The Malaysian Ministry of Defence (MoD) has outlined the scope of some of the offsets it will secure through its contract with China to procure four Keris-class Littoral Mission Ships (LMSs) for the Royal Malaysian Navy (RMN).
The MoD said in a statement in early August 2019 that a local shipbuilder will receive technologies from China to support localised maintenance, repair, and overhaul (MRO) services for the ships.
The shipbuilder was initially positioned to construct two of the 68 m LMS vessels, but the MoD announced earlier this year that all four ships would be constructed in China to cut costs.
In its press release the MoD clarified that despite its decision to build all vessels in China, the shipbuilder would still benefit through the programme.
It was noted that this decision will not negatively affect ongoing agreements with regards to the transfer of technology and knowledge and will not cause Malaysia to be dependent on China.
In addition, the Chinese side has agreed to carry out technology and knowledge transfer programmes. These will be done via the shipbuilder and other identified vendors. This also applies in the area of maintenance, repair, and overhaul and logistics support.
The MoD added that despite all four ships being built in China, the programme will consider the RMN’s future MRO requirements and will help Malaysia reduce dependency on foreign support.
The MoD indicated that Malaysian workers will also have future opportunities to expand capabilities through technology transfer programmes and job placements in China.
At a cost of MYR1.17 billion, the four-ship contract was signed in 2017 between the Malaysian government and China Shipbuilding Industry Corporation (CSIC). Under a revised deal announced in March 2019 – with all vessels built by CSIC – the value of the contract was reduced to MYR1.05 billion.
According to another report it was noted that the government’s decision to build four Littoral Mission Ships (LMS) of the Royal Malaysian Navy (RMN) in China will not bring any negative effects in terms of technology and knowledge transfer as well as Malaysia’s dependence on China, the Defence Ministry said.
While the original plan was to build two units of LMS in China and two more in Malaysia, but after considering the country’s current financial situation, the government had in October 2018 agreed to build all four vessels in China.
Following that, China agreed to implement programmes on the transfer of technology and knowledge to Malaysia through the aforementioned shipbuilder and the identified vendor companies, including in areas of maintenance, repairs and overhaul, and logistics support.
Malaysia will not lose high skills jobs because the shipbuilder will ensure that such expertise remains with the company.
If necessary, these highly skilled workers can deepen their knowledge through technology transfer and job placement. It was noted that this method would ensure that Malaysia benefits in terms of career development in fields that require high expertise.
This will support RMN’s needs in the maintenance and repair of strategic national assets and at the same time reduce our dependence on foreign countries.
It should be stressed that the procurement contract signed is between the Malaysian government and the shipbuilder. Furthermore, BNS still gets opportunities and benefits through a project to build littoral combat ships which are being undertaken in Lumut, the statement added.
