Price, MarkUps and Malaysia or RM7 Million

KUALA LUMPUR: With the tender for the new arms for the Malaysian Armed Forces, Malaysian Defence would like to clarify a few matters on the price of military equipment. In this case the firearms mentioned in the two earlier postings.

For the record, it is not an exact science, nor would Malaysian Defence claimed its exact. No one apart from the guys in Mindef and Finance Ministry, and the company which win the tenders will know exactly the real price.

Coupled with MINDEF propensity to keep secret the ‘actual’ company which got the deal.

Colt M4 Carbine. Need to be cleaned thoroughly every day to prevent malfunction.

For example when the Government signed a deal to purchase 20,000 M4/M16A4 last year, which company signed the deal and which was the one that actually represented Colt USA, the company which manufactured the assault rifle.? SME Ordnance was there but Colt agent is another company, which makes it difficult to say who actually got the deal.

To avoid any confusion, Malaysian Defence would defer discussing this matter to another time and would concentrate on the cost issue of purchasing an assault rifle.

Since the M16-series would be offered for the tender, we would used the rifle as an example. The price of an M16 (for the US forces) is US$568. This price is not absolute as it depends on the size of the contract and other matters (politics etc)

Malaysia could also get the same price but I believe we would need to purchase it under the Foreign Military Sales, which we would not do because, again, politics.

Malaysian Defence believes even without FMS, Colt would sell us a rifle for about US$100 more than the US forces are paying for it.

With the tender calling for accessories, we would include them too as would any prospective tenderer would do.

Days Optics (US300)
White light with fore grip (US$200)
Laser designator (US300)

So our assault rifle price is now around US$1,468. With an exchange rate of 3.4, the price of the rifle in Malaysian ringgit is around RM5000. For night vision add another US$1000. The day optics is the normal red dot with 3x magnification, a much better optic like the Schmitt and Bender cost around US$2,000.

To make money, let add around 5 per cent to the price of the rifle. So now our gun cost RM5.500. For an order of 14,000 rifles (this was the order made last year), the price goes up to RM77 million, a profit of around RM7 million.

Not much isnt it. Thats my estimate. Lets see how much the contract is worth when they signed it!

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About Marhalim Abas 1729 Articles
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6 Comments

  1. Just came across this article.

    Look like your estimate was wrong. The price is RM89.6 million. Not too far of. Only problem is that I hear this price is for “togel” rifles with just basic assesories like cleaning kits and additional mags. None of the fancy SOPMOD stuff.

  2. Haha, its a ball park figure, so basically I am right. Anyway the Army will have a media day soon where the new M4 will make its debut. The dates not confirmed yet, I will report on the actual specs but since its another National Interest project, you can bet that the accessories package will also be contracted out as well. An ACOG, Aimpoint or EoTECh holosight will easily be priced as high as RM10,000 each! Of course you can buy it civilian legal holosight on the internet for about RM2,000 (with postage!).

  3. Malaysia boleh……. Marhalim your pricing on optics is highly optimistic. Unless you’re willing to buy a Clonepoint made in China for Airsoft, a service grade reflex collimator sight like the Aimpoint Comp M2/3/4 is going to set you back $500+ for the sight alone. Then consider that you need a mount to get it to the right height, so add $120-150. A magnifier alone costs $500+…….. I just cannot see how the Army is going to be able to convince Treasury to shell out that kind of dough x14,000, let alone x120,000.

    We could buy the Airsoft clones………..

  4. The price I quoted is what I found on commercial sites on the internet. Aimpoint and EOTECHs. It maybe not MIL-STD but thats the price these items if you have the money to buy one or two pieces for recreational purposes. I need to have a reference point so I know when somebody is buying the third wife her third SLK in the pretext of supplying arms for national defence!

  5. The SLK simply tagged along with the third wife and she’s too kind to tell it to go away. Anyway, SLKs are happier together rather than surrounded by unfriendly BMWs.

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