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Friday, June 17, 2011

Here We Go Again

THE CORRIDORS OF POWER

Hakim Joe

Malaysia possesses submarines that cannot dive but are able to sail faster than a sampan going upstream. Likewise, we are also buying super expensive helicopters that can possibly out-fly and out-maneuver Superman in flight (in theory only).

Now we are looking at fighter jets to replace the ageing MIG-29N Fulcrum in 2015 and the budget could be in excess of RM6 billion.

Here we go again.

French aerospace company Dassault Aviation is planning to set up an office in Kuala Lumpur within the next few months with the intention of winning this lucrative contract from the Malaysian Government. On offer is their Multi Role Combat Aircraft (MRCA) Rafale at an estimated cost of 100 million Euro a pop (depending on who you ask). A squadron of a 12 aircrafts will cost in excess of 1.2 billion Euros (RM5.2 billion without optional extras like Krell Sound System, Liebherr fridge, Bosch reverse sensor or Prometheus dashboard cigar lighter).

Not to be out done, British defense company BAE Systems (who already has a large office in Kuala Lumpur) is offering a better deal. For an estimated RM5.5 billion, BAE Systems will sell to RMAF 10 units of their Tranche 3 Typhoon fighter/interceptor.

Now, how is this a better deal as compared to the Rafale? The Frenchies are offering 12 units whilst the Pommies are offering 10 units. The Frenchies deal cost RM5.2 billion whilst the Pommies deal cost RM5.5 billion. The Rafale is a MRCA whilst the Typhoon is NOT a MRCA.

What BAE Systems is also offering are another 20 units of Tranche 1 Typhoon FOC (gratis, as is basis) that the Royal Air Force is retiring from active service, kind of a “Buy 1 Free 2” offer. Technically, these aircrafts are not entirely free, as the RMAF will need to pay to fit specific items like the communication systems and other support items to be compatible to its existing ground control systems.

Boeing is also in the picture with its offer of the FA-18F Super Hornet (5th Generation) at USD57 million a piece. Cheap? Oops…the USD57 million is only for the chassis alone, not even the paint job. The real cost per unit after installation of the engine, avionics, pylons, radar, etc. approaches USD125 million a unit (without ordnance, training or support) minimum.

However, Boeing is the most optimistic that they are capable of securing this contract as RMAF is already using the FA-18E (4th Generation) and the Malaysian pilots are familiar with the aircraft (hence less training required) plus the important fact that they have appointed three (yes, three) Malaysian companies to do the lobbying for them - Composites Technology Research Malaysia Aero Composites (CTRM AC), SME Aerospace (SMEA), and Spirit AeroSystems. Likewise, of the four potential suppliers, only Boeing has made an official visit to Putrajaya this year to promote their latest aircraft to the former Defense Minister. The other three haven’t even applied for their visas.

Composites Technology Research Malaysia Aero Composites is a wholly owned subsidiary of Composites Technology Research Malaysia Sdn Bhd. Based in Batu Berendam, Melaka, CTRM AC is a government-linked company with the Ministry of Finance Incorporated as its major shareholder.

SME Aerospace, based in Sungai Buloh, manufactures aircraft parts, components and assemblies for customers worldwide and is a wholly owned subsidiary of the National Aerospace & Defence Industries Berhad.

Spirit AeroSystems Malaysia Sdn Bhd, based in Kuala Lumpur, is an indirect wholly owned subsidiary of Spirit AeroSystems Holdings Inc. [NYSE: SPR]

The fourth and final offer is from Sweden’s SAAB with its JAS 39 Gripen MRCA aircraft at USD60 million a pop even though this offer is considered to be the least successful of the entire lot and the cheapest.

For those detractors that think that the purchase of military aircrafts is not viable due to Malaysia’s economic outlook and that we are still financing the current fleet, think again. As of April 2011, a Request For Quotation (RFQ) has been issued to the four manufacturers.

But then again, when and what has economy and cost to do with the purchase of military hardware here in BolehLand? BTW, the submarines still refuse to submerge underwater.

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