politicians is the reason we are in such a mess right now.
Azlan – Going by that reasoning orders would have long ago been placed for follow on Adnans and Kedahs to save jobs at Deftech and BNS.
How many Adnan & Kedah do you wanted?
Aussie themselves had like around 400 ish m1a1 & 8 meko.
And Technically they did do a follow-up order As evidence in gempita & maharajalela. Unlike the f2000 or ec725 of before where new batch of politicians can just ‘cancelled’ future order. Localizations put politicians in a tough spot to ensure deftech & BNS (and thus their employees, vendors, vendors employees, crony or retired officers who owns the vendor, rakyat who put their saving in LTAT & PNB) survival which then ensure their own political survival thus why they haven’t cancelled the LCS outright (infact the 4th & 5th LCS is still being assemble during these past 4 years) while gempita production line still hasn’t close yet if not mistaken and they are weighting option to what deftech pekan can do next.
As of now The option is really
1)MPA manufacturing line would keep open for 15 years, heli would open for 15 years ( 2 RMK period for 24 heli & another 12 for EC725 replacement), LCA would open for 10 years or more, all of these are the same model Which kinda fit ATM requirements, provide job for employees, create competency in manufacturing & E&E, embedded MY deeper in the western supplies chain & thus closing the military, industrial, foreign affairs relationship with all these countries, diversifying our economy then an over reliance on china, increase security dependency to anglo sphere since while our weapon ain’t great or numberous, at least it compatible to work alongside theirs Or
2) keep on buying directly overseas,
*the cost would still be a 200% makeup as usual, the middleman postman keep all the markup (rather than sharing it with workers)
* The politicians would go around buying stuff from China or Poland as before in exchange for almost nothing to the country interest so they get sacks full of money
* Spend tons more money as stuff from Poland, Russia & china usually do not even meet ATM minimal requirements
*there’s would still be delay & once completed it would still be problematic like Aussie tiger & taipan as morally bankrup politicians would as always go for either a new varient or some on paper prototype purchase.
Purchase directly overseas would likely result in us getting 3 different kind MPA, 3 different kind of heli, 2 different kind of LCA. So rather than resulting in a stronger military, we would just end up weaker And all of it is not speculation either. This is exactly why we have a rojak military as we have now. We can’t exactly keep doing the same thing and expect different results could we?
Like I said before, military is an economic tools. The entire enterprise need to be profitable to the nation, France want to provide high paying jobs & create $$$ in high value added R&D, Korea want to make the already rich chaebol richer & an instrument to increase their E&E expertises & to create economy of scale for their manufacturing company. these 2 countries basically paying way more money for far less capabilities then just buying outright from the American.
But their weapon acquisitions program is ‘profitable’ & thus their government has no problem paying more then 1% of GDP for defense. And that is really the best case scenario we can realistically hope for.
kel – “Navy is essentially asking for RM3b for LCS and RMXb for LMS Batch 2”
Even if the LCSs were delivered on time the RMN would still have requested for the Batch 2s during this period to replace the FACs which should have been retired in the early 2000’s and other assets; in order to perform certain roles not requiring a LCS.
Yes 1.5 per cent, but you must remember that procurement is around 900 million USD annually
5zaft, you must be dreaming la. Australia where got 400 M1 Abrams. There are currently 60 but they have bought another 100 plus. Only 200 ish, not 400. We are also getting 30 K9 Thunder SPH.
If procurement is 0.9 b a year, that should be 4.5 b each Rancangan period. If the KAI 50 is 50 million each, 18 should only cost about 1b. So it’s all doable….
“Finance Ministry could just transfer the money to one part easily”
Am not sure if that’s so easy with the Govt, as it meant there is no oversight on expenditure.
In the private sector, OPEX & CAPEX serves different purposes and basically you can’t rob Peter to pay Paul, so to speak, without stakeholders approval which in the Govt’s case would be the Cabinet, the Parliamen & Auditor General. AFAIK it never does happen, since its easier for a govt to legislate additional budget to topup when needed (something which I suspect Najib’s Govt intend on doing with LCS project).
More often than not there is more attention & scrutiny to CAPEX budgeting & usage, and lesser to OPEX, giving the latter more broader leeway in utilisation, ie if you rebuild a ship with 90% new parts, you are still TECHNICALLY having the same old ship even if you are really getting a new ship, which is how TLDM got away with the rehulling project using OPEX instead CAPEX.
BTW usually CAPEX can be brought over but OPEX are typically expended in a cyclic year as that is not usually carried over unless budgeted into the new year.
It’s not about request. It’s about funding. The RM3b not spent is money still with the govt which they can use for other expenses like all those handouts and debt payments and even 1MDB debt repayments. Which is why it is always important to spent all budgeted amounts. So really the Navy is requesting RM3b to complete some unknown number of LCA and a separate amount for LMS Batch 2. MOF will say you already asking for RM3b to spent on LCS, cannot ask too much for LMS Batch 2. I thought this was a well known problem with procurement. Budgeted doesn’t mean funded. You need appropriations. Budget = What I plan to spent. Appropriations = What I have been given to spent. Actual spending is a cashflow issue. Budget RM100, appropriated RM50, ideally spend RM50.. But delays means even after being appropriated RM50, no spending was made. It doesn’t get carried forward automatically. It gets reallocated again in next year’s budget and gets reappropriated again. So Covid means no money for military spending even if the money has been budgeted.
Azlan, maybe the RMAF has decided on the AW 139/149 and perhaps the government is packaging it with the ATR72 and M346??
AW139 is an interim helicopter. it does not have the same capability as the EC735, Nuri or Blackhawk. A new helicopter for RMAF should take into account the FVL FLRAA (Future Long-Range Assault Aircraft) Program which will be downselected by the US army in a few weeks time.
M346 performance also is incapable of doing what the MiG-29 does, which is a main requirement of RMAF.
If you want to do package, it will not be with italy. It should be with south korea.
A package of
– 36x FA/TA-50, plus LOI for KF-21
– 8x Jose Rizal class for RMN LMS batch 2. 4x made in korea, 4x locally built if possible at 2 different shipyards.
– 3x Tae Pyung Yang class large OPV for MMEA. This large 140m ship shown recently at DSA 2022 remarkably is cheaper than keris class LMS batch 1.
– large quantity of Raybolt top attack ATGM + chiron MANPADs for malaysian army
With that large buy, offset of
– 1 to 1 reloads of metis-m missiles for every raybolt that we buy
– 2-3x pohang class corvette convert to opv for MMEA
– 24x newish retired Blackhawks for PUTD (supposed to be mid-life update, but retired early so that can support local industry by buying new Surion helicopter instead)
Meaningless offsets such as local assembly of FA-50 should be avoided.
Tom Tom – We are also getting 30 K9 Thunder SPH”
Funding approval is for only 18 [as per our practice of getting a bit but not enough of anything]. I have no idea if K9 is in the running but as of what I was told from a army guy and industry sources some time ago the army had decided on a wheeled platform. No idea if this has changed.
gonggok – ”Meaningless offsets such as local assembly of FA-50 should be avoided.”
A daft and an absolute waste of resources; an politically driven exercise which will lead to no tangible benefits.
Even with a 200% markup by middlemen, the overall cost is still lower than spending to setup a local industry just to get an equivalent.
I have mentioned this before, if we want to see a functional (not necessarily viable or sustainable by itself) local defence industry, we don’t have to look far to find one. Just look at SG for example.
It makes its own rifles, arty, SPH, APCs, IFV, ships & boats, but not entirely of indigenous designs or components as they are supported by foreign technical partners with solid credentials. Being the only main user with very limited exports, the cost of these equipment are certainly far higher than buying foreign ready made ones but difference is, SG economy can absorb such inefficiencies because it has a yearly defence budget of RM 49.7Bil, in comparison we have only RM 16.2bil last year. If we want a similar level of local industry involvement, we gonna need to spend RM 50Bil A YEAR rather than just RM16Bil, or about 3X currently. SG economy with their people’s affluence certainly can sustain such yearly outlays without harming their economy, but can ours?
Where will the Govt get that RM 50Bil a year just to prop up a local defence industry to be on par with SG? Raise taxes? GST at 10% with no exemptions (like SG)? Cut social welfare programs ie bantuan to B40/M40? Remove petrol, food, toll & other subsidies? Cars with COE at ridiculous prices? Increase debt levels that will take 3 generations to pay? How will our rakyat accept such sacrifices or will they sacrifice the Govt that dared to make such moves? The last incumbent Govt that implemented GST at just 6% didn’t last very long and not a single party aspiring to rule dares to raise this matter again.
Looking at defence, we must see the overall picture in terms of our economy and the people. If our economy cannot support it and the people don’t give a damn, why should any politician push it to the detriment of the rakyat livelihood? It will be politically suicidal.
Tom tom – Australia where got 400 M1 Abrams.
sorry, i meant to write m113a1 APC like the Adnan rather than the Abrams.
Gonggok – If you want to do package, it will not be with italy. It should be with south korea.
I think we are more interested in imitating KAI in getting LM to localized production in the country rather than go buy kpop products.like how we likely bought Leonardo heli because it’s half own by the Brits rather than because of Italy Or Adnan & gempita because fnss is half owned by BAE rather then because of ummah with turkey.
personally i agree with Tom tom that it most likely a package deal but rather than Korea vs Italy it’s more of UK vs US.
It’s either m346, various aw heli,tempest against fa50,Blackhawk or FVL,f35.
localised production? it is just glorified self assembly like you buy an Ikea table and assemble it yourself at home. Can you pride yourself and call an Ikea table something that you build on your own?
There is no benefit whatsoever locally assembling 36 FA-50, or any plane for that matter. Mofaz in the 90s assembled their own Bell Longrangers without any fanfare. They did not call their hangar an assembly plant for that.
also UK vs US??
There is nothing British about any AW heli or M346. Tempest is a PowerPoint aircraft.
LCA/FLIT, LMS batch 2, ATGM
FVL FLRAA, J-LTV, various EDA like blackjack UAV, 120mm mortars
Azlan, I meant we as in Australian are getting K9 SPH and K10 support vehicles. To be built in Geelong, just an hour from Melbourne. The Boxers will be in Ipswich, just outside Brisbane. Still no decision on the Land 400 tender, Lynx vs Redback, but again Qld vs Victoria. The K9 agreement is significant. First time Australian has bought major weapons from an Asian country.
5Zadt – ”I think we are more interested in imitating KAI in getting LM to localized production”
Well you ”think” wrongly. There is no such intent; there never was…
5Zaft – ”fnss is half owned by BAE rather then because of ummah with turkey.”
You are mistaken; I know as a hard fact that we bought Adnan also because it was pushed by a Muslim country [a secular one unlike us] and because the Turks were eager to indulge us when it came to offsets and ToTs; if you were around in the 2002 period this was also a widely known fact; as was also told to me by a FNSS guy at DSA 2002 at Mines and later by an ex Deftech guy [ex Royal Armoured Corps] who went on the first trip to Turkey.
5Zadt – ”It’s either m345”
For reasons which have been discussed the M346; excellent LIFT it is; is not in the running.
Joe – Where will the Govt get that RM 50Bil a year just to prop up a local defence industry to be on par with SG? Raise taxes
Actually the biggest difference is that SG is a highly industrialized nation with low growth rate. MY on the other hand is still an upper middle income country.
Money doesn’t necessarily need to come from an increase in taxation nor reduction in welfare but can come by just growing the economy. For example a 5% growth rates annually would double our economy size in 15 years while a SG that say grow at 2% would only end up at 50% bigger economy in the same time period.
Assuming the same defense spending per GDP at 1.5% for us & 3 % for SG. The MAF budget would be 2/3 of SAF by then rather then 1/3 of now. If we want spending parity by then. Then increase the defense budget to 2% of GDP. Or you know, fix the ringgit.
Like I said before, localizations isn’t a slam dunk that can solve all our problem. It would eventually open a different kind of cans of worms. But what it could do is incentives the gov to spend a bigger % of GDP on defence, create political commitment for a multi decade acquisition, commit to a large order (as you kinda need 100 jet, 12 submarines for example to create the necessary scale to make it worthwhile), improve efficiency & cost effectiveness on the sustainment due to usage of a common platform compared to the rojak of today. (Weapon acquisitions is afterall 1/3 the overall cost of a weapon)
Anyway SG military industrial complex isn’t all that bad. While SG weaponry is less capable, her weapon ability to work together in multilateral coalition would contribute to diversity which itself a quality as it create resilience & thus limit the opponent ability to counter all the different weapon aims at them. MY like SG is a small state dependent on globalization and thus never really had any ability to make unilateral military action in the first place. While having the biggest bomb with the furthest reach sound great on paper. In reality however, we don’t need it. What we wanted as a deterrence is convinced would be aggressor that we have the backing of other more powerful states, and thus rather than a weapon capabilities or it price point, it’s the weapon point of origin that matters most. We could for example get something like bramos for it performance & price point but getting the NSM is actually the one with the biggest deterrence capabilities.
Well this is what I have mentioned before, we cannot see defence expenditure in a vacuum. It is tied to the overall budget, and that is geared towards improving the economy & uplifting the rakyat so defence budget is always an afterthought once all the economic & rakyat friendly initiatives takes precedence.
In terms of parity with SG, we typically allocates 1-1+% of GDP for defence yearly, vs ~3% with SG for the last few years. The reason why they can afford to spend RM 50Bil vs our RM 16Bil, is simply their stronger currency and economy. As you said, fix the ringgit.
So when people were cavalier about increasing defence budget, I always ask; where the money will come from, as it is more sensible to use the overall budget to improve the economy, thereby strengthening the ringgit, thereby we can better afford all those goodies that SG is getting at their affordable level. At the moment, RM is like shit so we are suffering from crippling foreign exchanges with defence procurement from overseas. So we need to fix that before we go all high and mighty saying we can afford to increase defence budget to cater for local industry inefficiencies, and that the rakyat won’t care their pockets gets lighter to spend more on defence, because they DO CARE when significant number of voters are living around the poverty line.
Even if Govt do increase the budget in order to cater for local industries, there must be tangible results; how many of Deftech, BNS, STRIDE, or Armed Forces colleges initiatives have been put into usage? If the usual metrics applied; for every RM 1 spent for R&D in return we got 1/3 back, then to get a desirable return level of RM 1 we have to spend RM 3 in the local industry as compared to paying RM 1 overseas to get an equivalent. Even this is optimistic however if we can afford such inefficiencies, fine. But we can’t, isn’t it?
And no, buying Western stuff entirely won’t necessarily ingratiate us with the West. It is a more complex equation of geopolitics, trade, strategic locations, their intentions, etc. Buying entirely USA stuff won’t necessarily meant USA will come help us, no we need to be closer and being their stooge as SG have became. The weapons point of origin only matters where they prohibit usage in certain scenarios, like how Canada did not want to sell Bell412 choppers to Pinoys for use against insurgents due to human rights concern. Buying Western always entails certain condition attached.
What we need as a deterrence is to convince other nations that we will fight if we are attacked, and we will give hell to whoever attacks us.
Our peacekeepers have a good reputation because of that. We can be depended upon if called to fight. And we did fight, in Congo, in Somalia and in Bosnia.
But a navy full of gunboats, an airforce that can be decimated in a few days, an army with a handful of 155mm howitzers does not project any fear to a would-be aggressor.
We need to retune our mindset, moving out of insurgency and conventional warfare into a defensive, asymetrical warfare state of mind.
Increasing the defence budget is not the answer. We cannot afford it. Cutting away waste, rent seeking mentality, 200-300% profit is normal, from our defensive spending is the way to get more with existing levels of budget.
We need to stop paying crazy money for mediocre stuffs.
We paid as much as a caracal, but got a pretty basic spec EC725.
We paid for 7 million ringgit for each Lipanbara, while Thai Marines got the same vehicle for just 2 million ringgit.
Those 200% differences in price could have gottten our military so much more. Yet we are still doing it to line the pockets of select few.
No audits have touched on this crazy differences in our military contracts when compared to other countries, while things that is no issue like reduced claim on an item we got for free is highlighted.
“pretty basic spec EC725” this is plan wrong.
gonggok – ”and we will give hell to whoever attacks us.”
gonggok – ”any fear to a would-be aggressor.”
All this mention of ”give hell”, ”invaders” and ”would-be aggressor” is a bit too dramatic and rhetorical for me but I would like to know who in your worldview would be a potential ”invader” or ”would-be aggressor” that we would ”give hell” to and in what context? For me personally I see – as there has always been – the possibility of a short clash or conflict with certain neighbours over longstanding unresolved overlapping disputes. I don’t see the same possibility with china for reasons which have been done to death here over the years or with a neighbour who due to circumstancesd has to physically invade the whole counry,
gonggok – ”And we did fight, in Congo, in Somalia and in Bosnia.”
We fought in Bosnia? There was an incident were a single or a couple of Gerak Khas people were killed in a mission which was carried out not under MALBATT or the UN but the circumstances are still classified. Are you referring to this incident? BTW the Congo was also where – thanks to a weakling of an officer – suffered our worst humiliation but yes we were involved in various firefights.
To my understanding our Caracals are basically the same spec as those with French AF barring the self protection system and AAR probe.
what is plan wrong?
what is the actual plan?
RMAF paid 657 million dollars for 12 EC725. That is basically the high end side of the EC725 price. To compare, our neighbor paid 624 million dollars for 32 Blackhawks.
So why the RMAF isn’t fitted with all the options available for the EC725?
Where is the exhaust IR diffuser?
Where is the additional armor package for the windows?
Where is the chaff/flare dispensers?
Where is the missile approach warning sensors?
Why I can see some of those things fitted to Royal Thai Airforce H225M also for CSAR role, but not on RMAF EC725?
Why Thailand, which paid just 100 million euros for 4 H225M helicopters, are fitted with much more equipment than RMAF EC725?
Greatest overall threat would still be China, if not anything on the ground, is about finally enforcing its 9 dash claim grabbing all the resources within it. This could mean strikes to our military installations to enable them to accomplish their targets. Or china could even pull a Donetsk, unilaterally acknowledging independence of sabah and sarawak in exchange of the newly independent states relinquishing everything within the 9-dash line to China. This scenario could involve Chinese troops on the ground in East Malaysia to eliminate all elements that would be against the independence movement.
Secondly, I would say indonesia with a stronger economy and military in around 10 years time. With a new capital Nusantara in Borneo, the long held dream of a wholly Indonesian controlled Borneo can in the future become a reality. A militarily stronger Indonesia might reawaken the unfinished task they started with the Dwikora. Also if malaysian politics goes from bad to worse, there might even be sarawakians and sabahans that would see joining Indonesia at that time is a better deal than staying in a disintegrating Malaysia.