SHAH ALAM: After crunching the numbers and a few words with those in the know, I must concede the billion ringgit price tag for the proposed SGPV/LCS is probably justified, with a few caveats of course.
1) One wonders why the ceiling price for the project was announced when the navy has yet to sign off the final design? Pray tell what will happen if by chance that the final design cost more than the ceiling price? Will the Government upped the ceiling price or will the navy have to grit its teeth and get a lesser design?
2) The final design will be selected from six international companies, of which three I am told have been down selected to become the technology partner for Boustead Naval Shipyard, the forerunner of PSC Naval Dockyard. As Boustead had already submitted its SGPV/LCS design, we are now left wondering whether the navy will choose this design for the project or not?
3) What will happen if the RMN choose the other two contenders? Will Boustead be force to follow their design or these companies, reputable shipbuilders themselves will have to validate the Malaysian design? With Boustead holding the IP rights for the Meko A100 design, wouldnt it be odd that it has to build a new ship to a different hull?
4) With the hull being the most expensive part of any ship, any changes to the status quo will have a profound impact on the project”s cost. The Danes got their Absalon class ships for some US300 million as they fixed the hull price to US100 million. Are we fixing the hull price to save cost?
Despite my grudging admission over the cost of the project, I am still of the opinion that the RMN and the Armed Forces as a whole cannot afford the project. Yes, I understand the navy need new ships and wars happen due to illogical reasons and therefore we need to be prepare for it but the fact remains our Armed Forces are under funded.
With an annual operating budget of an average RM10 billion and an annual procurement expenditure of around RM3 billion, how can we be spending RM1 billion a year, get this: a single ship and all the risks it carries. For example in 2008 and 2009, the Navy only got around RM1.5 billion as the development expenditure. I dont have the figures for 2010 but I am assuming that its more less the same.
But it seemed that the state of events had been put in motion two decades ago: the privatisation of the dockyard to PSC and Amin Shah. To ensure the success of the exercise, the NGPV project was approved with the Meko A100 as the winning design. Yes, by having a sole source contract to maintain navy ships for perpetuity would have been profitable of course but ship-building seems more messianic and empire building.
The subsequent failure of Amin Shah and PSC saw the rise of Boustead and doomed the project to a government bail-out ensuring the ships were completed well behind schedule and way over-budget.
The original cost of the NGPV was around RM600 million (Amin Shah was also PAID around RM600 million as a reward for taking an unprofitable venture and turning it into a world class facility) but the time the six was completed, these ships cost more or less around RM1 billion. And here we go planning a ship with a ceiling budget of RM1 billion.
I have argued before that the navy needs only a lot of 60 or 70 metres missile armed FACs, or also known in some navies as corvettes – like this one from South Korea – as they are cheaper to procure and maintain. These ships invariably have the same weapons suites as the SGPV/LCS and therefore well suited for the same roles.
Other examples for FAC/corvette is the Danish Flyvefisken class which was offered to RMN in the original NGPV project
But having FACs/corvettes goes against the navy’s aspiration of becoming a Blue Water Navy, a lofty ambition raised following the privatisation of the dockyarrd and accelerated with the setting up of the Malaysian Maritime Enforcement Agency or MMEA.
A Blue Water Navy armed primarily with a few Littoral Combat Ships! What an irony!
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