Boustead Feels The Heat

28 Mei 2019

First Littoral Combat Ship at BHIC (photo : Malaysian Defence)

Jane’s reported that Boustead Heavy Industry Corp (BHIC) is feeling the heat from MINDEF’s ministry wide scrutiny exercise as reflected in its Q1 2019 financial results.

The Government has decided that all of the Keris-class Littoral Mission Ship (LMS) are to be build in China instead of the original plan to build two at Boustead Naval Shipyard’s facility in Malaysia. The move has resulted significant reduction to the LMS’ overall procurement cost.

The Maharajalela class Littoral Combat Ship (LCS) now faces delay as it had not received ‘equipment from the United States’ which pushed the ship’s service entry date to two years. To further add salt to the wound, the much anticipated contract signing of French-made Mica VLS surface to air missile system did not take place during the recent Langkawi International Maritime & Aerospace (LIMA) 2019 show last March. This was partly due to an unannounced quasi boycott on French made defence product following the country’s leading role on imposing ban on palm oil product from Malaysia and Indonesia.

First Littoral Mission Ship in Wuchang Shipbuilding Industrial Group, Wuhan, China (photo : Naval News)

Being a significant beneficiary of many defence deals related to France, the effect of so called Sawit War on the company is visible and real.

Last August 2018, MINDEF revealed that Boustead Naval Shipyard has been awarded with RM18 billion worth of contracts involving naval shipbuilding and repairs. A total of RM6. 7 billion was paid for the supply of 6 Kedah class New Generation Patrol Vessel (NGPV) delivered 4 years late than the early plan.

RM9. 1 billion was spent for the Maharajalela class LCS, also suffering from delays. The Minister of Defence also reported that the company was awarded with the Keris class LMS, valued back then at RM1. 17 billion.

Since 2000, the company has been awarded contracts to maintain Swedish made CB-90 combat boats worth RM1. 06 billion.

LMS equipped with stern ramp launch and recovery technology (photo : Sohu)

BHIC AeroServices which specialises in MRO service provider of Airbus Helicopters product has been tasked to maintain French-made helicopters operated by the Royal Malaysian Air Force (RMAF), the Royal Malaysian Navy (RMN) and Royal Malaysian Police (RMP). Having said that, many new maintenance contracts of these French made helicopters have been given to other companies.

The strong foothold of Italian Leonardo Helicopters have broke the long standing domination of AS332/EC-225 Super Puma helicopters in Malaysia. MHS Aviation, a subsidiary of BHIC is a significant operator of Super Puma helicopters in this country. More Government agencies have adopted the much more popular Leonardo AW139 helicopter family.

The rise of Russian Helicopters and recent endorsement by the Prime Minister also mean that French helicopters’ market share in Malaysia are declining fast.

No love lost for a company that was initially tasked to build 27 offshore patrol vessels (OPV) for the RMN. Rather than updating the OPV’s design blue print take could be developed into other variants, the decision was made to Go French and adopted Naval Group’s Gowind class corvette design.

(MFH)