SHAH ALAM: TH Heavy in a pickle. If you read the local business pages, you will be aware that TH Heavy Engineering (THHE) Sdn Bhd, is likely to be delisted from Bursa Malaysia. In fact the shares of THHE have been suspended from the Bursa since December 10. It would have been delisted on December 14 if the company had not appealed the decision.
Bursa announced the decision to delist THHE on December 1, this year. So what is this got to do with Malaysian Defence then? If you have a slight interest in Malaysian Defence you will know that THHE is the builder for Malaysian Maritime Enforcement Agency (MMEA/APMM) three OPVs. It was building the three ships under the THHE/Destini JV which broke up earlier this year. The JV got the contract to build the three OPVs in 2017 and until now none of the ships have been launched. It must be noted that the Pakistani Navy has commissioned two corvettes, a slightly larger version of the MMEA’s OPV, in 2020. Contracts for both ships were also signed in 2017.
So what if THHE is delisted from Bursa Malaysia? According to the Edge it its on the brink, really. With multiple creditors on its back and not much revenue coming in apart from the money due from the government when the three OPVs are commissioned into service. Whether it will get there or not is another issue.
It is interesting to note that the Defence Ministry had sought to ensure that the LCS hulls and its equipment stored at the Boustead Naval Shipyard in Lumut is protected from the company’s creditors. One have to wonder whether the Home Ministry had done the same for the MMEA OPV? Of course if indeed the creditors take over possession of the THHE Fabricators yard in Pulau Indah, Port Klang, it will take some time for the government to take back the ships and all of the associated equipment. Just like what had happened with the RMN training ships.
I have been told that the first MMEA OPV – Tun Fatimah – is ready to be launched at any time. However the ship cannot be launched until JV buy out is officially completed. Therefore it is unlikely that the ship will be delivered to the MMEA this February as stated in the revised contract. Of course she could be launched within the next 70 days or so, but delivery is likely to take place by June at the earliest, if we are lucky of course.
It is interesting to note that on December 7, THHE announced it signed a MOU with APO Integrated Services Sdn Bhd, the local representative of Liren Marine Technology Co Ltd, for a JV to jointly bid for the construction of eight units of RMN’s Second Batch Littoral Mission Ship project. The fact that THHE had signed a MOU with a local company which acted as an agent for a China shipping company instead directly with a shipbuilder from China, speaks for itself.
— Malaysian Defence
If not mistaken, previously THHE & Destini worked with Damen for the proposal of 2nd Batch LMS right? The next stupid thing that we need is another batch of Chinese built/designed/equipped LMS.
Incidentally just a few weeks ago the second of Philippines Coast Guard 94m MRRV/OPV was launched by Japan. The contract was signed in February 2020 costing a total of 132.57 million dollars for the 2 ships. That is less than 2 years from contract to launch of all 2 OPVs.
Philippines also has just approved the downpayment for 2 new South Korean Missile Corvettes, which is as big as our Maharajalela Frigates. By the looks of it, even these still unbuilt warships will be completed and be in the water before any of our Maharajalelas will.
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luqman – ”The next stupid thing that we need is another batch of Chinese built/designed/equipped LMS.”
It certainly won’t be Chinese built but Chinse designed. Nothing wrong as long as the RMN has a say in it’s design [without the local industry or anyone else dictating things] and as long as from the onset it’s not equipped with Chinese gear which is incompatible with what we already have and would make it highly problematic and expensive to integrate with non Chinse gear.
Why don’t the government just not procure any more major naval systems from local industry and companies. Lets just leave the ship building to their respective Ship Designers and Makers. The LCS should’ve been built by Naval Group themselves in France and these OPVs should’ve been built by Damen in Denmark itself, end of discussion. Malaysia cannot sustain a naval defence industry due to lack of activity, talent and demand. Local companies should only be involved in Maintenance and after service.
Damen is from Holland
Firdaus – ”Why don’t the government just not procure any more major naval systems from local industry and companies.”
This is a question which has been done to death with. It’s because under Mahathir we came up with a policy of ensuring that big ticket purchases must benefit the country as a whole; not just the armed services and foreign suppliers. The idea being that ToTs, offsets and local production would not only benefit the defence industry but also other industries and that jobs would be created and that the technology we gained would lead to long term tangible benefits.
With the NGOPV and LCS programme the idea was that the the local industry would learn and eventually be able to built its own ships without or with minimal foreign assistance [the ”self sufficiency” myth that some still go for], that jobs would be created, that the amount of local content could be gradually increased and that some of the money allocated could be diverted back into the local economy.
So goes the theory ….. In reality we have long found ourselves in a highly destructive and self defeating situation in which the local industry takes precedence over the services and the taxpayer; we end up paying more than what we should or could have, we have a MAF whose capabilities don’t reflect what we’ve spent on it and we have a MAF with a bit but mot enough of anything. On top of that defence is not something we take seriously.
Firdaus – ” Malaysia cannot sustain a naval defence industry due to lack of activity, talent and demand.”
Because of the lack of a holistic and apolitical policy; no continuity; no economics of scale; politicians and a public which don’t take defence seriously, a lack of funding and shifting priorities.
why don’t we just said the obvious thing that due to this cronies,these type of project will never be completed
6 lcs & 3 opv delayed, corruption and bad management. Safe to say our industries are still not ready to be conducting huge projects like these. Should’ve let overseas companies built it.
Oh not again. All ship contracts for Malaysian companies went kaput
What happens to LCS?
Abdul – ” obvious thing that due to this cronies,these type of project will never be completed”
Incorrect…. It’s because of a highly flawed and self defeating policy which is aimed at national interests rather than the end user or taxpayer. ”Cronies” or rather the local industry are a problem because we made it into one as part of our short sighted policy ……
Yes. We will not have new ships for many years to come. It’s good as funds can be better allocated for air force and army.
“Philippines also has just approved the downpayment for 2 new South Korean Missile Corvettes”
What interest me is that why they do not repeat the Jose Rizal (2600t) order or did not choose the in service Daegu FFX-2 (2800t) or the not yet built FFX-3 (3500t)? Why bother paying for a new design? what requirements where seen not enough in Jose Rizal? I wonder what different system will they put inside this new 3100t ship
The South Korean government has yet to approve the export of new in service naval combatants probably that’s why we have not heard of any sale of the frigates. As for the reason for not buying more Jose Rizal class is beyond me.
No lah we should be buying more stuff for the air force and navy
Still waiting for the minister to push for it to the Finance Minister. Probably he is still looking at the proposal even though the previous minister, the current PM, had done the leg work
Philippine is in shopping spree, 2 Corvette s.korea ( 2 pohang freebies), 6 OPV Austal Philippines, 32 Black Hawk, 5 C-130-J, and 12 Gripen C/D approved the budget anytime the initial down payment will be released.
Luqman – the proposed philippines corvettes are in fact, Jose Rizal class variants that are even larger.
Kamal – ”It’s good as funds can be better allocated for air force and army.”
Well the army will thank you for that. Problem is threats/challenges we face are in our maritime domain; for which logic dictates focus should be on the RMAF and RMN. given that the army is the senior service and traditionally has had better ”push” it’s imperative that strong political will is there for us to prioritise.
JUN – ”Philippine is in shopping spree,”
You are not the first to make this claim. Look at things in perspective; throughout the 1990’s and early 2000’s the AFP hardly got anything – the economy was slow, focus was on internal security and for a long period the American presence deterred external threats. They are making up for lost time and are able to do so now thanks to an improved economy and the China threat but internal security still remains a major issue.
To add salt to the wound…
Even Aussie’s OPV has now been launched. The ceremony was held today. Keel laying for the Arafura was in May 2019.
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gonggok – ”To add salt to the wound…”
Not only do we have no indication when the first LCS will be commissioned; we have no idea how many will eventually enter service; whether we will actually learn from yet another expensive cockup and whether by the class finally enters service whether it will be able to provide what the RMN needs in the operational sense.
Lets solve the Coast Guard shipsa first. First holding up delivery of the ships is not responsible ifbthe joint venture as it impacts the countrys defence.
Solution here is easy. Gov just pay up to a trustee agreeable to the two joint venture partners. If case is before the court then pay into court to obtain release of the ships. With that our Coast Guards have control of the ships.
The LCS is separate issue
Every navy ship building project failed. From the Meko NGPV, Korean training ship, Gowind LCS and now coast guard OPV.
@Firdaus
Let’s not tar the OPV project with the same LCS brush. The OPV, afaik, has far less technical hiccups compared to LCS. The fault lies with the company’s management, or perhaps the extra cost of clearing the slipway & late delivery forced by MCOs had drained their financial resources.
Let’s make it clear, we do not lack the technical ability to build complex ships. It is only when some fools thought it was just a small step from there to designing/redesigning a complex ship and fully building here which doomed the LCS. If we had stuck to Gowind ori design or at least let NAVAL to redesign & build the first couple at their yard with our guys learning, we would have gotten some in service already.
Nothing seems going right for us..BNS/govt screwed up big time for LCS project..Hoping to find some solace from MMEA opv project..turn out they also are as bad as that LCS project..almost two years late now..dont even let me started on that little birds thinggy
Is everything bad? Come on guys!
Has everyone forgotten about Bagan Datuk class NGPC? Nearly all were delivered with just the last unit, Lahad Datu, undergoing sea trials. It could have been much earlier if not for the political changes in Governments over the past 3+ years mucking up everything.
Let’s look at what’s ”bad”. The company awarded the contract for the Korean training ships went bust and the banks took over. Another company had to step in. The company which was awarded the Little Birds contract faced issues and another company took over. As usual the end user and taxpayer paid the price. Let’s not even go into the the NGOPV and LCS cockups; as well as others which are not widely/well known. We never learn because there is no political will to change. Procurement will continue to prioritise the local industry.
Let’s not even go into the many RFIs/RFQs placed with companies responding but us cancelling or postponing things indefinitely; leading to questions as to how serious we are. Or us having capability gaps which remain uncovered indefinitely. Or us barely having enough to meet the operational costs of what little we have. On another matter about 10 years ago the RMN had 16 ships armed with ASMSs and four armed with SAMs; now it has 4 armed with SSMs and a pair armed with SAMs which will no longer be operable in the near future because of obsolescent issues and might not even be replaced. The RMAF doesn’t even have a single LIFT and will soon have less helis than the RMN.
Yes things are ”bad” indeed but we can only thank the politicians [nobody else to vote for because they are all indifferent towards defence] and public apathy.
Azlan “Not only do we have no indication when the first LCS will be commissioned; we have no idea how many will eventually enter service; whether we will actually learn from yet another expensive cockup”
The question is what lessons we have to learn (beyond a simplistic “don’t build locally”) Despite talking about LCS for years, we’ve barely scratched the surface. We’ve seen every reason offered from local subcontractors being unable to meet quality standards to BNS being incompetent to BNS saying it’s the government’s fault.
@AM
From NGPC, we (the community, not the decisionmakers) learnt that with a matured ship design done by a reputable yard, zero meddling from the local builders/politicians, done by a company with sound financial background, with sufficient funding from the Government, built by competent local contractors & workmen, fully supported by the manufacturing yard, and without circumstances beyond their control (ie Covid & MCOs)… we can build complex ships nearly as good as the origin yards themselves.
We do not lack the technical capability to build & maintain them, but designing/redesigning such is a stretch too far for our current shipbuilding knowledge. We must also consider other non-technical factors such as above that would have doomed any project in the world, not just here.
AM – ”The question is what lessons we have to learn (beyond a simplistic “don’t build locally”) ”
We have learnt no lessons because the political will is lacking; because defence isn’t a priority and because the whole defence policy is heavily politically driven…
Also; what makes you so sure the politicians have learnt the “don’t build locally” lesson? We can build locally but there must be realistic plans on what can be achieved; economics of scale, proper oversight and the end user not the industry determining things.
AM – ”to BNS saying it’s the government’s fault.”
I have no idea as to where the blame lies over the LCS cockup but it was the government which insisted on local build [the first should have been done in France enabling BNS to go through a learning curve] and also approve a long list of other things. I will go further and say that the LCS is not what the RMN needs for its requirements in the coming decade. The way it’s fitted out is dictated not only by funding but also us not seeing the possibility of getting involved in anything more than a low to medium threat level conflict. The LCS is too modestly armed and zero free deck space for future upgrades; it limits our future options.
Anon – ”Every navy ship building project failed.”
Not really … Different times and less complicated ships but the 4 Jerongs; Mahawangsa and Mystari had no major hiccups.