ISS Contract to BDNC

KD Tunku Abdul Rahman at its welcoming ceremony in 2009.

SHAH ALAM: ISS contract to BDNC. Boustead Heavy Industries Corporation Bhd (BHIC) on June 16 announced its subsidiary company, Boustead DCNS Naval Corp Sdn Bhd (BDNC) was awarded a RM154.3mil contract from the Defence Ministry. BDNC — 60%-owned by BHIC’s unit BHIC Defence Technologies Sdn Bhd and 40%-owned by France’s Naval Group — received the letter of award for the In-Service Support for Prime Minister’s class submarines of the RMN.

The Bursa Malaysia announcement:

The Company wishes to announce that Boustead DCNS Naval Corporation Sdn. Bhd. (BDNC) had accepted a letter from the Ministry of Defence Malaysia (MINDEF) on 16 June 2020, awarding BDNC a contract for provision of In-Service Support for Prime Minister’s Class Submarines for the Royal Malaysian Navy (Contract). This Contract is for a period of one year starting 1 January 2020 at a contract value of RM154.3 million. A formal contract between MINDEF and BDNC will be signed at a later date.

BDNC is a joint venture company between BHIC Defence Technologies Sdn. Bhd. (60%), a wholly owned subsidiary of BHIC, and Naval Group (40%).

The Contract will contribute positively to BHIC Group’s current year earnings.

None of the directors or substantial shareholders of the Company, or persons connected with them, has any interest, direct or indirect, in the Contract.

KD Tun Razak preparing to leave Kota Kinabalu base for her 2016 maiden voyage from 5th to 12th January. RMN

The annnouncement came 11 days after BHIC announced that BDNC had been slapped with a claim liquidated damages from the Defence Ministry.

I am assuming that the contract was extended to allow for the support contract to continue as the ministry prepare the terms for a longer term contract, five years, which was supposed to be open to other bidders next year. The previous deputy Defence Minister had told Parliament last year that a closed request for bids was expected to be held in 2021.

A CGI of the LCS, a 3100 tonne Gowind frigate.

On June 10, BHIC also reported that it had posted a net profit in the first quarter of 2020. From the Edge.

Boustead Heavy Industries Corp Bhd (BHIC) returned to the black in the first quarter ended March 31, 2020 (1QFY20), boosted by defence-related maintenance, repair and overhaul (MRO) activities.

The heavy engineering services firm posted a net profit of RM20.38 million for the quarter, compared to a net loss of RM4.3 million for 1QFY19, and a net loss of RM118.6 million for 4QFY19.

KD Keris arriving at the Sepanggar naval base jetty for the welcoming ceremony

From the BHIC Bursa announcement with heading Future Prospects:

The global economy has come almost to a virtual standstill as countries impose lockdown and movement restrictions to check the spread of the Covid-19 virus. This has impacted many businesses and industries, including in Malaysia where a Movement Control Order was introduced on 18 March 2020 and has been extended several times. This has caused a sharp drop in consumption and production, impediments along supply chains and disruption in trade. They inevitably combine to send the economy into a tailspin, with a recession on the cards.

However, recently the construction of the remaining three Littoral Mission Ships (“LMS”) in China hasresumed post Covid-19. Both the LCS and LMS Programmes are ongoing at slower progress. The Associate and China Shipbuilding & Offshore International Company had declared Force Majeure due to Chinese government lockdown of Wuhan city and was agreed by the Malaysian Government during Covid-19. Although work has partially resumed, the milestones of the project will have to be reviewed given the delay caused by the lockdown.

The Group’s joint venture undertaking MRO works on helicopters is performing better and the Group is confident in securing contracts in relation to aviation from the Malaysian Government. The Group will continue its pursuit of new markets while looking out for opportunities presented by RMN’s 15to5 Transformation Programme as well as the Defence White Paper released by Ministry of Defence Malaysia. Our Business Development team will step up efforts to look for commercial deals to diversify our earnings base and non-Government businesses within and beyond our core businesses

— Malaysian Defence

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21 Comments

  1. If I’m not mistaken RMN want to set up major base in Bintulu, Sarawak past two years. How the progress of the project? Is it still on, and the construction already start or not?

    Reply
    AFAIK no

  2. Govt: “Here is your saman, and by the way we’re going to give you another contract, so take it up the chin and pay us back. Thank you very much”.

  3. The RMN is enlarging their Sandakan base instead

    Reply
    It was announced that they will be enlarging or building a new base in Sandakan but I think it will be like the Bintulu one, KIV. But I think both state governments will support both projects if funds are available now

  4. Lots of stuff said about the LMS delay but nothing at all on the LCS delay🤐

    anyway when is boustead is handing over their EC225LP for free to TUDM?? 🤣🤣🤣🤣🤣

    On another topic, any details of the impending USA donation of AN/TPS-77MRR air surveillance radar?? Seems like this radar is a bit more capable than our current thales GM403, as it can be used for maritime surveillance too.

  5. With change in government post GE-14, I suppose the Bintulu naval base project is permanently shelved?

    There were also news of setting up a Marine Corps (more like a Marine regiment, or naval infantry), what’s the outcome finally?

    MMEA facebook page reported incident of Vietnamese fishermen encroaching into our waters and Vietnamese Fisheries Department trying to interfere with MMEA inspection of said boat. Warning shots were fired during the incident. So now not only we have to contend with Rohingyas and CCGs, we need to chase the Viets away too? What are they doing so far from their place?

    Reply
    I think they are waiting for funding for RMK12 or 13 before development of the Bintulu naval base to begin.

    The Marine Corps proposal was made by the Policy Division of the Defence Ministry during Hishammuddin Hussein tenure there. He spoke about it publicly without the plan being agreed upon with the military and even more importantly funded. Yes it was mentioned in the DWP but until funding is available it will be just that, plans. Vietnam fishermen has always been there in the SCS since the 1990s, they replaced the Thai ones

  6. “Both LCS and LMS Programmes are ongoing at slower progress.”

    That is good enough. Back to business it seems.

    No more ‘one trillion debt’ propaganda.

  7. ZekMR “No more ‘one trillion debt’ propaganda.”

    Almost RM 0.8 trillion debt isn’t much better. Adding federal government guaranteed debt, the amount is much above RM 1 trillion.

  8. Marhalim “Vietnam fishermen has always been there in the SCS since the 1990s, they replaced the Thai ones”

    What if we sold fishing rights to Vietnamese fishermen, and how much money would it take for us to upgrade our enforcement (in terms of MMEA’s presence and the penalties for getting caught) to the point that it is cheaper for them to pay for the rights than to risk getting caught? How much money could we bring in and how much would we have to spend?

    Reply
    Most of the encroachments were and are in the EEZ. Under international law we cannot impose levies on shipping activities in the EEZ or even in territorial waters so I guess we cannot also do that when in comes to fishing.

  9. Too bad. I was thinking along the same lines –> allow them to fish but limit them to around X tonnage/month and they have to pay to get a license. Unlicensed boats will be towed and their catch seized and auctioned off.

    With regards to LCS. the government has finally provided the funding I suppose (as work on the ships has finally started) ?

  10. @ZekMR
    According to Marhalim, all build progress are stopped and only maintenance being done to keep those under construction from deteriorating so I’m not sure if the built has restarted or TheEdge has misreported (not the first time).

    @AM
    USA debt – USD$ 25 Trillion
    Japan debt – USD$ 11 Trillion

    The way to affluence is incurring debts. At the very least, politicians there don’t politicise their debt to international levels because they know that is necessary to continually grow.

  11. Marhalim: “Our EEZ are disputed, dont really think others want to pay levies for what they believe is their territory”

    Firstly, Vietnam’s EEZ claims overlap with ours to a limited extent. There would be no diplomatic obstacle to applying this scheme to parts of our EEZ that Vietnam does not dispute but where their boats still operate.

    My reasoning is that due to wages and other factors, Vietnam’s fishing industry is much larger and more competitive than ours. We don’t fish there on the same scale and hence can’t generate national income nor government revenue from it.

  12. @ marhalim

    I think with Vietnam, our EEZ is quite clear with the adoption of 1992 Malaysia-Vietnam continental shelf defined area (which is about the area between semenanjung and vietnam) and also 2009 Malaysia-Vietnam extended continental shelf submission to UN, which clearly puts islands like the Amboyna Cay unambiguously within malaysian area of continental shelf.

    Why IMO defending our EEZ is one thing, but having a clear plan to fully exploit our resources in our EEZ is surely another. If we cannot fully exploit the fishing resources in the outer extremes of our EEZ, why not levy charges for foreign fishermen to fish there? At least we will have an income from that, rather than making it illegal for all foreign trawlers to fish in malaysian EEZ.

  13. joe “USA debt – USD$ 25 Trillion Japan debt – USD$ 11 Trillion”

    It’s easy for you to quote things in insolation, but the fact is that those countries get away with it because their currencies are held by investors and other governments as reserve currencies. Nobody wants to hold our depreciating currency. Owing more money only makes our currency weaker, which is why we find imports (including defence equipment) getting more expensive. You’ve seen the ringgit depreciate over our history. It’s a vicious cycle because a weaker ringgit leads to capital outflows, always a concern for us, because no wealthy person wants to keep his money in ringgit. And as to what we do with the borrowed money, no one can say we spend it wisely nad get good value, relative to other governments.

  14. @AM
    And its easy to lump all debt as bad. The fact is, in life we need to have a healthy level of debt to keep things moving and growing. Without credit card debt facility we won’t spend as much with physical cash, without car loan we won’t be able to buy cars, the same without house loan no way we could afford for a house with cash.

    I agree that unwisely spending is bad, but not spending is critically just as bad. Being crippled by indecision and stagnating while every others are moving ahead meant poor governance. Take the various countries measures for the economic fallout of COVID-19 is by spending themselves out of the maelstrom. This incurs additional debt, and there’s no way around it. No country that was affected could afford to standstill.

  15. “Both LCS and LMS Programmes are ongoing at slower progress”

    Before this “slower progress,it was a slow progress..and not it became slower then slow..yeah..great.

  16. joe “And its easy to lump all debt as bad…. . Take the various countries measures for the economic fallout of COVID-19 is by spending themselves out of the maelstrom. ”

    Borrowing to spend is sometimes necessary, like in this situation. The point is we borrowed money to waste, and now that we have to borrow to stimulate the economy, our debt and interest obligations grow larger. You quoted the US and Japan national debt figures but our credit rating is below theirs, indicating that our ability to repay our debt is weaker. As such, we have to pay higher interest to lenders otherwise why should they take our debt instead of others.

    ZekMR was the one who brought up the debt in the first place when he quoted BHIC’s claim that ““Both LCS and LMS Programmes are ongoing at slower progress” and pronounced “That is good enough. Back to business it seems. No more ‘one trillion debt’ propaganda.”

    Not only is BHIC’s statement massively euphemistic, it has nothing to do with our “one trillion” RM debt. No idea how the issues of the LCS/LMS and the national debt are linked in his mind. The amount is real and in no way imaginary or propaganda.

  17. National debt is not supposed to be a hindrance for any development expenditure.

    Defence related industries included.

  18. “National debt is not supposed to be a hindrance for any development expenditure.”

    No need to make such laughable, high-sounding statements. Obviously you buy and borrow what you can afford to pay for.

    You seem to think debt markets are stupid and will lend you unlimited amounts at the same interest rates.

    As for the LCS, I would be thankful if the “slow progress” doesn’t resemble that of Gagah and Teguh Samudera.

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