LETTER | The Malaysian government has mandated a requirement for prospective suppliers of the 18 Light Combat Aircraft (LCA) for the Royal Malaysian Air Force (RMAF), currently being evaluated, to source or procure at least 30 percent of products/services from domestic companies.

The six international manufacturers of the LCA, who have submitted their bids when the tender for the supply of 18 units of fighter jets closed on October 6, 2021, will have to factor in this important national industrial policy requirement.

This could pose a major challenge for foreign manufacturers who may view such collaboration in defence-related projects with concerns over sensitivity on sharing knowledge on military technology.

While it is not known to what extent the current bidders for the supply of LCA for the RMAF will freely comply with the local content requirement or prevented from doing so, from information gathered in the public domain, one of the strong contenders at least has disclosed its willingness and ability to comply with such requirement.

Last week also saw the opening of Turkish Aerospace’s first engineering and design office in Malaysia. Reports stated that Turkish and Malaysian engineers will carry out joint studies in a variety of areas, which include unmanned aerial vehicles, jet trainers, helicopter projects and modernisation programmes for the global aviation ecosystem. Turkey is one of the international bidders for the RMAF LCA tender, offering its yet-to-be-built Hurjet.

Well before the tender for the LCAs was announced mid-year by the RMAF, Hindustan Aeronautical Limited (HAL), which is aggressively looking at the export market in the region, disclosed its intention to collaborate with suitable local players to set up an MRO joint venture in Malaysia.

HAL, which is offering its advanced signature asset, the fourth generation fly-by-wire Tejas, announced in March 2020 of its interest in setting up logistics bases in Malaysia, Vietnam, Indonesia and Sri Lanka as part of its initiative to provide close support for international customers for its Tejas as well as MRO facility for the country that purchases its planes.

Its chairperson and managing director, R Madhavan, was quoted as saying the development of such bases would serve as a facility for MRO services and provide after-sales services more efficiently and be more cost-effective.

In a more recent follow-up move to reiterate its serious commitment to Malaysia, it is understood that HAL has inked a conditional understanding to collaborate with Boustead Heavy Industries Corporation (BHIC), a leading defence contractor with diverse interests in the defence, security and marine sectors. BHIC, whose largest shareholder (59.4 percent) is the Armed Forces Fund Board, a public-listed organisation with investments in several public-listed companies as well.

The proposal to collaborate with BHIC, the largest conglomerate of its kind in the country, is seen as a strategic move to not just meet the “localisation” content requirement but also as a platform to produce components parts for Tejas as exports from Malaysia.

Subject to HAL winning the contract for the LCAs, with the proposed JV with BHIC, HAL will offer the full range of Depot Level Maintenance, covering reliability, availability, maintainability and supportability (RAMS). This D-Level maintenance is the highest level of support ever to be seen by a foreign defence manufacturer in Malaysia and looks certain to result in high technology and expertise transfer to RMAF and build the nation’s aerospace technical and local vendor ecosystem. It also will reduce the cost of maintenance and aircraft downtime to RMAF, ensuring Malaysia’s air defence readiness is at the optimum level.

Together with HAL’s end-to-end logistics support system covering a broad range of areas including preventive and corrective maintenance, data management, obsolescence maintenance, response planning and facilities management the linkage impact is expected to be very strong and extensive.

Such an initiative proposed by HAL is expected to further strengthen and expand the role of BHIC in the development of local industries in the defence sector as outlined in the National Defence and Security Industry Policy and strongly advocated by the Malaysian government.

SHERMAN SOCKA is an industry and investment analyst.

The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini.