ANDREW DOYLE / SINGAPORE
Western manufacturers hope that air force modernisation in South-East Asia will escape the fall-out of the terrorist attacks in the USA
South-East Asia is back on the map as a potentially lucrative market for defence sales as governments in the region look at modernising their air forces after a period of neglect following the Asian financial crisis of 1997-99.
It is unclear, however, whether the terrorist attacks in the USA on 11 September will again throw the area into recession and push military acquisitions further down the agenda, or, rather, encourage defence modernisation to ensure stability, as the USA reviews its Asian commitments.
Evidence of Western defence contractors' renewed efforts to close deals in South-East Asia will be on seen at this month's Langkawi International Maritime and Aerospace (LIMA) exhibition in Malaysia, to be held from 9-14 October, and at Singapore's Asian Aerospace show scheduled for February.
Malaysia is being eyed by Boeing as an export launch customer for the F/A-18E/F Super Hornet, while Singapore is looming as a key potential first export sale opportunity for Dassault Aviation with its Rafale and for Eurofighter offering the Typhoon.
Boeing is keen to capitalise on Malaysia's purchase of eight earlier-generation two-seat F/A-18Ds in the early 1990s. That deal failed to meet its full potential after the Asian economic downturn in 1997 thwarted plans for a further buy of 8-16 more Hornets. Malaysia's economy is however, gradually recovering, and government officials are indicating a multirole fighter acquisition is back on the agenda.
Boeing is to bolster its renewed marketing efforts in the country by bringing a pair of Super Hornets to the LIMA show. The company is trying to drive down the cost of the aircraft to around $40 million to increase the size of the potential market following the end of production of the cheaper but less capable F/A-18C/D.
Russian challenge
The principal challenge in Malaysia to the US manufacturer comes from Russian industry, offering a package of arms ranging from multirole Sukhoi Su-30 fighters, to ground-based short- and medium-range air-defence systems. A barter trade deal is being discussed that could lead to Russian manufacturer Irkutsk Aviation Production Association delivering Su-30s in return for shipments of Malaysian palm oil - a similar arrangement to that in 1994 when Malaysia bought 18 RSK MiG-29 fighters. The Su-30 had also been considered four years ago as an alternative to buying moreF/A-18s before the financial crisis hit.
Malaysian air force officials are understood to have visited Russia recently to perform a hands-on evaluation of the Su-30MK. "However, we have not made any decision on this as the purchase of aircraft such as the Su-30MK needs quite some time to be reviewed and it must be done on all aspects," Malaysian defence minister Najib Tun Razak recently told the state-backed New Straits Times.
"We cannot solely concentrate on the commercial offer which was made by the Russian Government, but we have to look at the actual capability of the aircraft, especially its combat capabilities," he says. Najib adds Malaysia would also demand technology transfer from Russia "which is needed for the interests of our country", and no decision is expected at or before the LIMA show.
Najib says Malaysia may announce purchases of other aircraft, including helicopters, at the exhibition. It is in talks with Eurocopter for six AS555 Fennecs to replace the navy's elderly Westland Wasps - a deal potentially worth $24 million. In addition, the first of six AgustaWestland Super Lynxes is due to arrive in 2003.
Potentially more lucrative is an expected contract for naval helicopters to equip 27 German-built corvettes being acquired by Malaysia. The country also needs a replacement for the air force's ageing SikorskyS-61As used for combat search and rescue.
BAE Systems is meanwhile spearheading a campaign to sell MBDA's RapierFSC-based Jernas air defence system to Malaysia and hopes to wrap up a deal potentially worth 1.3 billion ringgit ($340 million) by the end of this year.
Malaysia's regional rival Singapore is also back on the acquisition trail and is evaluating the responses to its recent request for information (RFI) outlining its requirement for a fleet of up to eight naval helicopters to equip six French-builtLa Fayette-class frigates due for delivery from 2005. It is also starting to examine options for replacing its ageing McDonnell Douglas A-4 Skyhawks and, at a later stage, its Northrop F-5s.
Singapore is regarded by Western contractors as an extremely desirable export customer due to its highly transparentprocurement procedures and lack of enthusiasm for direct industrial offsets. The helicopter acquisition could eventually be expanded to include another 13 utility machines, preferably of a common type to the naval variant, and a request for proposals (RFP) is expected to be issued by the end of the year.
Competing for the order are AgustaWestland offering the EH101, Eurocopter with the AS532SC Cougar, Kaman offering the SH-2G Super Seasprite, NH Industries with the NH90 and Sikorsky proposing the S-70 Seahawk.
On the fighter side, Singapore is seen as a potential early export customer for the US Joint Strike Fighter (JSF) and may buy additional Lockheed Martin F-16s as a stop-gap. If the country decides against pursuing the JSF option it could order another multi-role advanced fighter such the Boeing F-15 or F/A-18E/F, Rafale, Typhoon or Su-30.
Singapore's defence minister Tony Tan said at the Paris air show in June that he expects the fighter RFI to be issued by the end of the year and an RFP to follow 12-18 months later. A final selection is planned for 2004, and "at least one squadron of20-24 aircraft" will be procured, says Tan. The A-4s are due to be replaced by the end of the decade.
A key aspect of the battle will be Singapore's requirement to base some of the aircraft and associated personnel offshore due to training requirements and limitations on available space.
The Philippines air force aims to jump-start its modernisation plans by launching a tender to acquire at least one squadron of advanced fighters. The government is understood to have earmarked 3.3 billion pesos ($64.6 million) earlier this year to buy the fighters and other equipment such as advanced radars.
A third of the budget
The money for the air force represents a third of the 10 billion pesos that president Gloria Macapagal-Arroyo has allocated to upgrade the capabilities of the country's armed forces. The figure, announced in July, is double the amount previously set aside. The air force expects the F-16, F/A-18E/F, MiG-29, Dassault Mirage 2000 and Saab/BAE Systems Gripen to be evaluated for the requirement after an RFP is issued.
Thailand's efforts to boost its defence capabilities have recently focused on upgrades and acquiring used aircraft. The country is contracting Israel Aircraft Industries to upgrade 19 Thai air force Bell UH-1Hs, and the government last year approved the purchase of 16 used F-16A/Bs from the USA. Thailand has also announced an order for Super Lynx.
Indonesia is also interested in re-equipping its air force, but budgetary constraints mean that it may have to look at second-hand aircraft.
Source: Flight International
