SHAH ALAM: In late 2015, I predicted that the Armed Forces budget will take a big hit when the 2016 budget was presented. I was wrong of course. My prediction only came true this year as for 2017, the Defence Ministry budget only got RM15.05 billion from the total RM262.8 billion allocated for the year. That’s only 5.76 percent from the whole budget.

For 2017, the ministry (basically the Armed Forces) got RM15.05 billion, a drop of some two billion from last year’s allocation of RM17.3 billion. Despite the decrease in the overall budget, the Operational Expenditure (OE) for 2017 is actually an increase by RM226 million to RM13.683 billion compared to RM13.457 billion in 2016.

Most of the money for OE is for emolument costs, RM7.43 billion while other costs – supplies, assets, parts and services – is pegged at RM4.250 billion. The emolument costs for 2017 is the highest within the last three years while the other costs was the lowest in the same period.

Development Expenditure (DE) which pays for new assets is set at RM3.373 billion, a decrease of some RM440 million from 2016. It is also the lowest DE since 2014. DS Najib during the presentation of the budget only mentioned that the Armed Forces will be getting patrol vessels and armoured 8X8 vehicles from the 2017 allocation.

The patrol vessels is of course, the Littoral Combat Vessels being built by BNS while the 8X8 is the Gempita. It could also be the LMS as during the speech, Najib told Parliament he was going to China next week.

The security sector was among the last items touched in the budget speech. Part of the speech which touched on defence and national security.

Therefore, I am pleased to announce the Government will provide Special Insurgency Incentive Payment to veteran Malaysian Armed Forces amounting to RM55 million to those who are yet to receive their special incentive. To enable veterans who have lost their abilities during their service is eligible for this incentive. For an example, a corporal who has lost 80% of their ability during his service is eligible for bulk incentive of RM34,000 and monthly incentive of RM590 subject to current calculation. This is a new incentive in addition to Disability Pension.

The Ministry of Defence (MINDEF) will be allocated a sum of RM15.1 billion. Of which, a sum of RM1.8 billion is provided for defence asset maintenance such as aircraft, patrol vessels, communication equipment, buildings and weaponry. The ATM will be equipped with patrol vessels and 8×8 armoured vehicles. In addition, a sum of RM1.3 billion is allocated, among others for communication devices, rations and uniforms.

To enhance effectiveness of ESSZONE operations, a sum of RM323 million is allocated for personnel deployment at the eastern border of Sabah. Mr Speaker Sir,.In additio n, the Government will create Sea Basing at the East Coast of Sabah waters and Helicopter Forward Operating Base. Also, the Government will place AV8 GEMPITA 8×8 and 4×4 armoured vehicles in Lahad Datu as well as deploy of Hawk fighter jets and Eurocopter EC-725 helicopters squadron at the Labuan Air Base.

The armed forces will also build and upgrade roads under the Jiwa Murni Programme with an allocation of RM114 million in the interiors of Sarawak. In addition, Armed Forces School Ferry services involving 15,000 children of ATM nationwide will be continued. Meanwhile, the Ministry of Home Affairs (KDN) is allocated RM12.8 billion including a sum of RM8.7 billion for the Royal Malaysia Police.

Among the major programmes and projects include building 12 district police headquarters, commando 69 training centres as well as procurement of vehicles and equipment. In addition, a sum of RM60 million is allocated to enhance the effectiveness of crime prevention in cities including the omnipresence and Motorcycle Patrol Unit.

The Government also recognises the role of RELA in ensuring a safe and peace society. For this, the Government will provide RM80 million to more than 200,000 RELA members. Two of their representatives are with us today, please put your hands together for their contribution. To ensure a safe and peaceful neighbourhood, the Government will provide RM40 million to reintroduce grant to the registered Residence Association. These grants of up to RM10,000 is provided for purchase of security control equipment, cleaning and maintenance of neighbourhood. Mr. Speaker Sir,

For regular readers of Malaysian Defence, most of the items in the speech are old news apart from the line that says a sum of RM323 million is allocated for personnel deployment at the eastern border of Sabah.

I am assuming that this means that the proposed ESSCOM brigade and border regiment (also brigade size) have been funded and the Army will be getting its fifth division soon.

For 2017, the budget for the all three services have been reduced drastically with the Army getting the most allocation for OE (RM5.420 billion) as it has the most personnel (around 150,000) with the maritime and air operations following closely behind.

Most of the OE allocation is of course consumed by emolument costs while the rest are used to pay for logistics, training and operational costs.

The same document also revealed that despite the budget reductions across the board, the allocation for LIMA 17 is pegged at RM17 million. The amount is higher for the cost of paying for the ESSCOM operations involving the forward base and the basing of aircraft at Labuan and Lahad Datu which was pegged at RM10 million.
The document did not revealed how much money was spent for LIMA 2015.

As for DE, the Army got the biggest share with RM1.26 billion compared to the RMN (RM1.088 billion) and the RMAF at RM462 million. As the Army and RMN projects are being conducted locally (LCS and Gempita) its elementary that the government continue funding them while the RMAF only got the sole A400M to pay for.

What about MRCA then? If we did order the new planes we only need to pay a small deposit and payments will only start when the aircraft are delivered. I am still skeptical of an order soon, however.

It must be noted that the DE projects registered with the Finance Ministry is listed at more than RM36 billion. The government however have only spent around RM12 billion between 2011 and 2015.

For this year, the budget document did not specify the amount of money allocated for the whole security sector – defence and national security. From my cursory reading it should be around RM29 billion with RM5.1 as the DE. The total allocation for the security sector decreased by some RM2.2 billion compared to the 2016 allocation of RM31.2 billion.

Listed below are the allocations for the rest of the sector, figures in brackets are for the allocation in 2016.

National Security Council OE RM70 million (RM610.2 million)
DE RM498 million (RM12.3 million)

Malaysian Maritime Enforcement Agency OE RM383 million (RM428 million)
DE RM378 million (RM399 million)

ESSCOM OE RM19.5 million (RM21.4 million)
DE RM44 million (RM12 million)

Disaster Relief Agency OE RM17.8 million (RM8.6 million)

All of the agencies above comes under the Prime Minister’s Department. There was no DE allocation for the Disaster Relief Agency, which was spin-off from NSC. It is likely that the agency only received funding under OE as its most of assets are to be leased (paid under OE) or supplied by other agencies like the Armed Forces, Bomba, MMMEA and PDRM.

PDRM OE RM8.180 billion (RM8.164 billion)
DE RM554 million (RM301 million)

RELA OE RM112.878 million (RM112.891 million)
DE RM1 million (RM5.75 million)

Apart from the OE figures above, the government through the Home Ministry is also paying directly around RM789 million for PDRM facilities like the Air Wing hangar in Subang, and ESSCOM personnel costs.

The budget document detailed the spending breakdown of the police 2017 DE. One figure that leap out was the allocation of RM78.45 million for the purchase of weapons and ammunition. Does this mean that the police is finally buying their M4s? Your guess is as good as mine.

The police will also get RM14 million allocation to buy aircraft for its Air Wing. Most likely this is the payment for the two AW139 light twin helicopters announced earlier this year. The two helicopters are already here though the police have not formally accepted them.

The rest of the DE allocation for the police are for quarters and other facilities as well as new vehicles, technical, communications and computer equipment. It is also likely the funding of RM25 million for the prevention of crime under the National Key Results Area (1) will allow the police and the RELA to buy off the shelf purchases of equipment from weapons, bullet proof vests to torch-lights.

Analysis

With commodity prices under pressure for almost third year running and the world’s economy in a flux, it was expected that the government will have to cut its spending. However the total budget is a 3.4 per cent increase from the re-calibrated 2016 budget. However as this is a deficit budget, funding across the board has been slashed.

As it its easier to cut spending for things that seemingly without any tangible benefits to the rakyat, of course the security sector will bear the brunt of any reduction. However, emolument costs continue to rise and locally manufactured items continue to be funded.

While cutting allocation during hard times is good for the short term, further delays in funding for important projects – pick your own – will only exacerbate the problem in the longer term.

As it is most of the ships in the navy – as one example – is in a great need of replacement. So instead of replacing the ships at a more leisurely pace – two a year for example – in the near future, there will come a time we may have to retire ships without any replacement.

This woeful scenario likely to happen soon with the RMAF, as retirement for the Mig-29s are looming without any replacement in sight. Once an aircraft is declared non serviceable, it could no longer fly, unlike ships which could be towed to sea and used as a floating base even if its engines are not working.

— Malaysian Defence

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