Show Me The Money

SHAH ALAM: Show me the money. Defence Minister DS Ismail Sabri visited the Lumut naval base on Nov.15 where he spend some time being briefed on the RMN activities there apart from visiting the various navy units headquartered there. He also visited the Boustead Naval Shipyard Sdn Bhd, located adjacent to the naval base and Gading Marine Shipyard Sdn Bhd facility, also located in Lumut.

This is what the ministry’s post had to say about the BNS visit.

Seterusnya, beliau bersama delegasi telah dibawa ke Boustead Naval Shipyard Sdn. Bhd (BNSSB) untuk melihat dan meninjau perkembangan Kapal Littoral Combat Ship (LCS) serta beberapa kapal LCS lain.

Ismail arriving at the yard to check on the LCS project. The 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.

Which is basically nothing really, even though the LCS is the biggest elephant in the room. The minister also did not touched on the project on his interview on Bernama regarding the budget. Perhaps it was not his fault as the interviewer had asked specifically on the MD530G helicopters instead of the elephant in the room. That said, it may well be the only thing that the officials had given the greenlight for the interviewer to ask the minister. My friend had this to say about the minister “Ismail Sabri had done nothing wrong so far as the defence minister as he had not done thing really.

Ismail at BNS getting the briefing on the LCS project. Kementerian Pertahanan.

Anyhow what this got to do with the title anyway? It is simple really. As you are aware BNS needs money to complete the project – some RM3 billion to complete the first two ships and another RM3 billion for the other four, according to this report.

Ismail at the Gading Marine facility also in Lumut where the new RMN FIC are being built.

Ismail had already said the ministry was waiting the decision from the Cabinet on whether or not to continue with the project. From this reports, we already know the reasons behind the delays into the project, its the money or the lack of it.

A close up of Maharaja Lela at the BNS yard in Lumut taken in 2018.

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.

— Malaysian Defence

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64 Responses to "Show Me The Money"

A says:

November 16, 2020 at 4:09 pm

Seperti yang kita tahu harga siling projek ni ialah RM9 bilion. Saya agak keliru disini dan harap ada pencerahan.

Berdasarkan apa yang saya baca di post ni BNS perlukan lagi tambahan RM6 bilion (3+3) untuk lengkapkan keenam-enam LCS.

Adakah tambahan RM6 bilion (3+3) ni termasuk dalam harga siling kontrak RM9 bilion atau di luar harga siling kontrak?

Last saya baca kerajaan dah bayar RM6 bilion jadi jika BNS perlukan lagi RM3 bilion ia masih dalam klausa kontrak kan untuk total RM9 bilion?

Cuma tambahan lagi RM3 bilion untuk next 4 LCS barulah di luar harga siling kontrak.

Reply
Yes all extra funds being asked by BNS will go above the RM9 billion ceiling allocation. I don’t have the breakdown of which will break the ceiling but it will as I said in a previous post long ago
Firdaus says:

November 16, 2020 at 4:17 pm

My my so technically 12 bill for 6 ship..easy money for them..considering 1bill goes kapush without a trace..6 bill already paid..3 bill more to complete the first 2 and additional 3 bill to complete the rest ..12 billion! 2 billion per ship..wow just wow
... says:

November 16, 2020 at 4:54 pm

its just elementary calculations really.

in 2015 USD2.8 billion equals to RM9 billion.

but now in 2020 USD2.8 billion equals to RM11.8 billion.

That is why more money is needed.

Want those gowinds? we need to stump out those extra RM3 billion ringgit. If not, we need to have plan B for 6 new frigates of different type than the gowinds for less than the RM6 billion additional cost.
mofaz says:

November 16, 2020 at 5:17 pm

Is it because we delayed the purchase of the sub systems due to technical issue or monetary issue and since 2015 the Ringgit depreciated so much that those systems have basically triple the original price .. so the fault not entirely Boustead’s …

Reply
Yes and no, BNS, RMN and Mindef were working on the assumption of business as usual, that was disrupted by the 2018 general elections
Taib says:

November 16, 2020 at 7:08 pm

Alternative buy…buy more drones including flying munitions. Ships are sitting ducks anyway
... says:

November 16, 2020 at 7:16 pm

How to move forward with our frigate requirements

2 options from me

Option A

Option A RMK12 2021-2025 (USD2.0 billion)
6x Gowind SGPV LCS USD1400 mil (this is additional money in addition to RM6 billion already paid for to complete all 6 Gowinds)
2x MRSS USD300 mil (Based on RORO 2700 design. basic roro cost Eur55.5 mil)
16x FIC USD50 mil
8x NGLMS USD200 mil (based on damen FCS 5509)
3x Offshore OSV USD40 mil (used 80-90m length – MCM, survey, salvage, PASKAL support, as auxillary ship)

Option A RMK13 2026-2030 (USD2.0 billion)
3x Gowind SGPV LCS USD1200 mil (gowind no 7, 8, and 9)
1x Scorpene USD500 mil (Scorpene no 3)
10x NGLMS USD200 mil (based on damen FCS 5509)
1x Autonomous MCM system USD60 mil

____________________________________________________

Option B

Option B RMK12 2021-2025 (USD2.0 billion)
6x Hyundai HDF-2600M USD800 mil (plus all components from gowind project)
2x MRSS USD300 mil (Based on RORO 2700 design. basic roro cost Eur55.5 mil)
16x FIC USD50 mil
5x EC225LP USD60 mil (used – maritime utility helicopter)
4x Lynx ASW upgrades USD120 mil (2 additional used + 2 conversion from existing TLDM units)
2x AS355NP USD5 mil (used – utility and PASKAL support)
8x NGLMS USD200 mil (based on damen FCS 5509)
2x Autonomous MCM system USD120 mil
3x Offshore OSV USD40 mil (used 80-90m length – MCM, survey, salvage, PASKAL support, as auxillary ship)
2x Support tanker USD180 mil (Brand new Malaysia, STM Turkey NFM 158m design. BM5 BM6 replacement, as auxillary ship)

Option B RMK13 2026-2030 (USD2.0 billion)
6x Hyundai HDF-2600M USD1000 mil
1x Scorpene USD500 mil Scorpene no.3
10x NGLMS USD200 mil (based on damen FCS 5509)
2x Autonomous MCM system USD120 mil
16x FIC USD50 mil
2x Floating base USD40 mil (used – tanker ship conversion semisubmersible, as auxillary ship)
1x Heavilift RORO USD10 mil (used – additional transport – as auxillary ship)

_________________________________________

I personally prefer option B
... says:

November 16, 2020 at 7:28 pm

@ taib

” Ships are sitting ducks anyway ”

Why i always say of just for patrol, buy patrol ships for MMEA that costs less than LMS or what not.

to be able to strike back in a conflict, underwater assets would be much more survivable than surface ones.
Ed Liew says:

November 16, 2020 at 7:47 pm

So true to the words then, money make the wok go round 😅 Curious to know if those earlier payment ever reflected in any of the Audit General report? Personally I would prefer the government to end this “saga”, pay up, get all the 6 ships deliver and follow up with an investigation, which as always, will not find the reason or culprit behind this. 😂 Anyway, we’re used to paying premium price for our military procurement.
KL says:

November 16, 2020 at 8:22 pm

RM3 billion to complete 2 hulls and RM3 billion to complete the remainder 4 hulls. BNS smoking some serious pot or pulling a fast one. The first 2 hulls which are ready costs the same as 4 uncompleted hulls of which 3 are not even in existence. BNS is just making up numbers.

Paying RM6 billion or approximately USD1.43 billion without commitments from the shipyard they will get it done this time is wasteful.

Take the money and upgrade the NGPV, or go to Indonesia and contract them to build the Martadinata class frigates.

Or get more LMS. At the rate of progress, the Chinese would have constructed 6 more LMS before the first LCS ever sets sail.
fadiman says:

November 16, 2020 at 9:01 pm

This figures last time includes sub system, weapons and everything or what? Why every time involved in this projects alway in trouble…
... says:

November 16, 2020 at 9:03 pm

@ ed liew, KL

There is no culprit, no pulling a fast one.

Because of the procrastination to cough up the money on time, the exchange rate of malaysian ringgit to US dollar has significantly changed.

In 2015, USD2.8 billion equals to RM9 billion. Now in 2020 the same USD2.8 billion now equals to RM11.8 billion. Add up all the costs due to delays, that is what the money we need to cough up. So we have paid RM6 billion, to get to RM11.8 billion is around the RM6 billion that we need to put into the project. In all the Gowinds still cost USD2.8 billion, whatever the amount is in RM.

Upgrading the NGPV, or buying more of the expensive LMS, does not solve and can replace what the gowinds can and supposed to do.
ZekMR says:

November 16, 2020 at 10:28 pm

Cost overrun
Azlan says:

November 17, 2020 at 12:33 am

Taib – “Alternative buy…buy more drones including flying munitions”

This is like saying : don’t buy don’t buy a rifle; buy a GPMG. Different things are suited for different things. If one really looks at what a surface unit is intended to do in war and peacetime; how could a “drone” or “loitering munitions” (now a cliche due to events in the Caucasus but nothing new) be an “alternative buy”?

Taib – “Ships are sitting ducks anyway”

Without an adequate/efficient air umbrella everything and anything is a “sitting duck” ….

Nothing should operate by its own or punch above its weight category; whether a sub, LMS, corvette or destroyer. Even a destroyer with a 32 cell VLS can be a “sitting duck” if misused or placed in the wrong place.

Underwater assets by virtue of being underwater are more survivable but even they have to operate with other assets and can’t be misused or placed in an unfavourable situation.

Not only that but others also have subs and also understand the strengths and vulnerabilities of SSKs; plus can also deploy strong surface and air ASW units which can severely degrade the ability of a sub to perform. As clearly shown in both world wars and other conflicts; one doesn’t necessarily have to physically destroy a sub but merely deny it the ability to perform ….
Ed Liew says:

November 17, 2020 at 2:23 am

… Well this make some sense. But why is it so hard for 3 governments to make this clear to everyone and get the fund out rather than prolonging this? Of course this is only the layman me looking at it in a simpler term. 😅

Reply
BN government was voted out before they would agree to the extra money. PH government wanted to reduce the contract prices signed by BN see the Nexter 105mm guns and even LMS. Their target was 10 per cent across the board even with civil contracts. Imagine the reaction from the PH government when BNS came to them with the bill which offered no discount but an increase of maybe 40 per cent and a bill of RM3 billion to be paid ASAP! As for PN, its still early in the day to think about ponying up RM3 billion with another RM3 billion or more during a pandemic and an economic recession. I think it was still WTF response from the PH team
KL says:

November 17, 2020 at 7:47 am

The extra funds is not due to FX differences and delayed funding. If the shipyard was on schedule then the FX is a non issue. RMN needs real ships not hypothetical ‘maybe completed’ ships. At the rate things are going does anyone believe the LCS will be delivered by 2025? And given the NGPV track record, most likely the weapons will be downgraded if the program proceeds. By the time the ships are ready they will be outdated. So why bother? This isn’t about ‘we’ve spent a lot therefore we can’t quit now. Its about cutting losses and not repeating the NGPV debacle.
Taib says:

November 17, 2020 at 8:41 am

I have to agree (reluctantly) that cost overrun and exchange rate over the last few years do play a part in making our Gowind ships perhaps the most expensive ships in its class. But it doesn’t excuse then politicians from BN and PH from their follies. I also believe the events of the last 2 weeks that saw the annihilation of the Armenian forces saw how lopsided wars can be if we sit and remain satisfied with our former political and military might. I see drones becoming a major part of Malaysian deterrence as we try and balance our puny budget and defences against regional bullies like China. We may not even need more ships nor extra planes if we have the right drones and personnel flying them. I love to have flying munitions loitering in our EEZ skies policing and enforcing our sovereign right to keep our borders safe. And please, no more inept indecisions and procrastinations. If we need to change tact, do so. Buy all the Ankas and TB2s that we need to do this. I read it took the Azerbaijanis just over 3 months from June to August of this year to master the Bayraktars before going to war with Armenia! Incredible. No shame in joining late to the game than being shown up to be the classic buffoons that we are in our stumbling efforts to keep up buying the latest ships and warplanes with our neighbors.
... says:

November 17, 2020 at 9:49 am

Hmmm….

http://scontent.fkul14-1.fna.fbcdn.net/v/t1.0-9/125238851_2749261922013292_1960537073025091666_n.jpg?_nc_cat=104&ccb=2&_nc_sid=dbeb18&_nc_ohc=vofQQMe1Gi4AX8KACMN&_nc_ht=scontent.fkul14-1.fna&oh=f0902b758e6e78aef3d156af65e17742&oe=5FD7481B

Any more news on this from our sarawak commenter ASM and others?
ASM says:

November 17, 2020 at 10:43 am

@….

Nope i’ve more or less forgotten about this haha….got other pressing things to think about at the moment.
But say if the Navy doesn’t want its LMS anymore I propose the S’wak gov to buy them (discount a bit la…used item hehe)

“So why bother? This isn’t about ‘we’ve spent a lot therefore we can’t quit now. Its about cutting losses and not repeating the NGPV debacle.”

The thing is the Navy needs those ships badly as it does not have enough hulls for operations. If the LCS is “nice to have” item and not critical then yes, writing them off is more beneficial. If the Navy doesn’t get the LCS it’s unlikely the gov present or future would be willing to fund another batch of similar ships, and that would have a big impact on the Navy’s fleet operations.
ASM says:

November 17, 2020 at 10:59 am

Say if the Navy decides to reboot the LCS program and gov approves (wishful thinking, I know), they should really go for the Sigma design. And sell off those hulls to Egypt maybe?
... says:

November 17, 2020 at 11:10 am

@ ASM

Sarawak government to buy LMS? Please remember the behind the grandiose name of Sarawak Coast Guard, it has only jurisdiction in law for fisheries related enforcement, nothing more. It is just equivalent to Jabatan Perikanan enforcement boats.

” If the LCS is “nice to have” item and not critical then yes ”

Priority is relative, to me it is a critical capability to have to be able to track foreign submarines with the LCS. Probably not to others.
... says:

November 17, 2020 at 11:33 am

@ ASM

” Say if the Navy decides to reboot the LCS program and gov approves (wishful thinking, I know), they should really go for the Sigma design. And sell off those hulls to Egypt maybe? ”

I would prefer the HDF-2600 rather than the SIGMA. I dont like the SIGMA whole hull length central corridor, not great for battle damage.

Egypt, UAE would be a suitable buyer for our uncompleted gowind hulls.
Taib says:

November 17, 2020 at 11:38 am

@ Azlan
I also don’t see a GPMG replacing rifles wholesale. I still see the traditional concept of making war always revolves around the superior tactics, training a body of men receives and the technology that they possess. But possessing drones that does reconnoitring survey work and ordnance delivery can be seen as a vital short cut or force multiplier for forces like ours lacking ships and warplanes. Drones are changing how 21st century battles are fought. It can make or break a war. In the last part of the 19th century, the outcome of the Battle of Omdurman would have lasted much longer if the British empire forces didn’t have machine guns that chewed up the Madhists. Unequal fight leading to a massacre.
ASM says:

November 17, 2020 at 12:32 pm

@…

It was a joke. No point getting worked up whether it’s Coast guard or jabatan Perikanan. Also they can expand the jurisdiction of the agency if needed to, in any case nothing is set in stone yet.

But if the Navy really decides to get rid of the LMS in the future the S’wak gov should consider buying it, demilitarised the vessel and use it for long endurance patrols. At least the Navy can get some cash back
KL says:

November 17, 2020 at 1:05 pm

I think the point is not whether its critical. Its whether the ship exists. What is it tracking and deterring without weapons, propulsion, sensors, and stuck in the shipyard?

Keep pouring limited funding into a black hole, and watch how LCS becomes a glorified gun boat just like the NGPV, or take the RM6 billion and get a real ship. Not ships that seem to be perpetually under construction, and doesn’t look likely to be ready by 2025.
... says:

November 17, 2020 at 1:44 pm

@ ASM

” But if the Navy really decides to get rid of the LMS in the future the S’wak gov should consider buying it, demilitarised the vessel and use it for long endurance patrols ”

IMO better give the LMS to MMEA to use in semenanjung. You wouldnt want to use chinese built PV against chinese coast guard do you?
ASM says:

November 17, 2020 at 2:03 pm

The ships exist. The point of contention is whether to spend more to get 6 ships or just up to the ceiling price (RM9 billion) to complete the 2-3.

What I was trying to say was the Navy needs those ships because it doesn’t have enough vessels in its fleet. Chances of the gov rebooting the LCS is close to nil, and if the current LCS is canceled then the Navy has to soldier on with aging ships which are already difficult to maintain and pose a safety risk to the crews.
joe says:

November 17, 2020 at 3:20 pm

I don’t fully buy the issue that Forex was the main cause of this FUBAR. Wasn’t the cut steel have been pre-bought from the start? We already have progress so far ahead until keel LCS5 has been laid up so if the excuse on cost of steel have went up, that doesn’t look to be the case.

And what about the equipment & armaments? AFAIK those were bought by the Government so that cost doesn’t go into BNS account either.

BUT if Forex WERE THE CAUSE of funding shortages, we can’t really do anything much can we? And restarting from scratch will lead us to the same problems if our Ringgit goes further south. Again it comes back to my point awhile go, if we could not strengthen our economy and Ringgit currency, we will always be spending more for the same things in relative to more richer nations. Us spending RM 1Bil won’t get us the same capability as another spending SGD $1Bil.

Reply
Who said it was Forex?
... says:

November 17, 2020 at 3:26 pm

@ ASM

yes those ships exist in various stages of completion.

We just need to own up that RM9 billion in 2020 does not stretch to USD2.8 billion like in 2015. Whatever it is, the government has to chalk up the RM6 billion to complete all 6 gowinds, and that is the minimum without any other problems that could add to the costs.

By delaying the LMS, and getting overpriced LMS, its not getting TLDM and malaysia any increase in overall capability. I would look seriously into just forgetting about the gowind, and get a frigate built by competent foreign shipyard to quickly get our 6 ASW frigates in a short timeframe. Batch 2 of the same frigates can be then looked at to be built in malaysia.

Instead of stumping at least RM6 billion more to complete the gowinds, asking korea to build 6 HDF-2600 frigates instead and putting all the hardware (guns, radars, sonars, FCS, missiles etc) into those frigates that has been bought for the gowinds, would probably cost less than RM3.5 billion all in. The HDF-2600 for Philippines cost just around RM700 million each, and that price includes the guns, FCS and radars. Minus that as we already bought those for the gowinds, my projected RM3.5 billion cost is achievable.

http://www.navalnews.com/wp-content/uploads/2019/05/HHI-Launched-the-Jose-Rizal-Frigate-for-the-Philippines-Navy-2.jpg

http://www.navalnews.com/wp-content/uploads/2019/05/HHI-Launched-the-Jose-Rizal-Frigate-for-the-Philippines-Navy-3.jpg
Just look at the quick timeline of the frigate from signing to delivery.
... says:

November 17, 2020 at 5:49 pm

@ marhalim

” Who said it was Forex? ”

The root cause for all of this predicament in the beginning is not forex of course.

But the money needed now in ringgit malaysia to get the final USD2.8 billion cost plus all the costs of the delays and changes is clearly affected by the current exchange rate.
joe says:

November 17, 2020 at 6:46 pm

“Who said it was Forex?”
I did say “I don’t fully buy the issue that Forex was the main cause..” but to some, it is a valid reason hence “BUT if Forex WERE THE CAUSE of funding shortages…” If the reason was that simple, it is something we cannot control (who can predict what’s the Forex rate in 4-5 years time?), however most multi-year project budgets would account for Forex changes, otherwise how come other multi-billion RM projects like MRT1 completed on time & budget and MRT2 is progressing smoothly again?
Luqman says:

November 18, 2020 at 9:58 am

@…
“in 2015 USD2.8 billion equals to RM9 billion. but now in 2020 USD2.8 billion equals to RM11.8 billion.”

I have said the same thing before in one of the previous posts. RM in 2020 is weaker than in 2011 (the year contract was awarded). We buy stuff in USD not RM.

That being said RM value is not the sole contributor to the increase in price as we did buy some stuff before 2015 like the 57mm guns, radar, and TAS though in undisclosed quantities. There also the issue of lack of talent and redesigns throughout the construction.

As for getting Korean frigates, what will happen to the LCS hulls already build? Can it be scrapped and be built for other ships? If we did complete the first 2 LCS and then add 6 Korean frigates, will RMN accept it?

Reply
Again I have to reiterate Forex is not an issue with the problems with the LCS
FIRDAUS says:

November 18, 2020 at 12:40 pm

Lets just wait for govt decision regarding this LCS fiasco..It could go either way..50-50 but more likely to continue..And for their sake, i do hope BNS will not mess it up this time..
... says:

November 18, 2020 at 12:40 pm

@ luqman

” As for getting Korean frigates, what will happen to the LCS hulls already build? ”

We can sell them off. Even scrapping would be much more cheaper overall together with new korean frigates, instead of completing the 6 gowinds. Surely not the best outcome, but certainly the least costly to move forward to get 6 frigates for the navy.

@ marhalim

” Again I have to reiterate Forex is not an issue ”

Then spare us the waiting by enlightening us with the actual issue.
Taib says:

November 18, 2020 at 1:20 pm

Just for interests’ sake, what is the BEST current prevailing position on the LCS? Is the LCS project salvageable, or do we just stop the entire thingy and bkuy something somewhat cheaper whilst retaining the same specs? What’s the best view here?

Reply
Its salvageable but more money is needed of course
Chua says:

November 18, 2020 at 2:29 pm

Forex should not be the cause since money market hedging could have been carried out to lock in the costs at the historical prices as each payment comes due.

Or in simple terms: payments in 2016 would be converted in 2016, 2017 in 2017, etc. Hence the effect of ringgit devaluation would not be as sharp as suggested here.

IF hedging was not carried out then yes it would be a problem, but then the question becomes… why wasn’t hedging performed? I can think of only 1 legitimate reason why; the payments were not made.

But we know they were… or so it is claimed… unless they weren’t…
joe says:

November 18, 2020 at 3:15 pm

@Chua
IF hedging wasn’t done, that is a failure of the project team to do due diligence. Again it falls back onto BNS mismanagement. BNS can spin all they want, the buck stops at their front door.

Now coming back to the cost for completion. There is still RM 3Bil in the budget and it needs another 3Bil to complete all 6 ships. That puts it at 33% cost overrun.

Putting that into perspective, the Brit QE2 carriers had initially budgeted at UK 4Bil for 2 ships and the final cost was UK 7.6Bil putting it at 47% cost overrun.

So in that view, the cost overrun for LCS is not too unreasonable and something we could stomach to complete these ships. IMHO, pay the extra RM 3Bil and get these ships done by hook or by crook. Then look towards getting back penalty damages from BNS. If it bankrupts Boustead then so be it.

Reply
Boustead is state owned
... says:

November 18, 2020 at 3:52 pm

@ Taib

Best current prevailing position? Depends if we can afford to pay up at least RM6 billion for the 6 Gowinds (for a total of at least RM12 billion).

The issue is, even if we do pay up the needed additional RM6 billion to salvage the Gowind project, we are still not sure when it can be delivered, or be sure that there is no further problems with the project.

Going for my proposed plan to buy 6 HDF-2600 frigates instead. Yes it will be a very radical plan. Probably the HDF-2600 frigates will be around 10% less capable than the Gowinds (speed, range etc). But we can be sure that we will get our 6 Frigates on time. And the money needed to be spent will be less (nearly 50% less) than the money needed to complete all 6 Gowinds.

Then we need to think about what to do with the uncompleted Gowinds, and if any money could be salvaged from those hulls.

There is an idea that I thought of this afternoon.

What if we give all of the Gowind project back to Naval Group (minus all the Government Furnished Equipment GFE like the guns, torpedoes, NSM missiles, SMART-S radars, TMX/EO, TMEO, Captas-2, Vigile ESM etc) in exchange for a single Scorpene submarine? 1 Scorpene is about USD450 million. Then Naval Group can complete and sell those Gowinds on to any 3rd party that they deem fit.

So we scrap the Gowind project in exchange of a single Scorpene, and spend additional RM3.5 billion to get 6 HDF-2600 Frigates (total spend of RM9.5 billion)

A loss of money for sure, but much better than just 6 Gowinds for more than RM12 billion
... says:

November 18, 2020 at 4:08 pm

or the worse case scenario, just 2-3 Gowinds for RM9 billion.

Is there is any better plans from anyone here? Lets hear them.
AM says:

November 18, 2020 at 4:08 pm

@…

The sums sought by BNS – the undisbursed RM 3 billion of the original RM 9 billion allocated, plus an additional RM 3 billion – all appear to be 2020 ringgits.

So KL has a point- they are asking for the same amount of money to complete the first two hulls, as they are asking for to complete four far less complete hulls.

Quote from the Edge report “Boustead Holdings is looking at the remainder RM3 billion to complete at least two ships, and a further RM3 billion to complete the entire project,” a source familiar with the matter tells The Edge.”

I understand these are the sums BNS wants for its share of the work and that they do not include the cost of government furnished equipment. That will cost us extra, separately.
Chua says:

November 18, 2020 at 4:48 pm

@joe
Disclaimer; I’m just addressing the theory of forex being the sole culprit. I believe it is unlikely to cause such a major difference all by itself, so a combination of factors – including mismanagement – should be the answer.
romeo says:

November 18, 2020 at 5:02 pm

Let’s do the math

Pay only RM 3B for 2 LCS. The cost is RM4.5B/each

Pay RM 6B for 6 LCS. The cost is RM 2B/each

The latter is the better one. Best of the worst.
Mohd Haziq says:

November 18, 2020 at 5:39 pm

Hi all. The main reason is that the Government did not pay on time to BNS, no money. Not the company problem despite trying to accomodate government request for this and that. I am working in BNS so please dont write something that is hurtful to me. 🙁
... says:

November 18, 2020 at 7:30 pm

so the truth is just somewhere in there

government no money to pay/trying to delay the payment

delays caused by changes after changes to the design by VOs

PRU14

mat sabu

etc

etc

What we do know is that, the government still has no money to move this forward and TLDM still has not received any Frigates that it need.
Melayu Ketinggalan says:

November 19, 2020 at 2:59 am

Hi Marhalim et al,

Can any of you enlighten me regarding the specific ops differences between PASKAL, UNGERIN and STAR? Since all 3 operate in maritime/open waters.

Danke.

Reply
Paskal is a military unit while Ungerin and Star are both part of separate law enforcement agencies.
AM says:

November 19, 2020 at 3:28 am

Mohd Haziq “Not the company problem despite trying to accomodate government request for this and that.”

This is not credible. Considering that the end user had so little say in laying down the specs, it is hard to believe that suddenly they are allowed to demand changes to the point that it is causing delays to receiving their ships.
FIRDAUS says:

November 19, 2020 at 9:19 am

Its pretty much salvagable but the main concern here is whether BNS can finish all 6 ships even after govt pump another 6 billions for them..If their claim is true that most of the fund already paid for them already put in use to buy all critical equipments for all 6 ship then its understandable that they now demand follow on payment to complete the hulls..
joe says:

November 19, 2020 at 9:27 am

@Mohd Haziq
I am sorry if you feel slighted about our comments, but really it isn’t directed to your technical team but to the project managers and top management.

According to Audit report the disbursement up to date is to the sum of RM 5.94Bil and sorry to say I find it hard to believe 2/3 of the budget have been paid and yet not a single ship touched water.

Again let me reiterate I believe your technical team have the abilities and capabilities to built such advanced ships but certain issues beyond your control had doomed this project.
ASM says:

November 19, 2020 at 9:40 am

” Considering that the end user had so little say in laying down the specs”

The service (as in TLDM) doesn’t, but the gov certainly has. Strange, but probably not the first. I believed the Mirage 2000 specs were not decided by the French Air Force but by Dassault themselves

I find it weird that Mat Sabu didn’t say anything about LCS while making a lot of noise about the Flankers. As it turned out the Flankers issue were minor whereas this is more critical.

Reply
But both were really about money.
... says:

November 19, 2020 at 10:01 am

@ MK

” Can any of you enlighten me regarding the specific ops differences between PASKAL, UNGERIN and STAR? Since all 3 operate in maritime/open waters ”

all 3 has almost similar anti-terrorism/anti-piracy functions wise (capability wise there is differences of course), but controlled by different agencies.

PASKAL has additional warfighting capabilities that UNGERIN and STAR does not do.

The main issue for UNGERIN is that it is shackled by the police act. By law the police does not have any jurisdiction outside of the malaysian 12nm territorial waters. UNGERIN or even marine police operations outside of the 12nm territorial waters but still in the EEZ is actually unlawful (which is one of the reasons why cruise ships can open casino when they are outside of 12nm territorial waters)
ASM says:

November 19, 2020 at 10:30 am

“But both were really about money.”

Well yes. Everything is about the money. But there is a priority to each matter. Completing the LCS is quite important to the Navy, considering that its fleet is already quite under-equipped. Whereas some pointed out here that the Flankers’ case was not that severe than initially thought.

Reply
Well it depends in how you look at it. The Flankers should have higher priority as its an asset already in service while the LCS is a future one. Just to show you need someone who knows how to juggle things
Chua says:

November 19, 2020 at 12:19 pm

@joe
>”I find it hard to believe 2/3 of the budget have been paid and yet not a single ship touched water.”

Speculation – it could have been spent on major long-lead items. The hull is the cheapest part of the ship actually.

@AM, also @…
>”I find it weird that Mat Sabu didn’t say anything about LCS”

Mat Sabu blamed BNS for poor design work and late purchase of parts from vendors, and at the time stated that the cost overrun was Rm1.4 billion, and implied that the PH Govt would agree to pay for it.

according to http://www.malaysiakini.com/news/497882

I find it interesting that the cost of completion has gone up so significantly in the span of 2 years. Cost of VOs on delays, or what?

Repl
Yes most of the money already paid were for the steel and work on the hulls.
The VOs were the cause in the delay of payment. Mat Sabu was being disingenuous about the payments, they would not make the payments as they wants BNS to reduce the costs but it cannot do so as it involved work already done. The VOs were done during BN time but it had not been signed off yet when PH took over. It didn’t want to sign off the VOs.
AM says:

November 19, 2020 at 12:29 pm

ASM “The service (as in TLDM) doesn’t, but the gov certainly has.”

It’s still hard believe when someone steps in here and his first comment is essentially “it’s not BNS’s fault.”

There is no evidence either way. Before we take his claim as fact, many questions have to be asked. What are these claimed changes? Why would the government be so interested in making them, as claimed? Does making these changes prevent work from continuing in other areas ie are they the real cause of the delay? Earlier this year, someone said that contractors were complaining they could not meet the specs, so how much of each reason is really applicable?
Chua says:

November 19, 2020 at 1:07 pm

@Marhalim
Indeed, as I had suspected.

Next question is who are the VOs for.

Reply
Things on the ships of course
... says:

November 19, 2020 at 1:58 pm

Off topic

Never imagined to see the day that the german navy is using Tacticos CMS on their frigates.

http://www.navalnews.com/wp-content/uploads/2020/11/Thales-Aboard-MKS-180.jpg
ASM says:

November 19, 2020 at 2:01 pm

Pardon my ignorance, what are VOs?

” I find it interesting that the cost of completion has gone up so significantly in the span of 2 years. Cost of VOs on delays, or what?”

Maybe that’s where the Forex thing comes in. Adjusting to current exchange rate the same parts if to be purchased probably cost more?

Reply
Variance orders. Again nothing to do with Forex, these things happened in 2017
ASM says:

November 19, 2020 at 2:05 pm

” It’s still hard believe when someone steps in here and his first comment is essentially “it’s not BNS’s fault.” ”

A typical reaction I guess. He probably has a localised view of the situation and has no knowledge of the going-ons in the upper management level.

To the original commenter, you’re probably a competent employee who does his job diligently, unfortunately not all your co-workers have the same mindset. This is true in all companies.
joe says:

November 19, 2020 at 4:27 pm

@Chua
“Speculation – it could have been spent on major long-lead items”
Looking at the progress rate vis a vis the budget spent up to date, I doubt with the balance RM3 Bil they would have gotten any of the first ships into water.
... says:

November 20, 2020 at 8:01 am

off topic

2nd japanese FFM frigate has been launched.

http://1.bp.blogspot.com/-RZQmVUtOg_w/X7Z86nuYO0I/AAAAAAAAST8/AVnINYXnxfcZwS4p22oW7jX7RyRaJLGgACLcBGAsYHQ/s2048/FFM-2%2BJS%2BKumano-14.jpg

http://1.bp.blogspot.com/-NF0u7HILo_4/X7Z8_UILhMI/AAAAAAAASUU/UlT26NbFUKoDY6dGtWcrNJoA6KsSzq_xACLcBGAsYHQ/s2048/FFM-2%2BJS%2BKumano-9.jpg

http://1.bp.blogspot.com/-cxmBN6gJUTU/X7Z8-e9S1AI/AAAAAAAASUI/lSLz9OMuWEM6nJgciYf1xz6ZtcogSPF4QCLcBGAsYHQ/s2048/FFM-2%2BJS%2BKumano-10.jpg

I can understand why Indonesian navy suddenly is not interested on the iver huitfeldts after japan offered these frigates to indonesia.

Anyway, we need to settle our ASW frigates first. A larger frigate like Iver huitfeldt, T31e or even the FFM would be good as a replacement of our flagship lekiu and also kasturi classes after 2030.
Luqman says:

November 20, 2020 at 12:51 pm

Just to point out,
If TLDM moves on with 2nd batch of 6 Gowind LCS, it will be RM12 billion.

Why?
Because in 2011, usd 2.8 billion is RM9 billion, in 2020 it is RM12 billion. I dont see why someone can buy new equipment for the price of 33% less than orignal price (in USD of course) 9 years ago.

That being said like @… mentioned, getting the Korean frigates and its follow on batch are cheaper than current LCS batch. Extra money saved could be used to buy Scorpenes or Type 31

Reply
How could money not yet allocated be saved to buy something else?
joe says:

November 20, 2020 at 3:08 pm

@Luqman
Following the Forex logic put out, how sure are you that what budget we allocated for 6 new Korean frigates TODAY would be sufficient to complete all of them in few years time? We can’t predict what’s the exchange rate in a few years so should we put in extra buffer 33% into the budget then? But wouldn’t that make it lesser reasons to go from scratch rather than topping up the money and complete the 6 LCS?
... says:

November 20, 2020 at 3:16 pm

off topic

a very interesting news!

Absalons are now designated as ASW Frigates!

http://www.navalnews.com/naval-news/2020/11/royal-danish-navy-eyes-towed-sonar-systems-for-absalon-class-new-asw-role/

That would make it a very multi-purpose ship, that can do small team amphibious landings while also can do ASW. So in our case, would something like the absalon be a good design for our lekiu replacement post 2030 instead of a pure frigate like the iver huitfeldt or type 31e?
... says:

November 20, 2020 at 7:44 pm

Topping up the money to complete all 6 Gowinds is at least RM6 billion (probably more) in 2020 money. With unknown completion time.

building 6 new HDF-2600 would cost around RM3.5 billion (probably less as many expensive components like radar, guns, missiles and towed sonar already paid for). With known completion time.

If the korean frigate need to put 33% buffer, the gowinds needs 33% buffer too on top of the RM6 billion planned.

In any case, the korean path is cheaper (around the budget that the government has) , and with known completion dates.

As i said before, i am not happy that we are not going to get the gowinds, as i like those ships a lot. But it is better for us to get 6 korean frigates instead of not going to get all 6 gowinds. With our current budget (only rm3 billion) we can probably complete only 2-3 gowinds at best, and those completed ships have no guarantee that it will not have any issues, and need more money to repair and rectify them.
zainal abidin says:

November 28, 2020 at 6:32 pm

Just a layman’s point of view, I still don’t get it why we opted for the 57mm main gun and this alone makes the LCS as if it is smaller and less capable than the Formidables.
For the price (maybe) we could have opted for 6 units of larger 120m to 130m proper all purpose frigates.

Reply
I have written about it in an earlier comment, Boustead chose the 57mm gun as another subsidiary company is the local agent and the deal was the guns to be assembled here. It didn’t happened as it was decided that it will be cheaper and faster to deliver them here fully assembled.
... says:

November 28, 2020 at 7:49 pm

@ zainal abidin

Yes for the price we could have gotten 120m multi purpose frigates (like the Type 31 for example), but it wouldn’t have all the necessary sensors for thorough ASW missions like towed array variable depth sonars. I see that we do have a need for both, and complementary to each other.

Formidables are no expense spared ships. No mention of the cost, but with high end equipments and high levels of automation, i would not be surprised if the actual cost is somewhere nearer to a FREMM than to the gowinds.

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