Malaysia - Budgetary difficulties remain

As a relatively small export-dependant economy, Malaysia has been hit hard by the Global Financial Crisis with the 2009 Defence budget limited to around US $3.3 billion. Even though recovery is now underway the consequences are still being felt in areas of military expenditure.

26th May 2010


As a relatively small export-dependant economy, Malaysia has been hit hard by the Global Financial Crisis with the 2009 Defence budget limited to around US $3.3 billion. Even though recovery is now underway the consequences are still being felt in areas of military expenditure. Kuala Lumpur’s defence allocation is mostly budgeted under something called the Malaysia Plans, which budgets the entire spending of the Malaysian government for a five year period – along with special allowances for programs not originally funded.

With the current period of Malaysia’s Ninth Plan of 2006-2010 drawing to a close, the question has arisen as to whether the soon to be unveiled Tenth Plan for the period 2011-2015 will provide a significant allocation for Malaysia’s Armed Forces along with funding for programs which were scheduled under the previous Plan, but were instead shelved for economic reasons.

Three significant programs were to be implemented under the previous Ninth Plan but instead were postponed – namely the Army’s 8x8 AFV programme, the Royal Malaysian Navy’s (RMN’s) purchase of two Batch II Lekiu Class frigates and the RMN’s multi-purpose support ship acquisition. These joined the earlier Royal Malaysian Air Force’s (RMAF’s) attempted replacement of its S-61 Nuri (Sea King) helicopter with the EC725 Cougar – that programme originally provided for via a special allocation. Indications coming out from Kuala Lumpur are mixed. Malaysian Defence Minister Datuk Seri Ahmad Zahid Hamidi stated, when explaining the reason for retention of the MiG-29 fleet, that the current economic situation prevents the purchase of new multi-role combat aircraft.

However, the individual service chiefs have pointed out that the urgency and need to carry out several key replacement programs, as the existing equipment is either no longer in a viable state or is approaching the extreme end of it’s operational lifespan. Despite this, the Malaysian government is expected to be cautious on defence spending with the Opposition having been successful in portraying to the public that defence spending is wasteful owing to incompetence and corruption by the government. Matters have not been helped by the weak response of the government to such allegations. In some cases, the result has affected the armed forces procurement plans – such as in the case of the proposed purchase of 12 EC725s in 2008 to replace the S-61 Nuri fleet when then Prime Minister and Defence Minister Abdullah Badawi ineptly handled the Opposition’s allegations of corruption in the purchase and then meekly backed down in the face of a public outcry over the program.

Several incidents during the last two years have not exactly helped the public image of the armed forces either, namely the October 2009 loss of the KD Sri Inderapura to an onboard fire, and the revelation last year of the theft of two F-5E jet engines from an RMAF base which were later discovered in Uruguay. There have been further strange goings on about 2 Su-30 engines which were damaged on landing and have since been the subject of some speculation as to their status and whereabouts. Finally, there have been a number of teething problems with the Navy’s first submarine, KD Tunku Abdul Rahman. This negative public perception is of concern to Chief of Defence Force General Tan Sri Azizan Ariffin and his three service chiefs, but all of them are adhering to the principles of the Malaysian Armed Forces of not getting involved in the public debate and are relying on the politicians to address such issues. Defence Minister Ahmad Zahid Hamidi is expected to mount a strong rebuttal to the Opposition over defence issues when Parliament convenes for its first session this year in mid-March.

Current and future developments within the Malaysian Armed Forces are as follows:-

Joint Force Headquarters

Whilst not a separate service per se – and headed by a three star officer from one of the services – the Joint Forces Headquarters is responsible for all combined service operational missions carried out by the Malaysian Armed Forces. Currently it oversees two missions, firstly, Malaysia’s commitment to the United Nations forces in Lebanon where a total of 750 personnel are deployed. They are divided between two areas, a contingent of 300 personnel in Kaokaba in the eastern sector and a battalion of 440 personnel in Tibenim in the western sector. The remaining ten personnel are serving in UN headquarters and as part of the observer teams there. The second is the permanent MAF mission to ensure security in East Malaysia, Operation Pasir (Pandanan and Sipadan Island resorts) which began in 2000 following the kidnapping of foreign tourists from the Pandanan and Sipadan Island resorts by Abu Sayyaf terrorists from the Philippines. Operation Pasir is to prevent further such incidents and to secure the eastern Sabah coastlines and islands from any incursions or illegal entry. The Joint Task Force 2 Headquarters-Forward Operating Base building in the East Malaysian State of Sabah was recently operationalised on 25th January. The building, located in Kukusan Camp in the town of Tawau will act as a command center for Operation Pasir. The command center ties in the Malaysian PX2000 command and control, Masuri integrated communications system, Rohde & Schwarz radio suite systems and the eight maritime surveillance radars (provided by the United States) stationed along the Sabah coastline into an integrated C4I hub.

Malaysian Army

The Malaysian Army is looking to further develop its firepower and mobility capabilities under the upcoming Tenth Plan, and prominent among its plans is the establishment of an attack helicopter capability. Malaysian Army Chief General Tan Sri Ismail Jamaluddin told the media on 23rd February that the army requested funding for a squadron of 8-12 attack helicopters. However, he stated the approval of the request would depend upon the fact that the priority for funding for the armed forces will be the replacement for the army’s S-61 Nuri helicopters. Furthermore there is considerable uncertainty as to whether the government can afford the entire attack helicopter package - which includes the training and infrastructure costs. The Army Air Corps (AAC), which will operate the attack helicopters, has already been expanded to a regimental strength formation in terms of personnel and organisation. However, the army has now put plans to establish an AAC utility helicopter squadron on hold, and will instead rely on the RMAF for any utility helicopter support for the time being. In 2008, it was planned that the Army would takeover the S-61A-4 Nuri’s from the RMAF once the RMAF took delivery of its Eurocopter EC725 Cougars. As a consequence of postponing the purchase of the EC725s, this plan has fallen by the wayside and the army has, in any event, now decided to forego the utility helicopter squadron in favor of allowing funding for the attack helicopters to be made.

The army has also requested for funding to purchase an 8x8 replacement for some 88 6x6 Sibmas fire support vehicles and around 300 4x4 Condor APCs currently in service. The program was deferred from the Ninth Plan due to the economic situation. The army’s requirement for a long-range anti-tank guided weapon might also be tied in to the 8x8 programme, with the customer looking for such a system to be integral to the preferred vehicle. To date no AFV has yet been identified as the preferred choice, and it is expected that the army will issue an RFI for the requirement immediately when the program is approved under the Tenth Plan later this year.

A separate program for the purchase of some 20 plus 6x6 APC’s to replace the 4x4 Condor APC’s in service with the Malaysian contingent in Lebanon is currently ongoing, with the evaluation team having submitted its formal recommendations.

The establishment of the second Astros II MRL regiment, 52 artillery regiments is currently ongoing with the regiment scheduled for an operational date target of end 2010/ early 2011. The first battery of six launchers was delivered early this year, whilst the remaining 12 launchers will arrive in the middle of the year. Meanwhile, previous delays in the delivery of the army’s PT-91M Pendekar (Polish updated T-72’s) tanks have resulted in the operational status of 11 Regiment, Royal Armor Corps being pushed back to 2011 instead of this year. The army is not planning to buy any additional tanks, as it views a single tank regiment as suffiiente for its operational needs.

Royal Malaysian Navy

The RMN has been heavily engaged over the past two years with a continuous presence in Somalia on anti-piracy escort duties. The Malaysian government initially ordered three ships with a substantial force of commandoes to the region in September 2008, following the seizure of two Malaysian International Shipping Corporation vessels (MISC) and their crews. The mission was to protect MISC ships in the region and to mount a rescue mission if necessary, although the rescue mission was seen as an absolutely last resort. Also of concern was that one of the MISC vessels passing through the region was carrying a consignment of the Malaysian Army’s PT-91M main battle tanks.

Following the release of the ships and hostages in October the same year, the presence was scaled down to a single ship on a 3-4 month deployment and tasked with escorting MISC vessels through the region. However, only four ships in the RMN inventory were suitable for a deployment which called for the ability to operate for long periods in the Gulf of Aden without needing to replenish at a port, namely the LST KD Sri Inderapura, the support ships KD Sri Indera Sakti and its sister ship KD Mahawangsa, and the training frigate KD Hang Tuah, all of which made a deployment to the Gulf of Aden. All four ships are also over 25 years old and concern arose among the RMN that repeated deployments would shorten the ships service life, compounded by the fact that the Malaysian government indicated that funding for new ships would be a while off.

This resulted in the RMN working with MISC to provide an alternate solution in the form of a converted MISC merchantman to function as a naval auxiliary ship in the region. As such, the container ship Bunga Mas Lima was converted to a RMN auxiliary ship on 1 June 2009, following completion of modification works to the ship for its mission. The modifications to the 699 TEU container ship (owned by MISC) included the installation of a helicopter landing deck, light weapons mounts, military grade communications and medical facilities, the ability to launch RMN’s small craft and a repainting of the ship to RMN’s colours. The ship’s complement comprised of 21 MISC personnel, who underwent RMN training and were inducted into the RMN Volunteer Reserve and 36 RMN personnel consisting of naval special forces. In addition a helicopter detachment will operate RMN’s Super Lynx embarked upon the Bunga Mas Lima. Finally a Malaysian Armed Forces medical team was embarked aboard the ship. Three crew rotations were carried out through the Bunga Mas Lima’s deployment until January this year, when it returned to Malaysia for refitting and overhaul and it is expected to depart again to the Gulf in March.

Plans for the purchase and construction of two Batch II Lekiu Class frigates from BAE Systems have been scrapped. A report in the British newspaper The Times in August 2009 quoted a BAE spokesperson as saying that both parties had agreed to not continue with the deal due to cost cutting measures by the Malaysian government, although BAE offered a cheaper alternative in the form of offshore patrol vessels. However, with Malaysia already operating the Kedah Class offshore patrol vessels (OPVs), the offer seems unlikely to be taken. Rumors of the possible purchase of three BAE-built Nakhoda Ragam Class OPVs rejected by Brunei and currently marketed by Lurssen have also come up in Kuala Lumpur, particularly with the Nakhoda Ragams being similar in design to the two Lekiu Class frigates that the RMN operates.

With the sixth and final Kedah Class NGPV, Selangor, scheduled to be accepted and entering service this year, attention has now been focused as to whether a second batch of six ships will be ordered. Boustead Naval Shipyards, who built the Kedahs, is keen for the commitment to a second batch of NGPVs as its naval shipbuilding facilities currently has no further naval construction orders. The RMN is keen also on a second order as the next batch of ships will be designed to be larger and more heavily armed than the first and will somewhat offset the cancellation of the batch two frigates. However, the political and economic situation in Malaysia might hinder such an order, but Prime Minister Datuk Seri Najib Tun Razak did state at the Langkawi International Maritime and Aerospace exhibition held in 2009, that the Batch II NGPV along with the Cougar helicopter and the army’s 8x8 AFV replacement were the three most important defence programs that the government needed to carry. He added that the fact Boustead had over 2,000 subcontractors dependent on it was further reason for the government to continue the NGPV programme with a Batch II order.

Plans for the purchase of a multi-purpose support ship (which was put on hold in 2008) have been revived with the loss of the KD Sri Inderapura to a fire in October 2009. The loss of the ship has led to a significant gap in the RMN’s sea transportation and logistic support capability, and the Malaysian government is expected to announce its decision on the selection of a design this year.

Teething problems in regard to the RMN’s Scorpene submarine KD Tunku Abdul Rahman were revealed in February this year. RMN Chief Admiral Tan Sri Abdul Aziz Jaafar told the Malaysian media on 11 February that a defect in the KD Tunku Abdul Rahman’s high pressure air blowing system was detected on 17 January, which caused the postponement of the submarine’s tropical waters trial. This followed the finding of an earlier defect in the forward sea water cooling system on 17 December. The defects found led manufacturer DCNS to extend its warranty on the submarine, which was due to expire on 25 January, by an extra five months. The problems have now been fixed with the submarine successfully completing diving operations on 18 February, with all remaining trials now scheduled to be completed in May. After these, the RMN will class the KD Tunku Abdul Rahman as achieving initial operational capability, and in the same month a live firing of an SM39 Exocet anti-ship missile will be carried out from the submarine. The purchase of the two Scorpene Class submarines from DCNS and Navantia in 2002 remains controversial, due to the circumstances in which the contract was brokered through an adviser to current Prime Minister Najib Tun Razak and some other murky issues.

Another issue that has come up over the submarines is an impasse over the integrated service support (ISS) contract which will be provided by Boustead DCNS Naval Corp (BDNC), a joint venture between Boustead Heavy Industries Corp’s Defence Technologies and DCNS of France. Currently BDNC personnel are already at the Sepanggar Naval base, where the KD Tunku Abdul Rahman is based, carrying out maintenance work on the submarine under the DCNS warranty contract. However, the ISS contract has yet to be signed due to a disagreement on the final costs. Although initially a cost of MYR600 million (USD175.4million) had been agreed upon for the multi-year contract, BDNC was reported to have revised the figure to a higher figure whilst the government in turn has asked it to lower the amount – with neither side budging from their position.

Royal Malaysian Air Force

In a surprising turnaround, Malaysia has decided to retain its MiG-29 fleet instead of phasing it out by the end of the year. Malaysian Defence Minister Datuk Seri Ahmad Zahid Hamidi stated on 23 February that the government has decided to keep the 14 MiG-29s operational for the next five years. Last year, the minister had announced that the MiGs would undergo a phased withdrawal with the final six aircraft being decommissioned at the end of 2010 – designed to save an annual operating cost of USD76.3 million. He said that the decision to retain the MiGs was based on the fact that the country’s economic slowdown prevented any replacement capability through the purchase of new multi-role combat aircraft. He stated that local company, Aerospace Technology System Corporation (which is currently responsible for maintaining and supporting the RMAF’s MiG-29s) has been asked to refurbish the aircraft through equipment upgrades at the lowest possible cost. RMAF Chief General Datuk Seri Rodzali Daud has been quoted as saying only ten MiG-29s would be kept in service as others have already been decommissioned. The Defence Minister’s statement that funding prevented the purchase of new MRCA indicates that Malaysia expects that it will only be able to buy new fighters around 2014-2015.

However, even this is far from certain and the statement that no new combat aircraft will be purchased for the time being will disappoint Boeing and Saab, who have been heavily marketing the F-18 Superhornet and the Gripen respectively. Long-term plans called for the RMAF to operate six MRCA squadrons – but giving the funding shortages, this seems to be a largely unreachable goal and a more realistic estimate would be the purchase of 1-2 squadrons in the next ten years.

Saab has offered a package which would not only include the Gripen but also AEW and/or MPA Saab 340s or 2000s, and thus also addressing additional RMAF requirements. Despite the Minister saying no money was available for MRCAs, it is possible that the RMAF may not have pushed for these aircraft under the Tenth Plan, but instead moved forward the airborne early warning and control [AEW&C] capability. One RMAF program that is expected to be carried out under the Tenth Plan will be the purchase of 12 EC725 Cougars to replace the RMAF’s S-61 fleet, some 28 of which are in service with four Squadrons, namely No.3, No.5, No.7 and No.10 Squadrons. However, a recent news report stated that only ten of the 28 helicopters were certified flyable, and only five of those graded as operationally ready.

The retention of the Mig-29s are also said to be due to delays in getting the Sukhoi Su-30MKM squadron operationally ready. The RMAF has 18 Su-30MKMs deployed in a single squadron (No.11 Sqn) but delays in the delivery and problems in the integration of the aircraft’s Russian weapon systems and western avionics has resulted in training by the Indian Air Force (IAF) pilot/WSO team based in Malaysia being slowed. The team has been asked to extend its training mission by another six months and conclude in August this year, instead of February as scheduled. The six month extension was requested due to the fact that the planned training targets could not be met by the agreed February date due to the schedule being disrupted by aircraft availability. The training has been focused upon creating RMAF SU-30MKM pilots and WSOs capable of acting as instructors, and thus ensuring the RMAF has its own instructor-qualified personnel for the SU-30MKMs for future needs.

Deputy Defence Minister Datuk Dr. Abdul Latiff Ahmad stated in Parliament on 14 December 2009 that the squadron had nine qualified pilots and four qualified WSOs though it is understood that there are a number of other pilots and WSOs serving in the squadron but not yet classed as qualified. The IAF also has a ground crew team which is training RMAF ground crewmen for the SU-30MKMs, but that phase of the training has been unaffected by any delays and will be completed as scheduled in June this year. Given this, the expectations are that the Su-30MKM squadron will only be operationally ready in 2011.

Despite the problems surrounding the A400M program, of which Malaysia ordered four aircraft with an original delivery date of two in 2013 and another two in 2014 (which now looks to be unlikely and will be much later), the RMAF has not been too overly concerned on the delay. RMAF officers have said that while the A400M would add a significant boost to the RMAF’s airlift capabilities and enhance the Malaysian Armed Forces deployment and air supply capabilities, a delay would not affect the RMAF or MAF untowardly given that the RMAF’s C-130 fleet is in good shape and fulfilling all the MAF’s current operational requirements.

The RMAF is also seeking to further develop its radar coverage of Malaysian airspace. As a whole, the RMAF currently possesses total radar coverage save for some gaps at certain height levels, details of which are classified. The Sistem Pertahanan Udara Nasional (SPUN-National Air Defence System) is said to be currently between stage one and two of its three stage development goals, with stage one being full coverage of Malaysian airspace, stage two being the full integration and networking of all armed forces radar coverage along with the Malaysian Department of Civil Aviation while the third and final stage would be the addition of satellite coverage, AEW&C aircraft and surface-to-air missile systems into the air defence network.

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