Do We Matter At All?

The cost of living is fast rising and many of us are still trying to come to terms with this fact, especially retirees and the elderly who do not have a source of income and are dependent on their fast depleting savings. Last night, my heart sank when I read a report HERE which announced that the government has agreed to allocate RM6bil to build six second generation patrol vessels for the Royal Malaysian Navy according to Defence Minister Datuk Seri Dr Ahmad Zahid Hamidi on Saturday. Whilst we are tightening our belts and trying to make ends meet, some seem to be on a spending spree.

The rationale given for the expenditure was to "boost the economy while benefiting 632 vendor companies". The Defence Minister clarified that they would ensure that "at least RM2bil of the allocation will benefit these vendor companies which are strategic partners of Boustead Naval Shipyard Sdn Bhd".

So RM2billion is going to be spent for that reason. Hmm....

The official Boustead website HERE says that Boustead Holdings Berhad, founded in 1828 is one of Malaysia’s established and diversified conglomerates with an active interest in six primary sectors of the Malaysian economy including plantation, heavy industries, property, finance & investment, trading and manufacturing and services. It states that it has more than 100 subsidiaries and associate companies of which four companies are listed on Bursa Malaysia. The group employs more than 13 000 employees. Its major shareholder, Lembaga Tabung Angkatan Tentera (LTAT).

This link gives a breakdown of its involvement in heavy industries while THIS LINK is the official site for Boustead Heavy Industries Group.

Feeling curious, I surfed the net to unravel more information which might shed light on this unexpected development.

Image from Photobucket

As far back as in October 2010, The Star carried a report saying that "the construction of six patrol vessels by Boustead Heavy Industries Corp Bhd (BHIC), a maritime engineering and defence-related services provider, may only begin as early as the fourth quarter of next year"(2011).

The following excerpt taken from HERE is particularly interesting:

Analysts estimate that it can easily take another year before BHIC’s letter of intent (LOI) is firmed up and construction of the patrol vessels begin.

“This is as seen with the company’s Scorpene service job, which took a year for the LOI to be firmed up via the letter of award,” ECM Libra said in a research report.

BHIC received a LOI from the local Defence Ministry to construct six second-generation patrol vessels with combatant capabilities.

In its filing with Bursa Malaysia on Monday, the company says its associate company, Boustead Naval Shipyard Sdn Bhd (BN Shipyard), received the letter dated Oct 15. It adds that the value and duration of the project are to be negotiated with the Government.

However, AmResearch Sdn Bhd says the value of the six new patrol vessels can reach RM8bil, based on a 20% mark-up from the first batch’s price tag of RM6.7bil.

“We understand that the letter of award will be dispatched over the next four to six monthsafter the price has been finalised,” it says.

ECM Libra adds that the new order for six patrol vessels with combatant capabilities, littoral combatant ships, has more technical specifications than the first-generation batch which amounted to some RM1bil per vessel.

“We believe per unit cost should be higher. Assuming a value of RM1.2bil per vessel, the contract will provide BN Shipyard with an RM7.2bil orderbook that will likely last it five to seven years,” it adds.

The recent contract, which has been long awaited, is part of a privatisation agreement with the Government for the construction of 27 units of patrol vessels, where six have been completed.

Please CLICK HERE to read the rest of this very informative report.

It has only been 3.5 months since that research report was released and the official announcement has been given whilst the analysts anticipated it might take another year for the LOI to be firmed up.

So has the LOI been firmed up? If so when? If it has not, could someone kindly clarify the status of the development wrt the announcement disclosed yesterday? I am sure it is not difficult to get to the bottom of the issue, or is it?

Interestingly, this Naval-technology website surprised me because it provided MORE information about Fearless Class Patrol Vessels of Singapore than any information on Malaysian naval equipment.

Whilst I am happy that our country is boosting the security of our nation with the construction of the patrol vessels, the amount of money is really astounding. As an educator, I do wish that the government would spend MORE money on developing the human capital of our country by raising education standards to make our citizens more competitive and to draw investors to our nation. Imagine what benefits could have been reaped in the education sector with a RM6 billion budget.

Instead, we see how some policies which will be changed in the future may not be to the benefit of our country. Even TDM in his blog HERE which drew a record-breaking 1610 comments said he was "not surprised over the disappointment and even anger towards the Government's decision on the teaching of Maths and Science. Seems to me like the Government is not listening to the voice of the people."

At the end of the day, who or what is more important?

courtesy of masterwordsmith-unplugged