'Navy Vessels Costing 870 Percent More'

Written by Malaysiakini Tuesday, 08 February 2011 08:11

Kuala Lumpur - Yet another Defence Ministry purchase has come under the spotlight, with the whopping RM6 billion it is prepared to pay for six naval vessels said to be costing up to 870 percent more than what other countries paid for similar ships.
According to Petaling Jaya Utara parliamentarian Tony Pua, the offshore patrol vessels (OPVs) purchased by the Royal New Zealand Navy from "world-renowned global defence security company BAE Systems" last year had cost only NZ$90 million (RM210 million) each.
Israel, which is fighting wars on several fronts, paid US$260 million (RM791 million) for its OPVs, (or) RM219 million less than what the Defence Ministry is willing to pay.
The Irish Roisin class will cost US$34 million (RM103 million), the Greek Super Vita US$108 million (RM329 million), the German Type 130 US$188 million (RM572 million) and the Israeli Saar V US$260 million (RM791 million) each.
"Even at the very top of the range, Lockheed Martin and General Dynamics, two of the best and biggest military companies in the world, built the US Littoral Combat Ships (LCS) at a budget of less than US$300 million (RM913 million) in 2004," Pua (left) said in a statement today.
He questioned why the purchase was not made through competitive bidding, when even countries with the most advanced armed forces in the world, such as the United States, did so for their military requirements.
Boustead a bailed-out company?
On Saturday, Defence Minister Ahmad Zahid Hamidi announced that the government has agreed to allocate RM6 billion to purchase six OPVs from Boustead Naval Shipyard Sdn Bhd.
Ahmad Zahid said the deal would give the local defence industry a boost as at least RM2 billion of the allocation would benefit the 632 vendor companies partnering with Boustead Naval Shipyard.
However, the minister added, the price has not been "finalised", much to the ire of Pua, who wonders "the point of making such announcements" before anything was set.
Another Boustead Holdings subsidiary, Boustead DCNS Naval Corporation Sdn Bhd, was previously awarded a contract worth RM1.3 billion for the maintenance of two Scorpene submarines in the service of the Royal Malaysian Navy.
Bousted, noted Bukit Bendera parliamentarian Liew Chin Tong, is the "bailed out and re-named PSCI, which had failed to deliver the previous order of OPVs".
Why take away subsidies to buy warships?
While he concedes the merits of building a domestic defence industry, Liew, who is a member of the Pakatan Rakyat parliamentary shadow defence committee, questioned if it was wise to do so at the expense of both quality and costs.
"In the instance where international open bidding offers half the price and better quality, are we still insistent in building this particular segment of local industry?" he asked in a statement.
Echoing his DAP colleagues, Klang MP Charles Santiago (right) also raised the issue of "prudent spending", saying that such a huge amount of RM6 billion could be better spent in addressing more urgent issues.
South Korea, he said, recently made a deal for "larger and newer" frigates at US$300 million each, but unlike Malaysia, that country was in a confrontation with its neighbour, which had one of the largest armies in the world.
"In light of the recent increase in food and commodity prices in the country as a result of 'subsidy rationalisation', the question that needs to be asked is if this counts as prudent spending?" Santiago asked in his statement.
The DAP has previously called for a parliamentary committee on defence to build bi-partisan consensus on defence decisions and to scrutinise deals above RM100 million. -- Courtesy of Malaysiakini

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