Contracts Day, LIMA 2019
LANGKAWI: Contracts Day, LIMA 2019. Seven contracts, ten letter of awards (LOA) and eight letter of intents (LOI) worth RM3.655 billion were signed at LIMA 2019.
As reported earlier, there was no contract for the MICA SAM.
Even though the total amount of the deals, looks big, it is actually misleading as most of them had been announced before like the Starstreak, NSM, submarine ISS and the 105LG gun from Nexter. Its the normal, for a lack of a better word, the LIMA shuffle.
Others include spares and maintenance support of various ships, aircraft and equipment of the RMN and RMAF. The only thing that stood out was an LOA to a Serbian company, Glotec Ltd Serbia, for the MRO of the MB-339CM Viper 632-43 turbo jet engines.The announcement did not say how many engines will be overhauled though based on the contract amount of RM40.8 million, it may well be the whole complement of Vipers still in service. It is also unclear where the work will take place as the company website says it was established in 1989 in Singapore, Serbia and Montenegro.
I have no idea how many of the Viper engines are in service as they were taken out of the A’s for the MB-339CMs.The Viper engines were overhauled by AVIO of Italy before they were installed, inexplicably, on the CM.
Pulatibang 3 MB-339CM
Some 10 years after the CM’s service, the flying rates, I am told is dismal due to the difficulties in getting parts for the engines. We originally got eight CM but one crashed in 2016, leaving only seven air frames available. Leonardo, the Italian defence group which Aermacchi now belongs to, has a standing offer for RMAF to sell back the 339CM for the M-346 trainer. It has now been upgraded to the M-346FA, its entry for the LCA project.
— Malaysian Defence
by Marhalim Abas
Moving forward: Defence industry as an economic catalyst
April 1, 2019 @ 12:15am
MOST long-time watchers of the Langkawi International Maritime and Aerospace Exhibition 2019 agreed that this is the best show ever since its inception in 1991. But New Malaysia needs to aim higher. As a nation, we need to find a formula to develop a genuine and strong Malaysian defence industry, which will serve as a catalyst for the economy.
This year’s Lima has a special feel in part because Langkawi is where Prime Minister Tun Dr Mahathir Mohamad made his most dramatic political comeback at such an advanced age.
When Dr Mahathir bucked the Mahsuri curse to develop Langkawi, no one would have expected that he would seek the residents’ help one day, and with their support, lead the nation on a comeback act to rise again.
Many don’t recall that Dr Mahathir was also a defence minister between 1981 and 1986 with some indepth understanding of what needs to be done to defend national interests.
In hindsight, to organise an international airshow with the aim of building a domestic aerospace and defence industry in 1991 when Langkawi didn’t even have an international airport was indeed visionary.
WHY DEFENCE INDUSTRY
Having a strong defence industry means a nation would have to organise research and development across the board very effectively and the technological gains in defence industry would spill over to other civilian sectors. Internet, GPS and SIRI were all originated, tested and proven in defence before being adopted elsewhere.
A strong defence industry also means that in time of war or crisis, a nation has the engineering capabilities across the board to fend for itself.
Of course, at the end of all these, a strong industry’s ultimate aim is to create decent jobs for Malaysians. Malaysia’s defence industry has come very far since the first Lima. But, I would contend, not far enough. We can do more than what we have done thus far if we organise ourselves better and unleash our people’s full potential.
In my capacity as deputy defence minister, I visited two- thirds of the booths at the Mahsuri International Exhibition Centre and came away with two observations.
FIRST, Malaysia lacks exportable brands and products. The exhibition feels more like a show for foreign big brands selling us something that we may or may not need.
South Korea, Turkey, Indonesia and Singapore are examples of countries which had very little defence industry 30 years ago, but now boast of an impressive list of products to export just over a generation’s time — something that Dr Mahathir clearly foresaw with his Lima vision, though the nation did not achieve as hoped.
SECOND, more than half of the exhibition is about a computer system, which is a great entry point for Malaysia to make an impact in the quickest way.
We don’t need to build a full plane or even a flying car to arrive at our goal to have more Malaysian innovations and products of world’s quality.
Some deeper integrations between the defence industry and the Kuala Lumpur-Cyberjaya ICT industry as well as Penang-Kulim electronics and electrical industry are the place to start.
COMMISSION AGENT OR
PRODUCER
PRODUCER
One perennial question concerning the defence industry is whether Malaysia is just a mere trader or we can be a producer of exportable goods. To put it crudely, most of what we have in the industry are “commission agents” or “postmen” who sell arms as a local agent to the Defence Ministry and the Malaysian armed forces on behalf of foreign original manufacturers.
Some just have a small office in town with a skeleton staff, but make huge bucks out of a relationship with one of the former defence ministers or some generals. Razak Baginda (Perimaker) in the Scorpene deal is an extreme case in point.
Industry players complain that they can’t invest in R&D as well as productive capacity if the government procures on whims and fancies of ministers or generals.
On the other hand, generals and the final users — our soldiers — may dislike some local products because they don’t live up to the required standards.
A lousy product can mean loss of many lives in wars or operations.
PROCUREMENT OR INDUSTRIAL POLICY
This egg-and-chicken question has to be solved before we can move further. The new government needs to put in place stronger checks and balances, policy clarity, as well as consistency in our defence procurement, which I hope the Defence White Paper process can play a role.
For items that we are not capable of producing now, we should procure in the cleanest possible ways. But if there is any opportunity to nurture local producers, we should seize such chances.
When I visited Australia last year, I am told by defence officials that for the longest time the Department of Defence procures from everywhere in the world and with an arms-length attitude to ensure no collusion or corruption. But there has been a major shift in thinking in the past few years to develop a strong domestic defence industry to provide jobs and technological depth for the Australian economy. Australia’s current government has a Defence Minister and a Defence Industry Minister, both cabinet ranked.
If we agreed that some form of industrial policy is needed for the defence industry, then we will have to get it right. Industrial policy with a carrot and stick is more likely to succeed than just carrot only as the other name of this is “corporate welfare” or, worse still, cronyism. The defence industry must not just aim to sell to the Malaysian government but to aim to be an exporter. So there must be ways to measure successes and also impose penalty for failures like letting go some poor performers.
Admittedly, the time needed to nurture a genuine defence industry is probably longer than other industries. But if it is done right, we will see some clear results in a decade or so which is why I told the audience at a dialogue at Lima that many of us in this government is thinking not just about the next 20 days of firefighting which we will have to do as politicians, but we are also thinking about the next 20 years.
For industrial policy to succeed, the government will have to organise R&D across universities and research institutes better. Currently, most of them work in silos. R&D doesn’t work with the users close enough. And, the security and defence users (the three services in the armed forces, police and other enforcement agencies) must not work in silos to procure items that each prefer but can’t operate in sync and can’t help the overall industrial policy.
Funding will be an important subject. If all is state-driven with no market signal at all, it may go to the other extreme. A mixture of state funding as angel investor will be helpful. It is in this context that when I visited the Lembaga Tabung Angkatan Tentera (LTAT) in January, I suggested to the new management to forget about becoming a housing developer, which the last management pursued, but to be a strategic investor in the defence industry.
During Lima, I had an interesting meeting with Dr Ajay Kumar, India’s Secretary of Defence Production (India’s defence ministry has four secretaries-general responsible for strategic matters, defence R&D, defence production, and veteran affairs). According to him, revolutions in information technology in recent years have brought many formerly purely civilian ICT companies into defence industries. At the same time, as technological revolution creates a level-playing field, start-ups are competing with big boys in the defence industry, which inevitably becomes more technological driven.
It is my fervent hope that Lima ’21 and the subsequent ones would be transformative with many more Malaysian innovations and products so that we are not just being asked to buy from foreign corporations but we have something great to offer to the world as well.
The writer is deputy defence minister.
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