SHAH ALAM: The statement below is self-explainatory. It is the confirmation of the contract for the AV8. As mentioned in the previous postings, the LOA for the AV8 signified the three mandatory Armed Forces projects for the RMK 10. As a reminder the other two projects are the SGPV/LCS and the Nuri Replacement Programme (Cougar procurement).
The Cougar project has just started while the SGPV/LCS project will be signed, most probably, at Lima 2011 at the end of the year. Again as I had mentioned I am wary of having the government announcing the ceiling budget for any project under negotiations as the final price had always tracked the approved budget. In this case, the LOI was worth RM8 billion and the LOA (contract) is RM7.5 billion, a discount of RM500 million.
Like the SGPV/LCS project I am still of the opinion that this is another Bridge Too Far for MAF. Of course the Army needs to recapitalise its forces but spending RM7.5 billion for just 257 armoured fighting vehicles (AFV) is over the top for our defence budget. Yes, the money spent will be spread out most probably within 10 years or even longer but how the government can guarantee it will be spending a billion ringgit a year for these vehicles especially in an economic downturn?
The rest of the Army remained in need of recapitalisation and more money is needed for operational and maintenance concerns. Yes, there is even the chance of huge capital outlay in case a shooting war does take place , no matter how remote the chance of it happening.
Yes, I know the AV8 is an AFV and it was never designed to fight an Abrams. But for that price it should not only fight an Abrams it should tore it to pieces! I will not bore you with numbers but the rest of the 8×8 AFV cost around RM10 million each or cheaper (Western ones) while Russians and Chinese ones goes much, much cheaper.
I understand the argument on transfer technology and such but then again for RM30 million a piece everything on the AV8 should be designed in country and made locally. Instead it will have a Turkish body, a South African turret with gun and ATGW launcher, a German engine and French radios and electronics and assembled here. It was designed in the USA however, the country that bought an AFV from the Swiss, mind you.
By the way, I have no idea how much is the cost of the Singaporean 8X8 the Terrex. It may even cost as much as our AV8. But with an annual budget of nearly US10 billion, of course it can afford to pay for it.
Revised RMK10 tally (figures in bracket is actual contract price0
Cougar RM1 billion (RM1.6 billion); SGPV/LCS RM3 billion (RM6 billion), AV8 RM2.5 billion (RM7.5 billion) A400M RM1 bilion (RM2.5 billion)
DRB-HICOM BERHAD (“DRB-HICOM” OR “COMPANY”)
ACCEPTANCE OF LETTER OF AWARD (“LOA”) FROM THE GOVERNMENT OF MALAYSIA TO DRB-HICOM DEFENCE TECHNOLOGIES SDN BHD (“DEFTECH”) IN RELATION TO THE MANUFACTURE, SUPPLY AND DELIVERY OF ARMOURED WHEELED VEHICLES
Announcement Details/Table Section :
Further to the announcement dated 20 April 2010, DRB-HICOM is pleased to announce that its wholly-owned subsidiary, DEFTECH had accepted the Letter of Award dated 23 February 2011 from the Government of Malaysia to design, develop, manufacture, commission, supply and delivery of two hundred and fifty seven (257) units of twelve (12) variants of the 8 x 8 Armoured Wheeled Vehicles (AWV) (“Contract”). The Contract valued at RM7.55 billion is for a period of 7 years commencing from 2011.
DEFTECH, via this Contract, will spur and enhance the growth of the Malaysian economy through an economic enhancement program which consists of transfer of advanced defence technologies from its technology partners and original equipment manufacturers (“OEM”), research & development and local vendors development.
DEFTECH will also own its first intellectual property rights on armoured wheeled vehicle systems and sub-systems. Many new local OEMs will be created through direct and indirect foreign investments during the duration of the Contract and this will generate increased employment for the local defence industry.
Close collaboration with its technology partners and principal OEMs will also enhance the capabilities and knowledge of not only DEFTECH’s employees but create a knowledgeable workforce for the local defence industry including acquiring competencies in project management, supply chain management particularly defence business processes as well as systems engineering, amongst others.
The Contract will not have any material effect on the earnings, gearing and net assets of DRB-HICOM Group for the financial year ending 31 March 2011. However, the Contract will contribute positively to the future earnings of the Group.
None of the Directors and/or substantial shareholders of DRB-HICOM and persons connected with them have any interest, direct or indirect, in the said Contract.
This announcement is dated 7 March 2011.
–Malaysian Defence
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View Comments (48)
RM 7.5 billion spread over 10 years? How much of that is going to be siphoned off into pockets not intended to? Or in the event of more incompetencies, find ourselves with cost-ovverruns due to 'forgot to order spare parts'?
Technology transfers and first-time intellectual property rights my foot! The rakyat is footing the bill for a private enterprise which don't have the brains to even manufacture spare parts (trackpads mind you!) needed by the ACV-300s?!
First of all, the justification is not convincing.How much is actually going back into the economy and how much would be actually "leaked"out overseas?. The argument of Intellectual property is even more unconvincing.Do we get the IP for the whole vehicle-i.e the manufacture of the basic vehicle and not just for the variant that is produced or assembled here?
It is also argued that Malaysia will now be the asia hub for this vehicle. Really?.If its that expensive, how many Asian countries can afford to buy apart from Malaysia? They can get cheaper ones from Pindad or better ones from Singapore.
The government is not spending our money wisely.If they had bought PARs outright and maybe supplemet with anti tank armoured vehicles like the Centauro, it will be much much cheaper.
The whole project is a waste of money.We can get more bangs for the bucks like acquiring second hand tanks from Europe or new MRCP from the US or Europe too. We still have no funds for our AWACS. If only the budget for the armoured vehicles can be trrimed we can get two more AWACS already
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Buying second hand MBTs are out of question due to logistics reason (we bought the PT91M from Poland) and the fact that there is no second hand light tanks capable of fighting a MBTs. The Army does not believe any thing above 50 tonnes is capable of operating effectively here due bridge weight issues and the soil condition. The only real light MBT is the CV120T but if we had bought we would be the only country to use it although the chassis does have other variants.
the hope is that The RM7.5 billion also cover scheduled maintenance and parts for the next 10 years. But even say it is 30% of the contract, the av8 is way too expensive. The estimated cost for project badger south africa 246 8X8 is about EUR2.1 million a piece at 2007 price or 520 million euro. say 20% inflation, would be around EUR600 million. still almost 3 times cheaper at current exchange .
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It doesnt say so in the release. But as a rule we always skip the maintenance deal....
I'm never fond with the Pars design actually. Why in the hell does Deftech choose Pars as the base model for AV-8? It's a 'rejected' design been sold from Swiss --> US --> Turkey --> Malaysia.
In my honest opinion, buying a proven battle taxis off the shelf such as Patria AMV which has been proven in Astan is better deal and did I mention cheaper? Just because Indonesia started their Anoa programme and SG came out with Terrex, our G felt that we need to come out with something cool as well but we should consider the constraints in our budget.
The allocated budget should be spend wisely, do wisely even existed in 'their' books? Or fat paycheck is what those contractors are dreaming about.
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The Patria AMV or Wolverine was offered for local manufacture for around RM15 million..
Ym Lee,
At the moment we don't really know the full specs and configuration of the AV8 so in all fairness we can't say we can get better ones from Sing. In 2002, the Centauro and CV90 underwent trials here and were offered as a cheaper alternative to the t-90, t-84 and PT-91. Problem is both can't take the same amount of punishment as an MBT due to their armour protection levels. Personally, I would have liked surplus Leopard 2s as they have thicker armour and don't require the same amount of modifications and integration required for the PT-91 to meet our requirements. like it or not we are stuck with the PT-91M, it's not the best MBT but it's not the worst either.
All due fairness to Deftech, and I'm no fan of Deftech or any other local companies who apply the 'Made In Malaysia' logo on licensed assembled foreign products, the track pads issue was 5 years ago... From what I could gather, the army is getting good servicibility rates with the Adnans.
Something I noticed over the weekend, apart from small arms, the army applies it's logo on everything, including the G-5 and Jernas!
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Its good to hear about high availability rate of the Adnans. I remember back in early 2006 the fleet was left idle due to lack of parts. Wonder whether Deftech already got an extension to their parts contracts...
is the AV8 more costly compared to the ACV300 Adnan ?
If it is, wouldn't it be better to buy more Adnan instead ?
I don'y see the need to own the IP, its not like anyone will buy it from Malaysia and we can earn royalty.
There are so many 8x8 APC manufacturers. Why would anyone want to buy from Malaysia? What is our competitive advantage over the others?
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Based on records the Adnan costs around RM4 million each. The Adnan is for the. Armoured Brigade while the 8X8 is for the calvary units.
Azlan....you have not heard about the rollovers? Or the turret problems.
They are also underpowered and very hard to drive.
Logoing everything is in response to people selling stuff off, like jet engines.
The reason the Turks are chosen is because they understand the way things are done. You pay to play. This is a rerun of the Adnan deal where it was originally 88 for the same price as the 270+ they eventually got. That was early in the tenure of No.1.
For that amount of money we should get all kind of variants, basic model should have cloaking technology from the klingon, and 40watt plasma machine gun as co-ax. There should also be a variant with AMOS turret, air defence variant with CV-90 turret (40mm with that dust bin radar). For close support, it should mount 8in howitzer (no less), with 106mm RR as backup!
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LOL
257 to replace 400+ condors and 180 sibmas...might as well just go for the Indon Anoa and use the xcess funds for better equipment for the foot soldiers
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There are also the 250++ Adnans and another 200 plus MIFV also