SHAH ALAM: IN the previous post on the nationalisation of Boustead Naval Shipyard (BNS), Malaysian Defence speculated that the cost of the project is now RM12.4 billion. This is because Ocean Sunshine Bhd (OSB) – the government owned company set up to take over BNS will be paying the BHIC and LTAT (the previous owner of BNS) some RM1.2 billion in liabilities and debt.
Defence Minister DSU Mohamad Hasan (who did not say that the project cost is now RM12.4 billion) told Parliament on Monday (September 19) that the cost of the project had gone higher due to the change of specification of key systems. From FMT:
In his winding-up speech, Mohamad also said the increase in budget was primarily due to changes in the specifications of key systems, namely the surface-to-surface missile system (SSM), decoy launching system (DLS), and integrated platform management system (IPMS).
“Despite reducing the number of ships to five, this cost increase was unavoidable as it represents non-recurring costs for the construction of the entire ship,” he said.
Do note that Malaysian Defence had already stated in the past that the cost of the project will go above the RM9.1 billion ceiling contract due to the changes to the items mentioned in bold, above. Malaysian Defence has also pointed out that the increase in cost had been pencilled in since 2017 but it was not fixed as the-then government thought it would do so after the 2018 general elections. Of course, that did not happened.
On May 26, BHIC and BNS announced that the cost of the project had went up to RM11.2 billion. As mentioned above with the payments for BHIC and LTAT, which need to be paid due to the nationalisation, the cost is now RM12.4 billion.
Do note that I am using the FMT story as the parliament official record – the Hansard – has not been published when this post goes live.
— Malaysian Defence
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View Comments (79)
"surface-to-surface missile system (SSM), decoy launching system (DLS), and integrated platform management system (IPMS)."
I thought SSM were already choose early on (NSM), is it actually SSM or SAM? If it was the SAM change, it could be ESSM block 2 with mk41 vls or mk56 vls. Why I said this? Well RMN did get the SSM that they wanted but not the SAM and this was mentioned in the PAC report
The change of DLS is something that was also mentioned in the PAC report but not IPMS as far as I know. Correct me if I am wrong, IPMS is not CMS right?
Yes, chosen but not yet signed officially before the supplementary contract. IPMS is the integrated platform management system. Read my previous LCS stories.
SSM changes from what? Exocet to NSM?
Yup, NSM.
well the total cost in MYR should be higher now due to exchange rate
USD to MYR in 2014 was around 3.3
USD to MYR now in 2023 is 4.7
So RM9.1 billion in 2014 is about USD2.76 billion for 6 ships
Now say RM12.4 billion in 2023 is about USD2.64 billion for 5 ships.
We lost money paying people for years to do nothing and to pay liabilities and debts not related at all to the building of the Gowinds.
Yet most of the hardware to build the 6th ship is already paid for and included in the RM12.4 billion figure for 5 ships. To add manpower cost to build the 6th ship should not be a lot.
This is more reason why RMN should consider not ordering LCS batch 2. LMS, if configured correctly could even do exactly what LCS can
– 8-cell mk41 vls self-defence version
– 16x ESSM block 2 quad packed into 4 cells + 4 SM2 Block3c
– or 16x ESSM block 2 quad packed into 4 cells + 4 ASROC
– or 32 ESSM block 2 quad packed into 8 cells
– Thales NS100 AESA (Smart-s mk2 if really need to save money, change to 400km NS200 if can or)
– Thales Kinglip mk2 and CAPTAS2/4C size sonar
– 1x Millenium CIWS or GOKDENIZ (whichever that is cheaper) + 2x DS30
- 8x NSM
You can fit all of this in a 2000+ design with lower range at lower cost. But I still think better just go for Iver Huitfeldt/ Type31
That mean ESSM , is still a possible choice?
Nope
Never again we should allow local company to get shipbuilding contracts to build navy ship. All navy ships from now on should be and shall be made outside of the country.
Mark my words, the true final cost will likely be higher than RM 12.4Bil. As it is, thanks to the change of Govt and the cost actualisation was not done by subsequent Govts, people are still fixated that it is a RM 9Bil project and the cost increase must have been due to corruption, leakages. Yes, these are present but not to the extent where you could get a new redesigned ship with all the bells & whistles for the same price elsewhere. But is it the Govt fault? Yes! It is still their fault for hiding the true costing.
I am piqued by that statement on changes to SSM, wasn't NSM already bought & delivered for LCS fleet? Are they going for another missile?
Akmal - ''Never again we should allow local company to get shipbuilding contracts to build navy ship. ''
You playing Nostradamus now? Are you saying that if the yard is put through a learning curve; if there's no external interference and other things; that it can't deliver a hull on spec; within budget and on time? Is this written in stone?
Luqman - '' LMS, if configured correctly could even do exactly what LCS can''
[1] A LMS does not have the range, endurance or seakeeping of a LCS; nor will it have a helo
[2] The LMS Batch 2s will be modestly armed [count your lucky stars if it has a 8 cell VLS and not a stabilised MANPADS mount] and has 4 not 2 SSMs
[3] The RMN sees it's LMS as performing secondary type duties; not a main combatant which is the LCS. Just like how for the RMAF the more serious stuff will be the responsibility of the MRCAs not the LCAs.
[4] [4] From the 1970's the RMN has seen the need for a high/low end mix. In the 1970's and 1980's the FACs were the Team B; as part of a fleet in being. in the 1990's the plan was 6 Lekius and the NGOPVs [replacements for the FACs and PCs]. As of 2023 LCSs and LMSs.
@Akmal
"All navy ships shall be made outside of the country."
The Govt that does that will be the next to lose their seat of power. So which one will dare?
@Luqman
As I mentioned, a smaller hull (LMS2) will have limited potential for future upgrades and this is not what TLDM wants.
There is no need to be a cheerleader or echo chamber of a lost cause. There simply aren't enough long-term orders to justify supporting a local industry for large warships. In 22 years, the country has only built 6 warships, none of which are complex (no missiles). In 30 years (out to 2031), the country would if lucky, build only 10 warships (6 Kedah + 4 LCS) - none delivered on time or on budget. For a Navy with small budget, sometimes its ok to be a clairvoyant if the facts speak for itself. Especially since the approach for local production involves wasting money on buying the IP for custom design instead of proven design (e.g., DCNS does not offer 3100 Gowinds, nor does FNSS offer Gempitas). No need to hedge bets and take neither here nor there positions for fear of being wrong, when the facts speak for itself.