Show Me The Money, Part 2

Lacroix Defense Sylena Decoy system. Lacroix Defense

SHAH ALAM: Show me the money, part 2. Defence Minister DS Ismail Sabri has taken umbrage of his predecessor claims that the government had only taken the interest of Boustead Naval Shipyard (BNS) instead of the Royal Malaysian Navy (RMN) in approving the resumption of the LCS project, which had been stopped since November 2019.

In a statement, he said it was the PH government inefficiencies and failures which led to the suspension of the project which in turn caused financial losses to BNS and its subsidiary companies.

A Kongsberg Naval Strike Missile (NSM) is launched from the littoral combat ship USS Coronado (LCS 4) during missile testing operations off the coast of Southern California. The missile scored a direct hit on a mobile ship target. US Navy

The statement:

TUDUHAN BEKAS MENTERI PERTAHANAN MOHAMAD SABU BERKAITAN KEPUTUSAN KERAJAAN MENERUSKAN PEROLEHAN
LITTORAL COMBAT SHIP (PROJEK LCS)
Saya memandang serius kenyataan bekas Menteri Pertahanan Mohamad Sabu berkaitan keputusan kerajaan dalam isu perolehan Littoral Combat Ship (Projek LCS) yang dilihat seperti menagguk di air yang keruh.
Kenyataan Mohamad Sabu bahawa Jemaah Menteri membuat keputusan untuk menjaga kontraktor semata-mata adalah tidak benar sama sekali. Kesemua kepentingan Tentera Laut Diraja Malaysia (TLDM) dan Kerajaan telah diambil kira dan menjadi keutamaan di sebalik pertimbangan keputusan ini.
Namun sebagai Kerajaan yang bertanggungjawab, kita juga harus mengambil kira situasi semasa, keupayaan kontraktor dan kesan kepada ekonomi sama ada mahu membatal atau meneruskan Projek LCS ini.
Dalam hal ini, setelah membuat kajian mendalam ke atas semua aspek projek ini, Jemaah Menteri mendapati ada lebih banyak kebaikan dan keuntungan yang akan diperolehi oleh Kerajaan dan
rakyat dengan meneruskan projek ini.

Kerajaan sudahpun membelanjakan sebanyak RM6 billion dan jika ia dihentikan, wang ini mungkin tidak dapat dikembalikan sepenuhnya, malah Kerajaan perlu mengeluarkan wang yang lebih banyak untuk melantik kontraktor baharu. Kesemua ini akan memakan masa yang panjang dan projek ini akan menjadi lebih lewat untuk disiapkan, dan ini boleh menjejaskan kesiapsiagaan pertahanan laut negara.
Keputusan ini adalah keputusan yang bersifat menang-menang untuk Kerajaan, TLDM, Lembaga Tabung ngkatan Tentera (LTAT), Kumpulan Boustead dan vendor-vendor ekosistem pertahanan tempatan.
Keputusan Kerajaan untuk meneruskan projek LCS ini bukan sahaja akan menyelamatkan 8,000 orang pekerja malah ratusan vendor dan kontraktor tempatan.
Pihak Boustead telah mengemukakan sebuah pelan perancangan yang teliti pada awal tahun ini untuk meneruskan Projek LCS yang mencerminkan kesungguhan dan komitmen mereka untuk
menyiapkannya. Sehubungan dengan itu, pihak Jemaah Menteri telah bersetuju secara dasarnya untuk pihak Boustead meneruskan projek ini.
Langkah seterusnya adalah pihak Kerajaan akan memaklumkan secara rasmi kepada pihak Boustead mengenai keputusan ini beserta dengan pelan perlaksanaan projek tersebut. Rekabentuk terperinci
atau detailed design LCS ini sudah siap 96% dan dijangka siap sepenuhnya pada penghujung tahun 2022. Naval Group masih lagi bekerjasama dengan Boustead untuk menyiapkan projek ini.

Hakikat sebenar, apa yang dihadapi oleh TLDM, LTAT dan Boustead adalah dimulakan oleh kerajaan Pakatan Harapan khususnya Mohamad Sabu dan Bekas Menteri Kewangan Lim Guan Eng. Selepas
Pakatan Harapan mengambil alih pucuk pimpinan negara, selama 22 bulan projek ini hilang hala tuju dan segala kerja terhenti kerana hanya dipenuhi dengan siasatan.

Akibat kegagalan kerajaan terdahulu membuat keputusan yang tidak cekap pada tahun 2018, ia telah mencetuskan kemelut baharu iaitu peningkatan kerugian dalam korporat Boustead ekoran penangguhan kepada vendor-vendor Bumiputera dan juga tenaga kerja.
Bukan itu sahaja, kerugian RM50 juta setiap bulan akibat penangguhan ini juga memberi kesan buruk kepada tabung LTAT dan 130 ribu pencarumnya. Kelemahan dan kegagalan Bekas Menteri
Pertahanan untuk melihat impak jangka panjang inilah yang telah mengakibatkan apa yag terjadi sekarang ini.
Ketika Pakatan Harapan memerintah, Boustead Naval Shipyard Sdn Bhd (BNS) telah memohon kelulusan ketiga-tiga ‘variation order’. Pada Februari 2018 pula, BNS telah membuat tawaran kepada
Kerajaan ketika itu untuk menyerap kerugian sebanyak RM400 juta supaya Projek LCS ini dapat diteruskan tapi tiada keputusan diperolehi.
Pada Januari 2019, MINDEF telah bersetuju dengan permohonan ketiga tiga ‘variation order’ tersebut tetapi bergantung kepada keputusan akhir oleh Kementerian Kewangan. Namun tiada sebarang kata putus daripada Kementerian Kewangan. Kegagalan untuk mendapat kata putus mengenai ketiga-tiga ‘variation order’ ini telah menjejas teruk perkembangan kerja-kerja bahagian pembinaan kapal yang lain. Pada November 2019, OEM telah menghentikan kerja kerja pembinaan kapal kerana BNS menghadapai masalah aliran tunai.
Kenyataan Mohamad Sabu dalam hal ini dilihat hanyalah satu provokasi politik dan menyerlahkan ketidakmatangan beliau dalam memberi hujah cara menangani isu LCS.
Punca permasalahan LCS adalah daripada tindakan kerajaan Pakatan Harapan yang gagal memberi sebarang keputusan pasa masa itu. Ini mencetuskan masalah baru bagi syarikat korporat serta projek LCS yang sedia ada.
Berkaitan status dana RM1 bilion yang dikatakan hilang pula, Suruhanjaya Pencegahan Rasuah (SPRM) telah memaklumkan kepada kerajaan bahawa perkara ini masih dalam siasatan dan Kementerian tidak campur tangan dalam siasatan tersebut. Perkara ini boleh diajukan kepada pihak SPRM untuk mendapatkan perkembangan terkini.

YB DATUK SERI ISMAIL SABRI YAAKOB
MENTERI KANAN PERTAHANAN
11 Mei 202

Lacroix Defense Sylena Decoy system. Lacroix Defense

It is interesting to note that Malaysian Defence had also pointed out the lack of reference to the RMN in the announcement of the resumption of the project. Anyhow, the minister had also failed to outline the conditions imposed to BNS apart from saying that the company had already made its proposal to the ministry which led to the approval. So I am guessing that there will be an increase in cost as what had been reported before.
Boustead executive chairman TS Ramlan Ali (centre) greeting Defence Minister DS Ismail Sabri when the latter visited the BNS yard in November 2020 to check on the LCS project. The LCS hull in the background looked appeared to be fitted with the propellers but without the rudder. I am guessing that this is the second hull as it does not have water marks on it. Kementerian Pertahanan picture.

It is also interesting to note that nothing in the statement referred to any technical reasons for the delays which I had covered previously in this post.

BNS cannot complete the project without the money it is asking and thats been the case for the last 32 months. Yes you heard about the technical issues with the ships – with people claiming its either RMN or BNS fault – but its really about the money. If they – BNS – got the money they are asking for of course, the technical issues could be resolved. Yes, its that simple, really. Will the extra allocation being asked will go higher than the RM9 billion ceiling price? Of course it will be, that’s the reason the current and previous governments are/were holding up the funds.

Maharaja Lela was sprayed with sea water as part of the launch gimmick. This was the closest she got to the sea.

As for the three variation orders mentioned in the statement, I am aware of them but since it has not been made public I am holding on to it as there are many people out there reading this. That said one of them is this thing. The VOs which have cost issues -integration costs etc – as I was told that BNS did not have experienced people when negotiating the contract with its subcontractors. As for how much the project will cost us, my guess is as good as yours.

— Malaysian Defence

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Shah Alam

16 Comments

  1. The interests of the services and the taxpayer must always take precedence over the needs of the local industry. Unfortunately this hasn’t been the case for a very long time …

    BNS had the leeway to dictate various things; including various components and systems for the LCS. If the esteemed Defence Minister holds in to his post for a long period; I’d like to see how other procurement programmers are handled under him.

  2. Marhalim,
    This proposed three variants is to strip the ships capabilities/functions in order to reduce total production cost?
    And yes, would definitely reaffirm the minister two press releases if outline conditions imposed on BNS were make known and when money actually being channel back to the project.

    Reply
    If it was to reduce cost of course PH government would have sign it off. It is just to replace things that RMN did not want. One had to be replaced as it is no longer produced

  3. Enough talk and pointing fingers..Lets get to work…Is it possible to add asw rocketlauncher (Like rocketsan’s or bofor’s) on our LCS to make it more Asw-esque?..And of course a full fledge asw helicopter are needed to board our LCS..Really loves that decoy launcer look btw..

  4. Firdaus – “Enough talk and pointing fingers..Lets get to work”

    That kind of attitude is exactly why we keep repeating our cock ups …. We have to identify what went wrong and make sure it doesn’t reoccur

    Firsaus – “possible to add asw rocketlauncher (Like rocketsan’s or bofor’s) on our LCS to make it more Asw”

    You can answer the question yourself. Look at the design and tell me where the free deck space is . Also, a rocket system is great under certain operational conditions but it has penalties ..

    You will have noticed why most navies have done away with them. The Swedes still mountain them for littoral ops and the Russians still have the RBU series for deep water and littoral ops but most other navies (including us) have gone away with them.

  5. Marhalim, what things RMN does not want in Gowind? Mind clarifying? All specs look decent to us.

    Reply
    Originally they don’t want the Gowind so that’s that.

  6. Kamal – “All specs look decent to us.”

    Many things are “decent” – in fact the LCS is high spec when it comes to the components/ sub systems selected (just like the AV-8). The RMN originally wanted Tacticos for commonality with the Kasturis. It was BNS who decided (for its own reasons) the Bofors and the Rhrinmetall/Contraves directors.

  7. Actually what the navy want?

    Reply
    The Sigma light frigate like the ones bought built by Indonesia

  8. “Originally they don’t want the Gowind so that’s that.”
    Originally they wanted corvette sized Gowind or Sigma which is quite shortsighted imho, as we seen thru the escalation with China today, a larger ship such as LCS would be less of a pushover. The only fault would be going for an enlarged Gowind corvette rather than the far more deadly Formidable class of similar size.

  9. And what the politicians wants actually?

    Reply
    Anything that further their goals to be in power as long as possible

  10. A very very bad buy. GLCs should not be allowed to get away like this.
    Its money not well spent. Boustead signed a fixed price contract. By hook or crook must complete the project.
    Last time we should save Boustead n LTAT.
    Second ship project that got hit. Never build anymore ships locally. No benefit to the country at all

    Reply
    This was the first time, Lee. BNS was set up to rescue the Kedah class. It should not be blame for the problems with that project. I am not absolving BNS with the LCS project but clearly we must differentiate between the two.

  11. Like Gowind; the Sigma design offers customers a basic design ranging from a corvette to a frigate. The RMN’s requirements called for a frigate sized vessel with about a 2,500 to 3,000 full displacement .

    The distinction between a corvette and a frigate is easily blurred; what one navy calls a “frigate” could in another navy be a “corvette”. People tend to put to much emphasis on the actual designation. To all intents and purposes the LCS meets the criteria if a “frigate” and is seen so as such by the RMN. The reasons the Sigma was the RMN’s preferred choice could be due to actual pricing; growth potential and issues related to its actual design.

    In this day and age; the actual displacement/size of a surface combatant is secondary to its ability to work in unison alongside other assets: whether sea or air; manned or unmanned; as part of a fully networked environment. Each asset fully supplementing each other; each fully maximising and minimising respective strengths and weaknesses.

    Reply
    It must be noted that when the design was being looked at the Sigma was the more mature one compared to the Gowind which was a paper ship at that point. Furthermore it was during the time when relationship between RMN and Naval Group (DCNS) was at a breaking point due to issues with the first submarine.

  12. @Far de Man
    Am quite sure you should realise that politicians – ALL politicians – don’t really serve the people’s interest unless it aligns with that politician’s goals. All those talk about mandate rakyat, fighting for the people, serving them, helping the country, etc is all BS, the No1 person they serve is their selves.

    We’re in this mess bcoz BN politicians hid the true cost of this project, PH politicians were clueless and drop the ball, & PN politicians have only just refocused on this recently. Rather than focus on the issue, all 3 prefers to start the mudslinging firstly.

    So which politician now will come and ‘save’ us, I ask?

  13. Since political situation right are already mess up by the politician, people are suffer….. nobody will save us… Until someone would bring the changes…but the question is When?

  14. Selamat Hari Raya to all.
    On a related note, since we are all in agreement about avoiding another cock-up, the powers that be should avoid another fiasco with the LIFT cum LCA buy. Last I heard, the funding is approved. Please correct me if I am wrong. Interestingly, Nigeria is said to get 24 Leonardo M346FAs soon for US$1.2 billion, to replace their Alphajets.

  15. Far – “1but the question is When”

    Actually the questions are “who” and “how”; as well as whether society as a whole is ready and willing to make and accept the needed fundamental changes …

  16. @Far de Man
    The question that people should ask is not ‘Who’ or ‘When’ but ‘How’. How is the supposedly saviour gonna be saving the country, what is their plan, and what assurance do we have from them that it would be carried out as promised.

    We got had by snake oil salesmen promising cures for the country and turned out to be false Hope because we never scrutinise the plan, we never held them accountable to their promises and we’d never punish them for breaking it. Let us try not be so gullible a 2nd time.

    It doesn’t matter whether its BN, or PH or PN. All of them shouldn’t be trusted unless either of them comes out with the right solution and the honesty to carry them out.

    @Taib
    The only way to know if another cockup didn’t happen is to see the reasoning for the type of LCA plane buy.

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