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Tuesday, August 2, 2016

THHE Contracted for APMM Patrol Vessel

I read with interest YB Rafizi Ramli's blog post today on the awarding of a RM740 million contract to Tabung Haji Heavy Engineering Berhad to build 3 units of unspecified type of patrol vessels for the use of Agensi Penguatkuasaan Maritim Malaysia.

I would like to say that I partially agree to what the YB had mentioned.  The act of awarding the contract to inexperienced company may lead to non-performance of the contract.

As mentioned by the YB, the contractor does not have experience in shipbuilding.  This is a specific risk that APMM has to face.

I would not go into the fact that THHE is currently in the red.  I do not know much of THHE other businesses to sufficiently comment on those.  Plus, the feel is that he is politicising the issue rather than genuinely highlighting the issue.  Which in the end gets buried under tonnes of useless political ranting.

On the other hand, I do understand why the Government had awarded the contract to THHE instead of Boustead.  Let's see the reasons one by one.  Feel free to dispute as I may be wrong.

SGPV Project
Boustead is currently focusing on building 6 SGPV for RMN.  As the ships are going to be armed to the teeth, it would be better for Boustead to focus on THE SGPV contract.

Considering that Vietnamese Navy is also planning to procure Gowind type design for their Navy, I am remotely postulating that Vietnamese Navy may be approaching Boustead for the same.

RMN 15-to-5 Plan
RMN 15-to-5 plan is likely to be carried out by Boustead.  That means probably the procurement of between 10 to 15 ships to replace the ageing ship to rejuvanise RMN.  This are likely to be built by Boustead.  This in turn would lead to Boustead not being able to meet the requirements for other customers. 

The Need to Have a Competing Agency
To avoid complacency that had plagued the industry, the Government is likely to have awarded the contract to a separate agency so the new company can catch up and provide competition. 

However, I do feel other companies may be more suitable to take up the challenge.  

Labuan Shipyard Engineering has experience building ships.  So does Hong Leong Lurssen. The contract could have been provided to these companies instead.  

If these are not preferred, we do have Destini Berhad which is involved in defence industry per se.  Which would be more logical than THHE.

However, as pointed out by my comrades in MMP, no matter who you award the contract to, it is still a bailout. Quote used with permission.

"But it is a bailout. Tapi kalau nak be fair.. kalau bagi labuan shipyard.. its a bailout also. The same kalau bagi ke hong leong lursen.. will be also a bailout."

Case for THHE
This is just an extrapolation.  THHE may be able to pull it off as company by law is a legal person with no self-conscience.  To push for the contract to be fulfilled, it could be taking the easy way out by hiring expertise from the market.  Well, that is how I would do it.

Next they would need to invest in shipbuilding technology.  Which will not be cheap. Meaning that most likely this will b followed by future contracts.

It might be exciting time, or it would turn into a gut-wrenching anger.

APMM Needs
Does APMM need to have new ships?
Yes. Most of APMM ships are hand-me-down from the Navy, Marine police, fisheries and others.  Most are more than 10 years old during the formation of APMM. 

In fact, the Auditor-General had highlighted that APMM ships can be a danger to its crew in an audit report issued in 2012.  

Even myself, if I am in command, I won't want to send men and women to duty with old rickety ships and boats.

Will you?  Well, I'm not the warfair expert. 

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