RM6bil vessels: Preventing colonization by S'pore or sheer overpricing

Written by  Wong Choon Mei,

Irate Malaysian taxpayers are demanding to know why Prime Minister Najib Razak is splurging RM6 billion on 6 patrol vessels that are at least 50 times more expensive than those paid by Indonesia, 8 times more costly than the U.S. Sentinel series and 7 times dearer than Britain’s sophisticated HMS Clyde.

Even if Najib and Defense minister Ahmad Zahid Hamidi are trying to surreptitiously arm the Malaysian boats with high-tech missiles and gadgets without alarming Singapore and other ASEAN neighbours like Thailand, Philippines and Indonesia, the cost is still exorbitant.

“It is incumbent on the Malaysian government to explain the purpose of the purchase as well as the processes and procedures for deciding on the vendor. It should not be treated as a big secret because taxpayers have the right to know what they are paying for and if they are getting value for money,” Ramon Navaratnam, past president of Transparency International, told reporters.

Opposition politicians have already demanded that Najib explain the reasons for the costs and whether any open tenders were conducted.

No match in terms of pricing

According to Tony Pua, the MP for PJ Utara, even if the 6 vessels were armed with the most sophisticated warfare equipment, no other boats of this class in the world came close to the Malaysian pricing. In U.S. dollar terms, Najib is paying US$1.971 billion for the 6 ships or US$328.5 million or RM1 billion apiece.

“The Irish Roisin class will cost US$34 million (RM103 million), the Greek Super Vita US$108 million (RM329 million), the German Type 130 US$188 million (RM572 million) and the Israeli Saar V US$260 million (RM791 million) each,” Tony said in a statement.

"Even at the very top of the range, Lockheed Martin and General Dynamics, two of the best and biggest military companies in the world, built the US Littoral Combat Ships (LCS) at a budget of less than US$300 million (RM913 million) in 2004.”

He emphasized that Israel, which considers itself in a state-of-war, paid only US$260 million or RM791 million for each of its Saar V. That is at least RM200 million less than what Najib is paying for the Boustead boats.

Economic and transparency concerns

But does Malaysia need such high-tech and deadly equivalents? Already, the country is struggling under the weight of two Scorpene submarines that have cost taxpayers RM6.7 billion so far.

Malaysian sovereign debt hit a record 7 per cent of GDP last year and to reduce the borrowing, the Najib administration has insisted on slashing subsidies on consumer essentials, triggering price hikes on petrol, sugar and fuel.

The price rises have in turn jacked up broader food and transportation costs, angering Malaysians who are demanding that their interests be given priority rather than the large government-linked and crony firms.

"In light of the recent increase in food and commodity prices in the country as a result of 'subsidy rationalisation', the question that needs to be asked is if this counts as prudent spending?" said Klang MP Charles Santiago in a press statement.

Bukit Bendera MP Liew Chin Tong also accused Najib of trying to bailout the vendor - Boustead Naval Shipyard Sdn Bhd. Liew demanded full details and whether the BN government had undertaken any open tenders before transacting with Boustead.

According to Liew, Boustead was the previously “bailed-out and re-named PSCI", a firm that had failed to deliver on a similar previous order.

“In the instance where international open bidding offers half the price and better quality, are we still insistent in building this particular segment of local industry?" asked Liew in a statement to the press.

Preventing colonization by Singapore

Meanwhile, some Umno supporters are trying to “spin” away the “over-pricing” as a necessary evil to keep Singapore in its corner and prevent Malaysia from being “colonized” by the island republic, which is governed by Prime Minister Lee Hsien Loong and his father Lee Kuan Yew.

It is a favourite tactic of the Umno elite to use Singapore as a bogeyman to scare the rural Malays into rallying behind their party. For decades, Umno which is the boss in the ruling BN coalition, has adopted a divide-and-rule policy, stirring hostility amongst the different ethnic groups in a bid to cling to political power .

“We are not surprised by this same old, same old from Umno. No doubt, Malaysia has the right to defend itself but we have a foreign policy, a defence budget and a Parliament where all issues pertaining to public interest are supposed to be discussed and evaluated. The problem is Najib and Umno are too used to behaving like dictators and treating the country’s treasury as their personal piggy banks,” PKR vice president Tian Chua told Malaysia Chronicle.

“In this case, it is clear-cut. Even the most sophisticated warship is cheaper than the one Najib and Zahid are buying from Boustead. It is also interesting to know what state-of-the-art artillery or missiles a firm like Boustead can fit into our ships that they can blast even the Israeli and U.S. war models out of the water – price wise that is.”

Not the first time for Najib

This is not the first time that Najib has turned to mega arms-acquisition. The Boustead boats hark back to another huge naval deal made by Najib in the early 2000s when he was the defense minister.

He had approved the purchase of 2 Scorpene submarines that experts had insisted were unnecessary and which have cost Malaysian taxpayers RM6.7 billion so far. The annual service and maintenance fees are exorbitant and will set the country back a few more billion in the coming years.

Apart from that, the Scorpenes also cast shame on the nation as Najib got himself embroiled in corruption and murder allegations involving a Mongolian translator Altantuya Shaariibuu, who was killed in Malaysia in 2006 after she threatened to blow the whistle on the deal.

French vendor DCNS is currently being probed by Parisian authorities for having allegedly bribed Najib's close friend Razak Baginda with a 114 million euros side-deal to secure the order.